Criminale v State Authorities Superannuation Board

[1989] HCA 48

HIGH COURT OF AUSTRALIA

Brennan, Deane, Dawson, Toohey and Gaudron JJ.

PAUL MICHAEL CRIMINALE &ORS v. STATE AUTHORITIES SUPERANNUATION

26 October 1989

Decision

BRENNAN, DEANE, DAWSON, TOOHEY AND GAUDRON JJ. These proceedings are another chapter in the protracted history of the superannuation entitlements of persons employed at the United Dental Hospital of Sydney, an institution constituted under the Dental Hospitals Union Act 1904 (N.S.W.). Each of the appellants and one Dr Walker were employed by the board of control of that institution. They commenced their respective employment by the board at some time between 1955 and 1963. On 6 April 1979, by force of s.33FF(1) of the Public Hospitals Act 1929 (N.S.W.) which came into effect on that day, the appellants and Dr Walker were deemed to have been appointed as employees of United Dental Hospital of Sydney, a body corporate. It is convenient to refer to the previous employer as "the board" and to the body corporate as "the hospital".

2. On 10 October 1935, pursuant to s.92 of the Superannuation Act 1916 (N.S.W.) as it then stood, the provisions of the Superannuation Act were extended to the board by a proclamation which inserted the board's name into Sched. III of that Act and which notified 21 October 1935 as the date from which employees of the board should contribute to the State Superannuation Fund. Pursuant to the proclamation, the board became an "employer" for the purposes of the Superannuation Act and, from 21 October 1935, any person who answered the statutory description of an "employee" of the board was entitled and bound to make contributions to the State Superannuation Fund ("the State Fund") established by that Act and was entitled to the benefits of a contributor under that Act. At all material times the term "employee" has been defined by s.3(1) of the Superannuation Act to mean (omitting irrelevant parts) a -
"person employed by an 'employer,' and who is
by the terms of his employment required to give his whole time to the duties of his employment ... but does not include ... a person who is paid at hourly, daily, weekly, or fortnightly rates, or by piece-work." The first question that arises in this case is whether the appellants and Dr Walker fall within the words of exclusion in this definition. They will derive some financial advantage if it be held that they were "employees" at all material times. The respondent hospital and the respondent State Authorities Superannuation Board will incur some financial liability if the appellants and Dr Walker were "employees".

3. It was found by the trial judge (Lee J.) that the terms of employment of each of the appellants was that she or he should be permanently employed for a wage or salary that was stipulated at a nominated amount per week. In Dr Walker's case, it was found that she was appointed to a permanent position but at a salary of a nominated amount per annum. Lee J. construed the definition of "employee" in this way:
"The test which the section, in my view,
is seeking to assert in the words 'paid hourly ... piece-work' is the test of temporary employment against permanent employment. Whether an employee is or is not within the definition is not to be judged merely by reference to whether his employer has stated to him that he is, for instance, employed at an annual rate, payable weekly, or a weekly rate or a fortnightly rate but by reference to whether it is the intention of the parties that his employment shall be permanent in the sense that barring serious economic circumstances and, of course, putting to one side misconduct by the employee, the position is intended to be available indefinitely." Accordingly, his Honour held that the appellants and Dr Walker, having been appointed to permanent positions, fell outside the words of exclusion and were entitled, from the respective times when they were employed by the board, to contribute to the State Fund. On appeal, Mahoney J.A. (with whom Hope and McHugh JJ.A. agreed) rejected the construction placed upon the definition of "employee" by Lee J. Mahoney J.A. said:

"Phrases such as 'rate of remuneration' look to the amount of money to be paid and the period to be worked to establish the entitlement to it. Prima facie, if remuneration is fixed at a weekly rate, then to be entitled to the sum fixed, the employee must work for the week; if it is an annual rate, then prima facie he must work for the year. The stipulation for remuneration at 'pounds x per week' or 'pounds x per annum' prima facie establishes that there is a weekly or annual rate and that prima facie entitlement accrues in respect of that period. See generally Railway Executive v Culkin (1950) 2 All ER 637 per Lord Simonds at 641 and per Lord Reid at 651. I have said 'prima facie'. Strictly applied, the specification of an annual rate of remuneration would result in no remuneration being payable for a proportionate part of the year, absent some statutory or contractual arrangement for apportionment: cf Salton v New Beeston Cycle Co (1899) 1 Ch 775 at 779-80."

And his Honour concluded:

"In the end, the matter is, in my opinion, to be determined by the rate which the parties have specified in their contract and it is on this basis that the rights of the plaintiffs in the present case must be determined."

As each of the appellants had been appointed at a nominated sum per week, each fell within the words of exclusion. The Court held that none was an employee. Dr Walker had been appointed at a nominated sum per year. The Court held that she was an employee.

4. The appellants contend for a construction of the definition of "employee" which attributes to the relevant words of exclusion the meaning of "a person who is paid at rates fixed for persons employed by the hour, day, week or fortnight". Giving that meaning to the words of exclusion, the appellants submit that only persons who are employed by the hour, day, week or fortnight are excluded. To support this submission, attention is drawn to the words "a person who is paid ... by piece-work" as indicating that the words of exclusion relate to the stipulation of the work to be done for the "rate" to be paid. As each of the appellants was appointed to a permanent position, they submit that they do not fall within the exclusion.

5. The submission does not accord with the text of the definition. The criterion which the legislature adopted to distinguish between employees who are to come within the Superannuation Act and those who are not is, as the definition states, the period in respect of which the employee's rate of pay is stipulated. It may be artificial to draw a distinction between an annual or monthly rate of pay (the list is not exhaustive) on the one hand and an hourly, daily, weekly or fortnightly rate of pay on the other. None the less, it is the distinction which appears in the statute and it is capable of sensible application. If it were desired to select, as contributors to the State Fund, long-term employees earning wages or salaries in the higher classifications rather than short-term employees whose rates of pay are in the lower classifications, a rough but comprehensible criterion is to select employees whose rates of pay are expressed as an amount per month or per year rather than as an amount per hour, per day, per week or per fortnight. As Brereton J. said in Re Blair and Superannuation Act 1916-1955 (1958) 75 WN (NSW) 429, at p 430:
" I am clearly of opinion that the basis
for the exception of persons on hourly, daily, weekly, or fortnightly rates is that the benefits of the Act are intended to be confined to persons whose employment is likely to be of lengthy duration, and whose rates of pay are such that they can afford the contributions. Rates based on short unitary periods are in general lower than monthly or yearly rates, terminable at shorter notice, and indicate less inherent permanence of employment; and this test, I feel sure, has been adopted as a somewhat arbitrary indicator." The reference to those who are paid by piece-work does not require the attribution to the other words of exclusion of a meaning different from the meaning which they plainly bear.

6. Although a wage or salary rate expressed in reference to a period will often import an obligation to work for the period before any wage is earned, particular contracts or awards may make a different provision. The words of exclusion in the definition look neither to the minimum period of employment nor to the period which must be worked in order to become entitled to payment of the amount mentioned in the stipulated rate; they refer simply to the term of employment which stipulates the amount of wages or salary to be paid in respect of a given period of work and excludes persons employed by an "employer" whose wages or salary are expressed by the relevant term as an amount per hour, per day, per week or per fortnight. Looking solely at the terms of the contracts of the employment entered into by the board and the appellant employees, the relevant term in the case of each appellant provided for a nominated wage per week. Therefore, none of the appellants became an "employee" entitled to contribute to the State Fund. This conclusion is consistent with the decision in Re Blair; and possibly with the decision in Arkins v. State Superannuation Board (1980) 13 IR 104, though the emphasis on the period of engagement in each of those cases is misplaced.

7. Four of the appellants have a supplementary argument founded on the provisions of an industrial award which prescribed for the classifications to which they respectively belonged an annual rate of pay. It is submitted that the provision in the award and not the contractual stipulation is the relevant term of the employment. If this be so, these appellants would be "employees".

8. It is not necessary to consider this argument, however, because in 1983 particular provision was made affecting persons who, having been "employees" of the board, had not contributed to the State Fund before they were deemed to be employees of the hospital by s.33FF of the Public Hospitals Act. Before considering the 1983 provision, which is said to apply to Dr Walker as well as to any of the appellants who might have been eligible to contribute to the State Fund, it is necessary to refer to the Local Government and Other Authorities (Superannuation) Act 1927 (N.S.W.) ("the Local Government Superannuation Act") which provides for certain contributions to be made by, and certain benefits in the nature of superannuation to be available to, employees of local government councils and certain other authorities. Pursuant to s.2(4)(a) of that Act, by a proclamation of 22 June 1955, the Governor directed that the Local Government Superannuation Act should apply
"to and in respect of any employee of a
hospital or institution which, for the time being, is specified in ... the Third Schedule to the Public Hospitals Act, 1929-1943 ... and who has had or shall have had service in any capacity for one year, whether continuous or broken, with any such hospital or institution or with any number of such hospitals or institutions." At the time when this proclamation was made, the United Dental Hospital of Sydney was specified in the Third Schedule to the Public Hospitals Act. Accordingly, any employee of the board who then had, or thereafter would have had, one year's service became or would become an employee to whom the Local Government Superannuation Act applied, whether or not she or he was an "employee" to whom the Superannuation Act applied.

9. It is argued that the 1955 proclamation which applied the Local Government Superannuation Act to persons who had one year's service with the board impliedly repealed the 1935 proclamation which had applied the Superannuation Act to the board's "employees" (as therein defined). Prima facie, the effect of the two proclamations was to impose on the board and on some persons employed by the board a duplicated obligation to contribute and to confer on those persons a duplicated entitlement to benefits under the two Acts. If that be their true effect, the 1955 proclamation produced an administrative bungle. Had this been perceived at the time, a situation of financial and industrial difficulty would have arisen. In fact, it appears that all the appellants and Dr Walker contributed only under the Local Government Superannuation Act, but that fact does not determine whether the true effect of the two proclamations was to produce an administrative bungle or whether those instruments can and ought to be construed so as to avoid it.

10. An argument was advanced that the 1955 proclamation repealed pro tanto the 1935 proclamation so as to exclude from the application of the Superannuation Act those employees to whom the Local Government Superannuation Act applied. To attribute that effect to the 1955 proclamation is to misunderstand the effect of the 1935 proclamation. The 1935 proclamation extended the application of the Superannuation Act so that by force of the Act - not merely by force of the proclamation - it applied to employees of the board. That application of the Act was amenable to alteration by statute, but not by a proclamation made under a subsequent statute which did not purport to affect the application of the Superannuation Act or to authorize the Executive government to make a proclamation which would have that effect. Parliament may provide that the operation of an Act shall be modified on the occasion of the exercise by the Executive government of a power conferred upon it, but such a provision must be found expressed or necessarily implied in statute. The power to make the 1955 proclamation, conferred by s.2(4) of the Local Government Superannuation Act, contains no suggestion that, on the making of a proclamation under that Act, the application of the Superannuation Act should be affected. The power to make such a proclamation was conferred as the means of extending the application of the Local Government Superannuation Act, not as a means of restricting the application of the Superannuation Act.

11. Furthermore, if the 1955 proclamation could be construed as partially repealing the 1935 proclamation, the rights of employees acquired under the Superannuation Act would have been extinguished and the benefit of all contributions made to the State Fund by the board and those employees would have been lost. There was no legislative machinery for preserving the rights theretofore acquired under the Superannuation Act. Such a construction of the 1955 proclamation would be inconsistent with the presumption against disturbance of accrued rights by repealing legislation: see the Interpretation Act 1897 (N.S.W.), s.8.

12. An alternative argument was advanced that the 1955 proclamation should be read down so that the Local Government Superannuation Act was applied only to those employees of the board who were not then contributing to the State Fund or, alternatively, who were not then entitled to contribute to the State Fund under the Superannuation Act. (The alternative constructions might produce different results in these proceedings.) To read down the 1955 proclamation in one of these ways would be consistent with a more orderly scheme of coverage for the board's employees, but the desirability of exempting a class of persons employed by a particular employer from the general sweep of the proclamation is not a sufficient ground for reading down its meaning. There is no ambiguity in the terms of the proclamation and provision had been made in the Local Government Superannuation Act (see ss.7, 7A, 13 of that Act as it then stood) for such exemptions from the obligation to contribute as the legislature deemed appropriate. The Superannuation Act also provided for exemptions: see ss.11, 11A, 12 of that Act as it then stood. There is no acceptable construction of the 1955 proclamation which avoids the consequence that "employees" of the board who were entitled and bound to contribute to the State Fund and who had 12 months' service with the board became entitled and bound to contribute under the Local Government Superannuation Act. It may be noted that, when the 1955 proclamation was made, the Local Government Superannuation Act provided only for an employer-subsidized insurance scheme (Pt II) and a provident fund (Pt III); a superannuation fund was not established under that Act until 1968 when Pt 111B was enacted.

13. It seems that contributors to the State Fund enjoy greater benefits than contributors under the Local Government Superannuation Act. The appellants and others who were contributors under the Local Government Superannuation Act have sought to establish an entitlement to contribute to the State Fund in order to qualify for the greater benefits available under the Superannuation Act.

14. In consequence of the application of the Local Government Superannuation Act to employees of the board to whom the Superannuation Act extended, those employees became entitled under both Acts. They became entitled on appointment to contribute to the State Fund and, after 12 months' service, to contribute under the Local Government Superannuation Act. The delay in entitlement to contribute under the latter Act is, as we shall see, the circumstance on which the legislature subsequently seized in legislating to preclude a concurrent entitlement to contribute under both the Superannuation Act and the Local Government Superannuation Act.

15. In 1979, when the hospital was incorporated, provision was made by s.33FF of the Public Hospitals Act for the existing superannuation rights of employees to be continued. That section, in its relevant parts, provides:
" (1) All persons who, immediately before
the commencement of this Division, were employees, servants, or members of the staff, of the board of control shall be deemed to have been appointed as employees, servants, or members of the staff, of the hospital.

(2) Subject to subsection (3), where a person to whom subsection (1) applies was, immediately before his appointment as an employee, a servant, or a member of the staff, of the hospital, a contributor to a superannuation scheme, he -

(a) shall retain any rights accrued or accruing to him as such a contributor;

(b) may continue to contribute to any superannuation scheme to which he was a contributor immediately before his appointment as an employee, a servant, or a member of the staff, of the hospital,

and -

(c) his service as an employee, a servant, or a member of the staff, of the board of control shall be deemed to be service as an officer or employee of the hospital for the purpose of any law under which those rights accrued or were accruing or under which he continues to contribute; and

(d) he shall be deemed to be an officer or employee, and the hospital shall be deemed to be his employer, for the purpose of the superannuation scheme to which he is entitled to contribute under this section.

(3) An employee, a servant, or a member of the staff, of the hospital who, but for this subsection, would be entitled under subsection (2) to contribute to a superannuation scheme shall not be so entitled upon his becoming ... a contributor to any other superannuation scheme, and the provisions of subsection (2)(d) cease to apply to or in respect of him and the hospital in any case where he becomes a contributor to another superannuation scheme.

(4) Subsection (3) does not prevent the payment to an employee, a servant, or a member of the staff, of the hospital upon his ceasing to be a contributor to a superannuation scheme of such amount as would have been payable to him if he had ceased, by reason of resignation, to be an officer or employee for the purposes of that scheme."

Those persons employed by the board who had been contributing under the Local Government Superannuation Act - the appellants among them - were thus entitled to continue contributing under that Act but that entitlement was to cease if the employee became a contributor to the State Fund. Entry to the State Fund was opened to employees of the board who were deemed by s.33FF(1) of the Public Hospitals Act to have been employees of the hospital by a proclamation (made under an amended s.92 of the Superannuation Act) which extended the application of that Act to -

"United Dental Hospital of Sydney - in respect of persons who are employees by reason of the operation of section 33FF(1) of the Public Hospitals Act 1929."

These words were, by force of that proclamation, added to Sched.III to the Superannuation Act. Section 92A of the Superannuation Act then provided for the Minister to determine the conditions on which employees to whom s.33FF(1) of the Public Hospitals Act applied and who had been contributing under the Local Government Superannuation Act might become contributors to the State Fund. The Minister made such a determination in 1980. The enactment of s.92A and the Minister's determination were referred to in argument as the 1980 settlement. There is no question in these proceedings about the effect of s.92A or the Minister's determination. The superannuation rights acquired pursuant to the 1980 settlement are not in issue. However, the 1980 settlement did not purport to affect the entitlement, if any, of an employee to whom s.33FF(1) applied to contribute to the State Fund before the 1980 settlement came into effect. The benefits which would flow from an entitlement to contribute to the State Fund before the 1980 settlement came into effect are the benefits which the appellants and Dr Walker sought to establish by commencing these proceedings.

16. In answer to this claim, the respondents seek to rely on s.4(2) of the Local Government and Other Authorities (Superannuation) Amendment Act 1983 (N.S.W.) ("the 1983 Act") which makes express provision for the superannuation rights of employees to whom both the Superannuation Act and the Local Government Superannuation Act applied. The provisions of that sub-section were not raised by the respondents in the Courts below. It is not suggested, however, that any further evidence could have been adduced on any question arising under s.4(2) which might affect the result of these proceedings. Moreover, these proceedings are brought, as we were informed, as a test case; they would fail in their purpose if s.4(2) were omitted from consideration. On balance, we consider that the respondents should be allowed to rely on the sub-section.

17. It appears that s.4(2) of the 1983 Act is the legislative response to the administrative bungle which resulted from the proclamation of 22 June 1955 which applied the Local Government Superannuation Act to employees to whom the Superannuation Act already applied. Section 4(2) provides:
"A person who, before the commencement
of this Act - (a) was or would, but for this subsection,

have been a person to whom Part II, III or IIIB of the Principal Act (the Local Government Superannuation Act) applied; and

(b) was or would, but for this subsection, have become entitled or required to contribute to the State Superannuation Fund at a time on or before he became a person to whom Part II, III or IIIB of the Principal Act applied, shall -

(c) if he became a participant in a superannuation scheme under the Principal Act, be deemed not to have been so entitled or required since that time and while he remained a person to whom the Principal Act applied and may not, while he remains a person to whom the Principal Act applies, become a contributor to the State Superannuation Fund; and

(d) if he did not, while remaining so entitled or required, become a participant in a superannuation scheme under the Principal Act, be deemed not to have been, since that time, a person to whom the Principal Act applied and shall, while he remains so entitled or required, be deemed not to be a person to whom the Principal Act applies."

18. Employees of the hospital are persons who fall within par.(a) by reason of the proclamation of 22 June 1955. Persons who, being "employees" as defined by the Superannuation Act, are employees of the hospital by reason of s.33FF became or would have become entitled to contribute to the State Fund on appointment and, after 12 months' service, became or would have become entitled to contribute under the Local Government Superannuation Act also. Those persons fall within par.(b). Employees who fall within both paragraphs and who actually contributed under the Local Government Superannuation Act are, by par.(c), deemed not to have been entitled to contribute to the State Fund so long as they remained entitled to contribute under the Local Government Superannuation Act. Conversely, employees who fall within both paragraphs and who did not contribute under the Local Government Superannuation Act are, by par.(d), deemed not to have been entitled to contribute under that Act so long as they remained entitled to contribute to the State Fund. As the appellants and Dr Walker contributed under the Local Government Superannuation Act, par.(c) withdraws any entitlement which they might otherwise have had to contribute to the State Fund, subject to the operation of the 1980 settlement. The reason why par.(c) does not withdraw an entitlement to contribute to the State Fund acquired under the 1980 settlement is this: par.(c) applies to exclude an entitlement to contribute to the State Fund only "while (an employee) remains a person to whom the Principal Act applies". When, pursuant to s.92A of the Superannuation Act and the Minister's determination thereunder, certain contributors under the Local Government Superannuation Act acquired an entitlement to contribute to the State Fund, those contributors ceased to be persons to whom the Local Government Superannuation Act applied by reason of s.33FF(3) of the Public Hospitals Act. Therefore, if any of the appellants or Dr Walker acquired an entitlement to contribute to the State Fund pursuant to s.92A and the Minister's determination (as to which, as we have said, no question is raised in these proceedings), par.(c) would present no obstacle to that person's enjoyment of the entitlement to contribute to the State Fund. But, in respect of the period prior to the 1980 settlement, par.(c) denies to the appellants and to Dr Walker, each of whom was a contributor under the Local Government Superannuation Act, any entitlement to contribute to the State Fund.

19. It remains to determine the orders which should be made in the light of these conclusions. The appellants' appeal must be dismissed, for s.4(2) of the 1983 Act is fatal to their case. The respondents seek special leave to cross-appeal in Dr Walker's case but, as she is not a party to the appeal, it is erroneous to regard an appeal against the judgment of the Court of Appeal in her favour as a cross-appeal. However, counsel for the appellants announced his appearance for Dr Walker, admitted service of the notice of cross- appeal upon her, and made no objection to the grant of special leave to appeal and to the determination of the matter as between the respondents and Dr Walker on the issues above referred to. Had an application for special leave to appeal been filed and served upon Dr Walker, because s.4(2) of the 1983 Act destroyed her entitlement to contribute to the State Fund, it would have been appropriate to grant special leave to appeal against the judgment of the Court of Appeal in her favour and to allow the appeal. The proper course is, however, to make no order as against Dr Walker, but to leave it to the respondents to take the formal steps necessary to obtain the grant of special leave and to institute an appeal: see Transport Accident Commission v. C.M.T. Construction of Metropolitan Tunnels (1988) 165 CLR 436, at p 450.

20. It is necessary to refer specifically to the question of costs. As s.4(2) of the 1983 Act was not raised by the respondents until the argument in this Court, the order as to costs should be different from the order which would have been made had the respondents raised and relied on that sub-section at first instance. Had either respondent done so, the litigation might then have been brought to an end in their favour. Section 4(2) affected the scheme which the first respondent administers (see the Superannuation Act, the Superannuation (Amendment) Act 1987 (N.S.W.), ss.3(1), 14 and 15 of the Superannuation Administration Act 1987 (N.S.W.)) and it was enacted in order to settle a question relating to the superannuation entitlements of certain personnel employed by the respondent hospital. In these circumstances, it is appropriate to order the appellants to pay the costs of the respondents at first instance but for the respondents to bear the appellants' costs in the Court of Appeal and in this Court. In the event that formal steps are taken in relation to the judgment in favour of Dr Walker, the orders for costs in her favour in the Courts below should remain unchanged.

Orders

Appeal dismissed.

Order that the respondents pay the costs of the appellants in this Court and in the Court of Appeal.

Applications for special leave to cross-appeal refused.