Michael William Boyle as Executor of the Estate of the late John Patrick Boyle v State of New South Wales

[2000] NSWSC 442

CITATION:	Michael William Boyle as Executor of the Estate of the late John Patrick Boyle v State of New South Wales [2000] NSWSC 442
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 2989/99
HEARING DATE(S):	10/05/00
JUDGMENT DATE:	10 May 2000
PARTIES :	Michael William Boyle as Executor of the Estate of the late John Patrick Boyle (Plaintiff) State of New South Wales (Defendant)
JUDGMENT OF:	Santow J

COUNSEL :	G F Cohen (Plaintiff) S B Benson (Defendant)
SOLICITORS:	Hinde & Ginges (Plaintiff) I V Knight Crown Solicitor (Defendant)
CATCHWORDS:	SUPERANNUATION — Meaning of retrenchment for purposes of the Superannuation Act 1916 as amended in 1987.
LEGISLATION CITED:	Public Authorities Superannuation Act, s5 Superannuation Act 1916 (NSW), s23(1)(a) and (b)
CASES CITED:	Australian Workers Union NSW Branch v Roads & Traffic Authority (NSW) (1989) 29 IR 202
DECISION:	Termination not a retrenchment within the meaning of s23 of the Superannuation Act, 1916 (NSW)

REVISED — 24 May, 2000
IN THE SUPREME COURT
OF NEW SOUTH WALES
IN EQUITY

SANTOW J

No. 2989/99
MICHAEL WILLIAM BOYLE as Executor of the Estate of the late JOHN PATRICK BOYLE
Plaintiff
STATE OF NEW SOUTH WALES
Defendant
JUDGMENT — ex tempore

10 May 2000

INTRODUCTION

1    The Plaintiff by a summons claims as Executor of the Estate of the late John Patrick Boyle, a declaration in the following terms:

“1. A declaration that the termination on 12 June 1997 of the employment of the Late John Patrick Boyle with the New South Wales Department of Public Works and Services was not a retrenchment within the meaning of Section 23 of the Superannuation Act, 1916 (NSW).”

2    Although not strictly relevant to the matters before me insofar as they involve statutory construction in relation to the events that have happened, I should note the context in which the declaration is sought. As stated in the Agreed Narrative of Facts that follows, the late Mr Boyle took ill in March 1997, diagnosed with terminal cancer. In an effort to be helpful, he was invited to seek retrenchment by his then employer, the Department of Public Works and Services. 3    He did not elect under the SASB superannuation fund between a lump sum or pension with the result that he received a pension for a mere two weeks before his premature death on 28 June 1997, for reasons explained below. Had he been alerted to the need to do so and been well enough, he, like any rational person with a known terminal illness would have elected for the substantially more generous lump sum. 4    In fact the invitation to elect arrived after his death; see Annexure P to the affidavit of Mr Ginges of 3 August 1999. 5    That context is not of course to control the answer to the legal questions but rather to explain how this litigation has come about. 6    I turn now to the relevant events which are set out below in agreed form under the heading "Agreed Narrative".

AGREED NARRATIVE

7    The Deceased was employed as an architect with the NSW Department of Public Works and Services (DPWS) for a period of 24 years from 12 June 1973 until 12 June 1997. In March 1997 he became ill and was shortly thereafter diagnosed with lung cancer and did not return to work. On 28 May 1997 he completed a form indicating an expression of interest in voluntary redundancy. On 11 June 1997 DPWS made an offer of voluntary redundancy to him which he accepted on 12 June 1997, being the date upon which his employment terminated. He died on 28 June 1997.

LEGAL ISSUES

8 The essential issue before me is whether in the events that happened the late Mr Boyle is to "be taken to be retrenched", for the purposes of s23(1)(b) of the Superannuation Act 1916 (NSW) ("the Act"). 9 I quote s23(1) below:

“23 Retrenchment and discharge
(1) For the purpose of this Act , a contributor shall be taken to be retrenched when the contributor’s service with an employer is terminated and where the service is expressed by the employer to be:
(a) compulsorily terminated by the employer on the ground that:
(i) the employer no longer requires the contributor’s services and, on termination of the contributor’s service, does not propose to fill the contributor’s position,
(ii) the work which the contributor was engaged to perform has been completed, or
(iii) the amount of work that the employer requires to be performed has diminished and, because of that fact, it has become necessary to reduce the number of employees employed by the employer, or
(b) terminated as a result of the acceptance by the contributor of an offer by the employer of terms of retrenchment made on a ground specified in paragraph (a).”

10 It is common ground that if Mr Boyle were so taken to be retrenched, it must be on the basis that there was a voluntary termination in terms of s23(1)(b), on the ground stated above in s23(1)(a)(iii) in the Act. 11 The Plaintiff primarily contended that this statutory provision required there be an offer by the employer which expressly included the relevant ground or grounds in s23(1)(a) relied upon by the employer, or at least incorporated the same by reference or necessary intendment as part of the offer. 12 The Plaintiff relies on the words of sub-para (b) combined with the opening reference to "expressed by the employer" which introduces sub-paras (a) and (b) both for that primary contention and for his alternative argument. That argument is that even if, as the Defendant contends, the words "which was" are to be implied before the word "made" in sub-para (b), the opening reference to what “is expressed” by the employer necessarily requires that such required expression be either in the offer of retrenchment itself, or else be made contemporaneously with such offer. Further, such expression must identify the ground or grounds relied upon by the employer to effect retrenchment for the purposes of the Act. Such an interpretation proffered by the Plaintiff has the virtue as a matter of logic, of rendering compulsory termination in sub-para (a) and voluntary termination in sub-para (b) equivalent insofar as the expression of grounds are concerned. 13 The Plaintiff in relation to the latter argument points to a relevant contemporaneous document, as distinct from the offer itself, namely the document consisting of Annexure “I” to Mr Ginge’s affidavit of 3 August 1999 being the Employment Separation Certificate for the late Mr Boyle dated 22 July 1997. That document sets out a series of questions under the heading "Was Employment Terminated Due to:” 14 Relevantly the first of these dot points which follow contains a tick to the "No" box following the reference to "Shortage of Work?". The other four dot points do not, concededly, identify a ground for termination which could be equated to those set out in s23(1)(a) of the Act. 15 That negative answer serves to refute that as a matter of fact the late Mr Boyle was terminated on a ground in s23(1)(a). This follows because the only relevant ground relied upon was that in s23(1)(a)(iii) of the Act and that answer negatives its application. The expression "shortage of work" is a shorthand for that ground and, being the subject of a "No" answer, is thereby eliminated. 16 It is true that there followed a series of correspondence with the employer and the State Superannuation Fund which culminated in the somewhat self-serving letter of 8 April 1999. The latter followed the strong hint in the earlier letters that specification of a relevant ground of s23(1) was necessary to achieve retrenchment in terms of the Act. 17 I agree with the Plaintiff’s submission that the letter of 8 April 1999 (being Annexure “O” to Mr Ginges’ affidavit) could not be relied upon as a contemporaneous expression, so capable of satisfying s23(1) of the Act. I here adopt what was said by Watson J in the Australian Workers Union NSW Branch v Roads & Traffic Authority (NSW) (1989) 29 IR 202 at 210 when dealing with similar language to s23 in the context of the definition of "retrenchment" contained in s5 of the Public Authorities Superannuation Act. Thus in explaining what is meant by the word "expressed" in that analogous context he says:

“That, of course, does not mean what is ‘expressed’ after the event but rather what occurred contemporaneously or as part of the critical events which ended the employment. Obviously what an employer may state at that time could be conclusive on the issue.
‘Expressed’ does not simply mean the use of clear words. It means words or actions which are explicit or implicit as to the conclusion to be reached so that the conclusion can be said to arise clearly and plainly from what is said and done and not merely by inference therefrom. (See Shanmugam v Commissioner for Registration of Indian and Pakistani Residents [1962] AC 515 at 527; Brighton v Dungog Municipal Council per Jordan CJ (1943) 15 LGR (NSW) 74 at 81, and Public Service Association (NSW) v Industrial Commission (NSW) (1985) 11 IR 420; [1985] 1 NSWLR 627.”

18 I might add that in dealing with the subject matter of what must be "expressed" by the employer, albeit in the context of compulsory termination, it is clear from the judgment particularly at 215-6 that not only must the expression include that the employment of the relevant employee was "compulsorily terminated" but, relevant here, the applicable ground or grounds must be taken from s23(1)(a) of the Act. 19 It clearly could not be said that the employer in that contemporaneous sense, ever communicated or “expressed” to the late Mr Boyle the ground relied upon, even accepting that such communication might not be within the terms of the offer but as part of the surrounding circumstances. The actual offer (Annexure “D” to Mr Ginges’ affidavit) dated 11 June 1997 uses the expression "voluntary redundancy". It concludes with the final paragraph in these terms:

"your acceptance of the redundancy package will in no way reflect on your service with the Department of Public Works and Services and a Letter of Separation will be issued to you on or soon after your last day of employment."

20 The Letter of Separation is in fact Annexure “I” to which I have earlier made reference. It adds nothing save the exclusion of "shortage of work" as the ground of termination of the employment, thus refuting the very ground now sought to be relied upon by the Defendant employer. 21 I do not need consider whether to accept the matters in the Plaintiff’s first or second submission, as the same result must follow, namely that the Plaintiff succeeds. However, I turn now to analyse the section more closely in terms of its legislative history and statutory background. 22 The original version of s23 is in the following terms dating from 1916 (only in 1987 by the section in its present form):

“ 23. Compulsory termination by an employer of the service of a contributor expressed to be on the ground that the employment of such contributor is not necessary or that his position is not to be refilled, or on the ground that the work for which such contributor was engaged is finished, or on the ground that the quantity of work has diminished and has rendered necessary a reduction in the number of employees —
(a) shall be deemed to be ‘retrenchment’ if the contributor has served such employer for at least ten years, and if the Board be satisfied as to the bona-fides of such ground of termination of service; and
(b) shall be deemed to be ‘discharge’ if the contributor has not so served, or if the Board be not so satisfied.”

23    Clearly enough in that progenitor the word "expressed" requires an express statement by the employer of the ground for compulsory termination. The relevant potential grounds that then follow in the 1916 legislation are clearly, in their broad thrust, similar to the grounds adopted in 1987 when other amendments were also made. Those amendments eliminated any requirement for a minimum period of service before someone could "be retrenched". Likewise no longer need the Superannuation Board be satisfied as to the bona fides of the employee’s termination of service. Relevantly here, there was added for the first time the ground “termination of a contributor’s employment as a result of the acceptance by the contributor of an offer by the contributor’s employer of terms of retrenchment”; see Explanatory Note to Act No. 40 of 1987 being the Superannuation (Retrenchment) Amendment Bill 1987. 24    In the Second Reading Speech, the Minister for Industrial Relations and Minister for Employment, Mr Hills, sets out the objective of the legislation. I quote from the relevant part of the New South Wales Parliamentary Debates Vol. 196 at 10777:

“The objective of this legislation is to put in place the superannuation elements of the Government’s retrenchment policy for State Government and public authority employees. The policy seeks to pay out the accrued value of certain statutory employee entitlements, to compensate the employee for a period of unemployment while seeking new employment, and, subject to a minimum qualifying period, to pay out the full equity of an employee in his superannuation scheme, secured by both his own [ Quorum formed .] and the employer contributions. In detail, the retrenchment package provides for four week’s notice of retrenchment or payment in lieu; severance payment of two weeks’ pay per year of continuous service with a maximum of twenty-six weeks’ payment; the benefit allowable to the employee as a member of a superannuation fund to include full vesting of the employer contribution within the particular scheme structure after three years' membership; and a pro-rata annual leave loading in respect of leave accrued at date of termination. It will be observed that the superannuation component of this package affords full vesting of the employer contribution after a relatively short time. It is that aspect which is the principal subject of this legislation and I shall return to that specific aspect in the course of this speech.”

25    Later at 10779 the Minister points up that retrenchment gives rise to the superannuation benefits which attend what is so defined as retrenchment. Clearly as the passage which follows makes clear, the employee needs to know when considering an offer of voluntary separation that those redundancy superannuation benefits will follow. I quote:

“If further evidence of the Government’s compassionate approach is required, I draw honourable members’ attention to two special features of this legislation. In areas where redundancy is evident and retrenchment a necessity, it is the policy of the Government to seek voluntary separation on the offer of the same benefits as for compulsory retrenchment. Second, those who by age are entitled to early retirement benefits will have that superannuation entitlement with the other parts of the package. The purpose of the Government in these measures is to preserve, so far as it is possible, the essential dignity of those employees unfortunate enough to come under the retrenchment shadow by enabling them to effect voluntarily their exit on the most favourable terms available to them. It must be recognized, however, that although the purpose of retrenchment of employees is the achievement of cost savings to be had from dispensing with employees whose services are no longer required, in the short term considerable immediate costs are entailed.”
Summing up

26    The employee needs to know contemporaneously with termination of employment that the grounds are within s23(1)(a) of the Act in order to know that he or she has the elections thereby afforded. The employee can only do this if the employer “expresses” the relevant ground or grounds, being within s23(1)(a) of the Act, and does so in a contemporaneous communication to the employee. Here the employer never did any of those things. It is no answer to say the State Authority Superannuation Board or its successor administering the superannuation scheme should be the primary point of such communication, as the Defendant at one point contended. For it is the employee that has to decide, when his or her job terminates, and whether to accept the employer’s offer of voluntary separation with the elections that may follow between pension or lump sum. The employee needs first to have from the employer the relevant grounds, clearly enough expressed so the employee can understand if they come, or do not come, within s23(1)(a) of the Act. Such an interpretation accords with the evident legislative purpose, as elaborated in the Minister’s speech, the text of the legislation and the earlier legislative history to which I have made reference.

CONCLUSION AND ORDERS

27    It follows that the Plaintiff is entitled to the declaration it seeks and I make the declaration accordingly as earlier set out. 28    Costs should follow the event and be awarded to the Plaintiff. 29    I should add this. While Courts may not bend statutory interpretation to the just result when the words do not admit of it, in the present case there is a happy concurrence of both. The late Mr Boyle was exceedingly unfortunate to have been denied the opportunity to chose the lump sum he undoubtedly would have chosen had he been in a position to direct his mind to the matter. The present result is in accordance with a proper interpretation of the legislation. It also produces something closer to what might otherwise have occurred, had these tragic events not intervened.

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Last Modified: 09/25/2000