Geddes v Richards [1936] HCA 20; (1936) 54 CLR 606 (30 April 1936)

HIGH COURT OF AUSTRALIA

Geddes Nominal Defendant, Appellant; and Richards Plaintiff, Respondent.

H C of A

On appeal from a District Court of New South Wales.

30 April 1936

Starke, Dixon, Evatt and McTiernan JJ.

O'Mara, for the appellant.

E. M. Mitchell K.C. (with him De Baun), for the respondent.

O'Mara in reply.

The following written judgments were delivered:—

April 30

Starke J.

The appellant Geddes was sued in the District Court at Sydney, as a nominal defendant on behalf of the Government of New South Wales, by the respondent Richards, who was an employee of the Government, for certain wages under an award of the Commonwealth Court of Conciliation and Arbitration known as the metal trades award. The District Court gave judgment in favour of the respondent, and special leave to appeal to this Court was obtained on behalf of the Government.

Under the metal trades award, the Government was authorized to make, from the rates of pay prescribed by the award, reductions or deductions not greater than a statute of the State might require to be made "generally in and from substantially similar rates of pay of employees of the State." The Public Service Salaries Act 1931-1934 of New South Wales makes provision for the reduction in salaries of officers in the service of the Government of New South Wales. But employment was also rationed: employees were directed to remain away from work for various periods of time, in order that they might share the work available equally, or over an extended period of time. (See Act 1930 No. 53, sec. 4). The position of an employee whose wages or salary were reduced and who was also rationed is dealt with in the Public Service Salaries Act (No. 2) 1931, sec. 4 (3): "Where, by rationing of employment, reduction is made in the salary of any officer, the officer shall be given credit for the amount of such reduction as against the reduction to be made under this section." The respondent was rationed in his employment one week in every four during the periods extending from 30th June 1934 to 8th December 1934, and from 4th March 1935 to 20th June 1935, and he was not paid for any of the weeks in respect of which he was rationed. His loss of wages amounted to £46 10s. The respondent was not rationed for the period from 8th December 1934 to 4th March 1935, but reductions, amounting in all to £3 1s. 1d., were made by virtue of the provisions of the Public Service Salaries Act. The Government refused to give the respondent any credit for reduction in his wages due to rationing, despite the fact that he had thereby sustained considerable loss, and credit had not been given which exhausted the whole loss. The Government contends that the credit allowed by the Act can only be claimed in respect of a pay period during which rationing has taken place, or else in respect of a period during which a system of rationing has taken place. It would follow that for the period 8th December 1934 to 4th March 1935 the respondent could not claim the benefit of the provisions of the Public Service Salaries Act (No. 2) 1931, sec. 4 (3), although he had sustained a loss in wages, due to rationing, for the period extending from June to December 1934, not exhausted as a credit against reductions in wages under the Act.

The Government's contention cannot be supported. The section itself contains no reference to the periods suggested by the Government. It is designed to relieve against what may be called a double reduction of pay. It is not limited to any period of time, nor is there any apparent reason why it should be so limited. It may be that the right should be limited to the financial year of the Government, or the duration of the Acts, as was suggested by Mr. Mitchell, but this question does not arise in the present case, and therefore does not call for decision.

The appeal fails, and should be dismissed.

Dixon, Evatt and McTiernan JJ.

This is an appeal from a judgment of a District Court exercising federal jurisdiction. The judgment was given in an action brought by the respondent against the appellant as nominal defendant on behalf of the Government of New South Wales to recover a small sum alleged to be payable to the respondent for wages or salary under an award of the Commonwealth Court of Conciliation and Arbitration.

The respondent is employed by the State in an industrial pursuit governed by an award of the Commonwealth Court which fixes his rates of pay. But, as the result of a variation, the award contains a provision in the same terms as that dealt with by this Court in Australian Tramway Employees Association v. Commissioner for Road Transport and Tramways (N.S.W.)[1], permitting the State to make from the prescribed rates of pay deductions not greater than might be required by a State statute generally from the same or substantially similar rates of pay. In this case the validity of the provision is not impugned. Such a statute exists in New South Wales. It is the Public Service Salaries Act (No. 2) 1931. But the respondent contends that, in calculating the deduction allowed by the Act, an erroneous method has been pursued and that, as a result, he has been underpaid. The Public Service Salaries Act (No. 2) 1931 N.S.W. commenced on 7th August 1931. By sec. 6 it was to cease to have effect on 5th August 1932. But, before it expired, that date was extended to 30th June 1933 (Act No. 14 of 1932). A similar provision has been made annually and the Act is now in force until 30th June 1936.

The purpose of the Act was to make reductions in the salaries payable to officers in the service of the State of New South Wales. Sec. 4 (1) (b) provides for the reduction of salaries by percentages which are graduated according to the annual amount of the salary. Sub-sec. 3 of the same section contains the following provision: "Where by rationing of employment reduction is made in the salary of any officer, the officer shall be given credit for the amount of such reduction as against the reduction to be made under this section."

During the first five months of the financial year beginning 1st July 1934, the respondent's employment was rationed so that in every four weeks he worked only three and lost one week's wages. He was similarly rationed for the last four months, but, during the summer months, he was not rationed. He was paid fortnightly.

In applying sub-sec. 3, the Government treated every fortnight as an exclusive accounting period. Whatever loss the respondent had incurred during that accounting period as a result of rationing was credited against the percentage reduction which, otherwise, would be made from the salary earned during that fortnight. But no credit was given in respect of any loss of wages arising from rationing in any previous fortnight. Thus at the end of the first five months of rationing he had accumulated a credit which was not afterwards applied in his favour. It is this method of applying sub-sec. 3 that is attacked in the present proceedings.

In our opinion the method is erroneous. Sub-sec. 3 contains no reference to any divisions of time. Its object is to bring the income derived from their employment by men who have suffered rationing nearer to an equality with that of men paid at like rates who have suffered only the percentage reductions authorized by the previous sub-sections. It directs, in effect, that a reduction in salary effected by rationing employment shall be treated as a credit against future percentage reductions. Until the credit is exhausted no percentage reduction is to be made. In calculating the credit it may possibly be right to regard rationing as inflicting a loss only of the remuneration which would have been paid for the work forgone, that is to say, the salary calculated at the rates reduced by the appropriate percentage and not the original unreduced salary. It appears to be the practice so to calculate it. But, when it is calculated, it provides the employee with a notional credit which is to be used against future percentage reductions until it is exhausted. The question does not arise in the present case whether an unexhausted credit can be carried over beyond one of the dates at which the Act would have expired but for the annual extensions and then applied to the next period. It is possible that each financial year or other successive period for which the Act has been renewed must be treated separately. But, short of this, the application of sub-sec. 3 is not restricted in point of time.

For these reasons we are of opinion that the respondent's contention is correct and the appeal fails. It should be dismissed with costs.

Appeal dismissed with costs.

Solicitor for the appellant, J. E. Clark, Crown Solicitor for New South Wales.

Solicitors for the respondent, Sullivan Bros.

[1] [1935] HCA 17; (1935) 53 C.L.R. 90.