Coinvest Ltd v Celsius Corporate Services Pty Ltd
[2017] VCC 796
•20 June 2017
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION EXPEDITED CASES LIST | Revised |
Case No. CI-15-02493
| COINVEST LIMITED (ACN 078 004 985) | Plaintiff |
| v | |
| CELSIUS CORPORATE SERVICES PTY LTD (ACN 127 770 192) | Defendant |
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JUDGE: | HER HONOUR JUDGE MARKS | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 24, 25, 26, 27 October 2016 | |
DATE OF JUDGMENT: | 20 June 2017 | |
CASE MAY BE CITED AS: | Coinvest Ltd v Celsius Corporate Services Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2017] VCC 796 | |
REASONS FOR JUDGMENT
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Catchwords: STATUTORY CONSTRUCTION - Construction Industry Long Service Leave Act 1997 (Vic) – where long service leave charge required to be paid in respect of every worker employed by the employer to perform construction work in the construction industry for the purposes of the Act and the Construction Industry Long Service Leave Rules – whether employer was substantially engaged in the principal construction industry or the allied construction industry - whether work done was maintenance or routine repairs of a minor nature.
Legislation Cited: Construction Industry Long Service Leave Act1997 (Vic); State Authorities Superannuation Act 1987 (NSW); Acts Interpretation Act 1901 (Cth).
Cases Cited:Baytech Trades Pty Ltd v Coinvest Ltd [2015] VSCA 342; State of New South Wales v Law (1992) 45 IR 62; The Australian Workers’ Union & Anor v Construction, Forestry, Mining and Energy Union [2001] AIRC 177; The King v Central Reference Board & Ors; Ex parte Thiess (Repairs) Pty Ltd (1948) 77 CLR 123; Aust-Amec Pty Ltd (t/a Metlab Mapel & SRC Laboratories) v Construction Industry Long Service Leave Payment Board (1995) 62 IR 412.
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APPEARANCES: | Counsel | Solicitors |
| For the plaintiff | Mr J D’Abaco | Maddocks |
| For the defendant | Mr R Dalton | Kemp Strang |
HER HONOUR:
1Celsius Corporate Services (Celsius) provides labour to Celsius Fire Services Pty Ltd (Celsius Fire), which provides fire safety audit, inspection and testing services to corporate and government clients with a particular emphasis on ensuring they comply with the fire safety audit requirements set out in Australian Standards 1851 (2005) (AS 1851).
2Section 4 of the Construction Industry Long Service Leave Act1997 (Vic) (the Act) states:
“An 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.”
3The plaintiff is trustee of the Construction Industry Long Service Leave Fund (the Fund). It claims that Celsius employed workers to perform ‘construction work’ in the ‘construction industry’ (under the relevant definition of those terms). It claims long service leave charges due to it, as trustee of the Fund, as a debt under s51 and s52 of the Act.
4The question in this case is whether employees of Celsius were employed to perform ‘construction work’ in the ‘construction industry’ under s4 of the Act, given the relevant definitions of those terms. That detail is set out below. If they were employed to do construction work in the construction industry then Celsius must pay various long service leave charges to the plaintiff as trustee of the Fund.
5Celsius denies that the relevant workers performed construction work in the construction industry, as those terms are defined. Relying on a carve out in the definition of construction industry, it says that relevant work done by Celsius’ workers was maintenance or repairs of a minor nature in circumstances where Celsius was not engaged substantially in either the principal construction industry, or the allied construction industry, and so that work is not defined as being construction work in the construction industry. Further, it says that the claims made by the trustee are in relation to work done by Celsius’ employees which does not fall within the definition of construction work for other reasons. It says that the substantial character of the industrial enterprise Celsius is engaged in is such that it is properly characterised as being in the fire services industry and not in the construction industry and that therefore s4 of the Act does not apply.
6I will order that there be judgment for the trustee. To explain my reasons for this decision, I will first deal with the nature of Celsius’ business and the work carried out by its employees, then explain the nature of the construction industry long service leave scheme and the legislation underlying it, and finally deal with the issues and my findings in this case.
CELSIUS’ BUSINESS
7 The managing director of Celsius, Ms Karen Hunt, and her husband, Mr Stephen Birch, have been in what Celsius described as ‘the fire safety services industry’ since 1992, initially operating only in New South Wales. In 2007, they won a contract with Defence Maintenance Management in Victoria for the routine testing and inspection of fire safety systems and equipment at various premises in Victoria. Ms Hunt and Mr Birch established Celsius and Celsius Fire to provide those same testing and inspection services to clients in Victoria.
8 The majority of the work carried out by Celsius’ employees at relevant times constituted inspection and testing to ensure compliance with AS 1851. They also carried out maintenance on items, for example, lubricating or cleaning fire alarm panels and replacing light globes in emergency lighting systems, and they carried out some repairs, mostly of a minor nature, where their inspection and testing showed this to be necessary. This is clear from the evidence of Ms Hunt, the tender specifications, the service contracts, the evidence given by those employees called for the trustee and the contents of AS 1851.
9 Celsius’ employees perform their work in accordance with the requirements specified under the relevant service contracts that Celsius Fire has with its clients. There were two principal contracts in evidence. The first is a contract with the Department of Health and Human Services (DHS). It requires Celsius’ employees to perform testing of emergency lights and exit signs, fire alarm systems and panels, and portable fire extinguishers and fire blankets.
10 The second principal contract was with the Department of Justice.
11 As they carry out their tests, Celsius’ employees complete check sheets and record the results of their tests and inspections. Under AS1851 various inspections are required at regular intervals: every month, three months, year or even bi-annually, depending on the inspections. The check sheets list all different items that need to be looked at and a tick needs incorporation when those things have been done. Where issues are identified, those doing the tests and inspections rectify minor problems with fire safety equipment on the spot, such as replacing fire extinguishers that have lost pressure, fire blankets, signage required under Australian Standards, and batteries in fire panels. Mostly they take about half an hour per inspection. Where a repair is required that cannot be done on the spot, a job sheet is created and the client notified. On some occasions the client wants Celsius to fix the problem and particular employees troubleshoot these matters. On other occasions the client gets someone else to do the repair.
12 Four of Celsius’ employees are employed as “sprinkler fitters” to conduct testing and maintenance of sprinklers, hydrants and hoses. Celsius and Celsius Fire do not install fire sprinkler systems or other fire safety systems or tender for this work.
13 The nature of the AS 1851 fire safety audit services means Celsius Fire typically works under long-term contracts. Consequently, Celsius’ employees are generally long-term employees. Celsius makes appropriate allowances to meet its obligations under relevant long service leave legislation as and when due.
THE CONSTRUCTION INDUSTRY LONG SERVICE LEAVE SCHEME
14 The construction industry long service leave scheme includes the Act, the trust deed executed by the trustee on 1 April 1997 as in force from time to time (the Deed), and the rules relating to the Fund made under the Deed. Clause 5 of the Deed enables the trustee to make rules relating to the Fund, including in relation to the obligations of persons to make contributions to the Fund (subject to the Act, the Deed and the rules set out in Schedule 2 to the Deed).
15 The Deed contains the initial rules at Schedule 2. These have since been amended by the trustee from time-to-time pursuant to its rulemaking power in clause 5.1 of the Deed. The version dated April 2009 (the Rules) has been agreed by both the trustee and Celsius to be relevant to the period covered by the claims in this case.
16 The Act is brief. Amongst other things, it does not contain definitions of construction work or construction industry. To decide what is covered by its references to these terms, it is necessary to turn to the Rules. Importantly, s3(2) of the Act provides that words and expressions used in the Rules (as amended and in force for the time being) and the Act have the same respective meanings. It is the meaning that arises from those definitions of construction work and construction industry in the Rules that underlies the dispute in this case.
17 The initial Rules included a definition of construction industry and construction work. The Rules were amended, and now have a much expanded definition of construction industry. That definition now incorporates both the principal construction industry and the allied construction industry. The allied construction industry incorporates 10 industries which previously did not form part of the construction industry as defined, including, relevantly to this case, the electrical services industry. In short, a number of industries allied to what might be considered to be the historic understanding of what constituted the construction industry now fall to be considered as part of the construction industry in applying this legislative scheme. The definition of construction work has also been expanded by the amendments.
18 Section 7(1) of the Act provides:
“The trustee must not, without the prior approval of the Governor in Council, exercise any power, authority or discretion given to the trustee by the trust deed the exercise of which would have the effect of enlarging the class of persons capable of being paid benefits out of the fund.”
19 The variations to the initial Rules enlarged the class of persons capable of being paid benefits out of the Fund as they enlarged the scope of what was covered by construction work and construction industry. The previous class of persons capable of being paid benefits did not include as many workers, or potentially run as great a risk of covering workers also covered by other industrial awards. There was no suggestion in the case before me that the trustee had exceeded its power in making the new Rules.
20 As stated above, s4 of the Act is the key section I must construe:
“An 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.”
21 Relevant definitions to be considered in construing this section are set out in clause 1.1 of the Rules. The entirety of the Rules and Act need to be considered in arriving at relevant construction. I have extracted the most relevant parts below. Although the definitions are capitalised in the Rules, for ease of reading in this judgment I have simply referred to the defined terms without capitalising throughout, except where a direct quote from the Rules is set out. The Act itself does not capitalise either construction work or construction industry.
22 The key terms are construction work and construction industry. Each of these definitions incorporate other definitions, some of which refer to various industrial awards, which also require consideration in order to see if particular work falls to be considered as being construction work in the construction industry.
23 As will be seen from the definitions set out below, there is some circularity in the definitions. Deciding if construction work has been carried out involves considering, as an integral part of that decision, if the relevant work was performed in the construction industry. In other words, in construing s4, you cannot see first if construction work has been carried out, and then see if it was performed in the construction industry. If it has not been done in the construction industry, it does not fall within the definition of construction work in the first place.
24 It is necessary to set out relevant definitions so that the issues that follow can be understood in context of the legislation.
“Construction Work means
(a)Building Trades Work, Electrical Trades Work, Metal Trades Work and Other Trades Work; and
(b) any other work performed by a Worker… in the service of a single Employer where that other work:
(i)is performed by the Worker for a single Employer in addition to, but does not constitute, Building Trades Work, Electrical Trades Work, or Metal Trades Work; and
(ii)constitutes no more than 1/3rd of the total service of the Worker for that single Employer during a Prescribed Period.”
“Building Trades Work means work:
(a)performed in the Construction Industry in Victoria, being:
(i)work of a kind for which a rate of pay is fixed by a Prescribed Building Award …”
“Electrical Trades Work means work:
(a)performed in the Construction Industry in Victoria, being:
(i)work of a kind for which a rate of pay is fixed by a Prescribed Electrical Contracting Award …”
“The Construction Industry means:
(a) the Principal Construction Industry; and
(b) the Allied Construction Industry;
but does not include:
(c) the carrying out of any works on ships;
(d) the maintenance of or repairs to lifts or escalators; or
(e)the carrying out of maintenance or repairs of a routine or minor nature by Workers for an Employer who is not engaged substantially in the industries described in this definition.
To avoid doubt, for the purposes of these Rules:
(a)the Construction Industry is a single industry constituted by the Principal Construction Industry and the Allied Construction Industry; and
(b)continuous service performing Construction Work in either or both of the Principal Construction Industry and the Allied Construction Industry is deemed to have occurred in the Construction Industry.
To avoid doubt, for the purposes of the Act:
(a)the Construction Industry is a single industry constituted by the Principal Construction Industry and the Allied Construction Industry; and
(b)continuous service performing Construction Work in either or both of the Principal Construction Industry and the Allied Construction Industry is deemed to have occurred in the Construction Industry.”
“Principal Construction Industry means the industry of:
(a)carrying out the construction, erection, installation, reconstruction, re-erection, renovation, alteration, demolition or maintenance of or repairs to any of the following:
(i) buildings;
…
(xvi)structures fixtures or works for the use of any buildings or works of a kind referred to in subparagraphs (i) to (xv); and…”
“Allied Construction Industry means the industries of:
(a)carrying out Electrical Services;
…”
“Electrical Services means:
…
(b)the installation of electrical light and power, all classes of assembly, wiring, repair and maintenance of electrical installations and appliances including, without in any way limiting the generality of the foregoing, the assembling, installing, diagnosing, servicing and rectifying of faults in any of the following:
…
(xiv) fire alarm systems;…
by Workers for Employers and/or by Working Sub-contractors who contract to provide such services for which a rate of pay is prescribed under the Electrical Contracting Industry Award.”
“Employer means a person…who:
(a) employs Workers under a contract of employment; …”
“Worker means a person who:
…
(b) performs work under a contract of employment …”.
PRINCIPLES TO BE APPLIED IN CONSTRUING THE LEGISLATION
25 The legislation, including the Act, Rules and awards there referred to, was referred to by Counsel in the course of the trial as a labyrinth, and as being circular and repetitive. It is, in my view, all of those things, which adds to the difficulty in construing it.
26 The ordinary rules of construction apply in construing the Act and the Rules. Primacy must be given to the relevant Act, Rules and the awards referred to in the Rules, construed in the context of those instruments read as a whole. The Rules provide, in precise detail, for the scope of their application, and some aspects of the Rules limit, rather than expand, the cover of the legislative scheme: Baytech Trades Pty Ltd v Coinvest Ltd [2015] VSCA 342 (Baytech) at [63]. There is no basis to read the Rules expansively by reference to legislative purpose.
27 Celsius says that the Act and Rules should not be construed in a way that expands the reach of the scheme beyond the evident legislative purpose. It relies on State of New South Wales v Law (1992) 45 IR 62 as apposite. There, the New South Wales Court of Appeal considered the validity of an order made by the Governor which purported to close future membership of a superannuation scheme that had been established by the NSW Parliament under the State Authorities Superannuation Act 1987. The State argued that the legislation expressly empowered the Governor to amend the relevant schedule, without limitation. The Court of Appeal rejected that argument. Kirby P (at p73) observed that the Governor’s power to amend the schedule went “only so far as [it] would achieve the purposes and objects of the legislation.” Priestley JA agreed, stating (at 89) “[t]he amending power must be used by the Governor to fulfil the purposes of the Act, not destroy them.” However, that case does not significantly advance the task at hand here, which is construing legislation, not deciding as to its validity.
28 In interpreting the relevant provisions, I take into account that the interpretation that would best achieve the purpose or object of the Act is to be preferred to any other interpretation: s15AA Acts Interpretation Act 1901 (Cth). This applies in relation to the Rules, of course, as well as to the interpretation of the Act: s35A Acts Interpretation Act 1901 (Cth). The primary legislative instrument is the Act. However, it authorises the making of the Rules, and as stated above, specifies in s3(2) that words and expressions used in the Rules and the Act have the same meanings. Accordingly the interpretation that I give to the words of s4 must accommodate the Rules. There is authority for the proposition that if there is an apparent conflict between the Act and the Rules, the court should endeavour to resolve it on the same basis as it would where there was a conflict between different sections of an act, but that ultimately if the conflict is irreconcilable the regulations must give way to the act. There is no irreconcilable conflict in this case.
THE TRUSTEE’S PLEADED CASE
29 The trustee pleaded its case (at paragraph 6 of the statement of claim) on the basis that:
“Between July 2008 to March 2014, the Workers carried out the following work:
(a) the installation, inspection, checking or testing, repair and maintenance of fire sprinklers (Sprinkler Fitting Work); or
(b)installation, inspection, checking or testing, repair and maintenance of smoke alarms, fire alarm systems, smoke detectors and equipment, emergency and exit lighting, residual current devices, portable fire extinguishers and fire blankets and any associated equipment, installations, appliances or hardware (Fire Alarm Work);
(c)installation, inspection, checking or testing, repair and maintenance of fire hydrants and hydrant pumps and fire hose reels and any associated equipment, installations, appliances or hardware (Fire Suppression Systems Work);
(d)installation, inspection, checking or testing, repair and maintenance of fire doors and other fire-rated building elements, including walls (Building Elements Work).
(collectively referred to as ‘Work’).
30 The pleading then goes on to plead, for example, that “The Work is Construction Work” as it is Building Trades Work, or Electrical Trades Work. It deals with why each of the defined categories of sprinkler fitting work, fire alarm work, fire suppression systems work and building elements work constitute construction work. This is somewhat confusing as these categories defined in the statement of claim are not relevant to the way construction work as defined in the Rules, nor do they replicate the way, as a matter of fact, work was divided between different Celsius workers. None of the relevant workers all did the work in any of these categories; none of them did work across all these categories. In particular, no workers installed fire alarms, hydrants, fire doors and so on. Their principal work was testing and repairing. Many of the workers did not work for Celsius for the entire period pleaded of July 2008 to March 2014.
31 Celsius says that as a matter of pleading, the trustee has therefore not made out its case. I agree that the pleading would have been clearer and better had it alleged that over “some or all” or the relevant period “each of the Workers carried out some or all of the following work”, rather than “the Workers carried out the following work.” However, for the trustee to establish that construction work was done in the construction industry as a matter of fact, it did not need to plead (or prove) that its workers did all the work referred to in the pleading over all of that nearly six year period. Celsius defended the case by presenting extensive evidence of the specific work particular workers did. The trial was principally presented and argued (by both sides) on the basis that the question to be determined was whether any of the work done by the relevant employees amounted to construction work done in the construction industry. A great deal of work was done by the parties preparing a 24 page spreadsheet which was put into evidence. An amended version was handed up by the end of trial. It set out details, which were mostly agreed by both parties, in relation to 49 workers: of the dates they were employed, their position descriptions, the types of work they either did regularly or at least once, or were capable of doing for Celsius, which of the various Australian Standards or regulations each aspect of that work was designed to satisfy, and which aspects were required under the contract with DHS. The case involved a significant exploration of what was comprehended by those concepts under the legislative regime, and comparing them to the facts in this case. I therefore deal below with the substantive issues that were argued.
WAS THE WORK CONSTRUCTION WORK?
32 The trustee presented its case firstly by detailing the work done by particular workers and saying that fell within the definition of construction work in the Rules, and then detailing why it said that fell within the definition of construction industry (which includes both the principal construction industry, and the allied construction industry). It said that a large part of Celsius’ work was building trades work or electrical trades work (as defined in sub-paragraph (a) of the definition of construction work) which was done:
·In the principal construction industry, as it was carrying out maintenance of or repairs to buildings, or fixtures (including fire sprinklers). It relies on the definition of principal construction industry at sub-paragraph (a)(i) and (xvi);
·In the allied construction industry, as it was done in the industry of carrying out electrical services, in that it involved the repair and maintenance, including the diagnosing, servicing and rectifying of faults in fire alarm systems (one of the types of equipment that make up electrical installations and appliances), and the services involved are those for which a rate of pay is prescribed under the Electrical Contracting Industry Award 1992 (the Electrical Award). It relies on sub-paragraph (b)(xiv) of the definition of allied construction industry.
33 As discussed above, the definition of construction work is such that in order to establish that construction work has been carried out the trustee needs to establish that the relevant work was performed in the construction industry. Celsius says it was not in the construction industry, and that the relevant work was not done in the construction industry.
34 For the reasons set out below, I find that Celsius was in the construction industry, and its workers carried out their work in the construction industry.
35 I deal first with the other aspects that the trustee needs to establish in order to show that construction work, as defined, was carried out by the relevant workers.
36 The trustee’s case is that the work done by Celsius’ employees was construction work, because it was building trades work or electrical trades work. It is not suggested any of it was metal trades work or other trades work (as those terms are defined in the Rules).
37 It also says that some “other work” was done (under s(b) of the definition of construction work) by particular workers who otherwise did building trades work or electrical trades work, on the basis that the other work constituted no more than one-third of the total service of any worker. If it did constitute one-third or less of the total service of any worker who otherwise was engaged in construction work, that other work is included within the definition of construction work and thus relevant to determining the amount payable by way of long service leave charges.
Fire alarm work
38 The majority of the claim for work done by Celsius’ employees relates to what the trustee has categorised as fire alarm work. This involved the inspection, checking or testing, repair and maintenance of smoke alarms, fire alarm systems, smoke detectors and equipment, emergency and exit lighting, residual current devices and associated equipment. All the workers carried out this fire alarm work, except for the four sprinkler fitters (discussed above) and those employed exclusively as portables technicians. Although the trustee initially pleaded that fire alarm work also included inspecting, testing, repairing and maintaining portable fire extinguishers and fire blankets, it abandoned this aspect of its claim by close of trial.
39 The trustee says the fire alarm work is construction work because it is electrical trades work: it is work of a kind for which a rate of pay is fixed by the Electrical Award.Parts A and B of that Award are a Prescribed Electrical Contracting Award under the definition in clause 1.1 of the Rules. The relevant question is whether it is work of a kind for which a rate of pay is fixed under the award. It was agreed that there is no need for the terms and conditions of workers to actually be the subject of a relevant award. Under the definition in Rule 1.1 of the Rules it is not even necessary for a relevant award to be presently in force.
40 The phrase of a kind requires the Court to consider the nature of the work being done. It includes considering the basic mechanics of the tasks, the place they are done, the conditions under which the tasks are performed, and the standards and end to be achieved: EPM Concrete Pty Ltd. & Anor. V Building & Construction Industry Long Service Leave Payments Corporation (1985) 23 IR 430, p 437. Consideration should be given to what the worker is in fact doing, rather than just the title of the position: Builders’ Licensing Board v Pride Constructions Pty Ltd. (1979) 1 NSWLR 607, p 612.
41 Clause 7.1 of Part B of the Electrical Award fixes rates of pay for the classifications of Electrical Worker Grades 1 to 10. Various positions listed in the Electrical Award are assigned classifications in clause 8. These include the following positions, which the trustee says describe the work being done by Celsius’ employees, and which are defined in Clause 4 of Part B:
“4.1.1“Alarm/Security Technician Grade I” means a tradesperson employed to carry out repairs and maintenance of alarm/control panels, detectors, pumps, fire suppression signs, bells and other associated equipment in the industry of fire-alarm servicing…
4.2.1“Alarm/Security Tester Grade I” means a person who is employed to carry out basic inspection and test procedures on electrical Fire Detection Systems including panels, local alarms, detectors, signs and associated ancillary equipment and employed as such, and is able to carry out minor repairs and changes to detector circuitry, replace detectors, globes, batteries, etc. as required.
4.2.2“Alarm/Security Tester Grade II” means a person who is able to carry out all works of Tester Grade I and in addition is able to carry out involved test procedures and functional operations of all fire detection and suppression products including, but not limited to, panels, detectors, control equipment, emergency lighting, evacuation systems, systems of special application and employed as such.”
42 Celsius says the award does not prescribe a rate of pay for work of the kind performed by Celsius’ employees. It says the kind of work must be considered in the context of the work regulated by the Electrical Award. It says that in clause 5.1 of the Electrical Award states that it applies to the provision of “electrical services” by “electrical contractors” and Celsius is not an electrical contractor.
43 However, the definition in the Electrical Award of electrical contractor is simply “any entity who or which contracts to provide electrical services”. The term “electrical services” is defined at clause 5.2.2.2 of the Electrical Award, and is the same as the definition of that term in the Rules (see paragraph 25 above).
44 The term “fire alarm systems” is referred to at clause 5.2.2.2.14 and defined in clause 8.2.5.1 of the 1992 Electrical Award as:
“...the industry and trades which are concerned with the installation, repair, modification, maintenance, testing and servicing of fire alarms, detectors, fire-suppression signs, bells and associated equipment.”
45 I am satisfied that Celsius does contract to provide electrical services. It contracts with Celsius Fire to provide the services of the workers, and Celsius Fire contracts to provide the services of the workers to its clients.
46 Celsius then says that clause 5.4 of the Electrical Award says that it shall only apply to employees who are members of or eligible to be members of the Electrical Trades Union of Australia (ETU). It says that this arises from the fact that the Electrical Award was made in resolution of an industrial dispute between the ETU and a number of employers and an employer organisation. It says that the ETU’s eligibility rules as at November 1992 made no mention of any person who carried out the testing and inspection of fire panels or fire safety equipment as being eligible for membership. It says emphasis in the ETU’s eligibility rules was placed upon employees whose callings are peculiar to the electrical industry, with fire alarm testing and inspecting not being one of these. It also refers to the fact that Ms Karen Hunt gave evidence that although qualified electricians were employed as a requirement of the contract between Celsius and DHS, they “have overwhelmingly performed testing and inspection work, and only very occasionally are they required to perform a task that draws upon their electrical qualification”.
47 However, given that the scope of the Electrical Award refers to the same definition of electrical services, including fire alarm systems, as is in the Rules I find that the work done was of a kind for which of a rate of pay was fixed by the Award. As discussed below, I find that the testing and inspection work was all part of the electrical services work and that although the employees were employed to do work that in some instances non-electricians could do, the character of their work was electrical services.
48 Finally, Celsius says that the classifications relied on by the trustee were superseded and replaced. It says the descriptors in the Electrical Award do not describe the kind of work performed by Celsius’ employees. It says that the old descriptor of Alarm/Security Technician Grade I does not describe the kind of work that any of the Celsius employees were performing. It says that classification of work is that of a “tradesperson”, indicating that the work is performed by a person who has qualified in a trade (for example, an electrician) and who is employed to carry out repairs and maintenance. Celsius says that this is distinct from someone being employed to do checking and recording for fire safety compliance, with the occasional need to replace simple items and parts.
49 However, although the work done by Celsius employees included other work as well as electrical services of the nature described in the Electrical Award, I am satisfied that the descriptors in the Electrical Award cover most of their work. As discussed below, I find that the checking, testing, servicing, maintenance and repair work they carried out was that of a tradesperson. The fact that some of it (for example, a simple inspection) might be done by someone not so qualified, does not mean that it is not work of a kind to which the award relates.
50 Evidence was given by Anthony Paul Crossman, Michael James Newton, Trevor Daniel Zammitt, Shane McMaster and Malcolm Fretz in respect of the work they performed while employed by Celsius. I am satisfied that the nature of the work they performed was of a kind referred to in the positions of “Alarm/Security Technician” or “Alarm/Security Tester” as discussed above. Mr Crossman, Mr Newton and Mr Fretz were actually appointed to the position of Alarm Technician, and Mr Zammitt and Mr McMaster to the position of Electrician/Alarm Technician.
51 Much of the time spent on the evidence of those workers called by the trustee and of Ms Hunt dealt with the extent to which the workers undertook repair or maintenance work, and the extent to which that work involved simply the replacement of faulty pieces of equipment, or more complex work. This is discussed below, in the context of the discussion of whether Celsius was in the construction industry. Nothing turns on this evidence in the context of whether it was work of a kind that fell within the Electrical Award. Both the positions of Alarm Security Tester Grade I and Alarm Security Tester Grade II simply require that workers undertake basic inspection and test procedures (in the case of a Grade I worker) or in addition carry out involved test procedures and functional operations (in the case of a Grade II worker). This was done.
Building Elements Work
52 The work characterised as Building Elements work by the trustee involves the inspection, checking or testing of fire doors and other fire-rated building elements, including walls. This is part of what was done by those doing fire alarm work when they attended the premises of the clients, and part of what they were required to audit and note in their checklists. The trustee said that this work constitutes no more than one-third of their total service, so by operation of sub-clauses (b)(i) and (ii) of the definition of the term “Construction Work” in clause 1.1 of the Rules, the work constitutes “construction work”. In order for it to be other work, I need to be satisfied that two-thirds of the total service of the workers falls within electrical services work.
53 I am satisfied that at least two-thirds of the total service of the workers who did fire alarm work falls within electrical services work. I am satisfied that the building elements work constituted less than one third of their total service, and accordingly, is included as part of construction work as defined.
Sprinkler Fitters
54 Celsius employs four workers to test, service and repair fire sprinkler systems, inspect and test fire hydrant systems, inspect and test fire hose pumps and occasionally carry out repair or maintenance works to sprinkler fittings such as heads (this work falling within the trustee’s categories of sprinkler fitting work and fire suppression work). These workers were Matthew Driver, Adam Ceccomancini, Bradley Jones and Flynn Smith.
55 The trustee says their work was work of a kind for which a rate of pay was fixed under clause 10 the Sprinkler Pipe Fitters Award 1975, which is a Prescribed Building Award under the Rules. Accordingly, it says it is construction work as it is “performed in the Construction Industry in Victoria, being…work of a kind for which a rate of pay is fixed by a Prescribed Building Award…”
56 It says that clause 6 of the Sprinkler Pipe Fitters Award reinforces the application of that award to the repairing of automatic sprinklers and/or other fire protection systems such as fire hydrants and hose reels: it sets out the scope of the award:
“This award applies to the employment of persons employed in connection with the preparing, erecting, fitting, fixing, altering, overhauling or repairing of apparatus, pipes and/or fittings in and/or outside of buildings ships or other structures for the extinguishment of fire by automatic sprinklers and/or other fire protection systems.”
57 Relevantly, a rate of pay was fixed under clause 10 of the Sprinkler Pipe Fitters award for ‘first class sprinkler fitters’. Clause 8(a) of the award defines a first class sprinkler fitter as follows:
“First Class Sprinkler Fitter” means a fitter who can undertake all work in connection with the preparing, erecting, fitting, fixing, commissioning, altering, overhauling, repairing or testing of apparatus, pipes and/or fittings including the fixing and connecting of tanks, valves, water supplies, pumps, gauges, or alarms for systems for the detection, extinguishment and/or control of fires and/or pipes and/or fittings for conveyance of water, air and/or gas and/or chemical compounds and/or pipes and/fittings for hydrant and hose reel services.”
58 Celsius says that a necessary part of establishing that the award applies is establishing that relevant workers “can” undertake “all work” in connection with all the matters set out in the definition of ‘First Class Sprinkler fitter. The evidence led establishes that the relevant workers did testing, inspection and maintenance work, including minor repairs such as replacing heads on sprinklers. They did not install sprinklers. No evidence was led that they could prepare, erect, fit or commission sprinklers. Celsius says that because there was no evidence led by the trustee that the Celsius’ workers could undertake all work in connection with the matters in the definition, the trustee has not established that the sprinkler fitters did work of a kind for which a rate of pay was fixed under the Sprinkler Pipe Fitters Award.
59 The trustee referred to the fact that these four workers were described as Sprinkler Fitters on the Agreed Spreadsheet of work done by employees. However, the job descriptions are not part of what was agreed, and no evidence was led to establish that these employees were capable of doing all work in connection with the matters set out in the definition of First Class Sprinkler Fitter, only of the limited work that they did do.
60 I find that to qualify as a ‘first class sprinkler fitter’ it is necessary for a worker to have the capability to do all the aspects mentioned in the definition of the award. I am not satisfied, on the evidence, that the four workers who did the testing, inspection and maintenance work of which evidence was led were also capable of doing all the other work under the definition of First Class Sprinkler Fitter.
61 Accordingly, the trustee has not established that the work was of a kind for which a rate of pay was fixed under the Sprinkler Pipe Fitters Award 1975.
62 As an alternative way of establishing that they did construction work, the trustee says that the work done by the sprinkler fitters of checking or testing and maintenance of fire hydrants and hydrant pumps and fire hose reels was work for which a rate of pay was fixed under the Plumbing Trades (Southern States) Construction Agreement 1979 (PT Agreement) which is a Prescribed Building Award under the Rules.
63 No detail is set out in the PT Agreement of the work it covers. However, clause 7 sets out its scope. It provides, relevantly, that
“This agreement applies to the….persons…who are employed or usually employed in the plumbing industry in executing any plumbing, gasfitting, pipe fitting or domestic engineering work…or who execute any work in connection with ….(c) water (hot or cold), steam, gas, air, vacuum, heating or ventilating appliances, fittings, services or installations…”
64 The trustee says fire hydrants, pumps and hose reels all involve the conveyance of water to a building and are “fittings, services or installations” under clause 7(c) of the PT Agreement.
65 It refers to regulation 10(c) of the Plumbing Regulations 2008 (Vic), which set out that plumbing work includes fire protection work. It also refers to regulation 17(c): fire protection work includes maintenance, testing or commission of any part of a water service used for firefighting, including a fire hydrant or hose reel, a fires sprinkler system or a fire system pump.
66 I am not satisfied that work of inspecting, testing, maintaining and where necessary repairing fire hydrants, pumps and fire hose reels is work for which a rate of pay is fixed by the PT Agreement, and accordingly, was building trades work. The PT Agreement principally fixes rates of pay for plumbers, gasfitters and plumbers’ labourers. The scope of the PT Agreement specifically refers to those employed in the plumbing industry; the rates of pay under clause 9 are prescribed for a “plumber and gasfitter” and, in Victoria, a “plumber’s labourer. The PT Agreement (cl. 4) expressly excludes work of sprinkler fitters employed by employers respondent to the Sprinkler Pipe Fitters Award. The Plumbing regulations on which the trustee relies were enacted in 2008, and are not relevant to my task of construing the scope of the application of the PT Agreement of 1979.
67 As a further alternative in seeking to establish the sprinkler fitters did construction work, the trustee says that this work of inspecting, testing, maintaining and where necessary repairing fire hydrants pumps, and fire hose reels may fall within the category of fire alarm work. This category is discussed above. In relation to sprinkler fitters work, the trustee says it may be electrical trades work as it is work for which a rate of pay is fixed by the Electrical Award, It says that the items of equipment upon which this work is performed constitutes “associated equipment” relating to the definition of “fire alarm systems” in the Electrical Award. However, fire alarm systems are electrical in nature, designed to notify when a fire occurs. Hydrants pumps and hose reels are not ancillary to these notification systems. They are not associated equipment. They are designed to suppress fires. I find that this work is not covered by the Electrical Award.
Other work
68 Finally, in relation to the sprinkler fitters, the trustee says that the Court may be satisfied this work is a relatively small component of overall work done by workers, and that it falls within the definition of ‘other work’ to be considered under subclause b(i) and (ii) of the definition of the term construction work. However, it could only be ‘other work’ as defined, if at least two thirds of the work done by these particular workers fell within the definitions of building trade work or electrical trade work. As I have found none of the work done by these four workers to fall within those definitions, there is no basis for finding any of their work to be ‘other work’ as defined such that it is construction work.
69 Accordingly, I find that none of those four workers did construction work.
WAS CELSIUS IN THE CONSTRUCTION INDUSTRY?
70 The definition of Construction Industry at Rule 1.1 states that it does not include ‘the carrying out of maintenance or repairs of a routine minor nature by Workers for an Employer who is not engaged substantially in the industries described in this definition’.
71Celsius relies on this carve out. It says it is not an employer engaged substantially in the principal construction industry or the allied construction industry (being the industries described in the definition of construction industry), and that the relevant work done by its employees amounted to maintenance or repairs of a routine minor nature. So it says that even if work was done that would satisfies the other elements of the definition of construction work, as it was not done in the construction industry, it was not work to which s4 of the Act applies.
72“Substantial” is defined in the Macquarie dictionary as "of ample or considerable amount, quantity, size, etc.: a substantial sum of money". “Engage” is relevantly defined as “to occupy oneself; become involved: to engage in business”. What then is meant by a company being ‘substantially engaged’ in an industry? Does it mean that a large proportion of the company’s work is done in an industry? Or that it does a lot of work in that industry even if it is only a small proportion of its own work? I was not taken to any authority in relation to this. Considering the legislation as a whole and the purpose of the legislation, I am of the view that deciding whether a company is substantially engaged in an industry requires considering the importance and regularity of work done in that industry, compared to the other work done by the company that is not done within that industry.
73 Celsius was substantially engaged in the allied construction industry. I find that most of Celsius’ work was done in the allied construction industry, and that is the work that is was regularly engaged in and contracted to do. Most of its workers spent most of their time on the repair and maintenance of electrical installations and appliance’, including diagnosing, servicing and rectifying of faults in fire alarm systems. The definition of allied construction industry incorporates various industries, including the industry of ‘electrical services’. Sub-section (b) of the definition of “electrical services” includes, relevantly, “…repair and maintenance of electrical installations and appliances, including…diagnosing, servicing and rectifying of faults in…..(xvi) fire alarm systems.” It follows that diagnosing, servicing and rectifying of faults in alarm systems is included in the definition of allied construction industry.
74 The work done by Celsius in repairing and maintaining fire alarm systems, including diagnosing servicing and rectifying of faults in them, was a significant part of its business. Much was made by Celsius of the fact that a lot of its employees’ work was just checking to see what work had been done, and ticking boxes to show that it had been checked. It says that a service of checking and recording for fire safety compliance is distinct from ‘maintenance of or repairs to’ particular equipment, particularly in the sense described in the industry definition. Much time was spent in evidence by witnesses giving evidence, and being cross examined, as to the extent to which work was done which was effectively checking equipment to see if it worked, compared to actually doing anything substantive to it and carrying out minor or major repairs.
75 However, I find that majority of the work done constituted maintaining the equipment, including diagnosing, servicing and rectifying faults, in the sense described in the industry definition. According to the Macquarie dictionary: “diagnosing” involves identifying a “case, disease etc”. ; “Servicing” means “to make fit for service; restore to condition for service…”; to “maintain” is “to keep in existence or continuance; preserve; retain…. To keep in due condition, operation or force; keep unimpaired; to maintain order..”; to “repair” is to “restore to a good or sound condition after decay or damage; mend; to restore or renew by any process of making good, strengthening..”
76 I am satisfied that the work done by Celsius employees’ in auditing and testing equipment was part of diagnosing and servicing the equipment. Maintaining the equipment involved as a first step seeing if it was up to the relevant standards, and then doing what was necessary to bring them to that standard if they were not. This included minor work such as cleaning equipment, replacing bulbs, lubricating items, and more substantive repairs. Celsius’ clients did not simply contract to have their fire safety equipment checked and audited, and any issues or potential problems recorded and reported; it wanted them maintained and minor repairs carried out. Maintaining the equipment was carried out by the very workers checking it at first instance. The work of checking the equipment includes testing it, diagnosing any faults, and even where there are no faults, the workers were then involved in cleaning, lubricating, replacing items of equipment and generally maintaining them. Very occasionally once Celsius had identified a problem a client asked for to carry out a major repair and Celsius provided that service.
77 As I have decided that Celsius was substantially engaged in the allied construction industry, there is no need to consider further whether the carve out at (e) of the definition of construction industry applies. I do not need to decide whether Celsius is substantially engaged in the principal construction industry as a result of its work maintaining or repairing various fixtures and structures connected with the fire systems. I also do not need to decide whether relevant work was maintenance or repairs of a minor nature.
WAS CELSIUS ENGAGED IN THE CONSTRUCTION INDUSTRY?
78 In presenting its case Celsius argued that the first question to be determined in deciding whether s4 applies is “Was Celsius engaged in the construction industry during the claim period?” It says that if the answer to that is no, then the trustee’s claim fails. It says that s4 must be read to refer to an employer in the construction industry who employs a worker to perform construction work in that industry. It says that it was in the fire services industry, and not the construction industry, and so s4 does not apply to it.
79 Celsius says in determining if Celsius was engaged in the construction industry, it is necessary to consider its substantial character, and that the substantial character of its industry was that it was in the fire industry.
80 I am satisfied, as set out above, that Celsius was substantially engaged in the allied construction industry. On the basis of the same facts that led me to decide that, I would be satisfied if necessary that it had the substantial character of being engaged in the construction industry. I would therefore answer Celsius’ proposed first question as “Yes”.
81 As a significant amount at trial was spent on the question of whether it is necessary to consider the substantial industry of the employer given the wording of the Act and Rules, I deal with my view below.
82 Celsius refers to itself as being in the fire services industry and it was a central plank of its defence that this described its industry rather than the construction industry. However, the fact that Celsius is in the fire services industry does not mean it cannot also be in the construction industry. It is well established that an employer can be in more than one industry: The Australian Workers’ Union & Anor v Construction, Forestry, Mining and Energy Union [2001] AIRC 177 (CFMEU case) at [78].
83 An overall characterisation of the work Celsius carried out may well be that it had the substantial character of being in the fire services industry, but a significant subset of it had the substantial character of being in the construction industry, under the expansive definition of that industry in the Rules.
84 Celsius said that the construction of the Rules relied on by the trustee allows the “work-based definitions” to dictate what is the relevant industry. It says this approach to the task of construing the Act is circular and self-fulfilling and expands the reach of the scheme beyond any sensible conception of the construction industry. It says the work-based definitions in the Rules need to be read through the prism of the relevant industry the employer is engaged in, and that such a construction is available on the text of the Rules and best promotes the evident purpose and objective of the Act.
85 The trustee says that a consideration of whether the employer’s enterprise has the substantial character of being in the construction industry is irrelevant to the analysis required in considering if s4 applies: the comprehensive definitions under the Rules are all that need to be considered,
86 The legislative history to this scheme is that it was set up to provide for employers in the industry paying levies to the fund to be utilised by employees in the industry. It is a portable leave scheme, so that employees can work for different employers and still get coverage. The legislation expands the sorts of activities that can be done and still fall within the definition of ‘construction industry’ beyond the historic notion of the construction industry. The various industries contained in the definition of allied construction industry are included within the definition of construction industry. As discussed above, when the Act was first enacted and the initial Rules brought into being, the construction industry was defined only to include what is presently included in the principal construction industry definition. Later, that was expanded. However, an analysis of the Rules indicates that the scheme deals with employers in that expanded industry paying levies to cover employees working in that expanded industry.
87 There are repeated references to industries in the Rules including the central reference to construction industry in s4. In circumstances where the award system is based on a consideration of the substantial character of the enterprise in which employer and employee are engaged and the rules refer throughout to various awards and is hence intricately connected with the industrial relations system, I find that it is unlikely that the drafters of the Rules intended by them to be understood without reference to the historic meaning of the term ‘industry’.
88 That work needs to be done in the construction industry is central to this scheme. All words of a statute should be given some meaning where possible. Section 4 refers to workers employed by the employer to perform ‘construction work in the construction industry. The words “in the construction industry” in s4 need to be given meaning. Since work does not fall within the definition of construction work unless it is done in the construction industry, the fact that the employee (at least) is working in the construction industry is already contemplated by the beginning of s4 and the reference to the employee doing “construction work”. The only meaning left for those words where they appear at the end of s4 is for them to be a reference to an employer in the construction industry employing workers to do construction work in that industry. The words are otherwise unnecessary.
89 The trustee referred to the decision in Baytech, where the Court did not consider the issue of whether the substantial character of the employer was that it was in the construction industry. However, this was not relevant to the issues in dispute in that case, nor is there any evidence that the court was directed to argument about that concept. There (as here) it was accepted that the employer was substantially engaged in one of the industries that makes up the construction industry.
90 In The King v Central Reference Board & Ors; Ex parte Thiess (Repairs) Pty Ltd (1948) 77 CLR 123 (Thiess), the High Court examined the question of whether a particular employee was employed ‘in’ the coalmining industry. Latham CJ held at page 135:
“In my opinion the question to be asked is – What is the substantial character of the industrial enterprise in which the employer and employee are concerned? In the present case the employer is [Thiess]. That employer is not engaged in coal mining, but is an engineering company carrying on general work.”
91 The rules themselves refer, on a number of occasions, to testing whether an employee is substantially engaged in a particular industry. It is not necessary for me to determine whether, in all instances, an employer being substantially engaged in an industry will mean the same thing as an employer’s enterprise having the substantial character of that industry.
92 It may well be asked in another case: In what circumstances could the Thiess test first be satisfied, in that the industrial enterprise in which employer and employee is engaged is held to have the ‘substantial character’ of the construction industry, yet then the employer could be held to be not ‘substantially engaged’ in the construction industry, so that it could rely on the carve out in the definition of construction industry in the Rules? Is the test the same? If not being substantially engaged in an industry is effectively the same test as not having the substantial character of being in the construction industry, then there would arguably be no need for the carve out to refer not only to not the employer not being substantially in the industry, but also to the work being for maintenance and repairs.
93The only references in the Act or Rules to an “employer in the construction industry” or an “employer engaged in the construction industry” are contained in Rules 8 and 45. They do not assist in explaining what is meant, in the context of this legislation, to being ‘in’ or ‘engaged in’ the construction industry:
·Rule 8 requires the trustee to keep the register of employers, to enter the name of any employer it believes to be an employer in the construction industry, and to remove from the register the name of any employer who ceases to be an employer in the construction industry.
·Rule 45 sets out that both workers and employers may apply to the trustee’s CEO for a preliminary determination as to whether a person is, or is not, an employer engaged in the construction industry; or whether a worker is or is not employed in the construction industry
94However, the fact that the Rules distinguish between employers who are substantially engaged in the construction industry on the one hand, and those who are in it, but not substantially engaged in it, suggests that even a minor involvement in the industry is enough for an employer to be considered to be engaged in the construction industry to some necessary degree. The references are as follows:
· ‘Construction Industry’ is defined in the Rules to mean the principal construction industry and the allied construction industry but to exclude the carrying out of maintenance or repairs of a routine nature by workers for an employer who is not engaged substantially in those industries (subparagraph (e) of the definition of construction industry in Rule 1.1 of the Rules).
· The definition of allied construction industry includes a reference in relation to “Construction Yard Man Services” where an employer is engaged substantially in that industry, and in relation to “Shop Fitting Services” to where an employer is not engaged substantially in that industry.
95Further, what might be considered a fairly minor involvement in the construction industry (that is, employing a worker to do construction work in the construction industry) for less than five days a month is still sufficient for an employer to have to pay a charge for employing someone in the construction industry.
96In Aust-Amec Pty Ltd (t/a Metlab Mapel & SRC Laboratories) v Construction Industry Long Service Leave Payment Board (1995) 62 IR 412, Ipp J considered similar legislation to the Act and Rules in this case. His Honour drew a distinction between employers in the construction industry required to register as employers, and those who are not obliged to register as employers even though they may engage persons as employees in the construction industry and therefore be required to pay a charge. The same distinction applies under the regime in this case. Employers must register with the trustee in accordance with the Deed or they are prohibited from employing workers to perform construction work in the construction industry for more than five days in any month: s8(1). They must keep records and send the trustee information concerning their employed construction workers: s9. Workers similarly must register with the trustee; a worker whose name is not included in the register of workers kept by the trustee in accordance with the Deed must not, for more than five days in any month, perform construction work: s8(3). An employer must keep prescribed books and records relating to workers employed by him on construction work: Rule 47.
97Celsius refers to three examples given by the Full Bench in the CFMEU case, where the Full Bench said that particular work was construction work but not done in the construction industry. (It was not dealing with those terms as defined by the legislation in this case). Celsius says that on the trustee’s construction, put in the present case, these examples would be construed as being carried out in the construction industry as defined in the Rules. I disagree. In each of those cases, work was being done at the employer’s own site by way of repair to fixtures or fittings, and thus would be considered construction work in the general sense, but the employer was substantially engaged in a different industry to the construction industry. It was not substantially engaged in the construction industry. Those repairs were not part of the work the employer was contracting to provide to clients. In the present case, however, the major part of the relevant work done for reward, for its clients, is Celsius carrying out diagnosis, repairs and maintenance of the fire alarm systems and associated equipment.
98 Celsius relies on the Second Reading Speech to Parliament in relation to amendments made in 2004 to the Act. At that time, Mr Hulls, the Industrial Relations Minister said, relevantly:
“The amendments will strengthen the provisions requiring employers to pay long service leave levy to the fund, and to retain and provide information in respect of workers employed to perform construction work in the construction industry… A number of definitions are clarified to ensure that the scheme applies to workers performing construction work in the construction industry. This will limit the potential for other work groups or industries to seek coverage … The majority of industry employers will not be affected in any way by these minimal changes to the way the trustee operates…”
99 As Celsius says, this adds weight to the suggestion that the industry of the employer is relevant. However, I do not see that it assists with construing the relevant sections of the Act and Rules on the facts of this case. The fact that Parliament had the intention of introducing the amendments of limiting potential for other industries to seek coverage under this legislative scheme, does not of itself assist in deciding whether, on the facts of this case, Celsius itself was engaged in construction industry.
CONCLUSION
100 I have found that the trustee’s claim has been upheld in relation to all but four of the workers: their work was construction work done in the construction industry. The trustee has claimed long service leave charges which are due to it by Celsius as a debt in this proceeding, under s51 and s52 of the Act. Initially, the trustee sought an order that Celsius pay the charge calculated by the trustee for the period 1 July 2008 to 31 March 2014 of $115,524.83 (inclusive of interest up to and including 11 March 2015 pursuant to s5 of the Act), plus interest accruing after that, and costs. As at the close of trial, the amount had reduced to $92,785.99 [as at 27 October 2016] because amounts claimed for five workers relating to portable fire extinguishers was no longer claimed.
101 I propose to give judgment for the full amount of the trustee’s claim, less the amounts attributable to the four sprinkler fitters. If the parties are unable to agree on the quantum of this, and on the costs order to follow, I will list the matter for a hearing on those matters. Otherwise, those orders that follow will be made on the basis of an agreed minute of orders provided by the parties.
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Certificate
I certify that these 33 pages are a true copy of the reasons for decision of her Honour Judge Marks, delivered on 20 June 2017.
Dated: 20 June 2017
Samantha Marinic
Associate to Her Honour Judge Marks
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