Lindsay v Associated Furnishers Ltd
[1997] IRCA 203
•08 April 1997
DECISION NO:203/97
CATCHWORDS
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - Whether applicant was employed under award conditions, or “a manager”, and thereby excluded from the operation of the relevant award - consideration of various indicia which tended to show the applicant was a manager - Application dismissed - COSTS - Although the case was decided on facts which were not in dispute, the applicant had an arguable case. It could not, therefore, be said that the proceedings were “instituted vexatiously or without reasonable cause.”.
Workplace Relations Act 1996, ss: 170CD, 347
Clerks (State) Award.
Kanan v Australia Postal and Communications Union (1992) 43 IR 257
Christie v Qantas Airways Ltd (1995) 60 IR 17
City of Wanneroo v Holmes (1989) 30 IR 362
Federated Clerks Union of Australia, New South Wales Branch v Australian Workers’ Union 1971 AR 419
Patatou v Nestles Australia, Industrial Relations Commission of New South Wales, Commissioner Sheils, IRC 1073 of 1992, 3 December 1992, unreported.
R v Moore; ex parte FMWU (1978) 140 CLR 470
Thompson v Hodder (1989) 21 FCR 467
LINDSAY v ASSOCIATED FURNISHERS LTD
NI 1864 of 1996
Before: PATCH JR
Place: SYDNEY
Date/s of hearing: 8 APRIL 1997
Date of judgment: 8 APRIL 1997
FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NI 1864 of 1996
BETWEEN:
David Ellis Lindsay
Applicant
AND
Associated Furnishers Limited
Respondent
BEFORE: PATCH JR
PLACE: SYDNEY
DATE: 8 APRIL 1997
MINUTES OF ORDERS
THE COURT ORDERS THAT:
The application be dismissed.
Note: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules
FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NI 1864 of 1996
BETWEEN:
David Ellis Lindsay
Applicant
AND
Associated Furnishers Limited
Respondent
BEFORE: PATCH JR
PLACE: SYDNEY
DATE: 8 APRIL 1997
REASONS FOR DECISION
Delivered ex tempore - revised from the transcript
At the commencement of the trial of this matter this morning it was agreed between the parties at the suggestion of the Court that it would be convenient to first deal with a preliminary point, namely, is the applicant excluded from the operation of the relevant divisions of the Workplace Relations Act 1996 (“the Act”) by virtue of the operation of section 170CD of the Act?
Section 170CD of the Act reads as follows:
EXCLUSION OF EMPLOYEES NOT EMPLOYED UNDER AWARD CONDITIONS WHOSE WAGES EXCEED A PARTICULAR AMOUNT.
170CD(1) [Employee not employed under award conditions] The following Subdivisions do not apply to a termination of employment of an employee who is not employed under award conditions if:
(a) in respect of an employee who was continuously employed by the employer during the period of 12 months immediately before the termination day - on the termination day the employee’s relevant wages exceeded the applicable amount; or
(b) in respect of an employee who was continuously employed by the employer for a period less than 12 months immediately before the termination day - on the termination day the employee’s relevant wages exceeded the amount worked out using the formula;
days employed
----------------- x applicable amount
365
170CD(2) [Amount] The applicable amount for the purposed of subsection (1) is:
(a) subject to paragraph (b), $60,000.00; or
(b) if regulations made in accordance with Subdivision CA prescribe a formula for the annual indexation of the amount referred to in paragraph (a) - the amount worked out using that formula as it applies from time to time.
170CD(3) [Terms defined] In this section:“days employed” means the number of days in the period for which the employee was continuously employed by the employer immediately before the termination day;
“relevant award” means an award or a State award;
“relevant wages” in relation to an employee, means the total amount of the wages that the employee received, or was entitled to receive, from the employer in respect of:
(a) if paragraph (1)(a) applies to the employee - the period of 12 months referred to in that paragraph; or
(b) if paragraph (1)(b) applies to the employee - the lesser period referred to in that paragraph;
but, in relation to an employee whose contract of employment prescribes normal hours for the performance of work (whether by prescribing the number of hours in which, or the times at which, work is normally to be performed in a particular period), does not include any wages, additional to normal wages ,in respect of additional hours of work performed or in respect of work performed at other times;
“termination day” means the day on which the employer terminated the employee’s employment;
“termination of employment” means a termination of employment that occurred before or occurs after, the commencement of this section, but does not include a termination of employment in respect of which an application was made to the Court before that commencement.
The applicant was clearly earning in excess of the amount set out in section 170CD(1) of the Act. The question is this, therefore: was the applicant an employee who was “not employed under award conditions” as that phrase is used in section 170CD(1) of the Act?
In Christie v Qantas Airways Ltd 1995 60 IR 17, his Honour, the Chief Justice, said this at page 26:
“In framing the test set out in section 170CD(3), Parliament employed a double negative: “an employee is taken not to be employed under award conditions if wages and conditions of employment of the employee are not regulated”, by one or more awards. As counsel for the respondents point out, the words, “wages and conditions” are conjunctive, not disjunctive. Wages and conditions means both wages and conditions; not either wages or conditions. But because Parliament used the negative “not regulated”, the effect of this is that the stipulated test is satisfied only if both wages and conditions are not regulated by an award or awards. If an employee’s conditions are regulated by an award, this is enough to prevent satisfaction of the negative test”.
The applicant claims that the award which regulated his conditions (but not his wages, it being conceded by the applicant that his wages were not regulated by the relevant award) is the Clerks (State) Award (“the Award”), an award of the New South Wales Industrial Commission.
Clause 9 of the Award has the heading “Wages” and commences as follows: “(i) Grades - all adult employees shall be graded in one of the following grades....”
Five grades then follow going up in seniority from grade five to grade one. Grade one, the most senior grade, is as follows: “Grade 1 - means an adult employee who -
(i) is capable of and may perform any duties of a Grade 5, 4, 3 or 2 Clerk and who is fully competent in his/her work, requires little guidance in the performance thereof, exercises substantial responsibility and independent initiative and judgment with a requisite knowledge of office procedures and of the employer’s business; and/or
(ii)is required to accept responsibility for the work of a department or of a section or the work of clerks (excluding typists and stenographers) engaged in such department or section.”
After the definition of grade one the award includes a notation as follows:
“NOTATION: the definitions of grades one, two, three, four and five in sub-clause (1) hereof, shall have no application to a person employed in a managerial capacity, that is a person who is employed primarily to control the conduct of the employer’s business either in whole or in part and who in the performance of his/her duties, regularly makes decisions and accepts responsibility on matters relating to the administration and conduct of the business and whose performance of clerical duties is merely ancillary to his/her managerial employment.”
It is plain from those words that the award does not apply to persons “employed in a managerial capacity” as defined in the award.
The applicant relies also on clause 34 of the award which reads in relevant part as follows:
“It shall apply to all persons employed in any clerical capacity whatsoever and, without limiting the generality of the foregoing, shall include telephonists, receptionists, cashiers, messengers, copy boys, persons employed on machines designed to perform or to assist in performing any clerical work whatsoever in the State...”
Some exclusions follow which are for present purposes not relevant.
True it is that clause 34 is inclusive, but it is nonetheless, in my view, useful to examine the general nature of the various jobs listed in the section and to compare it with the definition of a person employed in a managerial capacity in clause 9. It is apparent on the face of the award that the types of jobs envisaged for the operation of the award are of a completely different nature to that of a person employed in a managerial capacity, generally speaking.
In the case of the City of Wanneroo v Holmes (1989) 30 IR 362, at pages 378 to 380, French J traversed a number of the authorities concerning the interpretation of an award. The principles he extracted were as follows:
* The interpretation of an award begins with a consideration of the natural and ordinary meaning of its words.
* The words are to be read as a whole and in context.
* Ambiguity, if any, may be resolved by a consideration, inter alia, of the history and subject matter of the award.
* Resort to such matters as prefatory statement and negotiations is of dubious assistance if admissible at all.
* Evidence of the conduct of the parties subsequent to the making of the award however cannot be relied upon to construe it.
* That is not to say that the words must be interpreted in a vacuum divorced from industrial realities.
* It is no part of the Court’s task to assign a meaning in order that the award may provide what the Court thinks is appropriate.
In addition to what his Honour said in that case, I also accept that awards are to be interpreted not narrowly but in a realistic and even beneficial way.
The meaning of the phrase, “employed in any clerical capacity whatsoever” in the award was considered in the case of the Federated Clerks Union of Australia, New South Wales Branch v Australian Workers’ Union 1971 AR 419. In that case, Sheldon J observed:
“Obviously all employees in an office are not engaged in a clerical capacity, It is clear that professional employees are not, nor are those who are truly and basically executive officers.”
His Honour continued by commenting:
“But an employee does not cease to be employed in a clerical capacity merely because his work includes many administrative and non recording actions. No doubt there are cases near the border which would be difficult to determine but in general, and subject to some special categories, those who are in a subordinate position are engaged in the ordinary work of office administration....”
“Those who are in a subordinate position but are engaged in the ordinary work of office administration are, in my opinion, prima facie, covered by this constitutional rule.”
So, having traversed some of the relevant authorities, it is necessary to return to the basic question which will determine this aspect of the case. Was the applicant a person who was employed in a managerial capacity, as that phrase is defined in clause 9 of the award?
In my opinion, the applicant was such a person. He was employed to control at least part of the employer’s business. That is clear on the applicant’s own evidence. The applicant had control on a day to day basis of a very important part of the respondent’s business, namely, credit control, and other aspects of the running of the business as well.
It is clear that the board was a very “hands on” board, but that does not mean that, as a manager, the applicant did not have day to day control. Obviously, a manager in any corporation is subordinate to the board. To construe the word “control”, as meaning having the ability to make absolute and final decisions without any supervision by the ultimate controlling body of a corporation, would be incorrect.
The applicant was also a person who, in the performance of his duties, regularly made decisions and accepted responsibility on matters relating to the administration and conduct of the business. Furthermore, those clerical duties that the applicant did perform, such as sending faxes, typing many of his own letters, using computer equipment and so on, were, in my opinion, merely ancillary to his managerial employment.
The facts, which I regard as established, which provide the basis for the above conclusions, are as follows:
1) The applicant engaged in extensive correspondence and contact with the respondent’s solicitors on a wide range of complex matters, requesting, on his own initiative, what turned out to be relatively complex legal advices to do with important matters concerning the conduct of the respondent’s business.
2) The applicant reported directly to the board. Managers report directly to the board, not clerks.
3) There was at least one person, even on the applicant’s own evidence, in a significant supervisory position, who was below him. This was the office manager, who is in charge of five employees in the office.
4) The applicant was one of four signatories on the respondent company’s cheque account.
5) The applicant’s title was “Chief Executive Officer”. Although not determinative, the fact that he had a title which normally means the most senior manager in a corporation tends to show that the applicant was indeed employed in a managerial capacity and was not employed in a clerical capacity. He always used that title in correspondence. He was sometimes called, by mistake, “General Manager”, but that only reinforces the fact that he was regarded as the most senior manager.
6) The applicant had the power to and did in fact order that the supply of goods to members be stopped.
7) In a situation where a member of the board owed a large amount of money to the respondent, the applicant, together with another manager in the company, met with that member of the board and negotiated an agreement regarding the repayment of that large debt.
8) On behalf of the members of the company (which was an organisation of furniture retailers who had banded together to increase their buying power), he negotiated a significant reduction, in cooperation with another large retailer organisation, of the rates that merchants pay to credit card companies when they use credit cards.
The applicant mediated in an attempt to resolve a bitter territorial dispute between two members of the respondent company. Those members were themselves retailers and the dispute was about who could trade in what areas.
10)One of the documents of exhibit D is a letter from the applicant, sent shortly after his appointment to the position of Chief Executive Officer, dated 4 December 1995. The letter sets out what his early strategy as a Chief Executive Officer was, as follows:
* Improve the competitiveness of our existing business
* Assist our member companies to provide for the future by improving their market penetration.
* To seek out new and grow existing operations where appropriate opportunities exist and do so and..
* Where the opportunity arises to expand on our asset base which have strengths and which had to the members’ assets value.
These are things that a manager would do, not a clerk.
11)The applicant’s salary was $80,000 per annum, which is approximately $1,600 per week. That is four times, more or less, the value of the highest grade of clerk in the award. That great discrepancy in the rates of pay is, in my view, indicative of the fact (although once again, not by itself necessarily conclusive) that he was employed as a manager, not as a clerk.
It follows from the conclusion that the applicant was employed in a managerial capacity, as that phrase is defined in clause 9 of the Award, that the applicant was not employed under award conditions, as that phrase is used in section 170CD of the Act.
It follows from that that the applicant is excluded from the operation of the relevant sections of Division 3 of Part VIA of the Act.
It follows from that that the only order open to the Court is that the application be dismissed.
I make that order.
COSTS
Section 347 of the Act reads as follows:
“COSTS ONLY WHERE PROCEEDING INSTITUTED VEXATIOUSLY ETC.
347(1) [Payment of costs] A party to a proceedings (including an appeal) in a matter arising under this Act shall not be ordered to pay costs incurred by any other part to the proceedings unless the first-mentioned party instituted the proceeding vexatiously or without reasonable cause.
347(2) [“Costs”] In subsection (1):
“costs” includes all legal and professional costs and disbursements and expenses of witnesses.”
There is a great deal of authority for the proposition that it is in exceptional circumstances that costs are awarded against an unsuccessful applicant in proceedings under what used to be the Industrial Relations Act, 1988 and what is now the Workplace Relations, Act 1996.
See, for example, Thompson v Hodder (1989) 21 FCR 467. See also R v Moore; ex parte FMWU (1978) 140 CLR 470. At page 473 Gibbs J said:
“In my opinion a party cannot be said to have commenced a proceeding “without reasonable cause” within the meaning of that section, simply because his argument proves unsuccessful. In the present case the argument presented on behalf of the prosecutor was not unworthy of consideration and it found some support in the two decisions of this Court to which I have referred. The fact that those decisions have been distinguished, and that the argument has failed is no justification for ordering costs in the fact of the prohibition contained in (the relevant section).”
In Kanan v Australian Postal and Communications Union (1992) 43 IR 257 Wilcox J (as he then was) said, at page 264:
“It seems to me that one way of testing whether a proceeding is instituted “without reasonable cause” is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to stigmatise the proceedings as being “without reasonable cause”. But where, on the applicant’s own version of the facts, it is clear that the proceedings must fail, it may properly be said that the proceeding lacks a reasonable cause.”
In this case I determined the preliminary point as to whether or not the applicant was excluded by the operation of section 170CD of the Act upon facts that were not substantially in dispute. That is a different question however from a determination that it is clear on the facts of the applicant’s own case that the proceedings “must fail”.
The applicant relied upon a case which I found useful. The case of Patatou v Nestles Australia, Industrial Relations Commission of New South Wales, Commissioner Sheils, matter number IRC 1073 of 1992, 3 December 1992, unreported. That was a case in which a person employed to some extent in a managerial capacity (but in a more junior capacity than what in my opinion was the applicant’s capacity), was nonetheless found to be covered by the Award. The applicant submitted that I would find that case illustrative. I did find that case illustrative, but I did not follow it because it seemed to me that the position of the person who was said not to be a “manager” in that case was significantly less important than that of the applicant in this case. Nonetheless, it was necessary to distinguish that case and I did so, although I did not refer to it directly by name in my earlier reasons for judgment.
It seems to me that the applicant did have an arguable point of law and, although I have found against him without too much difficulty, nonetheless, it cannot be said that the strict test set up by section 347 of the Act, namely, that the proceedings were instituted “without reasonable cause” has been satisfied.
I therefore decline to order costs.
I certify that this and the preceding 10 pages
are a true copy of the reasons for decision of
Judicial Registrar Patch as recorded in the transcript
and revised by the Judicial Registrar.
Associate: Dianna Fong
Dated: 18 June 1997
APPEARANCES
Counsel appearing for the applicant: Mr A Ridley Counsel appearing for the respondent: Mr R. Alkadamani Dates of hearing: 8 April 1997
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