Coinvest Limited v Bestaff Australasia Pty Ltd
[2012] VCC 1474
•31 October 2012
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted |
AT MELBOURNE
COMMERCIAL LIST
EXPEDITED CASES DIVISION
Case No. CI-12-00765
| COINVEST LIMITED (ACN 078 004 985) | Plaintiff |
| v. | |
| BESTAFF AUSTRALIASIA PTY LTD (ACN 099 01 943) | Defendant |
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JUDGE: | Her Honour Judge Kennedy | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 8, 9, 10, 11 & 23 October 2012 | |
DATE OF JUDGMENT: | 31 October 2012 | |
CASE MAY BE CITED AS: | Coinvest Limited v Bestaff Australasia Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2012] VCC 1474 | |
REASONS FOR JUDGMENT
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Catchwords: Preliminary questions under rule 47.04 – whether defendant has any liability to pay any additional long service leave charge to trust fund established under the Construction Industry Long Service Leave Act 1997 – whether an estoppel arose – whether plaintiff has liability to repay monies
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N. Green QC Mr J. D’Abaco | Maddocks |
| For the Defendant | Mr C. O’Grady Mr T. Jacobs | Russell Kennedy |
HER HONOUR:
1 The plaintiff is the trustee of a Construction Industry Long Service Leave Fund established by the Construction Industry Long Service Leave Act 1997 (“the 1997 Act”). It claims that the defendant, Bestaff Australasia Pty Ltd (“Bestaff”), has not paid the correct long service leave charge pursuant to the rules relating to the fund, and seeks declaratory relief and damages.
2 In particular, the plaintiff submits that an “averaging” exercise needs to be undertaken under clause 11.8(a) because “no normal weekly number of hours is fixed” under Bestaff’s employees’ terms of employment.
3 The defendant rejects the plaintiff’s contention and submits that clause 11.8 does not apply. Rather, the proper approach is to apply rule 11.7 such that it has no liability to pay the charge in respect of workers employed on the weekend, which are outside “normal” weekly number of hours.
4 The defendant additionally submits that, even if its construction is incorrect, then the plaintiff was proposing an incorrect calculation of the amounts properly payable. Finally, it submitted that an estoppel arose.
5 Given the volume of employees involved, the court made an order on 3 September, 2012, that the case proceed by separate questions in relation to Sample Employees, which questions are at Appendix A.
6 Given quantum was agreed[1], the primary issues in the case are:
(a)whether normal weekly number of hours were “fixed” under the terms of the employment of the Sample Employees for the purposes of rule 11.8(a);
(b)whether the plaintiff’s calculation was correct;
(c)whether any estoppel arose.
[1]An agreed table was provided by way of joint letter dated 19 October 2012
7 A subsequent issue also arose as to the appropriate treatment of hours for one of the Sample Employees, Mr Derby, with the defendant rejecting that all of his hours were worked in the Construction Industry. This issue will also be dealt with, below.
Background Facts
8 Although a large number of Court Books were filed, the parties are to be congratulated on filing a Statement of Agreed Facts dated 4 October 2012.[2]
[2]This were filed pursuant to the orders of 3 September 2012 (see Order 8).
9 The Statements of Agreed Facts included the following:
The Plaintiff
1.The plaintiff ("CoINVEST"), a trustee company, is the trustee of the Construction Industry Long Service Leave Fund ("the Fund"), which is established by the Construction Industry Long Service Leave Act1997 (Vic) ("the Act').
The Construction Industry Long Service Leave Fund
2.The Fund provides portable long service leave benefits to workers in Victoria who perform construction work in the construction industry in Victoria.
3.In its administration of the Fund pursuant to section 4.(1) of the Act, CoINVEST imposes upon employers who employ workers to perform construction work in the construction industry a long service leave charge (Charge).
4.CoINVEST is required to administer the Fund in accordance with a Trust Deed dated 1 April 1997 ("the Trust Deed"). Further, under clause 5 of the Trust Deed, CoINVEST is empowered to make Rules relating to the Fund ("the Rules").
5.Pursuant to clause 5.3 of the Trust Deed, the Rules are required to be construed as part of the Deed, provided that the provisions of the Deed prevail over the Rules to the extent of any inconsistency. The Rules, in combination with the Deed and the Act, govern the way in which CoINVEST exercises its powers as trustee of the Fund.
The Defendant
6.The defendant (“Bestaff”) is a company which provides labour hire services to clients. Bestaff is and was at all relevant times an "employer" for the purposes of the Act.
7.During the period 1 April 2011 to 31 March 2012 ("the Periods"), among other periods, Bestaff employed (among other workers) the following:
[various paragraphs then follow as to when the Sample Employees were registered as persons to be offered casual work by the defendant]
…
8.Between 1 April 2011 and 31 March 2012, Bestaff employed the Sample Employees on a casual basis on those occasions and for those periods that they accepted offers of work from Bestaff. The Sample Employees worked at the workplaces of Bestaff’s customers. Terms and conditions of employment of these workers are contained in amongst other things the following documents:
(a) A pro-forma document entitled "Bestaff Temporary Employment Agreement”;
(b) The Bestaff Australasia Pty Ltd Labour Hire Agreement 2009 – 2011 (an enterprise agreement made and approved pursuant to the Fair Work Act2009 (Cth));
(c) Metal, Engineering and Associated Industries Award 1998 – Part 1, as in operation as at 1 March 2006;
(d) The Manufacturing and Associated lndustries and Occupations Award 2010 (a modern award pursuant to the Fair Work Act2009 (Cth)); and
(e) The Bestaff ETU Enterprise Agreement 2003 – 2005 (an enterprise agreement made and approved pursuant to the Workplace Relations Act1996 (Cth) and continuing in force as a transitional instrument pursuant to the Fair Work (Transitional Provisions and Consequential Amendments) Act2009 (Cth)).
9.During the Periods, the procedure by which the Sample Employees attended for work at the workplaces of Bestaff's customers was generally as follows:
(a) Bestaff's customers notified it when they required Bestaff to provide workers and the initial period for which the customers required those workers.
(b) Bestaff contacted the Sample Employees by telephone or mobile text message informing them, among other things, of the customer's requirements for workers, including the initial number of days' work which the customer required.
(c) If a Sample Employee was available and wished to accept the work, he contacted a representative of Bestaff and informed that representative that he was available to work. Bestaff then advised the Sample Employee of the name of the customer, the address of the workplace and the time at which to report for work at the workplace.
(d) The Sample Employee would report to the customer's workplace and would commence work on the required day and at the required time.
(e) In working at the customer's workplace, the Sample Employee worked under the direction and supervision of Bestaff’s customer.
(f) Typically, at the end of each week during the Sample Period, the Sample Employee would complete a time sheet recording the number of hours which he worked on each day in the preceding week. The Sample Employee or Bestaff’s customer would then provide the completed timesheet to Bestaff.
10.During the Sample Period, Bestaff paid the Sample Employees on a weekly basis for work performed by each of them in the previous week ("the Payment Period").
11.During the Sample Periods, most of the Sample Employees were also registered with other labour hire agencies and/or performed work for other employers.
12.On the occasions when the Sample Employees completed weekend work for Bestaff, those employees may have worked for other labour hire agencies or employers during other days of that week.
13.Cluse 7 of the Temporary Employment Agreement provides, inter alia, "Ordinary hours are based on a Monday to Friday working week".
14.The payment for each Payment Period included an amount in respect of:
(a) work which attracted "base rates", "time and a half rates" and "double rates", with time and a half rates and/or double rates being payable for work performed on the weekend;
(b) allowances for fares and travel, meals, site attendance and clothing;
(c) rostered days off, public holidays, annual leave and sick leave; and
(d) whatever other amounts were payable having regard to the Sample Employee's timesheet for the relevant Payment Period.
15.Bestaff produced a pay slip for each of the Sample Employees on those occasions where the Sample Employee worked during a Payment Period.
16.Each pay slip:
(a) set out a breakdown of the Sample Employee's pay by reference to the matters set out in paragraph 14(a)-(d) above;
(b) identified whether or not Bestaff had made any and, if so, what payment with respect to "CoINVEST Long Service" in the Payment Period.
The Operation of the Fund
17.By operation of Rule 11 of the Rules, the Charge is the prescribed percentage of the Ordinary Pay actually received by a worker during the Prescribed Period in respect of the construction work performed by him (Rules 11.2(a) and (b)).
18.The expression "Ordinary Pay" is defined in the Rules at Rule 11.7 and Rule 11.8. The expression "Prescribed Period" is defined in the Rules at Rule 11.11.
19.During the Sample Period, CoINVEST set the charge at a prescribed percentage of 2.7 per cent of a worker's Ordinary Pay.
20.On those occasions that the Sample Employees performed work on weekends, Bestaff did not include the wages earned by the Sample Employees on the weekends as part of the Ordinary Pay of the Sample Employees.
21.Bestaff did not pay the Charge to CoINVEST in respect of any of the week-end work performed by the Sample Employees during the Periods.
22.During the period 1 March 2006 to about June/July 2010, the Plaintiff provided to the Defendant on a quarterly basis:
(a) a "Service Return Form" in the same or similar terms to the Service Return (and New Worker Return) Form which is Plaintiffs discovered document 24; and
(b) a letter to the Defendant enclosing the Service Return Form (in the same or similar terms to the letter from the Plaintiff to the Defendant for the period 1 March 2008 to 30 June 2008 at Defendant's Discovered Document 25) ("the Service Return letter"), which contained "Instructions" concerning the completion of the Service Return Form, which included the following statements:
“• Normal working days cover a normal 5 day working week and Do NOT include overtime hours or weekend work.
…
• Do not include:
Overtime.”
23.During the period 1 March 2006 to about June/July 2000, a representative of the Defendant completed the Service Return Form.
24.During the period of about June/July 2010 to the present date, the plaintiff provided to the defendant on a quarterly basis:
(a) a "Workers Days and Wages Form" in the same or similar terms to Plaintiff's discovered document 91; and
(b) a letter from the Plaintiff to the Defendant, including a page entitled "Guide to completing this form" ("the Guide"), which enclosed the Worker's Days and Wages Form (in the same or similar terms to Defendant's discovered document 237) which included the following statements:
“Do not include:
overtime*
*Overtime = Time in excess of ordinary hours.”
25.During the period of about June/July 2010 to the present date, a representative of the defendant completed the Worker's Days and Wages Form.
26.During the period of approximately 2011 to the present date, the plaintiff published on its website:
(a) a three page document entitled "Workers Days and Wages Form" in the terms of the document at Defendant's discovered document 9;
(b) the Guide (also at Defendant's discovered document 9); and
(c) a document entitled "Checklist" in respect of the completion of the Worker's Days and Wages Form (also at Defendant's discovered document 9).
Other evidence
10 There was also oral evidence called by the plaintiff from five of the Sample employees concerned (Mr Gary Miller, Mr Charles Swords, Mr John Mills, Mr Robert Boehme and Mr Daniel Muller). The plaintiff also called Mr Hartley, who was the CEO of CoINVEST, as well as Mr Hansen, Manager, Membership Services, who performed relevant calculations.
11 The defendant called its Managing Director, Mr Zimmari, as well as an administrator at Bestaff, Ms Albuthnott.
12 Although there was some cross-examination, very little in the way of credit issues arose.
13 There was, however, an issue that arose in relation to Mr Zimmari’s evidence, and also another witness called by the defendant, a Mr Peter Nolan. This issue concerned the admissibility of their evidence to the effect that there was an ordinary meaning of the concept of “ordinary rates of pay” in the metal trades industry.
14 I ruled that Mr Zimmari’s evidence would be admitted, subject to objection, and that Mr Nolan’s evidence would also be admitted, and that I would give short reasons as part of this decision.
15 In Pepsi Seven-Up Bottlers Perth Pty Ltd v FCT[3], Hill J set out the circumstances in which evidence may be given of the meaning and usage of a word in a trade. This included where the trade usage assists in supplying context or background of surrounding circumstances necessary to the construction of a word used in a statute.[4] In the result then, it appeared that their evidence was admissible.
[3] (1995) 132 ALR 632
[4] See Pepsi Seven-Up Bottlers Perth at 641 per Hill J
16 However, as will be seen below, their evidence has not, in the result been of assistance in resolving the actual issues before this court.
Regulatory Framework
17 Pursuant to s1 of the 1997 Act, the purpose of the Act is to repeal the Construction Industry Long Service Leave Act 1983 and provide for the scheme established by that Act to be administered in accordance with a trust deed by a company incorporated under the Corporations Law.
18 By force of section 4(1) of the 1997 Act, the defendant employer “must pay to the trustee a long service leave charge in respect of every worker employed by the employer to perform construction work in the construction industry.”
19 Pursuant to section 4(2), the date by which the charge is payable, the period in respect of which it is payable, the amount of the charge payable and the method by which the amount is to be calculated are as determined by the plaintiff in accordance with the Trust Deed dated 1 April 1997.
20 Section 5(1) of the 1997 Act empowers the plaintiff to recover the amount of the charge owing to it by an employer, with interest, as a debt in any court of competent jurisdiction.
21 Pursuant to s6(1), every worker is entitled to long service leave, and to be paid benefits out of the fund, in respect of continuous service in the construction industry.
22 Under Clause 5.1 of the Trust Deed, the plaintiff is empowered to make rules relating to the fund, including the obligations of persons to make contributions to the Fund. Those rules then form part of the Trust Deed provided that the provisions of the deed prevail over the rules to the extent of any inconsistency (clause 5.3).
23 The court was provided with Rules of the Construction Industry Long Service Leave Fund as at 7 April 2009. Both parties indicated that the court could work on the basis that these applied in relation to the resolution of the preliminary questions.
24 Rule 6 makes provision for the fund, and provides that the Long Service Leave Charge (inter alia) is to be paid into the Fund (rule 6.1), and for Long Service Leave Benefits (inter alia) to be paid out of the Fund (rule 6.2).
25 Rule 11 makes provision for the long service leave charge. Rule 11.1 provides that, subject to Rule 11.1A (which makes provision where the Employer delivers a return), after the last Pay Day in every Prescribed Period, and within 14 days after the end of that Prescribed Period, every Employer shall pay to the Trustee a Long Service Leave charge in respect of the Construction Work performed by a Worker.
26 Rule 11.2(b)(ii) then prescribed the amount of the Long Service Leave Charge in this case as the prescribed percentage in respect of the Ordinary Pay actually received by the Worker during the Prescribed Period in respect of Construction Work performed.
27 Pursuant to the Statement of Agreed Facts, the prescribed percentage is the rate of 2.7 per cent (para 19).
28 The “prescribed periods” are set as quarterly periods commencing 1 July to 30 September (rule 1.1).
29 The crucial issues in the case turned on the definition of “Ordinary Pay” contained in rules 11.7 and 11.8 as follows:
“11.7 Meaning of Ordinary Pay in Rule 11.2(b)
In rule 11.2(b) ‘Ordinary Pay’ of a Worker means the total amount of remuneration actually received by him during that Prescribed Period, and includes (without limiting the generality of the foregoing):
(a) any remuneration paid during the taking of annual leave by the Worker or absence from work of the Worker by reason of:
(i)illness or injury of the Worker (other than any absence by reason of an injury arising out of or in the course of the employment of the Worker);
(ii)the Worker complying with a summons to appear as a juror;
(iii)the Worker appearing to give evidence before any court, body or person before whom or which a person may by law be required to appear to give evidence; or
(iv)the Worker taking compassionate leave as prescribed by any Award;
(b) any remuneration paid upon the dismissal of the Worker in respect of annual leave to which he was entitled but which he had not taken; and
(c) (subject to rule 11.9) where the Worker is provided with board or lodging by his Employer or receives any payment from his Employer in respect of board or lodging – the cash value of that board or lodging or the amount of that payment (as the case may be);
but does not include:
(d) any remuneration paid in respect of work performed by the Worker outside his normal weekly number of hours of work;
(e) any allowance paid in respect of fares or travelling expenses; or
(f) any loading paid in respect of remuneration paid during the taking of any annual leave.
11.8Meaning of Ordinary Pay
For the purposes of the definition of ‘Ordinary Pay’ in rule 11.7:
(a) where no normal weekly number of hours is fixed for a Worker under the terms of his employment, the normal weekly number of hours of work shall be deemed to be the average weekly number of hours of work worked by him during the period of twelve months immediately before the last Pay Day in that Prescribed Period; and
(b) the cash value of any board or lodging provided for a Worker is deemed to be its cash value as fixed by or under the terms of the Worker’s employment or, if it is not so fixed, shall be computed at the rate of $2 per week for board and $1 per week for lodging.” (emphasis added)
30 Rule 11.10 further dealt with “Casual Workers” and provided that nothing in rule 11 shall apply to any employment of a Worker by a particular Employer for less than 5 days a month.
31 It remains, then, to consider the 3 main issues in the case in the light of the above provisions.
Whether normal weekly number of hours fixed for the purpose of Rule 11.8(a)
Evidence
32 As indicated in paragraph 8 of the Agreed Facts, the parties were able to agree that the terms and conditions of employment of the Sample Employees were contained in various documents. During closing, further documents were included as part of a document entitled Application of Agreements and Industrial Instruments to Sample Employee, handed up by Junior Counsel for the plaintiff, as follows:
(1)A document entitled "Bestaff Temporary Employment Agreement”;
(2)Terms of Engagement of Robert Boehme dated 3 June 2005;
(3)The Bestaff Australasia Pty Ltd Labour Hire Agreement 2009 – 2011;
(4) The Bestaff ETU Enterprise Agreement 2003 – 2005;
(5) The Manufacturing and Associated lndustries and Occupations Award 2010;
(6)The Metal, Engineering and Associated Industries Award 1998;
(7)Bestaff Australia Pty Ltd t/as Bestaff and the CFMEU Building and Construction Industry Enterprise Agreement 2008-2011;
(8)Bestaff Australasia Pty Ltd t/as Bestaff and the CFMEU Building and Construction Industry Enterprise Agreement 2011-2015
33 The parties also agreed that there should be a ninth document added, namely, the National Electrical, Electronic and Communications Contracting Industry Award 1998 (NEECA).
34 The Sample Employees called also all gave oral evidence that at no time during their employment did they reach agreement with anyone at Bestaff as to what their normal weekly number of hours were to be. Rather, consistent with para 9 of the Agreed Facts, the numbers of hours were dependent on customer’s needs. As Mr Mills put it, there was “nothing normal, it varies from week to week”.
35 The “Bestaff Temporary Employment Agreement” applied to all Sample Employees and included the following:
Clause 1:
“My employment with Bestaff Australasia is as a temporary on an assignment by assignment basis..”.
Clause 2:
“I understand that Bestaff does not control the length of any assignment and I accept that whilst Bestaff may indicate the potential length of an assignment with a customer in good faith, the customer may vary the length of an assignment period or terminate my attendance at any assignment at their absolute discretion.”
Clause 7:
“My remuneration by Bestaff is on an hourly basis according to my classification and is subject to all relevant provisions of any appropriate Award, Site or Enterprise Agreement. Ordinary hours are based on a Monday to Friday working week.”
Clause 8:
“As a casual employee, you are not entitled to paid public holidays, annual, sick, personal/carer’s, bereavement or jury service leave. Casual rates of pay are inclusive of casual loading and payment in lieu of annual leave, sick leave and redundancy.”
Clause 9:
“Where overtime, shift penalties or other allowances are provided for in a relevant Award, Site or Enterprise Agreement, such payments will be calculated according to the terms of that Award, Site or Enterprise Agreement.”
36 Although providing that “Ordinary hours” were based on a Monday to Friday working week (clause 7), the Agreement did not purport to prescribe or define the actual number of hours per week. Rather, employment was on an “assignment by assignment basis” in circumstances where Bestaff did not control the length of any assignment. The customer could also vary any assignment period at their “absolute discretion.” (clause 2).
37 The terms of engagement applicable to Mr Boehme only (and related to his work on hire to Robert Bosch Pty Ltd), included the following:
2 Remuneration
You will initially be paid at the rate of $26.85 per ordinary hours
3 Hours of work
The likely number of hours, which you will be required to be worked, will be 38 hours per week.
The likely pattern of hours, which you will be required to be worked, will be Monday to Friday – 9.00 am to 5.00pm.
38 Although this agreement thereby dealt with the number of hours, again no set length was prescribed; only a likely number.
39 Similarly, the Bestaff Australasia Pty Ltd Metal and Associated Industries Labour Hire Agreement 2009 to 2011 did not prescribe a definite length. Instead, clause 2 contained the following:
Clause 2
…In the course of a three month period employees could work up to 20 different workplaces. This requires starting and finishing at different times as required by the client. Employees are also called upon to work overtime and shift work at short notice, as this is the nature of the industry.
40 However, the defendant highlighted various provisions which distinguished between ordinary hours and overtime hours and for the rates of pay for each type of hours as will be set out below.
41 Thus, the Bestaff Australasia Pty Ltd ETU Enterprise Agreement 2003 – 2005 made provision for ordinary hours of work to be worked “any time between 6am to 6pm Monday to Friday.” There was, therefore, provision for a spread of hours, but nothing about the number, with provision for ordinary hours to be “varied by agreement” (clause 8.1).
42 The Manufacturing and Associated Industries and Occupations Award 2010 included the following clauses:
Clause 36.2 Ordinary hours of work- day workers
(a)Subject to clause 36.5, the ordinary hours of work for day workers are an average of 38 per week but not exceeding 152 hours in 28 days.
(b)The ordinary hours of work may be worked on any day or all of the days of the week, Monday to Friday. The days on which ordinary hours are worked may include Saturday and Sunday subject to agreement between the employer and the majority of employees concerned. Agreement in this respect may also be reached between the employer and an individual employee.
(c)The ordinary hours of work are to be worked continuously, except for meal breaks, at the discretion of the employer between 6am and 6pm. The spread of hours (6am to 6pm) may be altered by up to one hour at either end of the spread, by agreement …
(d)Any work performed outside the spread of hours must be paid for at overtime rates …
Clause 36.5: Methods of arranging ordinary working hours
(a)Subject to the employer’s right to fix the daily hours of work for day workers from time to time within the spread of hours referred to in clause 36.2(c) and the employer’s right to fix the commencing and finishing time of shifts from time to time, the arrangement of ordinary working hours must be by agreement …(emphasis added)
Clause 40.1: Payment for working overtime
(a)Except as provided in clauses 40.1(d), 40.1(e), 40.8 and 40.9, for all work done outside ordinary hours on any day or shift, as defined in clauses 36.2, 36.3 and 36.4, the overtime rate is time and a half for the first three hours and double time thereafter until the completion of the overtime work. For a continuous shiftworker the rate for working overtime is double time.
(b)For the purposes of clause 40 – Overtime, ordinary hours means the hours worked in an enterprise, fixed in accordance with clause 36 – ordinary hours of work and rostering.
Clause 40.7 Saturday work:
A day worker required to work overtime on Saturday must be afforded at least four hours work or be paid for four hours at the rate of time and a half for the first three hours and double time thereafter …
Clause 40.8 Sunday work:
An employee required to work overtime on a Sunday must be paid for a minimum of three hours’ work at double time. The double time is to be paid until the employee is relieved from duty.
43 Critically, although “ordinary hours” were described, the employer had the “right to fix” daily hours under the terms of employment. However, consistent with the Agreed Facts at paragraph 9, there was no amount of hours so fixed in the case of these Sample Employees; rather the number of hours was determined by the requirements of Bestaff’s customers.
44 The Metal Engineering and Associated Industries Award 1998 was substantially the same as the 2010 award in respect of relevant provisions and needs no further development (see clauses 6.1.1 (a) and (b); 6.1.4(a); 6.4.1; and 6.4.7 and 6.4.8).
45 The Bestaff and CFMEU Building and Construction Industry Enterprise 2008 – 2011 also contained the following:
36.1 - Hours of Work
36.1.1 – Ordinary hours of work will be eight (8) hours per day Monday to Friday with the notional weekly hours based on a 36 hour week in accordance with 36.5.
36.1.2 – Ordinary daily hours may be worked between the hours of 6am and 6pm.
36.1.3 – The company has a right to alter start and finish times within the spread of ordinary daily hours …
36.2 – Overtime
36.2.1 – Except as varied herein, overtime will be worked in accordance with the provisions of the award.
36.2.2 – Such overtime will be calculated by applying the divisor of 1/36th to the employee’s weekly rate as prescribed herein.
36.2.3 – Saturdays, Sundays and Public Holidays
(a) Overtime worked on a Saturday will be paid for the rate of time and one half ordinary time rates for the first two hours and double ordinary time rates thereafter….
Clause 36.3 – Leisure Time Protected
It is the intention of the parties that excessive overtime will not be worked.
To this end, the general standard of weekly hours will usually not be more than 56 per week (Monday to Saturday), provided that the aforesaid ‘usual weekly hours’ may, by agreement between the parties, be exceeded from time to time to meet the needs of the project, or a specific task on a project.
46 Again, there was certainly the characterisation of hours as “ordinary”, but no fixed length in number of hours, which might extend to 56, or more.
47 The Bestaff and CFMEU Building and Construction Industry Enterprise Agreement 2011 – 2015 was substantially identical to the agreement for 2008 – 2011 insofar as the provisions cited were concerned.
48 Finally, the National Electrical, Electronic and Communications Contracting Industry Award 1998 included the following:
20 – HOURS OF WORK
20.1 – Days of work for day workers
The ordinary hours of work prescribed herein may be worked on any day or all of the days of the week, Monday to Friday.
20.2 – Maximum daily hours
The ordinary hours of work prescribed by this clause shall not exceed 8 hours on any day.
20.3 – Spread of hours
The ordinary hours of work shall be 6.00am to 6.00 pm, except in South Australia, where it shall be 6.00 am to 7.00 pm and in Victoria and Tasmania it shall be 7.00 am to 6.00 pm
49 The industrial agreements thereby generally distinguished between ordinary hours of work and other overtime hours. In this context the defendant submitted that “normal weekly number of hours” meant “ordinary hours.” Such hours were “fixed” as hours worked on days which attracted ordinary hours of pay for the purposes of rule 11.8(a).
50 The plaintiff, however, emphasized that characterisation of hours and how they would be treated in terms of rates of pay said nothing about the actual numbers of hours. It therefore maintained that no normal weekly number of hours was “fixed” such that rule 11.8(a) thereby applied.
Construction
51 The concept of “fixed” appears to be an ordinary and everyday word, and, prima facie might be understood in this way.[5] According to the definition contained in the Macquarie Dictionary the meanings for “fixed” include “definite and permanently placed”; “permanently established” and “definite; not fluctuating or varying.”
[5] D. C. Pearce and R. S. Geddes, Statutory Interpretation in Australia (LexisNexis Butterworths, 2011) at [4.6]
52 However, the defendant relied on an array of industrial authorities and material to support its submission that “fixed” should have a particular meaning in these rules. Such material included legislative history; industry usage; various authorities; and the burdensome consequences of a different construction.[6]
Legislative history
[6] See footnote 2 of the document entitled ‘Construction of the Rules Contended for by the Defendant’ and references therein to the Outline of Submissions of the Defendant dated 5 October 2012.
53 The defendant relied upon the Second Reading Speech for the (former) 1983 Act as follows:
“A second change is to provide a clear and precise definition of the wage rate in respect of which long service leave charges and entitlements are to be paid. The Bill proposes that this rate be the worker’s total wage excluding overtime, travelling and fares allowances and annual leave loading. It should remove problems and confusion that are currently being experienced by employers.”
54 It was said that the terms of the 1983 Act should be construed in the same way as the 1997 Act, given, in particular, the statutory purpose (as is now evident in s1). It thereby followed that overtime should be excluded under both regimes.
55 However, statements of legislative intention made by a Minister do not overcome the need to consider the text of a statute to ascertain its meaning.[7]
[7]Jemena Asset Management (3) Pty Ltd & Ors v Coinvest Limited [2011] HCA 33, 527
56 Moreover, the apparent intent expressed in the second reading speech can be generally met by an appropriate construction of “normal weekly number of hours” under rule s 11.7(d). Thus, in cases where normal weekly number of hours are fixed, the exercise should be relatively straightforward, with hours “outside” standard hours being excluded. This would be expected to be the case with most full-time employees.[8] However, the speech provides no warrant for unduly straining the ordinary concept of “fixing” under rule 11.8(a) as the defendant contends.
Industry usage
[8] As described by McHugh J in Catlow v Accident Compensation Comission (1989) 167 CLR 543 at 562
57 The defendant further relied on evidence of Mr Nolan, Director, workplace relations with the Australian Industry Group. He stated that there was a generally understood meaning of the term “ordinary pay” within the metal trades industry such that it was the rate of pay for “ordinary hours” which was different to overtime rates.
58 As indicated already, Mr Zimmari also gave similar evidence that there was a commonly understood meaning of “ordinary hours” which was based on a Monday to Friday working week between 6am and 6pm.
59 The evidence needed to be treated with some caution. Thus Mr Zimmari clearly had an incentive to defend his own construction. Mr Nolan also admitted having a support role on behalf of Bestaff, and had attended a meeting at the offices of Coinvest in relation to the issue now before the court.
60 In any event, the evidence as to the classification of “ordinary pay” was of no assistance in resolving the issue as to whether the normal weekly number of hours was fixed within the meaning of rule 11.8(a).
61 The evidence as to industry useage therefore did not assist the defendant.
Authorities
62 The defendant further relied on various authorities which were said to be inconsistent with the plaintiff’s construction.
63 The provisions considered in each of these authorities were distinguishable from rule 11.8(a).
64 However, given particular reference was made to the High Court decision of Catlow v Accident Compensation Commission,[9] this decision will be considered, below.
[9] (1989) 167 CLR 543
65 Catlow was concerned with the question of the proper calculation of a worker’s pre-injury average weekly earnings under s95 of the Accident Compensation Act 1985 where s95(1) provided that the pre-injury average was to be calculated at the worker’s “ordinary time rate of pay for the worker’s normal number of hours per week.”
66 In the leading judgment, McHugh J determined that the phrase “normal number of hours per week” in s95(1) read in its context, the industrial background of the legislation, the judicial exposition of similar phrases, and the history of the legislation, all point to the phrase meaning the ordinary or standard hours fixed by the terms of employment.[10]
[10]Catlow at 563
67 The case was therefore concerned with a different provision with its own history and context. There are also a number of other matters of significance.
68 Firstly, and most importantly, the case was primarily concerned with a provision wherein a standard number of ordinary working hours had been fixed. Thus, as McHugh J states[11];
“But the question in the present case is what is meant by the phrase ‘normal number of hours per week’ in a context where the pre-injury earnings are to be calculated by multiplying those hours by the ordinary rate of pay and where the context shows that the legislature assumed that the normal number of hours per week was fixed by industrial awards.” (emphasis added)
[11]Catlow at 565
69 It is thereby of limited assistance in terms of the issue in the present case which is largely concerned with determining whether a normal number of hours are in fact fixed at all under the terms of employment.
70 Secondly, as is apparent from the passage, above, it was of some significance that the phrase “normal number of hours” appeared in a context wherein it was to be calculated by reference to the worker’s “ordinary time rate of pay.”[12] This is again to be distinguished from the reference to the term in clause 11.8(a).
[12]Catlow at 565, 561
71 Finally, the decision does not assist the defendant insofar as it deals with a provision similar to clause 11.8(a). Thus section 95(3)(c), like clause 11.8(a), provided that where a normal number of work house per week was not fixed for the worker’s work under the terms of the worker’s employment, the normal weekly number of hours was deemed to be the average weekly number of hours worked by the worker during the relevant period.
72 In dealing with this provision, McHugh J stated that although the general policy of the legislation was that hours actually worked were not to be taken into account if they exceeded the prescribed number of 35 hours per week:
“…the terms of s95(3)(c) might suggest the opposite conclusion. But since the terms of employment fix the ordinary hours for most full-time employees, it seems likely that s95(3)(c) was intended to operate in respect of casual workers, and most casual workers work less than the thirty-five to forty hours per week which in recent years have constituted the norm for ordinary hours of work. Section 95(3)(c) should therefore be seen as an exception to and not a denial of the policy…”[13]
[13]Catlow at 562
73 Overall, then, the decision in Catlow is consistent with a construction where an averaging process of all hours actually worked is to be adopted where normal weekly hours are not fixed, (such as where casual employees are concerned). Where hours are instead fixed, the “normal weekly number of hours” is to be calculated under clause 11.7 (d) and means the ordinary or standard hours so fixed, (as it did in Catlow’s case).
74 In terms of the other cases cited, I also briefly note the following:
· The case of Australian Communication Exchange Ltd v Deputy Commissioner of Taxation[14] was concerned with whether work done outside “ordinary working hours” was within the meaning of a defined concept of “ordinary time earnings” (which term was defined with specific reference to “ordinary hours”);
[14]Australian Communication Exchange Ltd v Deputy Commissioner of Taxation [2003] HCA 55
· The case of Scott[15] was concerned with whether the concept of “ordinary time rate of pay” as expressed by reference to a week covered rates fixed by industrial award or agreement rather than as fixed by individual contracts. The court determined this in the affirmative in circumstances where the relevant clause used very different language, and, in particular did not contain the phrase “under the terms of his employment” as in rule 11.8(a);
· The case of Kucks[16] was concerned with whether the phrase “allowances or the like” included “shift allowances.”
[15]Scott v Sun Alliance Australia Ltd (1993) 178 CLR 1
[16]Kucks v CSR Ltd (1996) 66 IR 182
75 The cases were therefore concerned with very different provisions and were of limited assistance in resolving the appropriate construction of rule 11.8(a).
Consequences of construction
76 The defendant submitted that the court should avoid a construction of the rules which would lead to absurd consequences.[17]
[17] See Outline of Submission of the Defendant dated 5 October 2012 at para 45 citing Cooper Brookes (Wollongong) Pty Ltd v CFT (1991) 147 CLR 297.
77 It relied on the evidence of Mr Zimmari that the averaging process took about 2.5 weeks to perform. It further highlighted that the defendant’s employees also registered with other labour hire companies and might be better off than a full-time employee where they both worked for 5 weekdays and two weekend days.
78 However, as McHugh J highlighted in Catlow, the situation encapsulated in rule 11.8 will not generally arise as most full-time employees would be expected to have standard hours. It was also not clear that the averaging task would be so onerous if it was completed contemporaneously. Finally , any benefit casual employees enjoy from the plaintiff’s construction is to be balanced against other disadvantages, including the absence of secure tenure and other benefits.
79 Overall, then, I do not consider that the construction leads to “absurd” results.
Resolution
80 As is referred to in Catlow, [18] “normal” may mean “regular or usual”[19], or it may mean “conforming to standard.” The natural reading of the two relevant provisions is therefore that rule 11.7(d) applies where there is a standard number of hours fixed under the terms of employment, and rule 11.8(a) applies where there is no such standard in which case usual, or average, hours are considered.
[18]Catlow at 565
[19] As it did in Kezich v Leighton Contractors Pty Ltd (974) 31 CLR 362
81 I therefore reject the defendant’s suggestion that the concept of “normal number of hours” had the same meaning in each case. Otherwise there would be little point in including the deeming provision contained in rule 11.8(a) at all.
82 The defendant submitted that rule 11.8(a) was intended to operate where there was no industrial award applicable. However, there is nothing in rule 11.8(a) which suggests that it operates where there is no industrial award applicable. This is despite the fact that the rules are clearly capable of making reference to an “Award” which is a defined term.
83 Instead, attention is directed to whether there is a normal number of hours fixed under the terms of his employment. The concept of “terms of employment” is a broad term and certainly would include applicable industrial awards. However, the core of every employment relationship is the contract of employment, not just any applicable Award. [20]
[20]CPEU v QR Ltd (2010) 198 IR 382 at [77]-[79]
84 In my view, then, an appropriate construction of rules 11.7 and 11.8(a) is such that, where the normal weekly number of hours is fixed under a worker’s terms of employment, the amount so fixed can be readily utilised to determine the “normal weekly number of hours” for the purposes of rule 11.7(d). However, where such hours are not “fixed” as that concept is ordinarily understood, then the averaging process must be undertaken. This latter scenario may readily apply where there are casual employees working fluctuating hours, as in the present case.
85 Such a construction upholds the primary mischief the 1997 Act seeks to remedy, namely, to ensure that workers in the construction industry are not disadvantaged if they cannot qualify for long service leave by reason of the itinerant nature of their employment.[21]
[21]Jemena at 528
86 Given this construction, I am further satisfied that no normal weekly number of hours is fixed under the terms of employment of the Sample Employees. Thus, on the basis of the oral evidence and the employment agreements tendered, there is no fixing of a number of normal hours of work. Nor is there any prescription of a defined number of hours in the various applicable industrial instruments.
87 I am therefore satisfied that Rule 11.8(a) applies.
Calculation
88 The evidence of Mr Hansen was that he derived an average weekly number of hours worked during the 12 months immediately before each prescribed period in the sample period. This was calculated on the basis of the total number of hours worked in that 12 month period (from payslips and timesheets) and dividing that number by 52.
89 By way of example, the evidence of Mr Hansen was that the average weekly number of hours worked in respect of the period for 1 April 2011 to 30 June 2011 in the case of Mr Muller was 23.18.
90 He then compared this average figure with the actual hours worked in the relevant weeks. Where that actual figure was more than the average it was reduced to the average. Where the actual figure was less than the average it was increased to the average. Where that figure was a zero it was left as a zero on the basis that no work was performed.
91 Again, by way of example, in the case of Mr Muller, given he only worked for 20 hours in the week ending 3 April 2011, these hours were notionally increased to the average of 23.18.
92 The “average” so derived is then multiplied by the relevant hourly rate in respect of the hours actually worked to obtain the remuneration received during each week.
93 In the case of Mr Muller, the calculation was 23.18 multiplied by his charge out rate of $78.28. This penalty rate was used given Mr Muller only worked on Saturday/Sunday as shown by the timesheet or payslip. This gave a total remuneration figure of $1814.36 for the week ended 3 April.
94 The total average remuneration for the entire sample periods is then derived from adding up all 4 prescribed periods with the charge of 2.7% then applied to this total. This gave the total charge payable for all prescribed periods in respect of the relevant worker.
95 If the amount derived is less than what was actually paid, then no further charge is payable (and Coinvest actually owed money). However, if the amount derived was more, then the defendant owed money to Coinvest.
96 The defendant took issue with this calculation on two grounds, namely:
(a)the deeming of the remuneration received to be increased to average even where the Worker worked less than average hours; and
(b)the use of penalty rates.
97 In terms of the use of the average, Rule 11.8(a) provides for the method for calculation of normal weekly number of hours. Once those hours are established the concept of “Ordinary Pay” excludes any remuneration paid in respect of work performed outside those hours pursuant to rule 11.7(d).
98 I do not consider that the rules provide any mandate to notionally increase hours so as to average up to the deemed normal hours. Thus, although any remuneration actually paid “outside” this normal weekly number is to be excised, there is no warrant to excise hours worked inside the normal and substitute the average instead.
99 In terms of the penalty rates, rule 11.8(a) only provides a mechanism for the deeming of the normal weekly number of hours. Once this is calculated, any remuneration paid in respect of those normal hours appears to remain as part of Ordinary Pay. In this light, it appears correct for Mr Hansen to apply the appropriate rate of pay applicable for hours within the normal. This is also consistent with the general concept of Ordinary Pay as meaning remuneration actually received in rule 11.7, which language is also duplicated in Rule 11.2(b).
100 In such circumstances, I consider that the application of the penalty rates as described by Mr Hansen is an appropriate methodology.
Estoppel
101 The Defendant claims that the plaintiff had repeatedly informed the defendant that the amount payable was to be calculated by reference to pay received by workers for “normal working days” being a “5 day working week,” and not including “overtime hours or weekend work” or “time worked outside normal ordinary hours/overtime.”[22]
[22] Amended Defence and Counterclaim dated 30 August 2012 at para 6
102 The Defendant further claims that these statements gave rise to an estoppel such that the plaintiff is precluded from now resiling from this representation.[23]
[23] Amended Defence and Counterclaim dated 30 August 2012 at para 9
103 Given the terms of the Agreed Facts at paragraphs 22-26 above it appears that statements to the effect alleged were made in Coinvest forms and on the website.
104 However, the Plaintiff contends that no estoppel arises in these circumstances, as estoppel cannot operate to prevent or hinder the performance of a positive statutory duty, or the exercise of a statutory discretion which is intended to be performed or exercised for the benefit of the public or a section of the public.[24]
[24] Plaintiff’s Outline of Argument dated 5 October 2012 at para 21
105 The plaintiff cites a number of cases in support of this proposition. [25]
[25] Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 21 FCR 193, 208, 210; Attorney-General for the State of New South Wales v Quinn (1989-1990) 170 CLR 1, 17-19, 40; Minister for Immigration and Ethnic Affairs v Polat (1995) 57 FCR 98, 105, 107; Downward Bricklaying Pty Ltd v Goulburn-Murray Rural Water Authority (2003) 8 VR 61, 90-91; Chamberlain v Deputy Commissioner of Taxation (1987-1988) 164 CLR 502, 510; Haoucher v Minister of State for Immigration and Ethinc Affairs (1989-1990) 169 CLR 648, 678.
106 As is apparent from the provisions cited earlier, section 4(1) of the 1997 Act provides that an employer must pay to the trustee a long service leave charge. Section 4(2) also provided that the amount of charge and method by which that amount is to be calculated are as determined in accordance with the trust deed, which includes the rules (by reason of clause 5.3 of the trust deed).
107 To these provisions might be added s13 which provides that, except as otherwise provided, any term of an agreement purporting to exclude, limit or modify the operation of the Act or the trust deed is void.
108 The cases cited by the plaintiff establish that an estoppel cannot operate to prevent or hinder the performance of a positive statutory duty. It follows that no estoppel can operate here to hinder or restrict the obligation of Bestaff to pay to Coinvest the long service leave charge in accordance with the rules.
109 However, the Defendant submitted that an estoppel should be available on the basis of a passage from the decision of Mason CJ in Attorney General (NSW) v Quin[26]:
What I have just said does not deny the availability of estoppel against the Executive, arising from conduct amounting to a representation, when holding the Executive to its representation does not significantly hinder the exercise of the relevant discretion in the public interest. And, as the public interest necessarily comprehends an element of justice to the individual, one cannot exclude the possibility that the courts might in some situations grant relief on the basis that a refusal to hold the Executive to a representation by means of estoppel will occasion greater harm to the public interest by causing grave injustice to the individual who acted on the representation than any detriment to that interest that will arise from holding the Executive to its representation and thus narrowing the exercise of the discretion.[27]
[26] (1990) 170 CLR 1
[27]Quin at 18
110 However, I am not persuaded that any public interest would be better served by holding the trustee to its statements in a situation where the countervailing public interest is in upholding a portable scheme for itinerant construction workers in accordance with the trust deed.
111 I also do not accept the defendant’s submission that the exercise of power under the rules is an “operational decision” subject to ordinary private law principles pursuant to Kurtovic.[28] The alleged representation was about the very matters which are the subject of the statutory obligation to pay the charge, and are not properly characterised as “operational” or “private.”
[28]Kurtovic at 215-216
112 In any event, the evidence as to the estoppel was unsatisfactory.
113 Mr Zimmari gave evidence that he had regard to the Coinvest return forms which suggested that overtime or weekend work was not to be included. Ms Arbuthnot also claimed that weekend work was not included because of statements made by Coinvest in the return forms.
114 However, Mr Zimmari accepted that, from April, 2009, all the people in the office were aware that Coinvest and Bestaff had been in dispute about the question of weekend work. Although Ms Arbuthnott’s evidence was a little unclear, she also agreed that she had been told there was a dispute though she hadn’t discussed what that dispute was.
115 It cannot be suggested that the plaintiff therefore induced the defendant to make the requisite assumption after April 2009 given its Managing Director was aware that the plaintiff was no longer taking the view evident in its forms.
116 In terms of detriment, various matters were also suggested, including the need to compete with others who may not comply with the rules; the inability to recover any additional charge from clients; and the need to complete an onerous task.
117 However, the “competition” submission was speculative since all employers are bound to comply with the rules. Moreover, although it might be inconvenient to prepare the calculation, I am not satisfied that any detriment was thereby established. Rather, as will be apparent from the ultimate result, in relation to the Sample Employees, the defendant will actually be better off under the correct construction of the rules. Any possible detriment in relation to other employees can only therefore be speculative.
118 It follows that no estoppel was established even if, contrary to my finding, above, there was no legal impediment to it.
Mr Derby’s hours
119 The defendant submitted that not all of Mr Derby’s hours should be treated as “Construction Work” giving rise to an obligation to pay the charge pursuant to rule 11 of the rules.
120 The definition of “Construction Work” was contained in rule 1.1 and included “Metal Trades Work.”
121 There was then a general definition of “Metal Trades Work” from which there was a “carve out” exception as follows:
…but does not include any work …where that work involves the manufacture of any structures, fixtures, fittings, chattels or works which are not manufactured specifically for a particular building or a particular work of the kind referred to in paragraph (a) of the definition of Construction Industry. For the avoidance of doubt:
(c) any manufacture of structures, fixtures, fittings, chattels or works in a permanently established factory or workshop is excluded from this definition of Metal Trades Work (emphasis added)
122 The evidence of Mr Zimmari was that Mr Derby worked for one of his clients, Airport Doors, in the workshop, and that he also went out on site to install security gates and roller doors. When he went out on site the CFMEU EBA applied to him.
123 This was reflected in the payslips tendered for Mr Derby which distinguished between “Lab installed ord” which referred to ordinary hours worked in the workshop and “Airport lab union ord” which referred to Mr Derby’s work on site under the CFMEU EBA.
124 The defendant accepted that the “lab union” payslips related to work in the Construction Industry. However, the payslips referring to “lab install” involved work in a workshop which was covered by the exclusion in the definition of “Metal Trades Work” cited above.
125 The plaintiff, however, relied on exhibit C which contained a register of workers as workers in the Construction Industry and which included Mr Derby as a worker who performed Construction Work.
126 Further, the plaintiff submitted that it may well be that the doors which were being manufactured by Mr Derby in the workshop were being manufactured “specifically for a particular building.”
127 While the register contained at exhibit C confirms that Mr Derby was a Worker “who performs Construction Work” under rule 10.2, it does not establish that all of his hours were Construction Work.
128 Moreover, the evidence of Mr Zimmari, coupled with the payslips, tended to establish that Mr Derby manufactured structures, fixtures, fittings, chattels or works in a workshop as excluded by the definition. The plaintiff’s suggestion that that manufacture involved manufacture specifically for a particular building was speculative only and was not established on the evidence.
129 It is the plaintiff who carries the onus in this case. On the evidence adduced, I am not satisfied that all of the hours worked by Mr Derby were worked in the Construction Industry.
130 However, the defendant has conceded that some of Mr Derby’s hours were properly so characterised.[29] Quantum will therefore be calculated on the basis of these reduced hours.
[29] In the letter of 19 October 2012
Conclusion
131 My findings may be summarised as follows:
(a)I accept the plaintiff’s construction that Rule 11.8(a) operates because no normal weekly number of hours was fixed for the Sample Workers under the terms of their employment;
(b)I accept Mr Hansen’s calculations insofar as he applied penalty rates in calculating the meaning of Ordinary Pay in Rule 11.7;
(c)I reject Mr Hansen’s calculations insofar as he “averaged up” amounts of hours below the normal weekly number of hours of work;
(d)No estoppel is established;
(e)the plaintiff has not established that all of Mr Derby’s hours were worked in the Construction Industry.
132 The parties agreed that in circumstances where “Coinvest succeeds on construction and the application of the penalty rates/ Bestaff succeeds on the application of the average” that item 3 of the table of 19 October would apply in terms of quantum. In circumstances where Mr Derby’s hours were to be reduced, the agreed result was that Coinvest owes $866.03 to Bestaff.
133 The answers to the questions for consideration are therefore as follows:
Question 1: No. The defendant does not have any liability to make any additional payments to the plaintiff.
Question 2: No. No estoppel is established.
Question 3: Yes. The plaintiff has a liability to repay monies paid by the defendant to it being an amount of $866.03
134 I will hear from the parties further as to the appropriate future course of the proceeding in the light of these reasons.
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APPENDIX A
1Whether the defendant has any liability to make any additional payments to the plaintiff in respect of the weekend work performed for the defendant by the defendant’s employees identified in the attached schedule (the “Sample Employees”) over the periods detailed therein (“the Periods”) [defined as 4 quarterly periods between April 2011 to March 2012] and, if yes, the quantum of any such liability?
2Further to Question 1 whether, at any time during the employment of the Sample Employees, including Periods earlier than the Periods, an estoppel arose precluding the plaintiff from asserting that an additional charge was payable in respect of weekend work performed by the Sample Employees?
3Whether the plaintiff has any liability to repay monies paid by the defendant to it in respect of the Sample Employees over the Periods and, if yes, the quantum of any such payments?
0
15
0