New South Wales Independent Education Union (NSW and ACT) v Thornton Child Care & Pre School Centre Association Inc
[2008] FCA 1117
•31 July 2008
FEDERAL COURT OF AUSTRALIA
New South Wales Independent Education Union (NSW and ACT) v Thornton Child Care & Pre School Centre Association Inc [2008] FCA 1117
INDUSTRIAL RELATIONS – whether pay increases determined by a State industrial authority and expressed to take effect at times after the commencement of Schedule 1 to the Workplace Relations Amendment (Work Choices) Act 2005 were determined wholly or partly on the ground of work value change – whether the preserved APCS under s 208 was taken to include the provisions under which those pay increases were to take effect
Workplace Relations Act 1996 (Cth) ss 171(3), 201–213
Industrial Relations Act 1996 (NSW) ss 10, 11, 19, 50, s 145(1), 151A, 152(1), 153, 162, 163 and 166Re Miscellaneous Workers Kindergartens and Childcare Centres etc (State) Award (2006) 150 IR 290
Re Miscellaneous Workers Kindergartens and Childcare Centres etc (State) Award (No 2) (2006) 150 IR 355
Re Teachers (Non-Government Early Childhood Service Centres Other Than Pre Schools) (State) Award [2006] NSWIRComm 4
Safety Net Review – Wages, June 2005 (2005) 142 IR 1
State Wage Case 2005 (2005) 142 IR 337
State Wage Case 2005 (Statement and Orders) (2005) 142 IR 335
State Wage Case 2004 (2004) 132 IR 190
Sterling Engineering Co Ld v Patchett [1955] AC 534
Kuligowski v Metrobus (2004) 220 CLR 363
Pastras v The Commonwealth (1966) 9 FLR 152
Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165
Timber Shipping Co. S.A. v London & Overseas Freighters Ltd [1972] AC 1
NZI Capital Corporation Pty Ltd v Child (1991) 23 NSWLR 481
Elliott v Reading [1999] WASCA 11Spencer Bower, Turner and Handley, The Doctrine of Res Judicata (3rd edition, Butterworths, 1996)
NEW SOUTH WALES INDEPENDENT EDUCATION UNION (NSW AND ACT) v THORNTON CHILD CARE & PRE SCHOOL CENTRE ASSOCIATION INC
NSD 2282 of 2007
GRAHAM J
31 JULY 2008
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 2282 of 2007
BETWEEN:
NEW SOUTH WALES INDEPENDENT EDUCATION UNION (NSW AND ACT)
ApplicantAND:
THORNTON CHILD CARE & PRE SCHOOL CENTRE ASSOCIATION INC
Respondent
JUDGE:
GRAHAM J
DATE OF ORDER:
31 JULY 2008
WHERE MADE:
SYDNEY
THE COURT:
1.Orders that the matter be stood over to a date to be fixed to consider the form and quantum of the relief to be granted.
2.Grants liberty to either party to apply on 3 days’ notice.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 2282 of 2007
BETWEEN:
NEW SOUTH WALES INDEPENDENT EDUCATION UNION (NSW AND ACT)
ApplicantAND:
THORNTON CHILD CARE & PRE SCHOOL CENTRE ASSOCIATION INC
Respondent
JUDGE:
GRAHAM J
DATE:
31 JULY 2008
PLACE:
SYDNEY
REASONS FOR JUDGMENT
This case requires consideration to be given to pay increases said to have been determined by a State industrial authority before 27 March 2006, wholly or partly on the ground of work value change, that were expressed to take effect at times after 27 March 2006.
The applicant submits that pay increases (‘the pay increases’) provided for in the fourth and fifth columns of Table 1 in Part B of the Teachers (Non-government Early Childhood Service Centres other than Pre-schools) (State) Award 2006 (‘the award’), which was made on 23 January 2006, were increases determined by the Industrial Relations Commission of New South Wales, a State industrial authority, wholly or partly on the ground of work value change, which were taken to be included in the ‘preserved APCS’ for which s 208(1) of the Workplace Relations Act 1996 (Cth) (‘the Act’) provided, by virtue of s 208(4) thereof. The respondent contends that the pay increases were not so determined. A copy of the relevant Table is attached hereto as Appendix 1.
The Workplace Relations Act 1996
Part 7 of the Act, entitled ‘THE AUSTRALIAN FAIR PAY AND CONDITIONS STANDARD’, was inserted into the Act by the Workplace Relations Amendment (Work Choices) Act 2005 (Cth) (Act No 153 of 2005)(‘the Work Choices Act’) which received Royal assent on 14 December 2005 and relevantly commenced on 27 March 2006.
Part 7 of the Act contained seven Divisions which were headed ‘Preliminary’, ‘Wages’, ‘Maximum ordinary hours of work’, ‘Annual leave’, ‘Personal leave’, ‘Parental leave’ and ‘Civil remedies’.
Section 171(3) of the Act provided for the provisions of Divisions 2 to 6 of Part 7 to constitute the ‘Australian Fair Pay and Conditions Standard’.
The provisions of Part 7 which are presently relevant are to be found in Division 2 – Wages which comprises ss 176 to 222 inclusive.
An APCS is a set of provisions relating to pay and loadings for particular employees that complies with Subdivision H of Division 2 of Part 7 (see s 201 of the Act). Subdivision H, which comprises ss 201-207, was entitled ‘Australian Pay and Classification Scales (APCSs): general provisions’.
Section 202 of the Act dealt with what must or may be in an APCS. It relevantly provided:
‘202(1)An APCS must contain:
(a) either or both of the following:
(i)rate provisions determining basic periodic rates of pay for employees whose employment is covered by the APCS;
(ii)rate provisions determining basic piece rates of pay for employees whose employment is covered by the APCS; and
(b)if the rate provisions determine different rates of pay for employees of different classifications–provisions describing those classifications; and
(c)coverage provisions.
(2) An APCS may also contain:
(a)casual loading provisions determining casual loadings for employees whose employment is covered by the APCS and for whom there are not basic piece rates of pay; and
(b)if the casual loading provisions determine different casual loadings for employees of different classifications–provisions describing those classifications; and
(c)provisions that determine, in relation to employees to whom training arrangements apply, whether hours attending off-the-job training (including hours attending an educational institution) are hours for which a basic periodic rate of pay is payable; and
(d)frequency of payment provisions; and
(e)other incidental provisions.
(3) Subject to subsection 208(4), rate provisions or casual loading provisions in an APCS must not include provisions under which a rate or casual loading provided for by the APCS will or may be increased by operation of the provisions and without anyone having to take any other action.
…’
Section 203 dealt with how pay rates and loadings were to be expressed in an APCS.
Subdivision I of Part 7 of the Act dealt with ‘Australian Pay and Classification Scales: preserved APCSs’. It comprised ss 208 to 213 inclusive. Relevantly, for present purposes, s 208 provided:
‘208(1)If a pre reform wage instrument [which included a pre 27 March 2006 State award of a State industrial authority, including the Industrial Relations Commission of New South Wales and, accordingly, the award] contains rate provisions determining one or more basic periodic rates of pay, or basic piece rates of pay, payable to employees, then, from the reform commencement [27 March 2006], there is taken to be a preserved APCS that includes (subject to this Subdivision):
(a)those rate provisions; and
(b)if those rate provisions determine different basic periodic rates of pay, or different basic piece rates of pay, for employees of different classifications – the provisions of the instrument that describe those classifications; and
(c)any casual loading provisions of the instrument that determine casual loadings payable to employees, other than employees for whom the instrument provides basic piece rates of pay; and
(d)if the casual loading provisions determine different casual loadings for employees of different classifications – the provisions of the instrument that describe those classifications; and
(e)any provisions of the instrument that determine, in relation to employees to whom training arrangements apply, whether hours attending off-the-job training (including hours attending an educational institution) count as hours for which a basic periodic rate of pay is payable; and
(f)any frequency of payment provisions for the instrument; and
(g)the coverage provisions for the instrument.
(2) The preserved APCS is derived from the pre-reform wage instrument.
(3) Subject to subsection (4) and the regulations, the preserved APCS is taken not to include any provision of the pre-reform wage instrument which, after the adjustments referred to in sections 209 to 212 take effect, will not comply with the requirements of sections 202 and 203.
(4) If:
(a)the rate provisions referred to in paragraph (1)(a) include pay increases for particular employees, determined before the reform commencement, that are expressed to take effect at a time or times after the reform commencement; and
(b)those increases were determined by … a State industrial authority, wholly or partly on the ground of work value change or pay equity;
then (despite subsection 202(3)), the preserved APCS is taken to include provisions under which those increases will take effect for those employees at that time or those times.
…’
No question of ‘pay equity’ arises in this case. Furthermore, it is not suggested that any particular significance need be attached to the provisions of ss 209-212.
Section 202(3) was originally identified as s 90X(3) when inserted into the Act by the Work Choices Act. The Explanatory Memorandum circulated by the authority of the Minister for Employment and Workplace Relations in respect of the Workplace Relations Amendment (Work Choices) Bill 2005 included in paragraphs 415 – 417 explanatory material in respect of the provisions which are now to be found in s 202(1)-(3) of the Act. The material is of limited utility but included:
‘415 Proposed section 90X would prescribe content rules for APCSs. …
…417Subsections 90X(3)-(6) would set out a range of provisions that cannot be included in an APCS. For example, subsection 90X(3) would prevent the AFPC from including a provision in an APCS that would otherwise automatically enable a rate or casual loading to be increased. The legislative note would set out some common examples of the types of ‘self-executing’ provisions that would be excluded from rate and loading provisions in APCSs. …’
A legislative note was inserted in respect of what is now s 202(3) of the Act as follows:
‘Note: This does not prevent an APCS, or an adjustment of an APCS, from being expressed to take effect at a future date. However, it does prevent an APCS from containing provisions under which (for example):
(a)there will be one or more specified increases of a rate or loading at a specified future time or times; or
(b) rates of pay or loading are indexed periodically.’
The Explanatory Memorandum also contained material referable to s 90ZD which was inserted into the Act by the Work Choices Act and in particular in relation to what became s 208(1) and 208(3). No explanatory material was included in the original Explanatory Memorandum in respect of what became s 208(4). The explanatory material relevantly included:
‘434Proposed section 90ZD sets out the mechanism by which a pre-reform wage instrument, … is converted into a preserved APCS on the reform commencement. …
435Subsection 90ZD(3) would provide that … any provision that does not comply with the requirements for what an APCS must or may contain (proposed section 90X) or how rates of pay and casual loadings are to be expressed in an APCS … is deemed not to be included in the APCS.’
The qualification upon the operation of s 202(3) of the Act and also s 208(3) was introduced when a new clause was added to the Workplace Relations Amendment (Work Choices) Bill 2005 which became s 90ZD(3A), now identified as s 208(4) of the Act. In a Supplementary Explanatory Memorandum in relation to the Workplace Relations Amendment (Work Choices) Bill 2005 circulated by the authority of the Minister for Employment and Workplace Relations, the following explanatory material was provided in relation to the amendments to the clauses which have now become s 202(3) and 208(3), and also the clause which became s 90ZD(3A), now s 208(4) of the Act, as follows:
‘68The proposed amendment to subsection 90X(3) would be consequential upon the proposed amendment to insert new subsection 90ZD(3A). This would enable an exception to be made to the operation of proposed section 90X(3).
…
70The proposed amendment to subsection 90ZD(3) would be consequential upon the insertion of new subsection 90ZD(3A).
71The proposed amendment would insert new subsection 90ZD(3A) to create an exception to the operation of s 90X(3), which prohibits “self-executing” rate or casual loading increases. Subsection 90(3A) would ensure that preserved APCSs are taken to include any pre-reform wage increases determined by the AIRC, or a State industrial authority, wholly or partly on the ground of work value change or pay equity. The subsection would only apply to allow the phasing-in of pay increases on those grounds scheduled to occur after the reform commencement.’
The question for determination in the present proceedings is whether or not the pay increases were increases, the phasing-in of which was authorised by s 208(4) of the Act.
The Kindergarten case
The respondent readily concedes that had the pay increases been determined by the Industrial Relations Commission of New South Wales in the same manner as the increases contained in the Miscellaneous Workers Kindergarten and Childcare Centres &c (State) Award 2006, they would undoubtedly be picked up by s 208(4) of the Act. However, the respondent submits that the pay increases for which the award provided were not increases picked up by s 208(4) of the Act.
The Miscellaneous Workers Kindergarten and Childcare Centres &c (State) Award 2006 was made by a Full Bench of the Industrial Relations Commission of New South Wales comprising the President, Wright J, the Vice-President, Walton J, Schmidt J and McLeay C on 16 March 2006 with effect from 7 March 2006. It rescinded and replaced the Miscellaneous Workers Kindergarten and Childcare Centres &c (State) Award published on 2 February 2001 and all variations thereof (see Re Miscellaneous Workers Kindergartens and Childcare Centres etc (State) Award (2006) 150 IR 290 (the ‘Kindergarten case’) at [348] and Re Miscellaneous Workers Kindergartens and Childcare Centres etc (State) Award (No 2) (2006) 150 IR 355 at [12]-[13]).
The Miscellaneous Workers Kindergarten and Childcare Centres &c (State) Award 2006 provided for a series of ‘further increases’ in rates and allowances which were to be phased in as follows:
‘First pay period commencing on or after 7 March 2006 – 4 per cent
1 September 2006 – 4 per cent, or the balance of the remaining increase, if less than 4 per cent
1 March 2007 – 4 per cent, or the balance of the remaining increase, if less than 4 per cent
1 September 2007 – 4 per cent, or the balance of the remaining increase, if less than 4 per cent
1 March 2008 – The balance of any remaining increase.’(See the Kindergarten case at [348])
The Kindergarten case would appear to have been before the Industrial Relations Commission of New South Wales over a protracted period of time. It occupied some 18 hearing days. Proceedings were commenced on both the employees’ and employers’ side of the record. The history of the proceedings is summarised at [1]-[12] of the Commission’s reasons for decision. The history included:
‘11 … on 19 December 2005, in supplementary submissions filed by the Union, a revised classification structure and rates of pay, quite different to what had been pressed to that point, emerged. … The rates pressed still relied on work value change ….
12 The parties then sought further assistance from the Commission in conciliation, which was provided, with the result that the parties further reduced the areas of disagreement, but still no final agreement emerged. The parties’ positions further altered, even as final submissions were put and on the part of some employers, after they were concluded. … The contest between the parties as to rates of pay and conditions, as finally pressed, involved claims for limited alterations to the existing classification structure. Substantially increased rates of pay were still pressed by the Union. …’
Later, in respect of the Union’s case the Commission said at [19]-[20]:
‘19 The award history was argued to demonstrate the absence of comprehensive assessment of the value of the work. …
20 Changes in the industry and in the skills required of workers which were not reflected in award rates, were said to include changes to licensing requirements, accreditation arrangements, training and regulation of childcare workers, as well as health and safety requirements and obligations flowing from child protection and privacy legislation. Mandatory reporting and other government policies had affected the work and training required. There had also been a change from traditional “care” duties, to a focus on individual development, educational requirements and care needs of each child. There had also been a devolution of work from teachers to child care workers, “with a consequent departure from long day care centres being run like classrooms”.’
It is clear that extensive evidence was placed before the Commission from both the Union perspective and the employer’s perspective (see at [40] and the list of witnesses recorded in Annexure A to the Kindergarten case at pp353-354).
Paragraphs [180]-[183] of the decision were recorded under the heading ‘The Work Value Cases’, paragraphs [184]-[194] under the heading ‘Work Value Changes – Child Care Workers and Co-ordinators’ and paragraphs [195]-[197] under the heading ‘Work Value Change – Support Workers’.
The reasoning of the Commission is not relevant for present purposes. It is, however, important to observe that claims were made for increases in rates of pay on the ground of work value change. At [184] and [196] the Commission recorded its conclusions in relation to such matters as follows:
‘Work Value Changes – Child Care Workers and Co-ordinators
184 We are satisfied that the evidence established work value change sufficient to satisfy the requirements of the principle, in relation to these employees.
…Work Value Changes – Support Workers
…196 While the evidence showed the duties and responsibilities which fall upon such employees, which are no doubt important for the proper operation of a child care centre, we are satisfied that change of the kind required to be demonstrated by the Work Value principle, was not made out. All work changes over time. Change, of itself, is not sufficient to satisfy the requirements of the principle. What must be established on the evidence is changes in work that “constitute such a significant net addition to work requirements as to warrant the creation of a new classification or upgrading to a higher classification.” This was not shown. It follows that the Union’s claim for increased wages for such employees, must be rejected. …’
The Early Childhood Service Centres case
By way of contrast with the Kindergarten case, the respondent points out that no evidence was adduced before the Commission in Re Teachers (Non-Government Early Childhood Service Centres Other Than Pre Schools) (State) Award [2006] NSWIRComm 4 (the ‘Early Childhood Service Centres case’) to establish changes in work that constituted such a significant net addition to work requirements as to warrant the creation of a new classification or upgrading to a higher classification for any of the employees represented by the applicant, the New South Wales Independent Education Union (NSW and ACT).
The award in the Early Childhood Service Centres Case was made pursuant to an application filed by the applicant union in the Industrial Relations Commission of New South Wales on 15 February 2005 (No. IRC 789 of 2005). The application provided as follows:
‘A. Application is made for a new Award.
B.Under section 11 of the Industrial Relations Act 1996 [the reference to s 11 would appear to be to s 11(2)(b) in particular].
C.In the terms stated in the attached schedule [the parties were unable to inform the Court whether there was an attached schedule or not].
D. Award affected:
Teachers (Non Government Early Childhood Service Centres Other Than Pre Schools) (State) Award 2002
E. Grounds and reasons:
1.This application seeks to make a new Award pursuant to section 11 of the Industrial Relations Act 1996 [presumably a reference to s 11(1)(a)];
2.The union seeks improvements in rates of pay and conditions consistent with the State Wage Case Wage Fixing Principles;
3.The union considers that it is appropriate for rates of pay contained in the award to be subject of review by the Commission.
…
F.Particulars:
1.The nominal term of the Teachers (Non Government Early Childhood Service Centres Other Than Pre Schools) (State) Award 2002 expired on 31 December 2004.
2.The State Wage Case Principles permit claims for increases in rates of pay and conditions to be processed as a special case.
3.The rates of pay applying to teachers in early childhood services covered by this award have not been subject of consideration in a special case by the Commission since 2001.
4.Changes in work value of teachers have occurred which have not been appropriately compensated by increases in rates of pay.
…’
The references in the application to ‘special case’ in Particulars 2 and 3 and to ‘Changes in work value’ in Particular 4 are important.
Awards made under the New South Wales Industrial Relations Act
The controls on the making of awards by the Industrial Relations Commission of New South Wales under the Industrial Relations Act 1996 (NSW) (the ‘Industrial Relations Act’) are somewhat limited. In the Dictionary to the Industrial Relations Act ‘award’ is defined to mean ‘an award made, or taken to be made, by the Commission under this Act, and includes any order of the Commission under this Act that sets conditions of employment.
Section 10 of the Industrial Relations Act contains the most significant control. It provides:
‘10The Commission may make an award in accordance with this Act setting fair and reasonable conditions of employment for employees.’
Section 19 of the Industrial Relations Act provides for the review of awards on a regular basis. It relevantly provides:
‘19(1)The Commission is required to review each award before September 2001 and subsequently at least once in every 3 years.
(2)The purpose of a review is to modernise awards, to consolidate awards relating to the same industry and to rescind obsolete awards.
(3)The Commission must take account of the following matters in the review of awards:
(a)any decision of the Commission under Part 3 or any other test case decision of the Commission [Part 3 which comprised ss 48-52, made provision for the making of State decisions being decisions of a Full Bench of the Commission that generally affect, or are likely to generally affect, the conditions of employment of employees in New South Wales who are subject to its jurisdiction, and the variation of awards and other orders on the adoption of National decisions being decisions of a Full Bench of the Australian Industrial Relations Commission that generally affect or are likely to generally affect the conditions of employment of employees in New South Wales who are subject to its jurisdiction],
(b)rates of remuneration and other minimum conditions of employment,
(c) part-time work, casual work and job-sharing arrangements,
(d) dispute resolution procedures,
(e) any issue of discrimination under the awards, including pay equity,
(f) any obsolete provisions or unnecessary technicalities in the awards and the ease of understanding of the awards,
(g) any other matter relating to the objects of the Act that the Commission determines.
(4)The Commission must also take account of the effect of the awards on productivity and efficiency in the industry concerned.
(5)During a review of awards, relevant industrial organisations and any other parties to the awards may make submissions on any of the matters being reviewed.
(6)The Commission is to make such changes to awards as it considers necessary as a result of a review.’
The Industrial Relations Commission of New South Wales was established by s 145(1) of the Industrial Relations Act.
Section 50 provided for the adoption and variation of principles or provisions of a National decision for the purposes of awards and other matters under the Industrial Relations Act. Section 50 provided:
‘50(1)As soon as practicable after the making of a National decision, a Full Bench of the Commission must give consideration to the decision and, unless satisfied that it is not consistent with the objects of this Act or that there are other good reasons for not doing so, must adopt the principles or provisions of the National decision for the purposes of awards and other matters under this Act.
(2)A Full Bench of the Commission is to give consideration to the National decision either on application or on its own initiative.
(3)The principles or provisions of a National decision may be adopted:
(a)wholly or partly and with or without modification, and
(b)generally for all awards or other matters under this Act or only for particular awards or other matters under this Act.
(4)The principles or provisions of a National decision so adopted may be varied by a Full Bench of the Commission, whether or not another National decision is made.’
In the exercise of its powers under s 50 of the Industrial Relations Act, the Industrial Relations Commission of New South Wales adopted the National decision of the Australian Industrial Relations Commission of 7 June 2005 in the Safety Net Review – Wages, June 2005 (2005) 142 IR 1. The Industrial Relations Commission of New South Wales relevantly made the following orders on 20 June 2005 in the State Wage Case 2005 (2005) 142 IR 337 at 338-9 (see also State Wage Case 2005 (Statement and Orders) (2005) 142 IR 335):
‘1.Pursuant to s 50 of the Industrial Relations Act 1996 the Full Bench of the Industrial Relations Commission of New South Wales orders, for the purpose of awards and other matters under the Act, the adoption, partly and with modifications as contained in the decision and reasons of the Full Bench, of the Principles and provisions of the National decision of 7 June 2005.
2.Pursuant to order 1, the Commission orders that the Commission's Wage Fixing Principles shall be as set out in annexure D to the Labor Council's submissions (Exhibit 1 in the proceedings [see now Annexure B to these Reasons for Decision]).
…’
In its reasons for decision in the State Wage Case 2005 the Full Bench of the Industrial Relations Commission of New South Wales said at [59]:
‘59 There were no differences between the parties as to the terms of the Wage Fixing Principles. Whilst the Principles we determine differ in a number of respects from those determined by the Australian Commission, we consider that there are good reasons for the modifications that have previously been adopted and retained. The Principles we adopt are set out in Annexure B.’
The ‘Wage Fixing Principles’ as so adopted were set out in Annexure B to the State Wage Case 2005 at pp352-361. These Wage Fixing Principles relevantly included:
‘Wage Fixing Principles
1. Preamble
These principles have been developed with the aim of providing for their period of operation, a framework under which all concerned - employers, workers and their unions, governments and tribunals - can co-operate to ensure that measures to meet the competitive requirements of enterprises and industry are positively examined and implemented in the interests of management, workers and, ultimately, Australian and New South Wales society.
In exercising its powers and obligations under the Industrial Relations Act 1996 (NSW) (the Act), the Commission will continue to apply structural efficiency considerations including minimum rates adjustment provisions.
Movements in wages and conditions must fall within the following principles.
2. When an Award may be Varied or Another Award Made Without the Claim Requiring Consideration as a Special Case
In the following circumstances an award may, on application, be varied or another award made without the application requiring consideration as a special case:
(a)to include previous State Wage Case increases in accordance with Principle 3;
(b) to incorporate test case standards in accordance with Principle 4;
(c)to adjust allowances and service increments in accordance with Principle 5;
(d)to adjust wages pursuant to work value changes in accordance with Principle 6;
(e)where the application is consented to by the parties it will be dealt with in terms of the Act;
(f)to adjust wages for the State Wage Case 2005 in accordance with Principle 8;
(g)to approve of an enterprise arrangement reached in accordance with Principle 11; and
(h)to adjust wages pursuant to an application claiming that work has been undervalued on a gender basis in accordance with Principle 14.
…
6. Work Value Changes
(a)Changes in work value may arise from changes in the nature of the work, skill and responsibility required or the conditions under which work is performed. Changes in work by themselves may not lead to a change in wage rates. The strict test for an alteration in wage rates is that the change in the nature of the work should constitute such a significant net addition to work requirements as to warrant the creation of a new classification or upgrading to a higher classification.
In addition to meeting this test a party making a work value application will need to justify any change to wage relativities that might result not only within the relevant internal award structure but also against external classification to which that structure is related. There must be no likelihood of wage leapfrogging arising out of changes in relative position.
These are the only circumstances in which rates may be altered on the ground of work value and the altered rates may be applied only to employees whose work has changed in accordance with this principle.
(b)In applying the Work Value Changes principle, the Commission will have regard to the need for any alterations to wage relativities between awards to be based on skill, responsibility and the conditions under which work is performed.
(c)Where new or changed work justifying a higher rate is performed only from time to time by persons covered by a particular classification, or where it is performed only by some of the persons covered by the classification, such new or changed work should be compensated by a special allowance which is payable only when the new or changed work is performed by a particular employee and not by increasing the rate for the classification as a whole.
(d)The time from which work value changes in an award should be measured is the date of operation of the second structural efficiency adjustment allowable under the State Wage August Case 1989 (1989) 30 IR 107.
(e)Care should be exercised to ensure that changes which were or should have been taken into account in any previous work value adjustments or in a structural efficiency exercise are not included in any work evaluation under this Principle.
(f)Where the tests specified in (a) are met, an assessment will have to be made as to how that alteration should be measured in money terms. Such assessment will normally be based on the previous work requirements, the wage previously fixed for the work and the nature and extent of the change in work.
(g)The expression “the conditions under which the work is performed” relates to the environment in which the work is done.
(h)The Commission will guard against contrived classifications and over-classification of jobs.
(i)Any changes in the nature of the work, skill and responsibility required or the conditions under which the work is performed, taken into account in assessing an increase under any other principle of these principles, will not be taken into account under this principle.
…
10. Special Case
Except for the flow on of test case provisions, any claim for increases in wages and salaries, or changes in conditions in awards, other than those allowed elsewhere in the principles, will be processed as a special case before a Full Bench of the Commission, unless otherwise allocated by the President.
This principle does not apply to applications for awards consented to by the parties, which will be dealt with in the terms of the Act, or to enterprise arrangements, which will be dealt with in accordance with the Enterprise Arrangements principle.
…16. Duration
These principles will operate until further order of the Commission.’
(Emphasis added)
It will be apparent that the Wage Fixing Principles set out in Annexure B to the State Wage Case 2005 were the applicable principles at the time when the award was made in the Early Childhood Service Centres case. However, at the time when the application for the award was filed, the applicable Wage Fixing Principles were those set out in Annexure B to the decision of the Industrial Relations Commission of New South Wales in the State Wage Case 2004 (2004) 132 IR 190 (the ‘State Wage Case 2004’) at pp210-219.
On 4 June 2004 the Industrial Relations Commission of New South Wales made an order (at [84(2)]) in the State Wage Case 2004 that the Commission’s Wage Fixing Principles should be as set out in Annexure B to the decision of the Commission in that case. The Wage Fixing Principles so adopted were expressed to operate ‘until further order of the Commission’ which of course meant until the adoption of the Wage Fixing Principles in the State Wage Case 2005.
There were, in fact, no relevant differences between the Wage Fixing Principles as set out in the State Wage Case 2005 as quoted above and those set out in the State Wage Case 2004.
Section 151A of the Industrial Relations Act made provision for the Industrial Relations Commission of New South Wales in Court Session to be known as the Industrial Court of New South Wales and, under s 152(1), the Commission in Court Session was established as a superior court of record.
The making of awards under ss 10-11 of the Industrial Relations Act was not a function of the Commission which was to be exercised only by the Commission in Court Session under s 153 of that Act.
Section 162 of the Industrial Relations Act provided for the Commission to determine its own procedure. Section 162(2) required the Commission to conduct its proceedings publicly or, if it considered it necessary, privately. It allowed for time limits to be imposed upon ‘the presentation of the respective cases of the parties before it’ and empowered it to require argument to be presented in writing. It also empowered the Commission to require evidence to be presented in writing. In relation to rules of evidence and legal formality, s 163 provided:
‘163(1)The Commission:
(a)is not bound to act in a formal manner, and
(b)is not bound by the rules of evidence and may inform itself on any matter in any way that it considers to be just, and
(c)is to act according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms.
(2)However, the rules of evidence and other formal procedures of a superior court of record apply to the Commission in Court Session.’
Section 166 of the Industrial Relations Act made provision for parties to proceedings before the Commission to be represented by legal practitioners or by agents who were not such practitioners, if they chose not to appear personally.
The making of the award in the Early Childhood Service Centres case
The Australian Federation of Employers and Industries (formerly known as ‘Employers First’) sought further particulars from the applicant as to what it said were the work value changes which had occurred since 2001 in the Early Childhood Service Centres case. The making of such a request was referred to when the application was mentioned before the Industrial Relations Commission of New South Wales constituted by Schmidt J on 27 April 2005. A document detailing ‘Work Value Changes’ upon which the applicant relied was provided to Employers First in late April 2005.
The application came before the Industrial Relations Commission of New South Wales constituted by the President, Wright J, on 12 July 2005. The transcript reveals that the matter had been referred by Schmidt J to the President with a request that it go to a Full Bench. When invited to tell the President ‘a little bit about the case’, Ms Heron for the applicant said, amongst other things:
‘Our application seeks to bring the salaries up to a level [equal] to those for teachers employed in schools where, currently, they are some 10, 15 per cent below what teachers are paid in schools and there are also some other changes in conditions. We will be relying in our arguments for better pay [on the principle of work value].’
The President was informed that the parties anticipated that the case would take approximately two weeks.
His Honour inquired as to the extent of any agreement which may have been reached. He was informed that ‘[a]t this stage there is no agreement’.
Counsel for Employers First informed the President:
‘… at this stage there has been no agreement, but there are still some further discussions that should be taking place between the parties.
With respect to directions this morning … It is a substantial case that the union is seeking. … the list of changes are approximately 20 and that’s not all of them they have indicated to us. For that reason we say due to the substance of what is being sought it is appropriate it be heard by a Full Bench.’
When his Honour enquired as to whether the 20 changes were to the award, counsel for Employers First responded:
‘No, I should clarify that. Within the areas Ms Heron has set out are work value changes and we have asked specifically what are those work value changes and we have been given a list by the union, which is not exhaustive, which is approximately around the 20 mark, in the sense they say these are approximately 20 areas that have changed since 2001.’
(Emphasis added)
Later in the directions hearing an exchange took place between The President and Ms Heron as follows:
HIS HONOUR: ‘Ms Heron, perhaps if you could clarify that … your work value changes are not designed to have rates of pay in excess of those paid to teachers in other areas of the Education sector but rather to buttress or assist to make out your case for parity.’
MS HERON:‘Yes, that’s true, but the amounts claimed in our application will bring them up to parity with teachers in non-Government schools and in the public Education system …’
Later, the President suggested that it may be appropriate to ask the Union to actually prepare its case and start filing it as a means of starting the ball rolling. Ms Heron indicated that she would need two months for her evidence. Counsel for Employers First indicated that Employers First would be looking at something in the vicinity of two to three months at the very least. The President then observed:
‘You have had this claim for a while and you have had … at least the non exhaustive list of some 20 items so you have had … a fairly reasonable idea of the union’s case. Why couldn’t you, if the union has two months, have two months as well? In other words, we are looking at September and November?’
The President proceeded to set a timetable requiring the Union to file and serve its evidence on or before 12 September 2005 and the employers to file and serve their evidence on or before 14 November 2005.
It was not until 25 November 2005 that the Union filed witness statements in support of its applications.
Then, on 12 December 2005 the Union filed an affidavit of urgency seeking to have the application heard as early as possible. Thereupon, dates for hearing were set for 23 and 30 January (before the Full Bench), 8, 22, 23, 24, 27 and 28 February (to take evidence on behalf of the Full Bench, before Schmidt J) and 6 March 2006, with a possible final date of 14 March 2006 (before the Full Bench). The then timetable for the filing of the employers’ evidence, which was due on 10 February 2006, was not altered.
As it transpires discussions took place between the parties between 7 and 20 December 2005 which ultimately led to a settlement. On 19 January 2005 the Union wrote to the Associate to the President in the Industrial Relations Commission of New South Wales in respect of the application in IRC 789 of 2005 and the related application 790 of 2005 as follows:
‘I am writing to advise that all the parties to the above matters have reached agreement on new awards to be made.
The parties will not therefore require matters to be arbitrated. The hearing dates, which have been set, may therefore be vacated. We would however seek a date at the Commission’s earliest convenience for the making of the relevant awards.
…’In the foregoing circumstances the two applications came before the Commission constituted by the President, Wright J, on 23 January 2006. The members of the Full Bench had been advised that it would not sit on that day as the Commission, constituted by the President, would deal with the consent proceedings. Ms Heron appeared for the Union, Mr T McDonald for Employers First and Ms B Kenneally appeared for the Association of Quality Child Care Centres, New South Wales.
It is necessary to refer to the transcript of proceedings before the President on 23 January 2006 in some detail. The application filed 15 February 2005 in the Early Childhood Service Centres case (IRC 789 of 2005) clearly came before the Commission for hearing on that day. The transcript records:
MS HERON:‘As we advised your associate the other day, we have reached a settlement of the matter and today we would like to make new awards in those two matters. I would like to hand up the awards at this stage. [Awards handed up] I might deal with both matters at once.’
HIS HONOUR: ‘What I might invite you to do is tender the letter to my associate dated 19 January advising of the settlement document.’
EXHIBIT #5 Letter sent by facsimile to Wright J’s associate on Thursday, 19 January 2006 tendered and admitted.
HIS HONOUR: ‘I assume the two documents you have handed up are drafts of the proposed award[s]?’
MS HERON:‘Yes.’
EXHIBIT #6 Draft of the proposed award in matter No 789/2005.
EXHIBIT #7 Draft of the propose award in matter No 790/2005.
HIS HONOUR: ‘Exhibits 6 and 7 come to you (sic) as agreed documents between the parties?’
MS HERON:‘Both Exhibits 6 and 7 are agreed documents between the parties. What the proposed settlement of the matter grants is 13.5 percent increase over 3 years. …’
…
MS HERON:‘The increases within the award are, as I indicated, 13.5 percent. There is a 4.5 percent from the date of making the award; a further 4.5 percent increase one year later and a further 4.5 percent one year subsequent to that. The award is to expire in December 2008 …’
It is probably convenient, at this stage, to refer to certain provisions of the Award which in draft form had become Exhibit 6 before the Commission. The Award recorded under ‘2. Salaries’ the following:
‘2.1The minimum fortnightly salary payable to full-time teachers shall, subject to the other provisions of this award, be calculated by dividing the per annum rates as set out in Table 1 – Rates of Pay, of Part B, Monetary Rates, by 26.07.
…’
Under the heading ‘18. Settlement of Award’ the following appeared:
‘18.1This award is made by consent as a settlement of the claims made by the Independent Education Union of NSW & ACT (“the IEU”) in Matter Nos. 789 & 790 of 2005.
18.2It is a term of this award that the IEU will not pursue any improvements in wages or conditions of employment, including any increases arising from the general increases given by the Federal or State Industrial Tribunals or the proposed Fair Pay Commission that arise during the term of this award.’
Later under the heading ‘22. Area, Incidence and Duration’ clauses 22.2-22.4 provided as follows:
‘22.2This award rescinds and replaces the Teachers (Non-Government) Early Childhood Service Centres Other Than Pre-Schools (State) Award published 9 August 2002 (335 I.G. 756).
22.3This award shall take effect from 23 January 2006 provided that the increases in rates of pay and allowances shall be effective from the first full pay period on or after 23 January 2006.
22.4 This award shall remain in force until 31 December 2008.’
The foregoing provisions of the award were contained in ‘PART A’. These were followed by ‘PART B’ which set out ‘MONETARY RATES’. The final part was ‘PART C’ dealing with redundancy and terminations. The award then concluded with attachments A and B which are not relevant for present purposes.
Under the heading ‘MONETARY RATES’ there were a series of tables recorded in the award with the following headings:
‘Table 1 – Rates of Pay
Table 2 – Director’s Allowance
Table 3 – Other Rates and Allowances
Table 4 – Authorised Supervisor’s Allowance (Clause 4.2(i)
Table 5 – Authorised Supervisor Allowance (Clause 4.2(ii)Table 1 - Rates of Pay commenced with the words:
‘The following minimum annual salaries shall apply from the beginning of the first full pay period specified in each column respectively:’
These words were followed by a table with five separate columns which, somewhat curiously, dealt with ‘All Other Teachers’ first, then ‘Two Years Trained Teachers’, ‘Three Years Trained Teachers’ and ‘Four Years Trained Teachers’.
Returning to the proceedings before the Commission on 23 January 2006 further dialogue took place between the President and Ms Heron as follows:
HIS HONOUR: ‘The first award under 7, [P]ersonal [L]eave and also under 11, Other Leave [which addressed Long Service Leave, Residential Study Leave, Parental Leave and Jury Service] [-] in terms of the parental leave provisions … [i]s there any particular fact or consideration relevant to the amount of increase that’s been approved?’’
MS HERON:‘No there isn’t. The parties have also inserted, which I should have previously mentioned, a clause called “Settlement of the Award” which is clause 18 in Exhibit 6. It’s a consent as a settlement of the claims made by the Union. [It is apparent that Ms Heron proceeded to quote in full the text of clause 18.2 as set out above]’
At this stage Mr McDonald for Employers First addressed the Commission followed by Ms Kenneally for the Association of Quality Child Care Centres, New South Wales. The transcript proceeds to record Mr McDonald and Ms Kenneally as saying:
MR McDONALD: ‘Your Honour, I confirm the consent of Employers First to the award proposed by the IEU in Exhibits 6 and 7 [the present case only calls for consideration of Exhibit 6]. We consent in accordance with [P]rinciple 2[e] of the [W]age [F]ixing [P]rinciples and view the award as consistent with the Act … [and] the [W]age [F]ixing [P]rinciples. The new award also incorporates the provisions of the general order in the [F]amily [P]rovisions [C]ase and in our submission, is consistent with the terms of that general order.
Your Honour also asks Miss [Heron] as to the considerations in the making of the award. We have sought to deal with that in clause 18, [S]ettlement of the [A]ward [to] which Miss [Heron] directed your Honour, and in clause 18.1 it is noted the award is made by consent as a settlement of the claims made by the IEU in these matters and those contained within its original application. [It will be recalled that one of the claims made by the IEU in its original application was “Changes in work value of teachers have occurred which have not been appropriately compensated by increases in rates of pay”. The reference to “the settlement of the claims made by the IEU … and those contained within its original application” is significant in that it amplifies what was expressly stated in clause 18.1 of the Award.]’
MS KENNEALLY: ‘The Association of Quality Child Care Centres also consents to both drafts of the award being Exhibits 6 and 7, and otherwise adopts the submissions made by … Mr McDonald.’
(Emphasis added)
The President inquired of Ms Heron as to whether there was ‘Anything arising’ to which she responded in the negative.
The President proceeded to deliver an ex tempore decision ([2006] NSWIRComm 4) and then formally vacated the hearing dates before the Full Bench and Schmidt J that had been fixed.
By his ex tempore decision the President found that the award was consistent with the provisions of the Commission’s Wage Fixing Principles and the provisions of the Industrial Relations Act. The Commission proceeded to make a new Teachers (Non-Government Early Childhood Service Centres other than Pre-Schools) (State) Award 2006 in terms of Exhibit 6 which was, as previously noted, tendered and admitted into evidence as a draft of the proposed award, on 23 January 2006. The President in making the award provided for it to commence from the first pay period to commence on or after 23 January 2006 and to remain in force until 31 December 2008. He noted that the award replaced the relevant predecessor award.
In his reasons for decision, the President said:
‘…
2. The matters came before Schmidt J and myself on various occasions in 2005 and were subsequently referred to the Full Bench for hearing of the respective special case applications in both matters.
3. Proceedings before the Full Bench occurred on 8 December and 12 December 2005 and on the last mentioned date, although earlier hearing dates had been set in light of the submissions put by the parties, particularly those of the applicant, revised hearing dates were set …
4. The proceedings also came back for further directions before me on 20 December 2005. As a result of the steps referred to above, the matter was prepared for hearing, with the parties having commenced to file their evidence and other documentation.
5. However, late last week, the applicant forwarded a letter by facsimile to my associate advising [that the parties had reached agreement on a new award] …
…8. The Commission was advised [when the matter came before me today] of the following details of the consent award proposed by the parties: the first aspect was that there was a 13.5 per cent increase in salaries, payable in three stages. The first increase of 4.5 per cent is operative from the first full pay period commencing on or after today; the second increase of 4.5 per cent will be operative 12 months hence, and the third increase of 4.5 per cent will be operative 12 months thereafter. In other words, the last two pay increases will be operative from the first full pay period to commence on or after 23 January 2007 and 23 January 2008 respectively.
9. The other changes resulting from the parties’ settlement include the following:
(a) there will be similar three-stage increases … in allowances …
(b) increases in the mileage allowances …
(c) insertion of a Jury Duty provision in the “Other Leave” clause …
(d) variation of the awards to include a provision consistent with the general order made by the Full Bench late last year in the Family Provisions Case …10 The employers emphasise the inclusion in the respective awards of a clause entitled “Settlement of Award” as Clause 18 in both new awards. [The President then proceeded to set out the terms of clause 18 in full – see [54] above].’
Principle 6 in the Industrial Commission of New South Wales ‘Wage Fixing Principles’ recognises that increases in rates of pay may be awarded from time to time wholly or partly on the ground of work value changes.
Principle 10, when taken with Principle 2 suggests that claims for increases in wages and salaries where significant issues were to be raised should be processed as ‘special cases’ before a Full Bench of the Commission. Naturally enough, the Wage Fixing Principles allowed for exceptions to that procedure. One such exception was in circumstances where the application was to “adjust” wages pursuant to work value changes in accordance with Principle 6.
It may be argued that where a review of rates of pay across the board for employees covered by an award is sought, to address changes in work value over an extended period, the relevant application is not merely an application to ‘adjust wages’ pursuant to work value changes. This would appear to have been the reason why the application for a new Award was brought before a Full Bench of the Commission in the manner described above.
Be that as it may, both Principle 2 and Principle 10 make it clear that there will be circumstances when claims for increases in rates of pay on the ground of work value change, may be determined by the Commission constituted otherwise than as a Full Bench. Not surprisingly, one such circumstance is where the application is consented to (see Principle 2(e) and Principle 10).
A determination on the ground of work value change?
The important question for the purposes of the present case is whether a determination, such as that embodied in the decision of the President, Wright J, of 23 January 2006 was a determination ‘wholly or partly on the ground of work value change’.
Just as a settlement of a Family Provision Act claim may require the imprimatur of a Court, so also awards are not made simply by the agreement of an applicant and the relevant employer bodies. Section 10 of the Industrial Relations Act requires that the Commission be satisfied that the proposed award sets fair and reasonable conditions of employment for employees, s 19(3) requires reviews such as were sought by the applicant to take account of the matters set out therein, and s 19(4) requires the Commission to take into account the effect of the proposed award on productivity and efficiency in the industry concerned. These matters could not be overlooked simply because the parties consented to the relevant application. Furthermore, s 19(3)(a) required the Commission to have regard to the Wage Fixing Principles as adopted by it under s 50 for the purposes of awards.
In seems to me that the pay increases contained in the award, as made in accordance with the decision of the President, Wright J, of 23 January 2006, were determined wholly or partly on the ground of work value change. That is clear from the terms of the application itself, the history of the matter before the Commission, the language of clause 18 of the award and the clear indication from the parties appearing for the employer bodies as to the basis of the settlement, highlighted at [59] above, in respect of which the applicant indicated that there was nothing arising (see at [60]).
A determination so made cannot be said to be contingent or provisional or, had it been made in a curial context, interlocutory. It constituted a final determination of the issues tendered by the applicant in the application.
Although the Commission was not sitting in Court Session when it made the award, some assistance can, in my opinion, be obtained in relation to the primary issue presently before the Court from the observations of the Honourable Mr Justice K R Handley in Spencer Bower, Turner and Handley, The Doctrine of Res Judicata (3rd edition, Butterworths, 1996) in respect of ‘Consent judgments and orders’ and ‘Judgments and orders by default’ at paragraphs 38-40 and 44-46 (see also Kuligowski v Metrobus (2004) 220 CLR 363 at [22], [25] and [32]).
Justice Handley observed at paragraph 38:
‘… Judgments, orders and awards by consent are as efficacious as those pronounced after a contest, in creating cause of action estoppels and effecting a merger of the causes of action sued on.’
At paragraph 39, Justice Handley proceeded to say:
‘Though consent judgments are decisions and their operative parts binding, it may not be clear what questions were concluded. The court will examine the available evidence to ascertain the matters in dispute. Any issues which the parties recognised was the subject of the litigation and was fundamental to the judgment or order will be conclusively determined. Where, however, there are no such materials neither party is estopped from disputing anything but the actual judgment or order. The proper approach to determining the scope of a consent judgment was stated by Lord Herschell LC:
“… a judgment by consent is intended to put a stop to litigation between the parties, just as much as is a judgment which results from the decision of the court after the matter has been fought out to the end. And I think it would be very mischievous if one were not to give a fair and reasonable interpretation to such judgments and were to allow questions that were really involved in the action to be fought over again in a subsequent action”.’
(Emphasis added, footnotes omitted)
If an administrative authority has no obligation to receive evidence or to hear argument then no estoppels can arise from its decision (per Lush J in Pastras v The Commonwealth (1966) 9 FLR 152 at 155). In my opinion that principle had no application to an award made by the Industrial Relations Commission of New South Wales where s 162 of the Industrial Relations Act clearly contemplated an obligation on the Commission’s part to receive evidence and hear argument.
Whatever else a court may look at in the event of a plea of res judicata being raised, it is at least entitled to know what were the issues raised in the pleadings in the action out of which the res judicata is said to have arisen (see per Viscount Simonds in Sterling Engineering Co Ld v Patchett [1955] AC 534 at 541).
The application for an award filed 15 February 2005 in the Early Childhood Service Centres case made it demonstrably clear that the applicant was seeking to raise a special case in which one of the primary issues was to be the alleged changes in work value which had not been appropriately compensated by increases in rates of pay.
It seems to me that evidence as to a party’s subjective belief as to the issues in the Early Childhood Service Centres case would not be determinative of the matter.
The determination of what the issues were that were settled in the Early Childhood Service Centres case should be addressed in accordance with the principles enunciated by Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ in Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 at [40]. One must ascertain what claims were made in the pleadings and what each party, by words and conduct, viewed objectively, would have led a reasonable person in the position of the other party to believe to be the relevant issues.
When one has regard to the terms of the application which was before the Commission and one gives careful consideration to the history of the matter in the Commission including in particular the matters set out at [58]-[59] above, the powers and obligations of the Commission, the terms of clause 18.1 of the award (see [54] above) and the decision of the President, Wright J, it is clear that the pay increases for which the award provided were determined by the Industrial Commission of New South Wales partly, if not wholly, on the ground of work value change. Plainly, the pay increases which were scheduled to be phased in after 27 March 2006 (i.e. 4.5% after 23 January 2007 and 4.5% after 23 January 2008) were covered by s 208(4) of the Act. The preserved APCS was taken to include the provisions under which the increases were to take effect for the relevant employees at those times.
Reliance was placed by counsel for the respondent in the current proceedings upon the development in the course of negotiations of what became clause 18 in the award. The genesis of clause 18(1) appears to have been a ‘without prejudice’ letter from Employers First to the Union dated 16 January 2006 in which Employers First proposed a clause for inclusion in the award under the heading ‘SETTLEMENT OF AWARD’ as follows:
‘1.This Award is made by consent as a settlement of the claims made by the Independent Education Union of NSW & ACT (“the IEU”) in IRC No. ........ . , including compensating for any work value changes.’
In a ‘Without Prejudice’ reply of 17 January 2006 the Union indicated a preparedness to settle on the basis that the relevant clause would read:
‘1.This award is made by consent as a settlement of the claims made by the Independent Education Union of NSW (“the IEU”) in Matter No.s IRC 789 & 790 of 2005 in respect of work value changes (not including undervaluation) up until January 15th 2006.’
By another ‘Without Prejudice’ letter erroneously dated 16 January 2006 Employers First responded to the Union’s letter of 17 January 2006. In it, Employers First proposed that the clause read:
‘1.This award is made by consent as a settlement of the claims made by the Independent Education Union of NSW & ACT (“the IEU”) in Matter Nos. 789 & 790 of 2005.’
It will be appreciated that this form of wording was later included as clause 18.1 in the award which was made.
In my opinion the omission of words such as ‘including compensating for any work value changes’ and ‘in respect of work value changes (not including undervaluation) up until January 15th 2006’ do not detract from the conclusions which I have reached and recorded above.
The significance of changes to draft documents in the course of reaching an agreement is not yet settled.
In Timber Shipping Co. S.A. v London & Overseas Freighters Ltd [1972] AC 1 at 15 Lord Reid said:
‘… If the words were first inserted by the draftsman of the agreement and then deleted before signature then I have no doubt that they must not be considered in construing the agreement.’
In NZI Capital Corporation Pty Ltd v Child (1991) 23 NSWLR 481 at 491, Rogers CJ Comm D said:
‘More recently in Mottram Consultants Ltd v Bernard Sunley & Sons Ltd [1975] 2 Lloyd’s Rep 197, Lord Cross, with whom Lords Hodson and Wilberforce agreed, clearly endorsed the use of deletions as an aid to the construction of contracts.’
After reviewing the authorities his Honour proceeded to take into account the omission of a specific provision from a precedent, to which regard had been had in drafting a loan document, in order to reach the conclusion that the loan document should be construed as creating a non-recourse loan. His Honour found the inference to be drawn from the omission to be clear.
In Elliott v Reading [1999] WASCA, 11 Ipp J, with whom Malcolm CJ and Pidgeon J agreed, applied the judgment of Rogers CJ Comm D. At [43] his Honour said:
‘… account has to be taken of the fact that, in entering into the Final Deed, the parties deliberately omitted the subject to finance condition contained in the First Deed. In NZI Capital Corporation Pty Ltd v Child (1991) 23 NSWLR 481 Rogers CJ Comm D, held that a deliberate deletion of a clause in a loan agreement expressly providing for repayment by a borrower ousted an obligation, said to be implied, to the effect that the borrower repay the loan. His Honour relied in coming to this conclusion on the remarks of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW at 352-353. In my opinion the same reasoning is applicable here. Once the parties agreed to exclude from the Final Deed the subject to finance condition that was contained in the First Deed, it is not open to imply a condition in the Final Deed to substantially the same effect as the one deliberately excluded.’
In my opinion, one cannot read into the words ultimately chosen for inclusion in the award any intention on the part of the parties to provide for pay increases on grounds that excluded work value changes. The reference in clause 18.1 to the settlement of the claims made by the Union in Matter No. 789 of 2005 clearly demonstrates that the award, as made by the Industrial Relations Commission of New South Wales, constituted a determination by the Commission of pay increases partly if not wholly on the ground of work value change. The consideration of the Early Childhood Service Centres case in the Commission and the manner in which the application was disposed of on 23 January 2006 reinforce this conclusion.
No relevant distinction is to be drawn between the Early Childhood Service Centres case and the Kindergarten case. The fact that the award made in the Kindergarten case was made after a full blown hearing does not allow a relevant distinction to be drawn simply because the award in the Early Childhood Service Centres case was made after a settlement had been reached.
The present application
In the proceedings presently before this Court the applicant, New South Wales Independent Education Union (NSW and ACT) has sought relief from the respondent, Thornton Child Care & Pre School Centre Association Inc in respect of alleged short payment of salary under the relevant preserved APCS calculated in accordance with Table 1 of Part B of the award to Julie Kay, as a Four Years Trained Teacher within ‘Step 9’, and to Lisa Suszek, as a Three Years Trained Teacher within ‘Step 10’.
The amounts allegedly underpaid are relatively small. The parties have agreed that if relief is to be granted to the applicant, the proceedings should be stood over to allow the form and quantum of relief to be addressed and appropriate draft Short Minutes of Order considered.
Affidavits filed on behalf of the applicant and the respondent in the present case refer to the first ‘Wage Setting Decision effective 1 December 2006’ of the Australian Fair Pay Commission and two rates of pay published by the Australian Fair Pay Commission on its website, which are said to record rates of pay applicable to early childhood teachers in New South Wales. The affidavit of Verena Christina Heron affirmed 8 November 2007 includes the following:
‘42 The rates of pay published by the Fair Pay Commission (sic) (“AFPC”) with respect to teachers formerly covered by the Teachers (Non Government Early Childhood Services (sic) other than Pre Schools) (State) Award have changed on a number of occasions between March 2007 and July 2007. …’
It may be that the terms of clause 18.2 of the award as picked up by s 208(4) of the Act when taken with clause 2 of the award and the Monetary Rates in Part B require, in relation to the relevant preserved APCS, that the phased in four and half per cent pay increases due to commence after 23 January 2007 and after 23 January 2008 be discounted during the life of the award i.e. until 31 December 2008, to ensure that there is no double counting.
It is clear that the applicant is entitled to declaratory and other relief but not necessarily in the terms proposed in the Application filed 19 November 2007. In the circumstances the matter should be adjourned for further consideration of what relief is appropriate.
Appendix 1
I certify that the preceding ninety-two (92) numbered paragraphs together with Appendix 1 are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. Associate:
Dated: 31 July 2008
Counsel for the Applicant: C M Howell Solicitor for the Applicant: Maurice Blackburn Counsel for the Respondent: R S Warren Solicitor for the Applicant: G J Duff
Date of Hearing: 14 July 2008 Date of Judgment: 31 July 2008
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