Chmiel & Anor v Alcohol and Drug Foundation - Queensland [2010] QDC 497

DISTRICT COURT OF QUEENSLAND CITATION: Chmiel & Anor v Alcohol and Drug Foundation – Queensland [2010] QDC 497 PARTIES: CHRISTOPHER JOSEPH CHMIEL First plaintiff AND LESLEY MARIANNE CLARKSON Second plaintiff AND ALCOHOL AND DRUG FOUNDATION – QUEENSLAND Defendant FILE NO/S: BD1257/06 DIVISION: PROCEEDING: Trial ORIGINATING COURT: District Court, Brisbane DELIVERED ON: 23 December 2010 DELIVERED AT: Brisbane HEARING DATE: 31 August-4 September 2009, 26 April, 15 June 2010 JUDGE: McGill DCJ ORDER: Judgment that the defendant pay the first plaintiff $92,601.73 and pay the second plaintiff $64,539.78. The defendant’s counterclaim is dismissed. Order the defendant pay the plaintiffs’ costs of and incidental to the counterclaim to be assessed. CATCHWORDS: EMPLOYMENT LAW – Contract of service – industrial award – remuneration – entitlements – termination of employment – overtime – allowances – annual leave – long service leave RESTITUTION – Money paid by mistake – whether relevant mistake – whether voluntary payment in response to bona fide demand – payments not recoverable. COSTS – Statutory provision – whether applicable – effect of – whether unreasonable act. -- 1 of 48 -- 2 Workplace Relations Act 1996 (Cth) s 720, 824. Australian and International Pilots Association v Qantas Airways Ltd [2007] FCA 879 – cited. BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 – cited. Bostik (Australia) Pty Ltd v Gorgevski (No. 2) (1992) 41 IR 471 – applied. CFMEU v Clarke [2008] FCAFC 143 – applied. Commissioner of Stamp Duties (NSW) v Atwill (1972) 126 CLR 665 – considered. D.P. Excavations and Haulage Pty Ltd v Commissioner of Taxation (2005) 190 FLR 198 – cited. Dowling v Fairfax Media Publications Pty Ltd [2009] FCA 339 – cited. Fryer v Systems Services (1995) 60 IR 68 – applied. Goldman Sachs JB Were Services Pty Ltd v Nikolich [2007] FCAFC 120 – cited. Gordon v Carroll (1975) 27 FLR 129 – cited. Gregory v Philip Morris Ltd (1988) 24 IR 307 – cited. Griggs v Noris Group of Companies (2006) 94 SASR 126 – applied. Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 – applied. Hill v CA Parsons & Co Ltd [1972] Ch 305 – cited. Larner v London City Council [1949] 2 KB 683 – distinguished. Macauslane v Fisher & Paykel Finance Pty Ltd [2003] 1 Qd R 503 – applied. Western Australia v Wilsmore (1982) 149 CLR 79 – considered. COUNSEL: A.J. See for the plaintiffs M.P. Amerina for the defendant SOLICITORS: Stevens and Tozer for the plaintiffs Hall Payne Lawyers for the defendant [1] The plaintiffs were formerly employed by the defendant, and claim that they are owed money payable either pursuant to their contracts of employment or under relevant industrial awards. There is a counterclaim for the recovery of what is alleged to have been an overpayment on the part of the defendant. The pleadings on which the matter went to trial were a further amended statement of claim filed 4 August 2008, an amended defence and counterclaim filed 20 March 2009, and a reply and answer filed 17 June 2006. However, on 31 August 2009 I gave leave to further amend the statement of claim, and a further amended statement of claim pursuant to that leave was filed in court that day. There was no consequential amendment to the defence. [2] Under the pleadings it is admitted that the defendant is capable of being sued and that the plaintiffs were employed by the defendant at all material times. It was -- 2 of 48 -- 3 further admitted that prior to 5 July 2001 the plaintiffs’ employment was governed by the provisions of the Social and Community Services (Queensland) Award 1996, and on and from the following day it was governed by the provisions of the Social and Community Services (Queensland) Award 2001, both awards made under the Workplace Relations Act 1996 (Cth). It followed that the defendant was bound by those two Awards. It was further admitted that at material times the first plaintiff’s position was classified as Level 8 under the classification structures contained in each of the Awards, and the second plaintiff’s position was classified as Level 7. The first plaintiff [3] The first plaintiff has qualifications in commerce and business administration: p 38. He worked for a bank, and then a range of other businesses as an accountant, a marketing manager and a general manager before joining the defendant as a marketing director in June 1992: p 39.1 During 1993 he was promoted to the position of Interlock State Director; Interlock is the name of a business operated by the defendant: p 44.2 Neither side produced a copy of the new letter of appointment, but the first plaintiff said that it was very similar to Exhibit 5, except that it provided for an increase in salary: p 49. [4] I should explain the Interlock business. Part of what the defendant did was operate what was for practical purposes a business of providing counselling services to employees of a wide range of entities, under contracts with the respective employers, so that the employers could provide counselling services to their employees in circumstances where that might be thought appropriate.3 For example, employees might be entitled to take advantage of counselling services if they had personal problems, or counselling services might be provided in the event of something traumatic happening to employees in the course of their employment. The counselling work was mostly done by counsellors employed on a casual basis, who charged for the actual hours worked. Because of the possibility of counselling being provided in response to particular traumatic events, the defendant had arrangements in place so that counsellors were available if required on short notice at any time of the day or night.4 [5] The first plaintiff said that in about mid 1998 he was approached to accept the position of general manager of the defendant, but he was reluctant to accept the position and he was not appointed to the position until July 1999: p 18.5 There was a further letter of appointment,6 but again neither side produced a copy of that letter; the first plaintiff said that his letter was almost identical to Exhibit 11, the later letter of appointment of the second plaintiff, when she was appointed Interlock South Queensland Manager in 2002: p 24. There was no evidence to contradict this proposition, and I accept that there was a written contract of employment between the first plaintiff and the defendant in accordance with this evidence. [6] Exhibit 11 was in the form of a letter which, omitting formal parts, stated as follows: 1 His initial contract of employment is Exhibit 5. 2 The job description for that position is Exhibit 36. 3 See for, example, Exhibit 6 p 6. See also Aldred pp 39-40. 4 See Exhibit 12. 5 For his responsibilities in that position, see p 21. 6 Aldred p 44. -- 3 of 48 -- 4 “On behalf of the Alcohol and Drug Foundation – Queensland, I am pleased to offer you appointment to the Foundation as Interlock Manager South Queensland on the conditions set out below: Start Date: Monday 13 January 2003 with a probation period of three (3) months. Salary: Your salary is $60,000 p.a. and the position is classified as level 7 of the Social and Community Services (SACS) award. Salaries are paid fortnightly and reviews take place annually. Superannuation: The Foundation contributes an amount equivalent to 9% of your salary towards the superannuation fund. Hours: Office hours are from 8.30a.m. to 5.00p.m. Monday to Friday with a rostered day off every four weeks. However, because of the nature of the work you can anticipate working outside these hours from time to time. Annual Leave: Annual leave entitlement is twenty (20) days per annum. An annual leave loading of 17.5% applies. Sick Leave: Sick leave entitlement is ten (10) days per annum in accordance with the SACS award is required for any period of absence over two (2) days. Termination of Termination of employment is in accordance Employment: with the SACS award. Other The position is covered by the Social and Conditions: Community Services (SACS) Award, a copy of which is available in the office for your information. Please sign the attached copy of this letter in the place provided and return to me as an indication of your acceptance of the conditions of employment.” [7] The plaintiff said that his start date was different, the salary was different, the level of the SACS Award was Level 8 but otherwise his letter of appointment was in the same terms: p 27. There were no other material changes in the first plaintiff’s position until his employment came to an end. The second plaintiff [8] The second plaintiff is a qualified psychologist who became interested in the sort of work provided by Interlock, and began to work as a part-time counsellor with Interlock in the early 1990s: p 82. She went on to become a full-time counsellor, and subsequently a senior counsellor in March 1995 when the person previously in that position retired: p 84. In that position the second plaintiff counselled clients, but also supervised the work of other counsellors within Interlock. She was also involved in setting up a program used by Logan House, a residential facility for -- 4 of 48 -- 5 people with longstanding alcohol and drug problems operated by the defendant, and developing a pre-release program for prisons for which the defendant had obtained a grant from the government: pp 86-8. There were other similar duties taken on, all at the request of the Chief Executive Officer of the defendant, Mr Aldred. In 1999 she became senior counsellor and clinical director: p 89. Finally, in January 2003 she was appointed to the position of Interlock Manager, South Queensland: Exhibit 11. [9] Apart from their work relationship, the plaintiffs, after meeting at work, married in 1998. 7 Date of termination of employment [10] On the pleadings there is a dispute as to how the plaintiffs’ employment came to an end. The resolution of this turns on the effect of an exchange of correspondence between the plaintiffs and the defendant in the context in which it occurred. The plaintiffs allege that the effect of that was that their employment was terminated on 20 April 2005 without notice; the defendant’s case was that the plaintiffs’ resigned their employment with effect from 20 April 2005. The determination of the date on which the plaintiffs’ employment terminated is obviously relevant. [11] I do not consider that the effect of the pleadings is that it is common ground that the employment terminated on 20 April 2005. The plaintiffs alleged that they were in effect summarily dismissed on that day, after they had previously given notice of termination of their employment on 15 July 2005. That was denied by the defendant. The defendant alleged that the effect of the correspondence was that the plaintiffs resigned as at 20 April 2005, but that was disputed by the plaintiffs. If the plaintiffs were entitled to terminate their employment on 15 July 2005 by notice given on 23 March 2005 (which in itself was not disputed by the defendant), and neither the plaintiffs’ nor the defendant’s allegation as to the effect of what happened on 20 April 2005 was made out, the result is that the plaintiffs’ employment came to an end on 15 July 2005. 8 [12] The second plaintiff’s employment contract expressly provided in relation to termination of employment that it was to be in accordance with the Social and Community Services Award: Exhibit 11. As I have said, I accept there was a similar condition in the employment contract for the first plaintiff. In any event, the award operated according to its terms. The relevant award is Exhibit 4, the 2001 Award as varied. Termination of employment is governed by Clause 16 within Part 2 of that award. Clause 16.1.2 provides that, for employees employed in Level 6, 7 and 8, at least four weeks’ notice shall be given, though Clause 16.1.3 provides that employees over 45 years of age at the time of giving the notice with not less than two years’ continuous service (which applied to both plaintiffs) shall receive an additional week’s notice. [13] The minimum period of notice for the defendant to terminate the plaintiffs’ employment under Clause 16 was therefore five weeks. There was an exception in the case of conduct which justified instant dismissal: Clause 16.1.6. Clause 16.2.1 provides that “the notice of termination required to be given by an employee shall 7 Chmiel p 83. 8 There was no alternative allegation that the employment was terminated in some other way. -- 5 of 48 -- 6 be the same as that required of an employer, save and except that there shall be no additional notice based on the age of the employee concerned.” Hence the plaintiffs were entitled to terminate their employment by giving at least four weeks’ notice to the defendant. The period of notice in fact given by the plaintiffs was in excess of three months, which was more than sufficient notice. Accordingly, it satisfied the requirements of the award, and therefore was effective to terminate the employment on 15 July 2005, unless the employment had previously been terminated.9 [14] There was some background to the circumstances of the termination which provides a context in which to interpret the correspondence between the parties at the relevant time. [15] The first plaintiff had in early 2005 been involved in investigating the conduct of an employee of the defendant working at Logan House: p 43. As a result of that investigation, he recommended that the employee’s employment be terminated and that recommendation was accepted by the Board. In the course of this investigation, it appeared to him that the manager of Logan House had been aware of what had been going on and had done nothing about it, and the first plaintiff said that he was asked by the president of the defendant to continue his investigation into the role of the manager of Logan House. At about the same time, he said that there was a complaint from another employee at Logan House that she was being victimised because she had provided information which led to the dismissal of the employee who was dismissed. Before he completed this investigation the plaintiff said that Mr Aldred became involved in the investigation, and wanted to wind it up on a particular basis, which the first plaintiff was not happy with, and subsequently Mr Aldred took the investigation out of his hands: p 44. [16] The first defendant received a memo dated 18 March 2005 from Mr Aldred which among other things relieved him of management responsibility for Logan House: Exhibit 16. Mr Aldred also took over responsibility for Human Resource Management. The memo also foreshadowed the appointment of a clinical director. There was an extraordinary meeting of the Board of Directors of the defendant on 18 March 2005: Exhibit 9. This followed difficulties which had arisen between the president of the defendant, Mr Fox, and Mr Aldred, as a result of which Mr Aldred came to be stood down; Mr Aldred said that he was stood down by Mr Fox, whereas Mr Fox said that Mr Aldred stood himself down. At that meeting the Board carried a resolution of confidence in Mr Aldred as CEO, and removed Mr Fox from the presidency; Mr Fox then resigned as a director of the defendant. [17] There was a further Board meeting on 22 March 2005, at the end of which the first plaintiff announced that the plaintiffs would be retiring: Exhibit 9. On 23 March 2005 they signed a notice of retirement letter which was given to Mr Aldred: Exhibit 15. That letter proposed that they continue to work for the next four weeks with the last working day being 20 April 2005. It noted that they had not taken any rostered days off that year and planned to take four days as rostered days off: 24 and 29 March, and 4 and 11 April. It said they had substantial amounts of outstanding leave and proposed to take annual leave from 21 April 2005 to 15 July 2005 which would be their last day of employment. They sought payment of outstanding annual and long service leave and other benefits on that day. 9 See Fryer v Systems Services (1995) 60 IR 68 at 87-88 per Gray J; Griggs v Noris Group of Companies (2006) 94 SASR 126 at 146; Hill v CA Parsons & Co Ltd [1972] Ch 305 at 313-4. -- 6 of 48 -- 7 [18] In accordance with the proposal in the letter of 23 March the plaintiffs did not work on 24 March; the following days were Easter. When they returned to work on 29 March they were called into Mr Aldred’s office and each given a letter which in the case of the first plaintiff became Exhibit 17. The letter referred to “your resignation of 23 March 2005 which is accepted by the ADFQ.”10 It continued: “I note your proposal for separation from the organisation, and save and except for reserving the ADFQ’s rights, I have no issue with advising the Board to accept that proposal in respect of timing. It is my decision, however, and one in which I am supported by the Board that, given the reasons you have cited for your resignation and that you consider that you no longer have the trust of the staff, it is appropriate that you not return to work. In reaching this decision, I have taken into account our long and fruitful working relationship. As you would also understand, I do not wish to place you in a position of embarrassment.11 In these circumstances, I have decided to grant, again subject to a full reservation of the ADFQ’s rights, special leave from the present time up to and including 20 April 2005. I request that you now return the following [a list of various specific property followed including ‘any other property of the ADFQ whatsoever’ which made the rest of the list unnecessary. The letter then advised that he had arranged for a representative of the defendant’s solicitors to attend at their residence to receive the property from them.].” [19] After both plaintiffs had been given these letters they were escorted from the premises by the solicitor who drove them home in the defendant’s vehicle which they had been using, collected some items of property which they had at home, and departed.12 There was no further communication between the parties until the plaintiffs received letters from the defendant’s solicitors dated 29 April 2005: Exhibit 18. The first letter referred to Clause 28 of the award and the letter continued with an assertion that the plaintiffs were not entitled pursuant to the award to accrue rostered days off. It was asserted that neither the CEO nor the Board were aware that the first plaintiff was purportedly accruing untaken RDOs and taking them as part of his annual leave or in conjunction with annual leave and that this had not been authorised by either of them. The letter continued that the purported accruing of such RDOs was without appropriate consent and was unlawful and that the taking of them was also unlawful and that the second plaintiff had also unlawfully accrued and taken RDOs, but the first plaintiff did not have authority to authorise the accruing or taking of accrued RDOs by the second plaintiff. The letter then continued that it was calculated that the first plaintiff had been overpaid an amount equivalent to 409 hours and the second plaintiff an amount equivalent to 367.34 hours, and called upon them to show cause within three working days as to why the foundation should not recoup these monies owed from monies that would otherwise be paid to them. There was a separate letter to 10 There is nothing in the award to indicate that the employer has the option of accepting or rejecting a resignation; under the award the resignation took effect regardless of the views of the employer. 11 According to Mr Aldred that statement was not true: the exclusion of them from the premises was undertaken because of a concern that the plaintiffs might sabotage the records and other property of the defendant: p 95. 12 Chmiel p 48; Clarkson p 107. The defendant was entitled to waive the plaintiffs’ obligation to work during the period of notice: Thomson “The Meaning of Dismissal” (1973) 89 LQR 331 at 335. -- 7 of 48 -- 8 the second plaintiff which incorporated without repeating it what was said to the first plaintiff. 13 [20] Although these letters were dated 29 April, the first plaintiff said (and I accept) that they were not actually delivered until 4 May: p 48. Leaving aside the deficiencies in content in the letters, the result of this correspondence was to cause the plaintiffs to consult the Department of Industrial Affairs, where they received advice. As a result they sent a reply by email dated 4 May 2005: Exhibit 19. For present purposes, the significance of that letter is simply that nothing in it could possibly amount to a resignation immediately, nor could it amount to a repudiation of the contract of employment; the letter restated the plaintiffs’ position that they were on annual leave which was to continue until 15 July 2005. They, however, asserted that the time taken in responding to the letter ought not to have come out of their annual leave and submitted a timesheet for three hours in respect of that time. [21] Two days later, on 6 May, each plaintiff received a further document from the defendant. The first document is headed “Termination Pay for Chmiel”, gave a commencement date of 1 June 1992 and then said on the next line “calculated up to 20/04/2005” : Exhibit 20. It then gave an hourly rate of $46.18, and a calculation of 60.8 hours for the fortnight ended 23 April 2005 with an amount of $2,807.74, an annual leave calculation of 716.25 hours up to 20 April 2005 and long service leave calculation of 421.21 hours up to that date, from which was deducted 1,124.8 hours as “RDOs taken in lieu of annual leave from June 1993 to April 2005, 12 days per year at 7.6 hours”. This produced a balance owing of 12.71 hours, which when multiplied by $46.18 produced a figure of $586.95. PAYG of $820.69 was deducted, with a net amount payable to the first plaintiff of $2,574.” In fact, a payment of that amount was made into his bank account at about that time. There was a similar letter in respect of the second plaintiff: Exhibit 31. Nothing else of relevance passed between the parties prior to 15 July 2005. [22] In light of that evidence, it is difficult to see why anybody should have thought that anything happened on 20 April 2005 which could have had the effect of bringing the employment to an end. Absolutely nothing happened on 20 April 2005. The plaintiffs were not at work, having been told in no uncertain terms that they were not welcome there and escorted from the premises; they were never asked to return. The fact that they were subsequently paid a termination payment which was calculated as at 20 April 2005 is neither here nor there; nothing which was done some time in May could have had the effect of terminating their employment as at 20 April 2005. The only way consistently with the award that the employment could have been terminated as at 20 April 2005 was if the defendant had given notice of such termination five weeks earlier, but nothing was relied on as constituting such notice, and nothing emerged in the course of the evidence which could constitute such notice. It was not pleaded or submitted that there was any conduct on the part of either plaintiff warranting summary dismissal, and certainly nothing emerged in the course of the evidence. [23] Plainly therefore the employment of the plaintiffs was not terminated by the defendant on 20 April 2005. As well there was no resignation by the plaintiffs as at 20 April 2005 as alleged by the defendant. Indeed, in the light of the evidence at 13 What I have said states the substance of the letters, without conveying their remarkably aggressive style. -- 8 of 48 -- 9 the trial, the proposition that there was such a resignation is so absurd that I do not need to provide any further reasoning in relation to that point. It was suggested during argument by counsel for the defendant that the pleadings, or perhaps the conduct of the parties after May 2005, was such that the employment contract was abandoned as at 20 April 2005. It is possible for a contract to be abandoned by both parties to it, but if the contract has been validly terminated in accordance with its internal mechanism for termination, or by force of an industrial award, nothing that happens thereafter could amount to abandonment of the contract by the parties. There would be nothing left to abandon. There was nothing prior to 15 July 2005 which amounted to abandonment of it by the plaintiffs or either of them. [24] In my opinion, notwithstanding the allegations in the pleadings, the evidence in the present case points unambiguously to a conclusion that the plaintiffs’ employment terminated on 15 July 2005 pursuant to their contracts and to the applicable industrial award as a result of the notice which they gave. It is therefore necessary for all of the relevant calculations with reference to the termination of their employment to proceed on that basis. Overtime [25] There was no dispute that the first and second plaintiffs were paid over award payments and that it was a term of their contracts of employment that the plaintiffs would not be paid overtime. In these circumstances, there is no contractual right to be paid overtime, but if on the true construction of the applicable Award and in the events that have happened an entitlement to be paid overtime arises in accordance with the Award, the plaintiffs have an entitlement to be paid that overtime. The Awards provided that there would not be an entitlement to overtime if the overall terms and conditions of an employee were more favourable than the provisions of the Award as a whole. The plaintiffs submitted that that requirement was not satisfied; the defendant’s case was that it was, so that there was no entitlement to payment of overtime under the Award. The defendant also disputed that the plaintiffs worked the hours that they claimed to have worked beyond normal working hours. [26] The 1996 Award (Exhibit 3) dealt with overtime in Clause 38. The basic entitlement was that provided in Clause 38.2, that all time worked in excess of ordinary working hours should be deemed to be overtime which (except in the case of shift workers) should be paid at a rate of time and a half for the first three hours and double time thereafter. Clause 38.6 required each employer to establish a procedure for approval of overtime, and Clause 38.7 provided that overtime shall only be worked with the prior approval of the employer, provided that the above procedure may allow for employees to work overtime without specific prior approval in defined emergency situations. [27] However, Clause 3.4 provided: “The conditions of this award, except Part 4, shall apply to employees classified at Levels 6, 7 and 8, provided that the overall terms and conditions of employment for such employees are no less favourable than the provisions of this award as a whole.” -- 9 of 48 -- 10 [28] The plaintiffs say that the overall terms and conditions of employment of the first and second plaintiffs were less favourable than the terms and conditions of employment that the first and second plaintiffs were otherwise entitled to receive under the provisions of the award as a whole. Because of this, Clause 3.4 of the award was said not to apply so as to deprive them of the benefit of the overtime provisions in Part 4 of the 1996 Award. Accordingly, the plaintiffs are entitled to be paid in accordance with more beneficial provisions than the 1996 Award, and in due course the 2001 award. The structure and arrangement of the 2001 Award was similar. Overtime was provided for in Clause 31, with Clause 31.2 similar to Clause 38.2 of the previous award. Again, Clause 31 was in Part 4, and Clause 3.3 provided (Exhibit 4): “The conditions of this award, except Part 4,14 shall apply to employees classified at Levels 6, 7 and 8, provided the overall terms and conditions of employment for such employees are no less favourable than the provisions for this award as a whole.” [29] Given that the first plaintiff was employed on Level 8 and the second plaintiff on Level 7, on the face of it this clause applied, so that the starting point for each of the awards is that the award applies to such employees except Part 4. The difficulty is as to the effect of the words in the clause commencing with the word “provided”. The plaintiffs’ submission is that if the plaintiffs were better off under the award as a whole, that is including the provisions of Part 4, then they were under the terms and conditions of their employment, they were entitled to the benefit of the award. Presumably the clause was not intended to mean that Part 4 did not apply to these employees unless they would be better off if it did, so there must be some other relevant comparison. [30] The concept of a “no less favourable” clause or provision is not difficult to understand, but such provision ordinarily applies in circumstances where there is no difficulty in making the comparison between the particular state of affairs to be subject to the “no less favourable” test and the equivalent state of affairs under the award. There is such a clause in the 1996 Award in Clause 28.1. But there are different rates of payment not just for each level, but for three or four pay points within each level, so, unless the comparison is between the provisions of the award for a particular Level 6, 7 or 8 employee with and without Part 4 applying, which does not really seem to make a lot of sense, it is not altogether clear what the hypothetical situation is with which the comparison of the actual overall terms and conditions of employment for the particular employee is to be made. [31] The wage rates increase from pay point to pay point, and from level to level, except that pay point 3 for Level 1 is the same as pay point 1 for Level 2. The increase from one level to the next up seems in Exhibit 3 to be ordinarily about $1,000 to $1,100, except for the increase from pay point 3 for Level 5 to pay point 1 for Level 6, which is $3,957. That supports the notion that there is some additional remuneration being provided, which could well be seen as a payment in lieu of a right to receive overtime (and other benefits in Part 4), although that does not seem 14 On 29 March 2004 the Award was amended to insert the words “and Clauses 26.5, 26.6 and 26.9” after the expression “Part 4”, with effect from 6 July 2001, when the 2001 Award took effect: Exhibit 4. These clauses dealt with overtime meal allowances, sleepovers and on call allowances, which in the 1996 Award were covered by Clause 38. -- 10 of 48 -- 11 to make much allowance for lost overtime. A person on Level 5 pay point 3 was required to work 38 hours a week: Clause 33. It follows that someone on pay point 3 within Level 5 who routinely worked 2.6 hours per week overtime would, because of the time and a half loading, be receiving more money than someone on pay point 1 of Level 6 regardless of how much overtime that person worked. That is not much overtime to have to work. [32] Indeed, given that the description of a Level 6 position in Clause 27.2 is somewhat more demanding than the description of a Level 5 position anyway, it is not clear what amount of the difference between Level 5 and Level 6 is attributable to a payment in lieu of Part 4, unless perhaps it is the difference of $2,867. Of course, it would be somewhat odd if a payment was to be received in lieu of overtime, unless the amount received by way of payment for overtime was greater than that payment, in which case one received the greater amount. That would mean that a person would effectively get payment for overtime anyway, but the employee also received a payment if no overtime, or less than the cut off figure, were worked. It is not I think an answer just to say that Clause 3.4 operates on the basis of a comparison between the actual conditions of employment of a particular employee and the provisions of the award as a whole, because the clause must surely be one which is capable of making sense in its application to someone who was paid in accordance with the requirements of the award but no more. [33] The defendant put in evidence the transcript of the proceedings in the Industrial Relations Commission in June 1996 when the 1996 Award was made: Exhibit 7. It was submitted and I accept that this is admissible evidence in the interpretation of the award. On that occasion the advocate of the Australian Services Union, in the course of advising the Commission about the terms of what was essentially an agreement reached between the parties as to the terms of the proposed award, said in relation to what became Clause 3.4 of the 1996 Award at pp 7-8: “At Clause 4 … there is what we would call a unique provision in terms of social and community services award nationally in this award. It is a provision if you like that one part of the award will not apply to certain employees engaged in the industry. Those employees are deemed employees of Levels 6, 7 and 8 of the award and the part of the award that does not apply to them is Part 4. Now the general intent here is in relation to managerial employees … and the issue of overtime in particular for those employees and regularity of hours of work. It has been put to the ASU that it is difficult for the employers to accept that employees at that level with responsibilities at that level should have deemed hours of work like other employees in industry and should have the same access to overtime that other employees have. In principle the ASU does not accept that submission but we have in terms of looking at appropriate compromises and in consultation with our membership considered this issue. The arrangement that we have come up with … is such that those employees will be exempted from Part 4 of the award if you like provided that their overall terms and conditions of employment are no less favourable than the provisions of the award taken as a whole. From the ASU’s point of view this is an issue of those employees not getting overtime and not having the set range of hours that other employees have. In terms of recognising that -- 11 of 48 -- 12 issue I have incorporated within the award an allowance if you like into the rates of pay for employees at that level. … The rates of pay at 6, 7 and 8 incorporate an agreed allowance of 7.5% to compensate them if you like for the fact that they are not going to have regular hours and may be required to do a reasonable amount of overtime without compensation. … The ASU … are slightly nervous about this provision because of its potential for abuse … for people to be required to work extraordinary numbers of hours, receive no overtime arrangements for that. We have, however, taken the employer’s … argument to us at its face value. They have indicated that they do not believe that will be the outcome. We have put wording in there of in terms of the employee’s conditions not being less favourable than the award taken as a whole. And we would therefore like to give it a go if you like and see if the industry is responsible enough to deal with these types of flexibilities in this award. We know the employers who have been negotiating this award with have put this issue to us in good faith and we have taken on that – the value of it at that level. We will keep a close eye on that issue … and there is a review process proposed for this award that is probably one of the things that we will have a look at in that review process.” [34] What this comes down to is that the union wanted overtime for everybody and the employers did not want overtime for people at managerial level, and this clause reflects a compromise. That it reflects a compromise is clear enough, and like some compromises it may well have been deliberately drafted with a degree of imprecision in order to facilitate its acceptance by both sides. The fact that the union advocate referred to the union’s having some concern about exploitation of employees being required to work very large amounts of overtime at that level (which is what in practice happened to the plaintiffs) taken at face value suggests that the union advocate thought that that was still possible despite the terms of Clause 3.4, though it may be that the wording of Clause 3.4 was intended to address that concern in a way which would prevent the difficulty from arising. [35] It was submitted on behalf of the defendant that this passage supports the view that the intention was that Levels 6, 7 and 8 employees would just not have overtime and that they received what was described as a 7.5% loading.15 But it does not seem to me that the passage suggests that the compromise involved simply a payment of 7.5% in return for the exclusion of Part 4. If that had been the situation, there would have been no need for the second half of Clause 3.4, but it appears the compromise included specifically the insertion of the no less favourable provision. Unfortunately the advocate did not explain how that provision was intended to operate. Overall it does seem to me that this passage supports the notion that there was to be some safeguard against large amounts of overtime being required of employees in Levels 6, 7 and 8 which was to apply in addition to the 7.5% loading. Accordingly I reject the submission that this evidence suggests that the concluding 15 Presumably in addition to ordinary increments within the award; I have not checked the mathematics and the figure of 7.5% does not so far as I can see appear in either Exhibit 3 or the 2001 Award; indeed the Commissioner in the transcript at the top of p 8 said that he could not find it within the documents he had either. It was made express only in an amendment to the award in march 2002: Exhibit 4. -- 12 of 48 -- 13 words of Clause 3.4 should in effect be interpreted as not modifying the operation of the introductory words.16 [36] Counsel for the defendant relied on the decision in Commissioner of Stamp Duties (NSW) v Atwill (1972) 126 CLR 665 where the Privy Council at pp 669-70 recognised that the meaning of a provision introduced with the words “provided that” could in a particular case be the same as if the words “in which case” had been used instead, though their Lordships added that “the proviso is complementary and necessary in order to ascertain the full intention of the legislature.” They went on to refer to an earlier decision17 where it had been said that “the latter half of it, though in form a proviso, is in substance a fresh enactment, adding to and not really qualifying that which goes before.” They went on to give other examples of provisos which were said to contain “what is called a substantive enactment”. [37] The decision of the Privy Council was cited with apparent approval in Western Australia v Wilsmore (1982) 149 CLR 79 at 90 per Aickin J and at 98 per Wilson J, but the point of the decision was that in a particular case the wording of the section of the statute as a whole indicated an intention to add to rather than qualify that part of the section which was followed by the apparent proviso. In other words, notwithstanding the use of the introductory word “provided”, the clause was seen as having an independent legislative effect rather than just operating as a qualification in some way of what had gone before. That is the opposite of interpreting the provision as something which does not have any independent effect, even by qualifying that which has gone before. [38] Even allowing for the fact that in some circumstances words in an award could be regarded as mere surplusage, perhaps more readily than in a statute,18 a court should still be more inclined to give a provision an award operation than not. 19 “Fractured and illogical prose may be met by a generous and liberal approach to interpretation.”20 [39] I also accept that the task of interpreting an award is the search for the meaning intended by the framer of the document, bearing in mind that the document was intended to work in a practical way and formulated by someone in an industrial relations environment.21 I also accept it is not a question of determining what would be fair or just regardless of what has been written into the award, and that ordinary or well understood words are to be accorded their ordinary or usual meaning. The difficulty in this case is not one of interpreting an expression which is clear enough on its face but seems to produce a result which strikes the court as odd; the difficulty here is one of working out just what on earth the proviso actually means. Accepting that some form of “safety net” was intended, what exactly was the safety net provided and how does it operate? 16 As pointed out in the submissions of the defendant, that could be achieved by reading the word “provided” as meaning “in which case”, or by reading it as “as this award has provided that”. 17 Rhondda UDC v Taff Vale Railway Co [1909] AC 253 at 258. 18 Federal Firefighters Union v Minister of State (ACT) (1988) 26 IR 1 at 7, 8. 19 Nylex Industrial Products Pty Ltd v TCFUA [2007] FMCA 2084 at [90]. 20 City of Wanneroo v Holmes (1989) 30 IR 362 at 380 per French J (as his Honour then was). 21 Cucks v CSR Ltd (1996) 66 IR 182 at 184. I think strictly speaking the award is made by the industrial commissioner rather than the parties who prepared what was essentially an award by consent, though their common view of how it was intended to operate is I think relevant. -- 13 of 48 -- 14 [40] Ultimately, I have to give some meaning to it. I accept that it was intended to provide some form of safety net. The reference to the award as a whole was not in my view just intended to say that in some circumstances Part 4 came back in; it was intended to ensure that the safety net operated in a way which was logically consistent with the structure of the award as a whole. One of the features of the award is that by and large as one progresses up within the grading system the remuneration level increases. In these circumstances it would be odd if a person on a higher level was receiving less remuneration than a person on a lower level, or less remuneration than would have received had that person still been employed on the lower level. [41] There are I think logical difficulties with the notion that the section simply means that a person receives a 7.5% loading, or the benefit of the overtime provisions, whichever is the higher, because that would be no compromise at all. On the other hand, if the point of comparison is taken as a person on the top pay point of Level 5, that is the best remunerated employee under the award who is not on Level 6, 7 or 8, then the difficulties associated with establishing an objective point of reference disappear. The test becomes, is the employee better off than the employer would have been on the top pay point of Level 5 with the benefit of paid overtime, etc? That is something which is not going to be difficult to calculate in a particular case, if it had to be done on a fortnight by fortnight basis, assuming the employer keeps proper records of hours worked and so on. [42] The defendant’s counsel submitted there were numerous practical difficulties in taking into account the overall terms and conditions of such employees, but most of these I think were related to a comparison of incommensurables such as the benefit of the provision of a mobile phone or a car which was for use for work purposes but could also be available for private use, and other incidental benefits which came to be conferred on the parties in connection with their employment, such as contributions to overseas travel which was in part for the benefit of the employer. I do not think that is the sort of thing that the parties had in mind when speaking about the overall terms and conditions for employment. I expect that they were simply thinking in terms of money, though no doubt bearing in mind that for more senior employees there could well be flexibility of working hours which would operate in both directions, so that for example, the question of hours worked would not necessarily be decided on a fortnight by fortnight basis if the flexibility did permit say overtime worked in busy periods to be made up by time off in quieter periods. But as long as proper records are kept of hours worked, then it seems to me that there is no difficulty in principle in determining whether, in terms of remuneration for the work done, the employees on the higher levels would nevertheless have been paid more had they been paid at the top pay point for Level 5. [43] That has the effect of giving some practical operation to this proviso, recognising that it was intended to be a practical compromise between the union’s position, that ordinary overtime provisions should apply, and the employer’s position, which was that there should be no extra payment for overtime for such employees. Doing the best I can, and conscious of my profound lack of experience in industrial relations matters, that is the interpretation of the clause at which I arrive. In principle therefore it is possible for the plaintiffs to prove that they are entitled to more remuneration as a result of the overtime worked. -- 14 of 48 -- 15 [44] The next point relied on by the defendants was that any overtime worked by the plaintiffs was not worked with the employer’s prior approval or in defined emergency situations. Both of the awards contain restrictions in relation to the working of overtime. The 1996 Award (Exhibit 3) provided in Clause 38.6: “In consultation with the employees, each employer shall establish a procedure for approval of overtime.” Clause 38.7 said: “Overtime shall only be worked with the prior approval of the employer, provided that the above procedure may allow for employees to work overtime without specific prior approval in defined emergency situations.” Clauses 31.6 and 31.7 of the 2001 Award were in the same terms: Exhibit 4 p 19. [45] There was no evidence of any “procedure for approval of overtime” which had been adopted by the defendant in compliance with the obligation of Clauses 38.6 and 31.6. Clause 38.7 speaks of employees working overtime without specific prior approval in defined emergency situations, in accordance with “the above procedure.” It is clearly based on the existence of a procedure as contemplated by Clause 38.6, and the reference to defined emergency situations is I think a reference to emergency situations defined in such a procedure. Accordingly, in order to rely on that part of those provisions it is necessary for the plaintiffs at least to put in evidence such a procedure.22 On the face of it therefore overtime is only to be worked with the prior approval of the employer. [46] It would seem to follow that an employee who works overtime on his or her initiative is not thereby entitled to remuneration for that overtime. I accept that that reflects a general industrial practice that overtime is to be paid only if it has been authorised or subsequently ratified. 23 A difficulty with this argument of the defendant, however, is that as far as I can see it has not been pleaded in the defence. [47] The claim for overtime in the statement of claim appears in paragraphs 10-13 of the statement of claim. Paragraph 10 is an allegation as to the number of hours of work in fact done, which is disputed on the facts in paragraph 10 of the defence. Paragraph 11 is a reference to the plaintiffs’ being required to be on call for four months in each year, which is disputed by the defendant. Paragraph 12 contains an allegation that the plaintiffs were paid over award payments but did not receive any payment for working in excess of 38 hours per week. In response to that the defendant denied that the plaintiffs were entitled to any payment for working in excess of a 38 hour week, and disputed the pay rates of the plaintiffs in some of the periods referred to in paragraph 12 of the statement of claim. Paragraph 13 of the statement of claim contains the allegations activating Clause 3.4 of the 1996 Award and Clause 3.3 of the 2001 Award. Paragraph 13 of the defence denies those allegations on the basis that (a) the overall terms and conditions of the plaintiffs were more favourable than the provisions of the awards as a whole, (b) as a consequence the plaintiffs were not entitled to the payment of any overtime or on-call allowance under either award, and (c) further or alternatively in any event the plaintiffs were never on call within the meaning of either award. That does not raise any issue about the overtime not being approved. It follows that the defendant 22 I do not propose to consider whether if the employer had failed to comply with this requirement under the award to establish such procedure, that would have any effect on this part of this restriction. 23 See the cases cited by the defendant in paragraph 8.7 of the written submissions: The Minister v Dey [1919] AR (NSW) 19, 27; QRSU v Commissioner for Railways (1947) 32 QGIG 938; QRSU v Commissioner for Railways (1956) 41 QGIG 719. -- 15 of 48 -- 16 not having raised this point on the pleading prima facie cannot rely on it by way of defence.24 [48] However, the point was in fact litigated during the trial. The plaintiffs were cross- examined about it. When I ran through the issues in relation to the overtime claim with counsel for the defendant on the second day of the trial, it was referred to as a matter relied on, without protest by counsel for the plaintiffs: pp 71-2. It was relied on in written submissions, again without protest. In circumstances where the point has in fact been disputed at the trial, I consider that it is open for the defendant to rely on it although the failure to plead it may be relevant to the question of costs. [49] Dealing with the factual issue of this line of defence, it seems clear enough that the plaintiffs and the defendant during the course of their employment in fact proceeded on the basis that they were not entitled to be paid overtime. No record of the hours actually worked was kept by either plaintiff, and there was no consideration at any time of the question of whether they were required to work overtime by Mr Aldred or anyone else. In these circumstances, there was certainly nothing purported to be an approval of the working of overtime by the plaintiffs. I think the defendant’s submission that in fact the attitude of all the parties during the course of the employment was that there was no entitlement to overtime was correct, the parties having no regard to the safety net provisions to which I have referred. [50] It seems it was really only when the idea of a claim for overtime was suggested to the plaintiffs by someone at the Department of Industrial Affairs that, in response to the extraordinarily insensitive treatment that they had received at the hands of the defendant at the end of their employment, they were provoked to advance a claim for remuneration in respect of overtime in reliance on the award. Since I have held that the safety nets were real, the plaintiffs were and are entitled to rely on them, but the fact that everyone proceeded on the basis that no overtime was payable meant that there was no express approval, or anything done which was intended to amount to approval to work, overtime by the employer. [51] It seems to me unlikely that a specific provision such as the provisions in the awards to which I have referred was intended to be triggered simply by the view of the employee, or even perhaps an objective assessment, that the work required of the employee could not be done within the ordinary working hours. Rather, I think the award operates on the basis that at knock-off time the employee was entitled to knock off unless required to keep working, a requirement which, subject to the restrictions in the award, the employer was entitled to make, but at the price of paying overtime. Nothing remotely like that happened in the present case, and the fact that the plaintiffs, because of their conscientious devotion to the interests of the defendant, have exerted themselves beyond the requirements of the award does not give them an entitlement to be paid overtime. This point is therefore fatal to the plaintiffs’ claims for overtime. In case a different view may be taken elsewhere, however, I will make precautionary findings. [52] The plaintiffs gave evidence about the extent of the hours that they worked, but there was no contemporaneous documentation about this matter. Although the plaintiffs did complete timesheets which, had they been properly completed, would 24 The defendant has throughout the trial been particularly assiduous in keeping the plaintiffs to the cases as pleaded. -- 16 of 48 -- 17 have shown the actual hours at which they commenced and finished work each day, the sheets simply show the plaintiffs starting and finishing work at the ordinary starting and finishing times each day. The plaintiffs said that this occurred because that was the practice required of employees whose contracts did not provide for overtime, and that in doing so they were simply following the standard practice. Ultimately, that there was such a practice in the case of such employees did not seem to be disputed, and there was some other support for it in the evidence.25 It follows that the timesheets are not reliable evidence of the actual hours worked. [53] The first plaintiff gives an estimate of 55 hours per week of the hours actually worked on average between 1995 and 2005: p 13. I accept the evidence of the first plaintiff that the system of recording only nominal hours for people on Level 6 and above was introduced by Mr Aldred: p 13. According to the first plaintiff one of the things the plaintiffs did was arrange for any counsellors who were due to work on a particular day who were not able to come that day to ring one of them at about 7 am so as to enable arrangements to be made to cope with this, either to find another counsellor to take those appointments or I suppose if necessary to reschedule the appointments: p 16. He said that at 7 o’clock they would still be at home, but by 8 o’clock or later they would be driving to work: p 17. [54] He said that typically they stayed at the office until 6.30 pm or later, and they took a copy of the next five days’ diaries before they left so that they would be able to deal with people ringing in, and also to avoid the risk of dislocation if something went wrong at the office. Sometimes they worked later. Ordinarily he started at the office at 8.30 am, but in some circumstances he might be required to start work much earlier, for example, if providing an information session to employees at a particular client which started operations at 5 am, where the session was scheduled for 4.45 am: p 31. He also gave the example of the possibility of his travelling earlier. No doubt things like that could happen occasionally, but it sounds as though ordinarily he started work at the office at about 8.30 am. [55] He said he normally worked until 6.30 pm or later: p 31. He used his laptop computer which he would take home and sometimes work at home, and he said that he would also sometimes come into the office over the weekend because things needed to be done: p 32. He said most weekends he did some work at home: p 33. When pressed he said that about three days a week he either stayed longer than 6.30 pm or did some work at home: p 33. He said that on most weekends he would do about four hours’ work: p 33. He said that it would not be uncommon in some weeks to work as much as 65 or 70 hours: p 33. [56] The second plaintiff also spoke of receiving phone calls before she arrived at work in the morning in relation to things that had happened, particularly in connection with counsellors who were calling in because they were unable to work that day: pp 97-8. She said the phone would sometimes ring before 7 am, and typically while the first plaintiff was driving into work she would be on the phone organising things, particularly dealing with problems that had arisen. She said that sometimes they were the first in the building in the morning and sometimes they were not: p 99. She said that usually they left the office after 6.30 pm, and sometimes they ran programs in the evening which would run until 8.30 or 9 pm: p 100. 25 Bolneo p 74; McDonald p 25. -- 17 of 48 -- 18 [57] Generally speaking they went home when the work was done, although on a Friday night they did make a point of leaving about 6 pm or a bit before just so that they would have one night to call their own: p 103. They also ordinarily did some work at weekends. She said that Mr Aldred knew that they were working as hard as this, and he would from time to time express his appreciation of their efforts, and suggested that something would be done to ease their workload, but it never was: p 105. They persisted in doing the work because they believed in the organisation, enjoyed the Interlock work which they found fascinating, and because they believed that in time the burden on them would be relieved by additional appointments. [58] The second plaintiff spoke highly of Mr Aldred: p 105. She said: “We’d always had an excellent working relationship with Bob Aldred. He had been supportive of all the work that we had done. It was a very good working relationship and he often thanked us for the work that we had done and how we’d supported staff and organised the programs here. He was very pleased with our work.” [59] There was evidence from some other witnesses in relation to the hours worked by the plaintiffs. Ms Sergeant was employed as a personal assistant to Mr Aldred and the first plaintiff from late 2003, and remained in that position (subject to the departure of the first plaintiff) until February 2008: p 37. She said that although her hours of work were from 8.24 am to 4.30 pm she would usually arrive at the office around 8 am, and that about half the time she would have to unlock the office, whereas the other half of the time Mr Aldred was there already: p 38. She could not recall the plaintiffs arriving at work before she was there, except perhaps on their last day. She could not say at what time they left of an afternoon, except that they were still there when she left at 4.30 pm. This is reasonably consistent with the evidence of the plaintiffs, so far as it goes, except for the suggestion that sometimes the plaintiffs had to unlock the building. [60] Ms Brennan was a psychologist who worked for the defendant from 1999: p 60. She initially worked on a casual basis, but subsequently worked full time: p 62. She was based at Logan House until 2003, when she began to work at the head office as a senior psychologist, working closely with the plaintiffs: p 65. She said that she was at work herself before 8.30 in the morning, often there before the building opened: p 69. She said that the plaintiffs were normally still there when she left, which might be 6 or 6.30 pm: p 69.26 [61] Ms McDonald said that she worked as an accounts officer with the defendant, initially for two days a week and from 2001, three days a week, with working hours 10.30 am to 6.30 pm: pp 2-3. She said that on the days that she worked she would be the last one out and would turn off the lights, lock the office and put everything on to the night switch: pp 6-7. She said that the plaintiffs left most of the time between 5 and 5.30 pm, about 20% of the time, she could not say definitely, they would stay and sometimes they would be the ones that closed up: p 7. This happened particularly before and after periods when they were on holidays. [62] Mr Aldred said that the plaintiffs usually arrived at the office at about 8.30 or 8.45 am: p 58. He said he usually arrived before them and indeed usually opened 26 She described them as being like part of the furniture. -- 18 of 48 -- 19 up. He said that on the basis of his observations the plaintiffs would go home around about 5.30 to 6 pm: p 59. Mr Aldred was not clear about when he would usually leave work, and who would usually leave first; his evidence suggested that sometimes he did and sometimes the plaintiffs did. [63] One feature which strikes me as a complication of the plaintiffs’ claim in respect of overtime is that it is not limited to additional time worked at the plaintiffs’ workplace, ordinarily the defendant’s premises. It includes time spent at home working, including on weekends, either on work taken home or responding to or making telephone calls in connection with work. It is not obvious to me that the concept of overtime for the purposes of this award extends to work done outside the employer’s ordinary place of work. I accept that it would be common enough for work to be done other than at a workplace in the traditional sense, and that it would be unsurprising for an award to cover such work. I have, however, found nothing in these awards to indicate expressly either that they do cover work wherever that is performed, including at an employee’s residence, or that they do not. [64] There are, however, some indications within Clause 38 that overtime contemplated work at the employer’s workplace. For example, there is provision for a meal or a meal allowance if more than two hours work on an ordinary work day is worked as overtime, or where an employee is required to work five or more hours on a day which is not an ordinary working day: Clause 38.10. Clause 38.11 contemplates the possibility that an employee might be required to sleep on an employer’s premises. Clause 38.12 deals with a situation where an employee is “recalled to work overtime after leaving the place of employment”. The terms of this clause suggest that what is contemplated is that overtime is something which would be worked at the place of employment. Clause 38.13 distinguishes between an employee being on standby, that is to remain at the employer’s place of employment during a period outside the employee’s normal hours of duty, and an employee being on call, meaning to remain at the employee’s residence or to otherwise be immediately contactable by telephone or paging system outside the employee’s hours of duty in case of a call-out requiring an immediate return to duty. [65] Overall, therefore such indications as exist in the 1996 Award (Exhibit 3) suggest that it contemplated that overtime would be worked at the employee’s place of work, which would ordinarily be the employer’s place of work. No doubt there were occasions when their work required them to work somewhere else, but I have difficulty with the concept that they could be seen, in the sense of this award, to be working overtime if they chose to take work somewhere else, in particular, to take work home. The position is similar with the 2001 Award. [66] I raised this issue with counsel, but neither counsel was able to assist me with any authorities as to the question of whether overtime would extend to taking work home and doing it there. No doubt it is more common than used to be the case for industrial awards to cover work which is done away from a defined place of employment, which could include work at home, but in such circumstances I would expect there to be some formal system in place by which the fact that an employee had started work and stopped work could be recorded in some particular way, for example, by the employee logging on and logging off on a computer. The difficulty that I have is in particular that there does not seem to be anything in this award which suggests that in this award the concept of overtime did extend to work which was done at home. -- 19 of 48 -- 20 [67] Overall, therefore, I am not persuaded that time spent by the plaintiffs in dealing with telephone calls in connection with work prior to their actually arriving at work in the morning, or time spent working on things which they did at home, amounted to overtime for the purposes of these proceedings. I consider that overtime was limited to time outside the ordinary working hours during which the plaintiffs were working either at their ordinary place of employment or at such other place as they were required to work. [68] I consider that overtime for the purposes of this award applied to work which was done outside ordinary working hours by an employee at the employee’s place of employment, that is to say, at the employer’s place of employment or at such other place as the employee was required to attend for the purpose of carrying out the employee’s work. If the employee was at some other place that the employee was required to attend, that would qualify as overtime, so if a plaintiff were attending a course or a plaintiff attended a client’s premises for the purposes of giving a presentation at 5 am, or was presenting until 8 pm at night, that would also qualify as overtime. But the fact that one or indeed both of the plaintiffs were engaged in telephone calls of a morning before they arrived at work would not. I shall, however, make precautionary findings in relation to the issue, in case a different view may be taken elsewhere. [69] With regard to the additional time spent at the office, or doing specific work at particular places away from the office, I accept that on occasions there were particular tasks which required one or other, or both, of the plaintiffs to commence work prior to 8.30 am, but I find that in general they commenced work at or about that time, so that on the view I take of the scope of overtime there was generally no overtime prior to commencing work. I accept that there were occasions when there was some. There is a conflict of evidence as to when the plaintiffs would normally leave work. I am wary about the evidence of Ms McDonald: She appeared to have some hostility towards the plaintiffs, admitting that directly in the case of the first plaintiff: p 10. She did not respect him as a person: p 12. (She was good friends with Mr Aldred: p 33.) She accused them of routinely taking more RDO’s than they were entitled to, and said she reported this to Ms Bolneo: p 14, p 20. She blamed them for not making available a car parking space for her use in or close to the building where they worked: p 8. Her evidence was even less favourable to the plaintiffs than the evidence of Mr Aldred, who I think was not out to do the plaintiffs any favours. In those circumstances I am not prepared to accept the evidence of Ms McDonald as reliable about this. [70] Doing the best I can on the evidence, I find that the plaintiffs would ordinarily work until 6.30 pm; no doubt there were some times when they left earlier than that, but I accept that there were also occasions when they would work later, either at the office or somewhere else. The exception to this was Fridays, when I find they left work at about 6 pm. That provides an average figure for overtime of seven hours per week, although that figure does not make any allowance for the occasions when they might be working unusually early in the morning. I accept that that was unusual, and in all the circumstances I think that an allowance of eight hours per week for overtime is reasonable on the evidence before me. [71] If one also takes into account work done away from the plaintiffs’ place of employment, on the evidence I would allow half an hour for each of the plaintiffs before work for telephone calls, and three and a half hours a week for work at night -- 20 of 48 -- 21 or at weekends, so that a total figure for extra overtime is six hours per week. No doubt it varied quite a bit, but all I can do is make a finding for an average figure, in circumstances where there were no detailed records available. [72] On these findings, if overtime was payable it would have been payable, on the view that I take of overtime, for eight hours per week, which is the equivalent at time and a half of 12 hours’ ordinary salary. In the circumstances I think I should assume that any applicable overtime would be paid at time and a half, and that there would be insufficient overtime on any particular day to qualify for overtime at double time rates. Even taking into account the additional amount if one includes time spent working at home, I will still make this assumption simply for ease of calculation, in circumstances where I am working on averages anyway and where it is difficult to know how such a calculation would be made in respect of, for example, time spent at a weekend. [73] The plaintiffs’ salary at material times was agreed: p 10. Doing the best I can I have extracted from the exhibits the amount payable under the top pay point for level five employees, which is on the basis of a 38-hour week. An extra twelve hours’ pay is an extra 32% of the award weekly pay, except for the period of annual leave, i.e. for 48 weeks a year. This is the equivalent of an extra 29.5% of the annual salary. An extra six hours overtime means an extra nine hours pay, a total of 21 extra hours per week, 55.3% of 38 hours. That is the equivalent, for a 48 week year, of an extra 51% of the annual salary. These percentages can be applied to the award from time to time. In this way I have calculated the amounts owing for overtime as I understand it (Overtime A), and for overtime if it includes time spent working at home (Overtime B), and figures for the amounts payable under the safety net without (A) and with (B) the time worked at home, which can be compared with the salary paid from time to time. The same safety net figures apply to both plaintiffs. The figures obtained are set out in the following table: Date Award Level 5 Overtime A Overtime B Safety Net A Safety Net B 29-05-00 39,502 11,653 20,146 51,155 59,648 27-06-01 40,386 11,914 20,596 52,300 60,982 05-03-02 40,399 11,918 20,603 52,317 61,002 27-06-02 41,338 12,195 21,082 53,533 62,420 27-06-03 42,121 12,426 21,481 54,547 63,602 27-06-04 43,112 12,718 21,987 55,830 65,099 -- 21 of 48 -- 22 [74] The comparison with the first plaintiff’s actual salary is as follows: Date Actual Salary Safety Net A Safety Net B 01-05-00 65,000 29-05-00 51,155 59,648 17-03-01 70,800 27-06-01 52,300 60,982 05-03-02 52,317 61,002 22-06-02 73,300 27-06-02 53,533 62,420 12-10-02 75,000 27-06-03 54,547 63,602 27-09-03 78,750 31-01-04 82,700 27-06-04 55,830 65,099 25-09-04 86,850 12-02-05 91,250 [75] It follows that at no time, and on neither level of overtime, did the safety net figure exceed the actual salary of the first plaintiff. The equivalent figures for the second plaintiff are set out in the following table: Date Actual Salary Safety Net A Safety Net B 29-05-00 51,155 59,648 08-07-00 50,000 11-11-00 53,000 27-06-01 52,300 60,982 05-03-02 52,317 61,002 27-06-02 53,533 62,420 -- 22 of 48 -- 23 06-07-02 57,000 15-02-03 60,000 27-06-03 54,547 63,602 25-10-03 63,000 31-01-04 70,000 27-06-04 55,830 65,099 12-02-05 72,000 [76] From these tables it is apparent that, if overtime as I understand it was applicable, Safety Net A was operative until the second plaintiff’s salary was increased on 11 November 2000, and notionally from 27 June 2002 to 6 July 2002, although that period can be disregarded as too short. The shortfall was therefore $1,155 for 0.346 of one year, which comes to $399.63. If overtime includes time spent working at home, so that Safety Net B is applicable, the safety net amount was payable until the salary increase on 31 January 2004. That means a shortfall of: $9,648 x 0.346 to 11 November 2000 $3,338.20 $6,648 x 0.615 to 27 June 2001 $4,088.52 $7,982 x 0.692 to 5 March 2002 $5,523.54 $8,002 x 0.308 to 27 June 2002 $2,464.61 $9,420 x 0.025 to 6 July 2002 $235.50 $5,420 x 0.615 to 15 February 2003 $3,333.30 $2,420 x 0.365 to 27 June 2003 $883.30 $3,602 x 0.327 to 25 October 2003 $1,177.85 $602 x 0.269 to 31 January 2004 $161.93 TOTAL $21,206.75 [77] For the reasons given earlier, however, this is a precautionary finding only, and the claim for overtime payments fails. On-call allowance [78] The plaintiffs also claim that under the Award they were entitled to be paid an on-call allowance. There was no dispute that the plaintiffs were not paid any such -- 23 of 48 -- 24 allowance; the defendant denied that the plaintiffs were required to be on call for the purposes of the relevant provision in the 2001 Award, or that they were entitled to be paid any such allowance. [79] Neither of the plaintiffs was liable to be called out in the sense of being required to attend the workplace out of hours in order to deal with some particular problem, or to go to some other place in order to provide the service which was to be provided by the defendant to a customer. Nevertheless, the plaintiffs’ evidence was that there was a roster maintained of people in a managerial position who would be on call at any particular time in order to deal with any problem which arose in relation to the ordinary process by which the counsellors would respond to an out-of-hours request.27 [80] The 1996 Award provided in Clause 38.13.8 that an employee rostered to be on call should receive a particular allowance for each 24-hour period or part thereof when on call between rostered shifts or ordinary hours Mondays to Fridays, and higher allowances when the on call period is on a Saturday, a Sunday, a public holiday, or a day when the employee is rostered off duty. Clause 38.13.2 provided: “On call shall mean a written instruction to an employee to remain at the employee’s residence or to otherwise be immediately contactable by telephone or paging system outside the employee’s normal hours of duty in case of a call out requiring an immediate return to duty.” [81] This provision is in Part 4 of the 1996 Award, and is accordingly subject to the same issue about the effect of Clause 3.4 of the Award. I have already dealt with the effect which I would give to Clause 3.4 of the Award, and that applies here as well. In the 2001 Award Clause 26.8 contained an equivalent provision for an allowance for an employee rostered to be on call, although the rates were different. The term “on call” in the 2001 Award was defined in Clause 6.4 in terms which were identical to the definition in Clause 38.13.2 in the 1996 Award. [82] It was submitted on behalf of the defendant that the plaintiffs, although involved in a pager system where they were liable to be called out of hours, were not “on call” for the purposes of this provision because they were not required to “return to duty” in the event of their being called; all that was required of them was that they respond to whatever came to them over the telephone. It was submitted that, although they might be required to perform managerial functions, they would not be called out requiring an immediate return to duty, because they would not be required to go anywhere to do anything at that place if they were contacted in this way. The position I think is similar to the issue which I have considered earlier, as to whether work done by the plaintiffs at their own home, or at a place of their choosing, was overtime for the purposes of the award. For that reason I conclude that even when the plaintiffs were rostered to hold this backup pager, they were not rostered to “return to duty” in the sense contemplated by the award. In those circumstances, they were not “on call” for the purposes of the award. [83] In the light of this it is unnecessary for me to decide the further issue, raised by the defendant, that there was no “written instruction” for the purposes of the definition 27 Exhibit 43; Chmiel p 14, p 34; Brennan p 66. -- 24 of 48 -- 25 of being “on call”. There was certainly a written roster in relation to the backup pager, and in the circumstances and bearing in mind the backup pager was held by only fairly senior people within the organisation, and bearing in mind that it was a small organisation, I consider that this was a sufficient “written instruction” for the purposes of the clause. There are no particular restrictions as to what is required by way of a written instruction, and it seems to me, bearing in mind the approach to interpretation of an industrial award referred to in the authorities cited earlier, that it would not be appropriate to adopt a strict or restrictive interpretation to the sort of documentation which would satisfy such a provision. [84] There was also an issue raised by the defendant as to the extent to which the plaintiffs were on call. The limited evidence on this subject confirms that the plaintiffs were two of three individuals who between them operated a roster to hold the backup pager one month at a time, at least from September 2004: Exhibit 13. Another roster suggests that at times other people were also involved, but I accept that was unusual.28 It follows that, if a plaintiff’s being required to carry and respond to the backup pager amounted to being “on call” for the purposes of the award, each plaintiff was generally on call in every third month; in effect, four months a year. That is the equivalent to 17 weeks a year for each plaintiff on which the plaintiff was on call for seven days in each week. [85] The allowances for being “on call” varied during the relevant period. If a particular person was on call all week, the amount payable was five times the weekday allowance plus the Saturday allowance plus the Sunday allowance. The following table sets out the amounts of the allowances as varied from time to time by changes in the award, so far as I can detect them in the exhibits before me: Date Allowance for 1 week Allowance for 17 weeks Relevant period Amount 29-05-00 $107.84 $1,833.28 0.97 year $1,778.28 27-06-01 $111.07 $1,888.19 1 year $1,888.19 27-06-02 $114.94 $1,953.98 1 year $1,953.98 27-06-03 $118.64 $2,016.88 1 year $2,016.88 27-06-04 $122.77 $2,087.09 0.75 year $1,565.32 [86] Accordingly, if the on call allowance had been recoverable, the amount recovered by each plaintiff would have been $9,202.65. For the reasons given earlier, however, no amount is recoverable in respect of on call allowance. 28 Some of the particulars given of this claim may have been incorrect, but I would attribute that to some deficiency in the plaintiffs’ legal advice rather than a deliberate contrivance by the plaintiffs. -- 25 of 48 -- 26 Rostered days off [87] It was further admitted by the defendant that it was a term of the contract of employment of each of the first and second plaintiffs that each plaintiff was entitled to one rostered day off in every four week work cycle, although there was a dispute as to whether the agreement was reached in June 1993 or in about 1997. There was a dispute as to whether it was a further term of the employment contract that rostered days not taken could be accrued. [88] There was no dispute that the provisions in the award as to rostered days off did not apply. The provisions for working rostered days off are in Clause 34 of the 1996 Award, which is part of Part 4 and is therefore not applicable to the plaintiffs pursuant to Clause 3.4 of that award; because this does not affect the remuneration paid, the proviso in my opinion was not applicable here. The position is similar with the 2001 Award, where relevant provisions appear in Clause 28 which is also in Part 4. [89] The letter setting out the terms of the contract of employment of the second plaintiff in the position of senior counsellor dated 19 November 2002 (Exhibit 11) provided expressly: “Office hours are from 8.30 am to 5 pm Monday to Friday with a rostered day off every four weeks.” I accept that the previous letter setting out the terms of employment of the second plaintiff, and the letter setting out the terms of employment of the first plaintiff, at the relevant times, contained a provision in the same terms, or at least to the same effect. There was no real dispute that this was so, and Mr Aldred agreed that the plaintiffs worked on the basis that they were entitled to take a rostered day off every four weeks: p 49. [90] The defendant did not dispute that general proposition, but the defendant’s case in relation to rostered days off turned on the proposition that a rostered day off had to be taken during the four-week period to which it related, otherwise the benefit of it was lost, and that in practice the plaintiffs had frequently not taken rostered days off during the four-week periods to which they related, with the result that the right to take them had been lost. It followed that, where the plaintiffs had subsequently taken rostered days off on a “catch up” basis, they had not been entitled to do so and were therefore liable to repay the salary that they had been paid in respect of such days. This was the basis of the counterclaim. It also necessarily followed that there was no entitlement to be paid anything in respect of rostered days off not taken even on a catch up basis during the period of employment. [91] It is not immediately apparent why this should be so. The defendant’s case proceeded on the basis that there is no right to accumulate untaken rostered days off, and that if they are not taken during the particular four-week period the benefit of them is lost. There is nothing in the written contract of employment to that effect; on the face of it the written contract says nothing about when the rostered day off is to be taken, merely that there be one for each four-week period. It is not immediately apparent why there should be implied into the contract a restriction in the terms contemplated by the defendant. Such a term would seem to me not to satisfy the requirements for an implied term in accordance with the conventional test; apart from anything else, I would not regard it as being so obvious that it goes without saying, nor would I regard it as fair and equitable as between the parties, -- 26 of 48 -- 27 nor is it necessary to give business efficacy to the contract.29 On the contrary, I would have thought that, given the relatively senior position of the plaintiffs and the fact that this was a small organisation where having a day off for such a senior person could well be quite disruptive to the ordinary work of the defendant if there was not some appropriate degree of flexibility, the appropriate term to be implied would be that the rostered day off would be taken at a time which was mutually convenient to the parties. [92] It is true that the awards contain restrictions on the extent to which rostered days off can be accumulated, though it is by no means clear that the effect of the awards on their true construction is that if a rostered day off is not taken within the four-week period, or accumulated in accordance with a provision in the award (such as Clause 34.2 of the 1996 Award), the benefit of it is lost to the employee. But I do not think it is necessary for me to decide anything about the terms of the award, or how it operated. The position is clear, the entitlement to a rostered day off under the award did not apply, so the terms and conditions upon which the award would have provided for rostered days off had it applied seem to me to be irrelevant. [93] In these circumstances, in my view it is not a question of the plaintiffs proving that there was an agreement to accumulate or defer rostered days off; it is a matter for the defendant to show that there was some reason to modify or restrict what was on the face of it a clear contractual entitlement to one rostered day off for each four- week period, without limitation as to when it might be taken. In my view it is not necessary for the plaintiffs to prove an express oral agreement to accrue or defer rostered days off. However, if I am wrong about that, and it is necessary for the plaintiff to prove that there was an agreement, in my opinion an agreement can be inferred because of the long course of conduct of the parties. [94] The defendant has prepared an analysis which, on the basis of such records as the defendant retains (which seem to be fairly comprehensive for most of the relevant period), it can I think fairly be said that it was the exception rather than the rule for a rostered day off actually to be taken during the four-week period to which it related. The analysis also shows that it was frequently the case that untaken rostered days off were taken in a group together in conjunction with other holidays. Accordingly, it was certainly a well-established practice for the plaintiffs to defer or accrue rostered days off, and given the fact that it was a small organisation and that the presence or absence of the plaintiffs would have been quite obvious to the person senior to them, Mr Aldred, it is inconceivable that he did not in fact know at the time what the plaintiffs were doing.30 [95] One of the defendant’s witnesses said that it was common knowledge at the time that the plaintiffs were not only taking rostered days off but were accruing them; 31 given the frequency with which it occurred, that is entirely unsurprising. Furthermore, there was nothing clandestine about what the plaintiffs were doing. 29 BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 at 283; Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 347, 404. 30 At least one of them was expressly authorised by him: Exhibit 39; Exhibit 27, p 146. Mr Aldred in his evidence gave what struck me at the time as a specious explanation for this document, one which is not easily reconciled with its terms: p 52-54. I reject that evidence; in my view the document was simply what it appears on its face to be: a request for annual leave at a particular time to be made up in a particular way, which was approved. 31 Sergeant p 45. -- 27 of 48 -- 28 When they took rostered days off, they submitted timesheets with the days taken as rostered days off identified as such; essentially this is the material on the basis of which the defendant’s analysis has been prepared.32 So the plaintiffs were quite open about what they were doing, and it was common knowledge within the office that they were doing it. [96] There is another document, Exhibit 38, which was signed by Mr Aldred which expressly provided for a rostered day off to be taken late in connection with a period of annual leave. This on its face was a memorandum to Mr Aldred from the first plaintiff dated 3 April 1996 seeking annual leave for a period in June and July 1996 to enable him to travel overseas. It refers to his annual leave entitlement, and provides a break up for the days that he would be away as 15 days annual leave, one day public holiday, and one day “RDO substitution for 8 March 1996 (not taken through staff shortages at that time)”. The document was signed as approved. Evidently, Mr Aldred as at 9 April 1996 had no difficulty with the plaintiff’s taking a rostered day off after the period for which it had accrued. [97] There is the further consideration that, even at the end of their relationship, when the plaintiffs gave notices of retirement to Mr Aldred (Exhibit 15) in which they proposed to take four days in respect of untaken rostered days off for that year, no objection was taken to that course in the reply by Mr Aldred: Exhibit 17. Although the wording of that letter is couched in terms which would not amount to an express agreement to that course, tt is I think nevertheless inconsistent with the notion that what the plaintiffs were doing in catching up with untaken rostered days off was anything out of the ordinary. [98] There is no doubt that the fact of an actual agreement between parties can be inferred from conduct. In my opinion, the conduct here is so obvious and so consistent and so prolonged that that is the obvious inference to draw. That supports the evidence of the plaintiffs, which was very imprecise, that there was such an agreement.33 There is also the consideration that, given the very senior positions of the plaintiffs within the organisation and its small size, it is inconceivable that matters such as timing of leave, or even timing of a particular rostered day off, would not have been discussed with Mr Aldred from time to time.34 Insofar as Mr Aldred’s evidence is to the effect that he thought that the plaintiffs were not just taking rostered days off but taking them off only within the four-week periods to which they related,35 such evidence is plainly inconsistent with all the other evidence in the case and I reject it. [99] The plaintiffs do not claim now to be entitled to be paid anything in respect of rostered days off which accrued but which had not been taken. The fact that they were not required to work during the bulk of the period of notice prior to their employment ceasing meant that, to the extent that they had in the past worked on days on which they were entitled not to have worked, they received compensation in kind in this practical way. The real issue in relation to rostered days off arises 32 There usually even identified the particular month in respect of which the RDO was taken, most unlikely if the claim was dishonest: Exhibit 27. Reliance was also placed on work diaries, which was misplaced, as they were not a reliable indication of RDO’s actually taken: Chmiel p 6; McDonald p 18. 33 Chmiel p 2, p 5. 34 Chmiel p 10. 35 Aldred p 49. -- 28 of 48 -- 29 because of deductions made by the defendant when making the payments to the plaintiffs following the termination of their employment, and because of the counterclaim. [100] The first plaintiff was paid in April 2005 an amount of $2,574, calculated on the basis set out in Exhibit 20: this calculated his termination pay as at 20 April 2005, which as I have already found was inappropriate. It then calculated annual leave up to that date, and long service leave up to that date, expressed as a number of hours, and then with the deduction from this described as “RDOs taken in lieu of annual leave from June 1993 to April 2005 12 days per year”. The practical effect of this was to offset all of the annual leave and most of the long service leave. This assumed that there had been 12 days taken as RDOs each year from June 1993. It is apparent that no attempt was made to perform the sort of exercise that was undertaken for the counterclaim of working out which RDOs had been taken in the applicable four-week period and which had not been. That was supported by the evidence of the defendant’s then employee who prepared the document, that this was prepared on Mr Aldred’s instructions and that he said that he did not know anything about those RDOs. 36 That was not consistent with Mr Aldred’s evidence to me, which was that he knew the plaintiffs were entitled to, and did at times take, RDOs: p 49. I do not doubt that he was aware of what was going on at the time, particularly of whether the plaintiffs were at work or not and why, though it may well be that this was not a matter that was of any particular significance to him at the time. [101] The position in relation to the second plaintiff’s calculation of “termination pay” was similar; it was assumed that the defendant was entitled to deduct hours equivalent to twelve RDOs taken each year from September 1995: Exhibit 31. Counterclaim [102] The counterclaim was based on the proposition that the plaintiffs received payments which were the equivalent of 409 hours’ work in the case of the first plaintiff, and 367.34 hours’ work in the case of the second plaintiff in the course of their employment which they were not entitled to receive, and claimed that the defendant was entitled to recover this amount as money had and received by the plaintiffs for the use of the defendant, calculated by multiplying the number of hours concerned with the hourly salary rate applying to each plaintiff as at the date of termination.37 The plaintiffs denied that they received payments to which they were not entitled or authorised to receive. Their position at the trial was essentially that there is in fact a balance owing by the defendant to each of them, rather than the other way around. No defence of change of position has been raised in the answer. [103] The counterclaim proceeds on the basis that the plaintiffs were not entitled to take RDOs other than within the particular four-week period to which the RDO related, a proposition which I reject.38 There was a contractual right to take an RDO in respect of each four-week period, but there was no express or implied term in the 36 Bolneo at p 71. 37 No explanation was offered as to why, if something were recoverable, it was not the amounts in fact paid for the relevant days. 38 There was also in effect a claim that more RDO’s had been taken than could be taken, which was based in part on treating as taken days shown only in work diaries as RDO’s, which was not appropriate, and in part by disregarding specific approval of some days taken as “catch up” RDO’s. -- 29 of 48 -- 30 contract that it had to be taken only during that four-week period. Indeed, the practice of taking them at other times was so widespread and so prolonged that I consider that the appropriate inference is that there was in fact an agreement to the contrary, but even if that were not the case, the plaintiffs’ superior, Mr Aldred, must have been aware of when the RDOs were taken, simply because of the significance of the plaintiffs within the overall organisation, and the fact that it was such a small office.39 Mr Aldred and the first plaintiff for most of the time shared a personal assistant.40 [104] I think it very likely that in practice when an RDO was taken the matter would have been discussed with Mr Aldred prior to the RDO being taken, and he would have either agreed or not objected to its being taken on that particular day, and that when RDOs were taken at different times Mr Aldred either agreed to their being taken at that time or at the very least acquiesced in their being taken. Even if the plaintiffs did not have a right to take an RDO outside the four-week period in respect of which the right arose, there was nothing to prevent the defendant from allowing the plaintiff to take it at a later time, and it seems to me that in circumstances where it was being taken openly and would have been discussed with Mr Aldred in advance, the fact that no objection was ever taken prior to the acrimonious circumstances surrounding the termination of the plaintiffs’ employment demonstrated that the defendant through Mr Aldred in fact agreed to these RDOs being taken when they were taken, or at the very least acquiesced in that course. If either of those occurred, I cannot see how there can be any possible basis upon which the defendant can now recover the salary paid in respect of those days. [105] It was suggested that this was money paid under a mistake, but there was nothing clandestine about what the plaintiffs were doing. They put in timesheets identifying the days that they took as RDOs, and if the defendant chose to pay them then it seems to me that this was a voluntary submission to a bona fide claim, which is not recoverable. There is evidence that it was common knowledge within the office that this was happening. There is certainly no evidence from anybody that anybody made any operative mistake in relation to the salary paid in respect of periods when the plaintiffs had said they were taking RDOs.41 Even if one assumes (a proposition which I reject) that the plaintiffs lost the right to take RDOs if they were not taken in each specific four-week period in respect of which the right to take an RDO arose, I cannot see how the defendant has any right to recover any payment in fact made in respect of RDOs which in fact were taken late. It seems to me that the counterclaim was entirely misconceived. [106] Indeed, I treat the fact that these large deductions were made from the termination pay as evidence of malice against the plaintiffs on the part of Mr Aldred. I am satisfied that he knew quite well that plaintiffs were entitled to RDOs and he knew that they had been taking them and when they were taking them. To have a calculation performed on the assumption that the plaintiffs were not entitled to take any RDOs and that they were in fact liable to reimburse the defendant in respect of those amounts taken, can I think only be rationally explained on the basis that this 39 There were only 10 people there: Chmiel p 45. 40 Sergeant p 37. 41 That distinguishes the decision in Larner v London County Council [1949] 2 KB 683, on which the defendant relied; in that case there was a mistake as to the amount of the service pay of the defendants, caused by their failure to inform the plaintiff of changes in those amounts. -- 30 of 48 -- 31 was a vindictive act on the part of Mr Aldred to ensure that there was no substantial amount paid to the plaintiffs by way of termination pay. That conclusion is reached bearing in mind his behaviour towards the plaintiffs, particularly the first plaintiff, in connection with the dispute about Logan House, and his having the plaintiffs escorted from the premises effectively the day after they gave notice of their resignation. I have something further to say about Mr Aldred elsewhere in relation to issues of credibility, but it is convenient to deal with this at this point. Untaken annual leave [107] The plaintiffs claim that they were not paid accrued annual leave on termination of their employment. They claim that as at 20 April 2005 there was accrued annual leave for the first plaintiff of 716.25 hours and for the second plaintiff of 581 hours. The defendant alleged that there was no entitlement under the 2001 Award to accrue annual leave, so that in effect unless annual leave was taken in the year it arose the benefit of it was lost. In addition, if an entitlement existed the defendant disputed that it was in the amount claimed, or that the plaintiffs were entitled to an annual leave loading of 17.5%, as they claim. [108] The plaintiffs also claimed an entitlement to be paid accrued annual leave under the contract of employment on the basis that the term was implied by custom, usage and practice, or in the further alternative it was alleged that there was such an entitlement arising under the Industrial Relations Act 1999. That alternative claim ultimately was not pressed on behalf of the plaintiffs: p 24. There are therefore issues arising as to whether the plaintiffs were entitled to accrue annual leave which had not been taken, whether the defendant was liable to pay an amount in respect of annual leave accrued but not taken, the period of annual leave applicable, and whether or not it was subject to the 17.5% leave loading. [109] Under the 1996 Award Clause 41, the plaintiffs as employees were entitled to not less than four weeks’ “annual holiday on full pay”: Exhibit 3. The entitlement arose at the end of each year of employment: Clause 41.1. Public holidays falling during a period of annual leave were to be added to the period of leave: 41.4. Clause 41.5 provided: “The annual leave provided for in this clause shall be allowed and shall be taken, and, except as provided by subclause 41.48 hereof, payment shall not be made or accepted in lieu of annual leave.” [110] I accept that this provision reflects a general principle concerning the function of annual leave, that employees obtain the benefit of the period of recreation which is of advantage both to the employees and the employer, the benefit of which will not accrue to them unless the annual leave is actually taken. It does not, however, follow that a right to annual leave which has arisen under the clause will readily be lost. One would expect that, if for whatever the reason the annual leave is not taken within the period contemplated by the award, it could still be taken at a later time, because if a situation arises where an entitlement to annual leave in effect disappears, then the advantages of employees of actually taking annual leave will again not be achieved.42 Accepting that it is an important industrial principle that annual leave should actually be given and taken, and that it may follow that an 42 No submissions were made about the effect of the Workplace Relations Act 1996 s 234. -- 31 of 48 -- 32 entitlement to annual leave will disappear if that does not occur,43 ultimately whether it does so depends on the terms and true construction of the particular award. The real principle is that annual leave should not be “cashed out” during employment.44 [111] There is nothing in the following provisions of Clause 41 of this award which suggests that that result will occur, and there are parts of that clause which it seems to me lead to the opposite conclusion. Clause 41.6 provides that annual leave shall be given at a time determined by mutual agreement within a period not exceeding six months from the date when the right to annual leave accrued, provided that such annual leave may be deferred by mutual agreement in writing between employer and employee. Prima facie then, annual leave must be taken within the first six months after the end of the year which generated the entitlement to annual leave, but it can be further deferred by mutual agreement in writing. The issue that arises is, what happens if neither of those things occur? [112] Clause 41.7 seems to me to deal with that eventuality; it provides: “Unless an employer and employee otherwise agree, and where the employee has accrued annual leave in excess of eight weeks an employer may give notice, which must be at least four weeks, of the date on and from which the employee’s annual leave is to be taken and the employee is to comply with such notice.” (emphasis added) [113] The first thing that is apparent from the passage to which I have added emphasis is that the clause contemplates that annual leave in excess of eight weeks can accrue. Given that the clause provides for a minimum period of four weeks for each year, an employee receiving the minimum period of annual leave would take two years to accrue eight weeks’ annual leave. Such a situation could only occur when annual leave had not been given and taken within the period specified in Clause 41.6, and it follows that a failure to give and take annual leave within that clause does not lead to the loss of the entitlement. Significantly as well, Clause 41.7 gives an employer a right to require an employee to take annual leave, but there is no corresponding right in an employee. Furthermore, Clause 41.7 provides that it operates unless an employer and employee agree otherwise. For that reason, it seems to me that the clause cannot be read down so as to apply only in circumstances where there is a mutual agreement in writing, as contemplated by Clause 41.6; both clauses are subject to an agreement otherwise. [114] Whatever the general approach to awards may be, Clause 41.7 of this award indicates that an entitlement to annual leave will accrue if the leave is not in fact taken, on the true interpretation of this award. On the other hand, there is nothing which says that a right to annual leave shall be lost, and defines the circumstances in which that right shall be lost.45 I would expect that if such a consequence were to follow from the operation of this industrial award, a clear statement of the applicable circumstances would be set out in the award. 43 Gordon v Carroll (1975) 27 FLR 129 at 144. 44 Note also the Workplace Relations Act 1996 s 235(2) (from 2006). 45 The defendant referred to Clause 34.90.4 of the 2001 Award. That clause only caps the period of leave in respect of which the 17.5% leave loading is payable. It contemplates that more than the minimum period of leave may be available. -- 32 of 48 -- 33 [115] It follows in my opinion that annual leave not in fact taken under the 1996 Award did accrue and continued to accrue unless and until it was actually taken. The provisions of Clause 34 of the 2001 Award are not materially different from the provisions of Clause 41 of the 1996 Award. [116] Clause 34.8 of the 2001 Award provided as follows: “If after one month’s continuous service in any qualifying twelve monthly period, an employee leaves such employee’s employment or such employment is terminated by the employer, the employee shall be paid pro rata leave at the rate of one-twelfth of the annual leave for which such employee would be eligible for each completed month of service in respect of which such employee has not been granted annual leave.” [117] I accept that, in view of the terms of Clause 34.5, entitlement to payment in lieu of annual leave will arise only under Clause 34.8. The plaintiffs had completed more than one month’s continuous service, and the plaintiffs left the defendant’s employment. Accordingly, they were entitled to be paid what is described as “pro rata leave” at the rate of one-twelfth of the annual leave for which they would be eligible for each completed month of service in respect of they had not been granted annual leave. Although the clause appears to have been drafted so as to ensure that payment would be made for pro rata leave in respect of uncompleted qualifying 12- month periods, there is nothing in the wording of the clause which restricts its operation to one year, and the clause operates naturally (and appropriately) where annual leave in earlier qualifying 12-month periods has not in fact been taken; there is an entitlement to payment at the specified rate for each completed month of service in respect of which that is the case.46 No such restriction should be implied. [118] Assuming that an entitlement to pro rata annual leave arises in respect of each month of completed service, one can calculate the amount of annual leave which has not been taken by reference to the number of months, which would include months in an incomplete 12-month period, so long as each month was complete. The process sounds complicated, but in practice would not be difficult to apply so long as one proceeds on the basis that an entitlement to annual leave accrues on a month to month basis. In my opinion the plaintiffs satisfied the requirements of Clause 34.8 in the 2001 Award, so that under that clause they were entitled to be paid at the rate of one-twelfth of the annual leave for which they would be eligible for each completed month of service in respect of which they had not been granted annual leave. [119] In these circumstances it was unsurprising that an entitlement to annual leave not taken was accrued within the accounting records of the defendant, and that a liability to make such a payment was treated as a liability in the accounts of the defendant. That in my view was entirely correct and appropriate. In my opinion, on the true construction of this award, there is an entitlement on termination of employment to be paid in respect of the whole period of annual leave which had not 46 See the analysis in Griggs v Noris group of Companies (2006) 94 SASR 126, concerning a differently worded provision which performed the same function as this clause; I regard the approach taken in this case as instructive. -- 33 of 48 -- 34 in fact been taken, including any annual leave which has been outstanding for more than six months after the end of the year in respect of which the right to it arose. [120] It seems to me that much the same situation arises under the terms of the contract of employment, which provided: “Annual leave entitlement is 20 days per annum. An annual leave loading of 17.5% applies.” [121] For a person working five days a week, as were the plaintiffs, this is in effect four weeks’ annual leave for each of them, which was consistent with the award. By a process of reasoning analogous to that which applies in relation to the contractual right to rostered days off, it seems to me that there is nothing in the contract of employment providing for any annual leave entitlement to expire once it has arisen, and there is no reason why such an implication should be made. I would not make such an implication. In any case, the terms of the award are implied into the contract by force of the award, or by implication in fact.47 [122] It is necessary to quantify the accrued annual leave entitlement that the plaintiffs had. The plaintiffs did not dispute the correctness of the amounts shown in the calculation of termination pay for the first and second plaintiffs, Exhibits 20 and 31, which provided a “balance as per records” which was presumably the annual leave accrued but not taken as at 30 June 2004, plus annual leave credits up to 20 April 2005. The calculation is in hours, on the basis that a working day was 7.6 hours, and if there were 20 days annual leave per year that produced 152 hours of annual leave per year. It appears to follow that no annual leave had been taken up until 20 April 2005 in the current financial year. If therefore one calculates employment to a date in July, the full 152 hours annual leave for the year would have arisen as at 30 June 2005, and there was not one completed month of service thereafter. Accordingly, as at 15 July 2005, the accrued untaken annual leave for the first plaintiff came to 740.8 hours.48 The accrued untaken annual leave for the second plaintiff came to 634.7 hours.49 [123] This assumes that no part of the period after the plaintiffs were escorted from the premises is treated as annual leave. The plaintiffs proposed in Exhibit 15 that they take annual leave from 21 April to 15 July. The response (Exhibit 17) did not offer unqualified agreement, but did not dissent from that, and at no time thereafter did the defendant express any disagreement or indeed do anything else other than calculate (incorrectly) and pay termination pay as at 20 April 2005, as I have explained. The plaintiffs were never asked to return to work for the period after 20 April 2005, nor were they given leave on any other basis, though it is I think fairly clear that they were not welcome at work. The defendant seems to have assumed that the employment had terminated, but it had not, until the period of notice had expired. [124] In these circumstances, it is difficult to know whether the period from 21 April to 15 July should be characterised as annual leave, or, if not, how it should be characterised. No plausible alternative suggestion was put forward on behalf of the 47 Gregory v Philip Morris Ltd (1988) 24 IR 307; 80 ALR 455. 48 588.8 hours from Exhibit 20 + 152 hours. 49 482.7 hours from Exhibit 31 + 152 hours. -- 34 of 48 -- 35 defendant. In the circumstances, it seems to me that the most sensible way to treat what has occurred is as an acceptance or agreement, or rather perhaps as putting the defendant in the position where it is taken to have accepted or agreed, to the plaintiffs’ taking the period from 21 April to 15 July 2005 as annual leave.50 That represented a period of 12 weeks and two week days, but three of those days, Anzac Day, Labour Day and the Queen’s Birthday, were public holidays, so it reflected 59 days annual leave, which at 7.6 hours per day comes to 448.4 hours. That left a balance for the first plaintiff of 292.4 hours annual leave accrued but not taken as at 15 July 2005. [125] The first plaintiff is entitled to recover payment for that at the rate of $46.18 per hour as accrued annual leave, which is $13,503.03. I accept the defendant’s submission that the annual leave loading of 17.5% does not apply under the award in respect of a payment made on termination; see Clause 34.9.3 of the 2001 Award.51 The same limitation would apply to the contractual right in respect of annual leave, in circumstances where the contract itself does not specify just when an annual leave loading of 17.5% applies. On the other hand, the defendant is liable to pay the 17.5% loading in respect of the 59 day period from 21 April to 15 July when the plaintiffs were on annual leave. I shall deal with this in respect of unpaid salary during the period of notice. [126] The position is similar in relation to the second plaintiff. The amount payable by way of unpaid annual leave is $6,786.91. The calculations which give rise to this figure are as follows: 634.7 hours - 448.4 hours = 186.3 hours @ $36.43 = $6,786.91. Payment in lieu of termination [127] The plaintiffs claimed that under the 2001 award the defendant was required to provide five weeks’ notice of termination of their employment, and claimed a payment in lieu of notice of termination in accordance with that award. This was disputed by the defendant on the basis that the employment had not been terminated by the defendant. This claim is closely related to the issue about how the employment came to an end. [128] The plaintiffs were paid up to 20 April 2005. I have found that the employment continued until 15 July 2005. The plaintiffs were therefore entitled to be paid the balance of this time. This is a period of 12 weeks and two days, and includes three public holidays: Anzac Day on 25 April, the Labour Day holiday on 2 May and the Queen’s Birthday holiday on 13 June. Accordingly there were 59 days annual leave, and three days of public holidays. In respect of the period taken as annual leave, the plaintiffs are entitled to a 17.5% loading under the applicable award, and under the contract. 50 This is consistent with the approach to assessment of damages for wrongful dismissal in Macauslane v Fisher & Paykel Finance Pty Ltd [2003] 1 Qd R 503 at 518. This is not a case of wrongful dismissal, but of wrongful calculation of termination payment, which is analogous. 51 This makes any custom, usage or practice irrelevant. There was some evidence that on other occasions the defendant had in fact paid the loading on annual leave included in termination pay: Bolneo p 70. That would not establish an entitlement to be paid. -- 35 of 48 -- 36 [129] The first plaintiff’s hourly rate as at 20 April 2005 was $46.18, giving a daily rate on the basis of 7.6 hours per day of $350.97. For the three days of public holidays therefore, he is entitled to recover $1,052.91. For the 59 days of annual leave he is entitled to recover $24,331. That is a total of $25,383.91. The second plaintiff’s hourly rate as at 20 April 2005 was $36.43, giving a daily rate on the basis of 7.6 hours per day of $276.87 For the three days of public holidays, therefore, she is entitled to $830.61. For the 59 days of annual leave, she is entitled to recover $19,194.01. That is a total of $20,024.62. As well, the defendant, in Exhibit 31, made a deduction form the net salary paid up to 20 April 2005 in respect of rostered days off. This also needs to be brought to account, but I have dealt with this in relation to long service leave below. Superannuation payments [130] The plaintiffs further alleged that it was a requirement of the 2001 award that the defendant would make superannuation contributions to an approved fund in respect of their employment in particular amounts, and that those payments were not made. In the alternative, it was alleged that an entitlement to receive such payments was an implied term of the contracts of employment. The defendant says that it has in fact made contributions to superannuation funds as required by the applicable Commonwealth statute, and that in any event if it has not the statute did not give the plaintiffs any cause of action against the defendant in respect of the unpaid contributions. There was also an issue in relation to how the superannuation contributions were to be paid, in circumstances where it had been agreed from time to time between the parties that there would be a “salary sacrifice” in respect of part of the plaintiffs’ salaries paid as superannuation contributions. [131] The plaintiffs’ cases on failure to pay superannuation contributions ultimately came down to the proposition that, if their salaries had been underpaid because of a failure to make the payments required under the award in respect of overtime and on call allowances, there was an entitlement in addition for superannuation contributions to be paid in respect of the shortfall, since the superannuation contributions had been paid on the basis of the actual salaries rather than what the plaintiffs allege ought to have been paid to them bearing in mind their rights to overtime and on call allowances. In circumstances where I have found, however, that the plaintiffs were not entitled to any additional money on the basis of overtime or on call allowance, it follows therefore that there is nothing in this claim on this basis. The only aspect of concern in relation to superannuation is that presumably the defendant made superannuation contributions in respect of the plaintiffs only up to 20 April 2005, when the superannuation contributions should in fact have been paid to 15 July 2005. It seems to me that there is no reason why the plaintiffs should not be entitled to relief in respect of the failure to pay superannuation contributions in respect of that period. [132] The 2001 Award provided in Clause 19.2 that the employer shall make such superannuation contributions for the benefit of an employee as will avoid the employer being required to pay a superannuation guarantee charge under the superannuation legislation with respect to that employee: Exhibit 4. It follows that the award imposed an obligation on an employer to make a superannuation contribution for the benefit of an employee, even though of course no such -- 36 of 48 -- 37 obligation is imposed by the superannuation legislation itself.52 In addition, the plaintiffs rely on the Workplace Relations Act 1996 s 720 which relevantly provided: “If an employer is required by an applicable provision … to pay an amount to an employee or to pay an amount to a superannuation fund on behalf of an employee, the employee … may, not later than six years after the employer was required to make the payment to the employee or fund, sue for the amount of the payment in an eligible court.” [133] It seems to me that the effect of this section is that there is a statutory right in the plaintiffs to recover amounts which under the award ought to have been paid to the superannuation fund by the defendant but were not so paid. Apart from this, under the contracts the defendant was obliged to pay a superannuation contribution of 9%.53 That was a contractual right the plaintiffs had, and the plaintiffs are entitled to damages for breach of that contractual term.54 Strictly speaking, the damages are not the amount of the payment, but the amount by which the plaintiffs are worse off because that payment was not made. However, there is no precise evidence of that figure, and doing the best I can, I am prepared to assess the damages at being the equivalent of the payments not made. Whether payable under the award or payable under the contract, therefore, the defendant is liable to pay 9% of the amount of the salary in respect of the period not covered by the contributions already made. [134] In these circumstances, I do not need to deal with the argument advanced on behalf of the defendant as to why the Award did not require 9% of actual salary, but, if anything, something else. To some extent the argument depended on the proposition that payments made by way of additional superannuation contributions, in substance by the plaintiffs, as a result of salary sacrifice arrangements, had the effect of satisfying the superannuation taxation legislation, so that no amount became payable under the award because it was not necessary for any additional amount to be paid by the defendant. It had the effect of reducing the charge percentage to zero, so that there was no amount payable either by way of superannuation guarantee charge, or therefore payable under the award. [135] Without delving into the intricacies of this legislation, I would be very surprised if the effect of a contribution achieved by a salary sacrifice could generate what is in effect a tax deduction for the employer in this way, but assuming that it is so, there is no reason to think that any such salary sacrifice arrangement interfered with the contractual obligation to pay a superannuation contribution of 9% of salary. Plainly, as a matter of interpretation of the written contract, what was referred to there as 9% of the salary was 9% of the figure stated as the salary in the written contract. [136] No doubt it would be possible for the parties to the contract to vary that term by a subsequent agreement, for example, by an agreement that the “salary” for the purposes of the obligation to pay a superannuation contribution should be the 52 D.P. Excavation and Haulage Pty Ltd v Commissioner of Taxation (2005) 190 FLR 198 at 204; Woodford v Landline Investments Pty Ltd [2000] QDC 258 at [6]. 53 See Exhibit 11; I find there was such a provision also in the first plaintiff’s contract. 54 Macauslane v Fisher & Paykel Finance Pty Ltd [2003] 1 Qd R 503 at 518. -- 37 of 48 -- 38 reduced amount after making allowance for the “salary sacrifice” amount, whether paid by way of additional superannuation contributions or anything else, though I cannot imagine why any employee in his right mind would agree to such a term in the contract. But there was simply no evidence of any such term in the salary sacrifice agreement between the parties; indeed, there was no evidence of the actual terms of that agreement, but presumably it simply operated by the parties agreeing that some of the plaintiff’s “salary” would be dealt with in particular ways, by way of additional superannuation contributions or by other benefits such as a bill payment facility,55 with the plaintiff receiving on a fortnightly basis only the balance. [137] I can think of no reason why it would be an implied term of a contract of that nature that that would have the effect of varying the employer’s obligation under the employment contract to pay 9% of the “salary” as fixed by that contract by way of superannuation contributions.56 It is not the function of a salary sacrifice arrangement to relieve an employer of its obligation to make superannuation contributions. That I think is clearly so, even if (which I would find surprising) the superannuation legislation permits such a thing to be done. Accordingly, whether or not the salary sacrifice arrangement interfered with the obligation under the award to make superannuation payments, it seems to me clear that it did not interfere with the contractual obligation to make those payments, and that obligation is enforceable. [138] The “salary” therefore is the amount payable in respect of the period of 62 days until the end of the plaintiffs’ employment. It does not appear that superannuation contributions are payable in respect of the leave loading, so that should be disregarded, and the ordinary salary rate of the plaintiffs should be taken in respect of this period. On the basis of the figures in Exhibit 20, the ordinary daily gross salary of the first plaintiff was $350.97, which for a period of 62 days comes to $21,760.14. Nine per cent of this is $1,958.41. It follows that the first plaintiff is entitled to recover this amount in respect of unmade superannuation contributions. On the basis of the figures in Exhibit 31, the second plaintiff was receiving a gross salary of $276.87 per day, so the total of 62 days was $17,165.94, of which 9% comes to $1,544.93. These amounts are therefore recoverable in respect of unpaid superannuation contributions. [139] I should say, on a precautionary basis, that if I had been satisfied that the plaintiffs had been underpaid salary in respect of overtime or on call allowances or both, then the plaintiffs would have also been entitled to recover superannuation contributions in respect of salary which ought to have been paid but was not, either under s 720 of the Workplace Relations Act, or as damages for breach of contract. That issue, however, does not arise on the findings I have made. Long service leave [140] There was no dispute that the plaintiffs were entitled to long service leave, and indeed Exhibits 20 and 31 contained long service leave calculations on the basis that the first plaintiff was entitled to 11.08 weeks of long service leave accumulated up to 20 April 2005. That in turn was calculated from 1 June 1992, at 12.79 years of 55 Chmiel p 74, p 78. 56 See also, in the 1996 Award, Clause 28. -- 38 of 48 -- 39 the 15 year period necessary to accumulate 13 weeks long service leave. On the basis that this figure was incorrectly calculated to 20 April 2005 instead of 15 July 2005, the long service leave calculation should have been 13.02 years of 15 years which comes to 11.28 weeks, which at 38 hours comes to 428.64 hours. At $46.18 per hours, this in turn comes to $19,794.60. In fact some of this was paid to the plaintiff, an amount of $586.95: Exhibit 20. It follows that the first plaintiff is entitled to recover the balance, amounting to $19,207.65. [141] The second plaintiff’s calculation in Exhibit 31 for long service leave was that she had completed to 20 April 2005 10.6 years out of 15 years to qualify for 13 weeks’ leave. Taking that figure up to 15 July 2005 is an additional 0.23 of a year, so that the second plaintiff was entitled to 10.83 years of 15 years towards 13 weeks, which comes to 9.39 weeks. Multiplied by 38 hours, that gives 356.82 hours, which at $36.43 per hour comes to $12,998.95 [142] Neither this nor the amount calculated as at 20 April 2005 was paid to the second plaintiff with Exhibit 31, and instead a deduction was made which the defendant was not entitled to make in respect of rostered days off, which meant that no amount was paid by way of long service leave. Accordingly this full amount is recoverable by the second plaintiff. Indeed, an amount of $449.18 was deducted from the gross salary payable up to 20 April 2005, and this amount of $449.18 ought to be brought back into account, strictly speaking as unpaid termination pay but since I am bringing the payments made in April 2005 into account at this point for the first plaintiff, it is convenient to do it for the second plaintiff as well. In any event, the second plaintiff is entitled to recover $12,998.95 in respect of long service leave, and $449.18 in respect of salary up to 20 April 2005. Credibility [143] I should say something about my general view in relation to the credibility of witnesses. Generally speaking, I thought that the first and second plaintiffs were honest witnesses and gave reasonably reliable evidence to the best of their ability. There were times when they were obviously struggling to recall the details of things that had happened some time ago, frequently in a context where they were being asked for details of something which at the time was a routine occurrence which would not have been of any particular significance to them. At no point did it seem to me that any part of their evidence was exposed as false in cross-examination. The first plaintiff may have believed that Mr Aldred paid more attention to his time sheets than was really the case: p 90. [144] The only witness with whom there was a direct conflict on anything of significance, apart from Mr Aldred, was, it seemed to me, Ms McDonald, and I was wary about her evidence, as already explained, because it seemed to me that she was hostile to the plaintiffs, in part because she saw them as having unfairly deprived her of the opportunity to park her car on the premises, notwithstanding that when she worked there she worked until fairly late in the evening. The second plaintiff had no recollection of this (p 55), but it could well have happened, with the plaintiffs turning down the request on the basis that the car parking spaces, which no doubt were limited, had to be made available to the casual counsellors who were required to come in to see clients. I suspect this incident did happen, and probably did lead Ms McDonald to be hostile to the plaintiffs, and that in turn seems to have served to put a slant on her evidence. -- 39 of 48 -- 40 [145] I was not favourably impressed by Mr Aldred as a witness. I have already referred to his behaviour in deducting the amount for all rostered days off over a period of about 12 years for the first plaintiff and about 10 years for the second plaintiff when the calculation of termination pay was made in April 2005, as having been malicious and vindictive. I also regard his claim of being unaware of what was happening with the plaintiffs’ RDO’s as incredible. Apart from that, there were matters which impressed me unfavourably with Mr Aldred’s character. He admitted to having secretly tape recorded a conversation with another witness, Mr Fox: p 87. Police officers are encouraged by the legislature and the courts to tape record conversations that they have with people who may be involved in criminal activity, and therefore routinely tape record conversations. Otherwise, however, I do not consider that it is characteristic behaviour of decent honourable people in their dealings with others. I consider that such behaviour reflects adversely on Mr Aldred’s character. [146] There was also a reference in the minutes of the Board meeting of 22 March 2005 (Exhibit 9), Item 5.0046.1, which records as part of Mr Aldred’s report to the Board: “Staff morale has greatly increased since the departure of [the plaintiffs]. Staff have revealed a great sense of relief and an ever- increasing list of grievances has come to light. Mr Aldred advised that he had been surprised of [sic] the extreme level of happiness across the entire organisation at their retirement. The level of motivation and enthusiasm has increased significantly.” [147] There is an issue about the timing of that entry in the minutes, since according to the evidence at the time of that meeting the plaintiffs had not made known their intention to resign even to Mr Aldred. 57 The explanation offered was that this entry had been inserted into the minutes in the wrong place, although Mr Aldred did confirm that he had said such a thing to the Board at some time after the retirement of the plaintiffs was known.58 For present purposes, what matters is that these remarks of Mr Aldred were in the circumstances gratuitously disparaging the plaintiffs, and consistent with a malicious and vindictive attitude towards them. Again, they are not the sort of thing that would have been said by a decent, honourable person. I note that the minutes record that after the first plaintiff said that he would be retiring, two members of the Board “spoke of the valuable contributions Chris and Lesley had made”: Exhibit 47 p 27. [148] Mr Aldred claimed that time sheets for level 6, 7 and 8 staff should have reflected actual times worked, not notional times: p 58. As a theory that was of course correct, but what he said seemed to be evidence as to what was in fact happening at the time within the defendant. But the evidence of all other witnesses was that the practice was that such staff put nominal times on their time sheets. Whoever was responsible for the policy, there is no doubt that it was the policy, and I find it 57 See Aldres p 92, pp 30 – 35. 58 The minutes, Exhibit 47, do not contain anything to suggest that the minutes were inaccurate in this respect, the minutes having been signed as correct by the president and the subsequent minutes recording that the minutes of the earlier meeting were accepted as a true and accurate record of proceedings: Exhibit 47. Nevertheless, they cannot have been right. -- 40 of 48 -- 41 incredible that Mr Aldred claims to have been unaware of it, even allowing for his not filling in timesheets himself. Conclusion [149] In summary therefore the first plaintiff is entitled to recover the following amounts: (a) accrued annual leave entitlements $13,503.03 (b) long service leave entitlements $19,207.65 (c) unpaid salary in respect of the balance of the period of termination including leave loading $25,383.91 (d) unpaid superannuation contributions in respect of the balance of the period of notice $1,958.41 TOTAL $60,053.00 [150] The second plaintiff is entitled to recover the following amounts: (a) accrued annual leave entitlements $6,786.91 (b) long service leave entitlements $12,998.95 (c) unpaid salary in respect of the balance of the period of termination including leave loading $20,523.8059 (d) unpaid superannuation contributions in respect of the balance of the period of notice $1,544.93 TOTAL $41,854.59 Interest [151] The submissions in writing on behalf of the parties did not even agree as to the identity of the statutory basis upon which interest may be awarded. Section 722 of the Workplace Relations Act 1996 provided that in a proceeding under s 720 the court “must, upon application, unless good cause is shown to the contrary, either” award interest as the court thinks fit on some or all of the amount for which judgment is given or include a lump sum instead of such interest in the judgment. It follows that insofar as I am enforcing an obligation under an award pursuant to s 720 of the Act, the source of the power, indeed on the wording of the section, the obligation, to award interest is s 722 of the Act. Insofar as I am enforcing the plaintiffs’ common law rights under the contract between the parties, I am not acting under s 720 and the source of the authority to award interest is s 47 of the Supreme Court Act 1995. That simply confers a discretion, though it is a discretion ordinarily exercised in favour of an award of interest unless there is some good 59 $20,024.62 + $449.18. -- 41 of 48 -- 42 reason to the contrary. For practical purposes, the same result follows under either provision. [152] The amounts which the plaintiffs are entitled to receive are essentially amounts which should have been paid to them upon the termination of their employment, that is to say, within a reasonable time of 15 July 2005. Given that ample notice had been given of their departure, I consider that a reasonable time would be quite short, and accordingly interest should run for a period of five years and five months. I will allow interest at 10% per annum; that is the rate which is commonly allowed in proceedings these days, other than for actions for damages for personal injuries. No doubt this is in part because at least since 1 July 2007 a rate of 10% has been fixed for the purposes of default judgments by a practice direction.60 Accordingly I will allow interest at that rate for that period. That is an amount of $32,548.73 in respect of the first plaintiff and $22,685.19 in respect of the second plaintiff. Costs [153] It was common ground that it is relevant to have regard to the Workplace Relations Act 1996 s 824. That section provides relevantly: “(1) A party to a proceeding (including an appeal) in a matter arising under this Act … must not be ordered to pay costs incurred by any other party to the proceeding unless the first mentioned party instituted the proceeding vexatiously or without reasonable cause. (2) Despite subsection (1), if a court hearing a proceeding (including an appeal) in a matter arising under this Act … is satisfied that a party to the proceeding has, by an unreasonable act or omission, caused another party to the proceeding to incur costs in connection with the proceeding, the court may order the first mentioned party to pay some or all of those costs.” [154] Subsection (1) is a longstanding provision of industrial relations law; a provision in these terms was formally numbered s 347. Subsection (2) on the other hand was introduced by an amendment which took effect only in 2006. The defendant’s submission was that the effect of subsection (1) was that no order for costs could be made in relation to the proceeding, and that subsection (2) only applied in relation to the conduct of the proceeding, and did not and could not apply to behaviour which had occurred prior to the commencement of the proceeding, or indeed prior to the commencement of that provision in the statute. [155] In the present case the plaintiffs’ claim was based on the industrial award, seeking to enforce the right to payment under s 720, and at common law, on the basis that there was a right to payment under the contract of employment which was enforceable in the ordinary way as a personal action, or for damages for breach of contract. There were some exceptions to this: the claims for overtime and for on 60 In the course of my work on the Rules Committee, I have come across information suggesting that interest rates commonly allowed under analogous provisions in other states are frequently higher than this. -- 42 of 48 -- 43 call allowance were pursued only under the award, but most of the claims were pursued and I have found were available both under the award and as money payable under the contract of employment, or for damages for its breach. [156] There is, however, longstanding and well established authority in the Federal Court that, when the one proceeding joins both a claim to recover money payable under an award and a common law claim, the whole matter is really a proceeding in a matter arising under the Act, so that s 824(1) applies. The basis of this was explained in the detailed analysis in the judgments in Gregory v Philip Morris Ltd (1988) 24 IR 397, 80 ALR 455. In that case it was held that, because the terms of the applicable industrial award were incorporated into the contract by force of the award, an action to enforce the contract, apparently at common law, was in substance a matter arising under the Act, which was the legislative authority for the award. A majority held that the same situation applied because the terms of the award were also incorporated into the contract by implication, in accordance with ordinary principles for implying terms into a contract, a proposition which is reinforced in the present case by the fact that the written contracts of employment provided expressly for the application of the award. [157] On either of these bases it was held that even an action at common law was covered by the prohibition in s 824. That approach was endorsed again by the Full Federal Court in Bostik (Australia) Pty Ltd v Gorgevski (No. 2) (1992) 41 IR 471, where Gray J at p 477 made the point that: “If [the common law] claim had been brought in a State court, separately from the penalty claim, it would still be clear that the relevant proceeding would be a matter arising under the Act.” [158] Hence even if the plaintiffs had not pursued claims under the award in the present action, s 824 would on his Honour’s view have applied anyway to prevent an order being made for costs except in the limited way contemplated by that section. That approach is well established in the Federal Court; for example, it was recently confirmed in Goldman Sachs JB Were Services Pty Ltd v Nikolich [2007] FCAFC 120. 61 Accordingly, it follows that prima facie no order can be made for costs unless under the proviso to subsection (1), or under subsection (2). [159] As to the latter, it appears to be accepted that that subsection is concerned with an unreasonable act or omission occurring in the conduct of the proceeding. That was the approach of the Full Court of the Federal Court in CFMEU v Clarke [2008] FCAFC 143, especially at [29], although the point was not considered expressly. On that basis, the question of whether conduct prior to the commencement of the section can be taken into account really becomes academic, since the subsection commenced at about the same time as the proceeding, but the transitional provisions applicable indicate in any case that such conduct cannot be taken into account. 62 [160] Counsel for the defendant did not seek an order for costs against the plaintiffs in respect of any proceeding under the exception in subsection (1), or under subsection (2). On the other hand, the plaintiffs sought to bring aspects of the 61 See also Bahonko v Sterjov [2008] FCAFC 30, where a different situation arose because of the operation of a different Commonwealth Act. 62 Australian and International Pilots Association v Qantas Airways Ltd [2007] FCA 879 at [16], quoting the Workplace Relations Regulations, Ch 7, Part 2, Division 8, Reg 2.10. -- 43 of 48 -- 44 conduct of the defence within subsection (2), in particular the defence of the plaintiffs’ claim to recover for annual leave accrued and not taken, and the defendant’s pursuit of the claim to recover amounts paid in respect of rostered days off said to have been taken improperly. Reference was also made to the question of whether there were occasions when offers to settle litigation were not addressed reasonably. That is not a matter that I can decide at the present time, since before I give judgment I cannot take into account offers to settle. [161] Addressing the other two matters, it seems to me that, although the defendant’s argument that it was not liable to pay in respect of annual leave accrued but not taken, or at least not liable to pay more than annual leave which had accrued in the previous 12 (or 18) months, was unsuccessful, I am not persuaded that it was unreasonable to pursue those issues. There was some room for argument about the terms and interpretation of the award, and the authorities relied on by the defendant, although ultimately I found them to be distinguishable, really did have things to say touching on the issue of payment in respect of annual leave not taken. It is clear from the authorities on s 824 that the mere fact that a defence was unsuccessful does not mean that the pursuit of it was unreasonable, and I am not persuaded that the defendant’s conduct in relation to the claims for unpaid annual leave was unreasonable. [162] With regard to the counterclaim in relation to payment made in respect of rostered days off which were said to have been not properly taken, I have already had something to say about this matter; as mentioned earlier, in my opinion the counterclaim was misconceived. It also seems to me that it is relevant to this issue to take into account the conduct of the defendant in relation to the subject matter of the counterclaim at an earlier stage, in particular the conduct of the defendant in summarily deducting, in a wholly unjustifiable way, from the termination payments of the plaintiffs an amount in respect of rostered days off. Again, I have already had something to say about that; in accordance with the approach adopted by Northrop J,63 I consider that this is a factor which is relevant in determining whether the pursuit of the counterclaim was unreasonable, although it does not in itself have great significance. [163] The counterclaim has failed for a number of reasons, which really operate cumulatively, and I have found that it was misconceived. I find therefore that the pursuit of the counterclaim was an unreasonable act or omission. Indeed, it may be that the counterclaim qualifies as a proceeding instituted without reasonable cause within the exception to subsection (1). On the findings I have made, it was certainly instituted without reasonable cause, but it may be that the counterclaim was not a proceeding in a matter arising under the Act. It is unnecessary to determine that question, since it seems to me clear that the pursuit of the counterclaim falls within the scope of subsection (2) as interpreted by the authorities, and an order for costs in respect of the counterclaim can be made under subsection (2) against the defendant. The remaining issue, in relation to settlement offers, cannot be assessed at this stage; I will determine that after giving judgment, if the plaintiffs pursue the matter further. [164] I should perhaps make some findings on a precautionary basis, in case the view is taken elsewhere that the approach in the Federal Court does not apply in the State 63 See below re objections to evidence. -- 44 of 48 -- 45 courts. Aspects of the plaintiffs’ claim have been unsuccessful, and the claim for overtime and the on call allowance were a significant part of the plaintiffs’ overall claim. On the other hand, there was I think some substance in the proposition that a safety net was available, and I was told that there had been no previous authority on the operation of the relevant provisions of that award. In those circumstances it was I think not unreasonable for the plaintiffs to have sought to rely on the safety net provisions in the award. In the event, that reliance has been unsuccessful, but the situation is not such that, if I were deciding the question of costs on ordinary principles, I would make a separate order in relation to the costs of those issues against the plaintiffs. [165] Another issue which arises is in relation to the costs of the evidence which was subject to objection, and the evidence which was led in response to evidence subject to objection. It is probably fair to say that overall about one day of the trial was spent on such matters.64 In retrospect, it would have been more efficient if I had been able to decide the objections to evidence at the time. The real problem which I confronted, however, was a lack of familiarity with the law in this area, and it is really only after I have had the opportunity of considering the matter in some detail that I have been able to make what I regard as a proper determination of the limits of admissibility on the basis of relevance. As it happens, that has resulted in quite a lot (but not all) of the evidence objected to being excluded. But I do not think that the plaintiffs should bear an additional cost burden as a result of my unfamiliarity with industrial law matters. At the end of the day, both parties will have incurred additional costs because the trial went longer as a result of this evidence being led, and that should be treated as simply an additional part of the costs of each party of the trial. [166] Another day was taken up by the defendant’s application for me to disqualify myself. That application was unsuccessful. But for s 824, I would have ordered that the defendant pay the plaintiffs’ costs of that application, on the basis that the costs should follow the event of the application. The application was a proceeding for the purpose of subsection (1), and was also an act of the defendant within subsection (2), but I would not find, bearing in mind the reasons which I gave when dealing with the application, that as a proceeding it was instituted vexatiously or without reasonable cause, or that it was an unreasonable act on the part of the defendant. Within the constraints of s 824 therefore no order for costs can be made in respect of that application. Objections to evidence [167] There were a number of occasions during the trial when I admitted evidence subject to relevance notwithstanding objection on that ground from counsel for the defendant. As a result of this, some additional evidence was led by counsel for the defendant which was led, as it were, provisionally, only on the basis that the evidence objected to was admitted. Counsel for the defendant in submissions pressed those objections, and submitted that matters going to credit which arose in the course of such material should also be disregarded for the purposes of assessing credit. As to the latter point, this I think depends on whether the evidence came from the witness whose credit was in issue or another witness. As a general 64 On the other hand, time was spent crossexamining the plaintiffs about matters of no significance to the real issues: see eg Day 4 p 31. -- 45 of 48 -- 46 proposition, anything which may cause the tribunal of fact to take an unfavourable view of the reliability of a witness is material to credit, and the test here is traditionally very broad. The distinguishing feature, however, is that evidence cannot be led from a witness, in chief or in cross-examination, which is relevant only to the credibility of another witness.65 [168] There were certainly on any view of the matter credit issues involving at least the plaintiffs and Mr Aldred. Although there was no claim for damages for wrongful dismissal, it did emerge that there was an issue as to the termination of the plaintiffs’ employment, as to the date on which that took effect, despite the inappropriate pleadings on this point. I think that the circumstances under which the plaintiffs’ employment came to an end, and particularly the hostility towards them associated with that, are relevant as providing a background against which the objective behaviour of the parties, and the written communications between them, are to be assessed. To some extent, therefore I consider that the evidence as to the events leading up to and indeed following the occasion on which the plaintiffs were escorted from the premises are relevant in determining that issue. They are, however, not relevant to the other matters in issue. [169] The matter is complicated by the provision as to costs, which I have dealt with elsewhere. I accept that in the light of those authorities the relevant act or omission which has to be unreasonable in order to activate s 824(2) cannot for the reasons given there be any act or omission occurring in the course of the employment. Nevertheless, there is some authority to support the proposition that conduct of the defendant (or, for that matter, the plaintiffs) during the course of the employment is relevant to the exercise of the discretion under s 824. In Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 Northrop J had to consider the application of the then equivalent provision to s 824(1) of the Act, s 197A of the Conciliation and Arbitration Act 1904. His Honour said at pp 274-5: “In considering this matter the court must have regard to all the material properly before it. The test is not subjective to the party instituting the proceedings as at the time of the institution of the proceedings. The conduct of the opposing party prior to the institution of the proceedings may be relevant in deciding whether the proceedings were instituted vexatiously or without reasonable cause. The conduct of the opposing party both prior and subsequent to the institution of proceedings may be relevant to the discretion remaining in the court. It may be difficult to satisfy the test where disputed questions of fact arise and the proceedings eventually are dismissed because the court finds facts adverse to the party instituting the proceedings. Where the test is satisfied, having regard to the general policy of the section, the court may, nevertheless, in the exercise of its discretion, make no order as to costs.” [170] That passage was cited by Moore J in Dowling v Fairfax Media Publications Pty Ltd [2009] FCA 339 at [53], as part of a summary of the principles applicable in relation to s 824 which was approved by the full Federal Court on appeal: [2010] FCAFC 28 at [40]. It follows that conduct of the parties prior to the institution of 65 There are four recognised exceptions: Cross On Evidence para [17595]. -- 46 of 48 -- 47 proceedings may be relevant in deciding whether the proviso to subsection (1) applies, and whether the discretion may be exercised. At that time there was no subsection (2), but I consider that by analogy, and if a situation arose in practice where it could be relevant, the general principles stated by Northrop J would apply as well in determining whether an act or omission which fell within subsection (2) was unreasonable, and whether to exercise the discretion provided by that subsection. I accept that it is less likely that a case will arise under subsection (2) where such material is relevant. Nevertheless, in principle the conduct of the parties prior to the commencement of proceedings, which seems to me to encompass both the origins of the dispute which ultimately produces the proceedings and the pre- litigation phase of the dispute, is relevant. [171] Accordingly, I consider that some evidence as to the circumstances surrounding the end of the plaintiffs’ employment is relevant as at least potentially impacting on the application of s 824. I accept, however, that a good deal of the evidence objected to went further than could reasonably be justified for admission on these bases. [172] A number of passages were objected to in the evidence of Mr Fox. The first is at p 73 line 35 to p 76 line 15. The early part of that, on pp 73 and 74, is relevant to the background to the termination of the employment of the plaintiffs, but I consider that the further evidence on p 75 (there is no evidence on p 76 before line 15) was inadmissible as irrelevant. The passage at p 81 lines 1 to 29 was irrelevant. The passage at pp 87 to 89, which was concerned with the practice and policies of the defendant, was irrelevant. The next passage from pp 97 to 103 occurs in the cross- examination and I am not sure that counsel can object to his own cross-examination on the ground of relevance. I have not in fact had regard to its contents. The passage at pp 103-104 in the re-examination was irrelevant. Parts of Exhibit 8, at paragraphs 2 and 3(c) and (d), were irrelevant. [173] With regard to the evidence of the first plaintiff, there was a passage objected to on pp 43-45; a very limited part of this passage from p 44 was taken into account in relation to the sequence of events prior to the plaintiffs’ resignation, but otherwise the passage is irrelevant. With regard to the passage at pp 46-47, the early part of that is of some relevance in relation to the sequence of events, but the evidence of the conversation between the plaintiff and Mr Aldred is irrelevant. The passage on p 48 is concerned with the circumstances under which the plaintiffs ceased to attend the defendant’s premises and is relevant. The passage the next day from pp 26 to 27 was irrelevant, though it occurs in cross-examination. The passage from pp 30 to 31 is in the same category; it strikes me as essentially an unsuccessful attack on the credit of the first plaintiff. The cross-examination on pp 79 to 96 was in the nature of provisional cross-examination, and was irrelevant; I have not had regard to it, except to the extent that it touched on the sequence of events leading up to the end of the plaintiffs’ employment, which it does only to a very limited extent. [174] Part of the evidence of Ms Sergeant at pp 52 to 54 was objected to; I do not think there was anything relevant said in those passages. With regard to the evidence of the second plaintiff, the passage on pp 105-106 was irrelevant. The passage on p 107 concerns the circumstances in which the plaintiffs were escorted off the premises and is relevant as part of the circumstances of the termination of the plaintiffs’ employment. The passages the following day on p 3 are concerned with Exhibit 30, which is plainly relevant, and the fact that the plaintiffs were escorted off the premises. The passage in the cross-examination on pp 41-47 about the -- 47 of 48 -- 48 Logan House investigation was like other cross-examination in relation to that; I had not in fact had regard to it, except to the very limited extent that I have referred to the background to the termination in my reasons, none of which I believe I actually obtained from that passage. The passage on p 61 about Logan House was irrelevant but in cross-examination. The passage from pp 62 to 66 was I thought an attempt to attack the credibility of the second plaintiff, and as such was relevant. [175] With regard to the evidence of Mr Aldred, I consider that, insofar as matters were led in evidence-in-chief which could have been exposed in cross-examination in relation to credit, those matters could properly be taken into account in relation to credit. The same applies in relation to matters relevant to the witness’s credit in cross-examination, even if the evidence was not otherwise relevant. To some extent the passages objected to touch on the circumstances surrounding the termination of the plaintiff’s employment and are relevant for that reason. However, I accept that a good deal of evidence which was led on the provisional basis went further than was necessary in relation to those matters, and was irrelevant. Some of the evidence was relevant to the sequence of events, and to a very limited extent I have taken it into account in relation to my reasons earlier, but it is otherwise irrelevant. The cross- examination at p 103 which was objected to is irrelevant. The cross-examination at p 104, which was objected to, is irrelevant. The passage at p 105 was I think legitimate cross-examination as to credit, but the passage at p 106 was irrelevant. The passage at pp 31 to 37,66 which actually contains questions by me, was relevant to the credibility of Mr Aldred. That I think deals adequately with the objections to admissibility of evidence on the ground of relevance. 66 This was Day 7 rather than Day 6; Day 6 was actually 24 September 2009, the date on which the application was made for me to disqualify myself. -- 48 of 48 --