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Federal Court of Australia |
Last Updated: 10 August 2001
John L Pierce Pty Ltd v Kennedy [2001] FCA 779
JOHN L PIERCE PTY LIMITED v JOHN ANTHONY KENNEDY (INSPECTOR UNDER SUBSECTION 84(2) OF THE WORKPLACE RELATIONS ACT 1996)
N138 of 2000
MADGWICK J
SYDNEY
27 JUNE 2001
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
N138 of 2000 |
NEW SOUTH WALES
BETWEEN: |
JOHN L PIERCE PTY LIMITED APPELLANT |
AND: |
JOHN ANTHONY KENNEDY (INSPECTOR UNDER SUBSECTION 84(2) OF THE WORKPLACE RELATIONS ACT 1996) RESPONDENT |
JUDGE: |
MADGWICK |
DATE: |
10 AUGUST 2001 |
PLACE: |
SYDNEY |
HIS HONOUR:
1 In my Reasons for Decision, dated 27 June 2001, in para 24 I stated that there was no breach of the Transport Workers (Long Distance Drivers) Award 1993 ("the 1993 Award"). However, the true position as agreed between the parties, subsequent to my reasons being published, was that aside from the breach of the 1993 Award found by the Chief Industrial Magistrate, there was still some underpayment by the appellant of the 1993 Award rates to Mr Gray. Therefore, the appellant is guilty of a breach of the 1993 Award, but not on the basis found by the learned magistrate.
2 This having been brought to my attention, orders were made on 26 July 2001 for the payment to Mr Gray of the amounts he was owed under both the Transport Workers (Interstate Drivers) Award 1988 and the 1993 Award. An additional penalty of $1 was imposed on the appellant for the breach of the 1993 Award.
Associate to Madgwick J
10 August 2001
John L Pierce Pty Ltd v Kennedy [2001] FCA 779
INDUSTRIAL LAW - appeal from a decision of the Chief Industrial Magistrate of New South Wales - construction of an award - natural meaning of a word - consideration of extrinsic circumstances - intention of the parties to the Award should be given effect to - imposition of penalty.
WORDS & PHRASES - "income".
Workplace Relations Act 1996 (Cth), s 178
Reuter v Federal Commissioner of Taxation (1993) 111 ALR 716, referred to
Amalgamated Society of Engineers v Adelaide Steamship Co. Ltd [1920] HCA 54; (1920) 28 CLR 129, applied
New Zealand Shipping Company Ltd v Societe des Ateliers et Chantiers de France (1919) AC 1, distinguished
Suttor v Gundowda Proprietary Ltd [1950] HCA 35; (1950) 81 CLR 418, distinguished
Macquarie Dictionary 3rd ed., 1998.
JOHN L PIERCE PTY LIMITED v JOHN ANTHONY KENNEDY (INSPECTOR UNDER SUBSECTION 84(2) OF THE WORKPLACE RELATIONS ACT 1996)
N138 of 2000
MADGWICK J
SYDNEY
27 JUNE 2001
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
NEW SOUTH WALES
BETWEEN: |
JOHN L PIERCE PTY LIMITED APPELLANT |
AND: |
JOHN ANTHONY KENNEDY (INSPECTOR UNDER SUBSECTION 84(2) OF THE WORKPLACE RELATIONS ACT 1996) RESPONDENT |
JUDGE: |
MADGWICK |
DATE OF ORDER: |
27 JUNE 2001 |
WHERE MADE: |
SYDNEY |
1. The appeal be allowed in part.
2. The decision of the Chief Industrial Magistrate of New South Wales, given on 2 February 2000 in relation to breach of clause 10C(b) of the Transport Workers (Long Distance Drivers) Award 1993 be set aside and the part of the information alleging such breach be dismissed.
3. The orders of the Chief Industrial Magistrate of New South Wales, given on 2 March 2000 be set aside.
4. The appellant pay the Department of Employment, Workplace Relations and Small Business a penalty in the sum of $1.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
NEW SOUTH WALES
BETWEEN: |
JOHN L PIERCE PTY LIMITED APPELLANT |
AND: |
JOHN ANTHONY KENNEDY (INSPECTOR UNDER SUBSECTION 84(2) OF THE WORKPLACE RELATIONS ACT 1996) RESPONDENT |
JUDGE: |
MADGWICK |
DATE: |
27 JUNE 2001 |
PLACE: |
SYDNEY |
HIS HONOUR:
3 The appellant appeals from parts of the judgment of the Chief Industrial Magistrate of New South Wales, given on 2 February 2000 and the consequent order made on 2 March 2000. The learned magistrate found that the appellant breached clause 10C(b) of the Transport Workers (Interstate Drivers) Award 1988 ("the 1988 Award") and clause 10C(b) of the Transport Workers (Long Distance Drivers) Award 1993 ("the 1993 Award"). The appellant was ordered to pay $13,420.87 to Mr Keith Gray pursuant to s 178 of the Workplace Relations Act 1996 (Cth) ("the Act") and a civil penalty of $1,000 for a breach of s 178.
Grounds of appeal
4 By its Amended Notice of Appeal, the grounds of appeal are:
"4. The breaches pleaded in the Information did not constitute a single breach of a term of an award as defined under s 178(2) of the Workplace Relations Act 1996 (Cth) and the Information is therefore defective.5. The Chief Industrial Magistrate erred in his interpretation of the meaning of the term "income" in sub-clause 8(a) of the Transport Workers (Long Distance Drivers) Award 1993.
6. The Chief Industrial Magistrate erred in taking into account extrinsic evidence which was incorrectly labelled as being a transcript of evidence of proceedings before the Australian Industrial Relations Commission before Her Honour Deputy President Marsh `in the 1993 Award hearing'.
7. The Chief Industrial Magistrate erred in the exercise of his discretion in imposing a civil penalty of $1,000 on the appellant.
8. The Chief Industrial Magistrate erred in ordering the appellant to pay $13, 420.87 to Mr Keith Gray."
Background
5 The respondent sought the imposition of penalties against the appellant before the Chief Industrial Magistrate under s 178 of the Act for alleged breaches of the 1988 Award and its successor the 1993 Award. It was alleged that there was non-observance of clauses 10C(b) and 10C(d) of both Awards in respect of the employment of Mr Keith Gray during the period 30 June 1992 and 16 August 1996. The respondent also sought orders pursuant to s 179 of the Act for alleged underpayments to Mr Gray. The appellant pleaded guilty to a breach of clause 10C(b) of the 1988 Award but not guilty to a breach of the 1993 Award and to breaches of clause 10C(d) of both Awards.
6 The historical background to the dispute was set out in the judgment of the Chief Industrial Magistrate at p 3:
"The 1988 Award provided in Clause 10C(b) for a cents per kilometre method of payment. As a result of wholesale non-observance of this provision and other disputes concerning long distance drivers' wages and conditions, a Memorandum of Understanding between employer groups and the Transport Workers Union was reached in September 1993.That memorandum was made in order to address the non-observance problems confronting the Industrial Relations Commission in the making of the 1993 Award. The 1993 Award was made in light of the non-observance of the Award and the agreed position in the memorandum [was] that there would be a savings clause in the 1993 Award that no current employee would lose income as at the time of the implementation of the agreement...
There is no issue between the parties that prior to the introduction of the 1993 Award as from 1 October 1993 Mr Gray was not paid in accordance with Clause 10C(b). The Award rate then being $0.2683 cents per kilometre.
In the 1993 Award the cents per kilometre rate in the 1988 Award was reduced to $0.2241 (some 20% reduction). This reduction was not made retrospective."
7 Clause 8(a) of the 1993 Long Distance Award, the savings clause, provided:
"No weekly employee employed under this award as at 30 September 1993 shall lose income as a result of changes to the award which took effect on 1 October 1993, and in return, such employees shall enter into positive discussions with their respective employers in order to establish an Enterprise Agreement designed to reduce any cost disadvantage that may have occurred due to those changes." (emphasis added)
That is, the subject savings clause occurred in the context of a reduction in the rates payable to drivers.
The Chief Industrial Magistrates decision
8 The first issue before the learned magistrate was what the word "income" in clause 8 of the 1993 Award meant. The present appellant had submitted that there was nothing ambiguous about the word and that Mr Gray was entitled to continue to be paid at the same rate as the 1988 Award had prescribed. The appellant submitted that the word "income" means "remuneration for the job" and that clause 8 could not be taken to mean that the 1988 Award rate was enshrined.
9 On this issue his Worship found that:
"The word `income' has a broad meaning. `Income' in general use means receipts from one's work... However, when interpreting a word it must be interpreted in the context of the award. When used in the context of the Award it would seem to me that the word must connote the award rate of pay and allowances. It is a requirement of industrial law that there must be specification of individual industrial benefits paid and one cannot simply set off an over Award payment in one area against another...In the 1988 Award a specific rate was set, a rate per kilometre, this was the legal rate. If an illegal rate was set by an employer then I have great difficulty in accepting the defendant's submission that the rate saved in the 1993 Award for `old' employees was the illegal rate and not the legal rate. If that was to be the case then simply the AIRC could have retrospectively varied the rate, which it did not do.
If the word income was to be considered to be ambiguous then I would still come to the same decision based on the extrinsic evidence before me.
Clearly new employees under the 1993 Award are entitled only to the `new rates'. The Memorandum of Understanding expressly endorsed that condition....
On the evidence before me the defendant failed to pay the `saved' rate $0.2683 after 1 October 1993 to Mr Gray and accordingly is in breach of Clause 10C(b) of the 1993 Award."
10 In reaching this conclusion on the issue of Clause 10C(b) of the 1993 Award, the learned magistrate referred to an extract of what he believed was a transcript of proceedings before Deputy President Marsh in the 1993 Award hearings.
11 The Chief Industrial Magistrate also dealt with the alleged breach of clause 10C(d) of both Awards. His Worship found that that claim was not established and his reasoning on that issue is not relevant for present purposes.
12 Finally, the learned magistrate dealt with the issue of penalties. On this matter he said:
"The defendant conducts a large transport operation. It is well respected in the industry and has no prior record for breaches of the Act. Mr Rochfort asked that in all circumstances, including the plea of guilty to the first particular and the fact that [it] appears that the defendant has been singled out by the Department that no penalty be imposed. Mr Rochfort also asked that applying the principles of equity, good conscience and the substantial merits of the case, no order be made in favour of Mr Gray.On the evidence, Mr Gray, after his Union refused to take action on his behalf, complained to the Department against his former employer. I have found the complaint in regard to Clause 10(b) made out under the 1993 Award and the defendant itself conceded that it was in breach of the clause prior to the 1993 Award. Despite Mr Rochfort['s] assertion that Mr Gray was somehow bound by the undertaking of his Union (the TWU) not to prosecute breaches he is and was legally entitled to pursue his claim. A course of action which he did. The fact that the 1988 Award was more honoured by its non-observance is not in my view a valid reason not to enforce a penalty.
Taking into account the nature and gravity of the breach, the more subjective matters put in mitigation and mindful of the maximum penalty and the principles of sentencing, a civil penalty of $1,000 is imposed."
The learned magistrate also ordered that the appellant pay Mr Gray the amount of $13,420.87 being the amount that he was underpaid.
Meaning of "income"
13 The 1988 Award set out a specific rate in cents per kilometre. It is common ground that during the currency of the 1988 Award Mr Gray should have been but was not paid this rate, giving rise to a breach of clause 10C(b) of the 1988 Award.
14 Counsel for the appellant submitted that the term "income" should be given its normal everyday meaning, which is remuneration received. It was claimed that income, except by some artificial extension, cannot include amounts that were never paid or received. The savings clause was included, in the making of the 1993 Award, to prevent reductions in income arising from the 1993 Award and not to impose or preserve a retrospective entitlement.
15 Counsel for the respondent submitted that the interpretation urged by the appellant would have the result that the savings clause in the 1993 Award saved an illegal rate (below the award rate) previously paid by the appellant and that such an interpretation would allow the appellant to benefit from its own unlawful act in underpaying its employees their entitlements under the 1988 Award. This it was claimed was contrary to a general principle of law that persons should not be permitted to take advantage of their own wrong doing. Further, the interpretation urged by the appellant would bring about the unjust result that the award rate of pay for existing employees would vary amongst employers regardless of the fact that such employees were performing identical tasks, and it would also create difficulties in implementation where an employee had been receiving varying over award amounts during the time of the 1988 Award, as the "saved rate" would be unclear.
16 With respect, I am unable to agree with the interpretation of the word "income" given by the learned magistrate. In my opinion, the word income has a clear and natural meaning, which is the amount of remuneration that a person is actually receiving, not what he or she may be entitled to receive, but has not been actually paid. An entitlement to remuneration is not in ordinary parlance income. Income is the satisfaction of the entitlement.
17 This impression is confirmed by the dictionaries. The Macquarie Dictionary 3rd ed., defines income as:
"...the returns that come in periodically, especially annually, from one's work, property, business, etc.; revenue, receipts... something that comes in" (emphasis added)
The emphasis is, relevantly, on monies received for work. The implication of an actual receipt of monies is consistent with English dictionaries: see the Shorter Oxford English Dictionary and hybrids such as the Australian Concise Oxford Dictionary. Looking at the word "income" in the context of taxation, in Reuter v Federal Commissioner of Taxation (1993) 111 ALR 716 at 730, Hill J said:
"Perhaps the most usual usage of the word `income' in ordinary speech is to describe that which comes in as a reward for service." (emphasis added)
18 In any case, if there is an ambiguity and one looks to extrinsic factors, the historical background that gave rise to the 1993 Award is consistent with both the Union and the employers distinguishing between income and award entitlements or award rates. The entire and unusual purpose of the 1993 Award was to overcome the problem of widespread underpayment of the previous award rate. To suggest that the compromise reached by the parties must have involved saving the very rate that had been so widely ignored by employers in the industry, is simply not sustainable. The employers would, in such a scenario, have been agreeing to a new award which saved a rate of pay that a great many of them had not been paying, thereby exposing themselves to the very type of claim now brought. The organised employers would know that any assurance given by the Union not to prosecute breaches of the 1988 Award would not prevent individual employees, or governmental enforcement officers such as the respondent, from bringing a claim against an employer. Certainly, it would be unusual for a union to agree to a provision that would permit an employer to profit from its own breach of a formerly applicable award. But agreement in the 1990s to a frank reduction in award rates of pay and an undertaking not to prosecute past award breaches were, themselves, very unusual. It was an unusual situation. At least it is no more likely that the employers would have agreed as the respondent asserts, than that the Union would have agreed as the appellant asserts. Thus, the extrinsic circumstances do not demand that the more common meaning of the term be cast aside or that any ambiguity should be resolved against the more common meaning of the term "income".
19 I agree with the learned magistrate that a word must be interpreted in the context of the award in which it appears, but in my opinion the context of the award and the circumstances in which it was entered into, rather indicate that the word income should be given its natural meaning of monies paid rather than monies that should have been paid. The intention of the parties to the 1993 Award is sufficiently clear, in my opinion, and effect should be given to that intention.
20 There are other problems in giving the word "income" the meaning attributed to it by the learned magistrate, as counsel for the appellant submits. Any wage payment over and above the award rate would not be protected as income if "income" be defined in terms of accrued entitlement. Any employer who had been paying over the award rate would be entitled, as a matter of the Award's construction, to reduce an employee's rate to the award rate pursuant to clause 8(a) of the 1993 Award. Clearly this would not have been the intention of the Union as it would not have saved the existing income levels of its members.
21 The word "income" was chosen rather than any other term commonly enough found in awards. This in my opinion was done for a specific reason: to preserve the status quo of those existing employees whose income was not lower than the new rates prescribed by the 1993 Award, and otherwise to start again so as to achieve, with the passage of time and likely award rate increases, some uniformity of rates across the entire industry.
22 I acknowledge the submissions of the respondent that such an interpretation of the word income saves, among other things, some "illegal" rates under the 1988 Award and that this in effect rewards employers who were not complying with the 1988 Award. I also appreciate that such an interpretation brings about a result which is unfair to those employers who were acting lawfully in compliance with the 1988 Award and may tend to call in question the worth of compliance with future awards. However, as Higgins J said in the context of interpreting words in the Constitution, in Amalgamated Society of Engineers v Adelaide Steamship Co. Ltd [1920] HCA 54; (1920) 28 CLR 129 at 162:
"[t]he question is, what does the language mean; and when we find what the language means, in its ordinary and natural sense, it is our duty to obey that meaning, even if we think the result to be inconvenient or impolitic or improbable."
23 Counsel for the respondent referred to New Zealand Shipping Company Ltd v Societe des Ateliers et Chantiers de France (1919) AC 1, where, in a contractual context, Lord Atkinson said that, if a contract can be voided on the happening of an event which is brought about by one of the parties, then that party cannot insist that the contract be voided or void the contract itself, as this would permit it to take advantage of its own wrong. This case was referred to by the High Court in Suttor v Gundowda Proprietary Ltd [1950] HCA 35; (1950) 81 CLR 418, where it was affirmed that only the party who is not in default can avoid the contract. However, this case is not about the voiding of existing contractual arrangements. Further, private contractual arrangements invite a different judicial approach than that required in the interpretation of a quasi-legislative document such as an award intended to have industry-wide application, even though the subject award has a consensual origin between parties who represent or can bind others.
Validity of the initiating process
24 Counsel for the appellant submitted that the initiating process was invalid. It was argued that, in proceedings relating to a penalty, a defendant is entitled to know the essential factual ingredients of the offence charged and a failure to accurately describe or characterize the nature and particulars of the alleged offence renders the summons bad.
25 However, counsel indicated to the Court that if the appellant succeeded on the "income" issue it would abandon the submission as to the validity of the initiating process. Accordingly, the appellant's plea of guilty to breach of clause 10C(b) of the 1988 Award and the Chief Industrial Magistrate's acceptance of that plea will not be disturbed.
Penalty
26 Having found that there is no breach of the 1993 Award, all that the appellant is guilty of is the breach of clause 10C(b) of the 1988 Award. In mitigation, it was conceded by both sides that the appellant was one of a large number of employers that did not comply with the rates prescribed by the 1988 Award. Despite this widespread non-compliance within the industry, the appellant is the only employer pursued for breach of the 1988 Award. The appellant has no relevant prior conviction. The amount actually underpaid to Mr Gray was about $1,800 compared to the $13,420.87 unpaid as a result of the alleged breach of both awards.
27 Given these various factors, taking into account the nature and severity of the breach, and noting that the appellant pleaded guilty to the breach of the 1988 Award and has not sought to further challenge the finding of such breach, in my opinion, a nominal penalty of one dollar should be imposed in relation to breach of the 1988 Award.
Disposition
28 The appeal will be allowed in part. The decision of the Chief Industrial Magistrate, given on 2 February 2000 in relation to breach of clause 10C(b) of the 1993 Award will be set aside and, to that extent, the information will be dismissed and the orders made on 2 March 2000 will be set aside.
29 The finding of breach of the 1988 Award is confirmed and the appellant is ordered to pay a penalty of one dollar for such breach.
30 In relation to the order to pay Mr Gray the amount owing from the breach of the 1988 Award, the parties are to quantify the amount owing and provide my Associate with it within 7 days, at which time the order will be made (there being no reason why Mr Gray should not be paid what remains of his lawful entitlement).
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick. |
Associate:
Dated: 27 June 2001
Counsel for the Appellant: |
P Newall |
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Solicitor for the Appellant: |
PricewaterhouseCoopers Legal |
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Counsel for the Respondent: |
D Godwin |
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Solicitor for the Respondent: |
Australian Government Solicitor |
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Date of Hearing: |
23 March 2001 |
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Date of Judgment: |
27 June 2001 |
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