Poulos v Waltons Stores (Interstate) Ltd

No judgment structure available for this case.

Re: PETER ANTHONY POULOS
And: WALTONS STORES (INTERSTATE) LIMITED
No. ACT 10 of 1984
Industrial Law
15 IR 313

COURT

IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY
DISTRICT REGISTRY
INDUSTRIAL DIVISION
Smithers J.
Keely J.
Gray J.

CATCHWORDS

Industrial Law - operation of common rule in the Australian Capital Territory - employee not a member of any union - entitlement pursuant to common rule.

Conciliation and Arbitration Act 1904 - ss.49(1) and 123.

Retail & Wholesale Shop Employees (Australian Capital Territory) Award 1968

The Constitution (63 and 64 Vic, Chap.12) s.51 (xxxv), s.122

HEARING

MELBOURNE

#DATE 22:4:1986

ORDER

The appeal be allowed.

Judgment be entered for the appellant in the sum of 6,208pounds 30.

Costs be reserved.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules.

JUDGE1

The appellant has been employed by the respondent as a store representative since 20 November 1978. By proceedings in this court he sought to recover from the respondent the difference between the remuneration actually paid to him and that which would have been paid to him at the rate applicable to work in the classification of that performed by him under the Retail and Wholesale Shop Employees (Australian Capital Territory) Award 1968 (the Award).

There was an issue as to the proper classification for the purposes of the Award of the work performed by the appellant. That issue was determined at first instance in this Court on 10 February 1984 in favour of the respondent. The Court decided that the classification was not that designated in category 4 in clause 5 of the Award with the result that the appellant's claim under that clause was not sustainable. However, upon appeal to this Court it was decided that the work performed by the appellant was work within that classification of the relevant award, namely "order person and outdoor order person, namely employees engaged in collecting orders and/or soliciting business and/or selling away from the employer's place of business". Accordingly, if the applicant was a person entitled to the benefit of the Award, his claim was sustainable.
But it was a critical issue between the parties, whether, even if the appellant were covered by clause 5 of the Award he was a person entitled to the benefit thereof. It was contended by the respondent that the appellant was not so entitled because he was not personally a party to the Award and was not a member of any organization of employees which was a party to the relevant Award or of any organization of employees. The respondent was a party to and bound by the Award. The appellant's reply to this contention was that at all material times there was in force a declaration of the Conciliation & Arbitration Commission "that the whole of the terms of the (relevant) Award shall, in the Australian Capital Territory, subject to the specified exclusions, be a common rule of the industry in respect of which the dispute arose which led to the working of such Award", or a declaration to that effect. Those declarations were made pursuant to s.49(1) of the Conciliation and Arbitration Act 1904 (the Act) which provides that:

"The Commission may, if it appears to be necessary or expedient for the purpose of preventing or settling an industrial dispute with which it is dealing or of preventing further industrial disputes, declare that any term of an award shall, in a Territory, be a common rule of any industry in connection with which the dispute arose.

The Award was made in and only for the ACT. Under the Award the wage payable to an employee for the relevant period was in excess of that paid to the appellant. If the appellant is entitled to the benefit of the Award within the meaning of s.123 of the Act he is entitled to recover the amount of that excess. The respondent contends that, notwithstanding the declarations that the terms of the Award should be a common rule in the industry, the appellant is not so entitled. The contention made is, in substance, that just as in relation to an award not extended by a common rule declaration, an employee who is not himself a party to the award or a member of an organization of employees which is a party to it, is not entitled to the benefit of the award, so, in relation to an award in respect of which a common rule declaration has been made that same situation obtains.

It is said that it is established by the decision in Leontiades v. F.T. Manfield Pty. Ltd. (1980) 43 FLR 193 that where an employee works in an industry to which an award is applicable, but he is not a party to the award or a member of an organization which is, then, although that award binds his employer to pay to him the award rate, then that employee is not legally entitled to the benefits conferred upon an employee by the award. It is so established. The decision had its roots in The Australian Boot Trade Employee's Federation v. Whybrow & Co. & Ors. (1910) 11 CLR 311 in which those provisions of the Act purporting to authorise the Commonwealth Court of Conciliation and Arbitration to declare a common rule in a particular industry and direct that a common rule so declared should be binding upon the persons engaged in that industry, were ultra vires the Commonwealth and invalid. It was pointed out by O'Connor J. at p.329 that the making of the common rule is not an exercise of the power to settle industrial disputes by arbitration and is in no way a settlement of an industrial dispute. He added that:

"One can have no mental conception of arbitration without parties in difference over some matter capable of judicial adjustment by an arbitrator. The exercise of an authority to impose conditions of employment upon employers and employees between whom there exist no such differences, even though it may be exercised by a standing arbitral tribunal, is not and cannot be an application of arbitral power. No fair reading of sub-sec. xxxv. of sec.51 of The Constitution can justify the Parliament of the Commonwealth in conferring such an authority on the Federal Arbitration Court."

The scope of the award under examination in Leontiades' Case was of course not extended by any common rule declaration. It was clear therefore, that, as concluded by Keely J., in respect of an award to which the employee is in no sense a party, he could not be said to be entitled to any benefit thereunder. Under The Constitution 63 and 64 Vic, Chap.12, the conciliation and arbitration power contained in s.51(xxxv) provides the only legislative power under which the Commonwealth could provide for the rights and obligations of employers and employees in relation to the terms of employment. It is of the essence of arbitration that it proceeded between parties. Accordingly, an award being the product of arbitration imposes obligations and confers rights only upon parties. An employee neither a party himself nor a member of an organization which was, is not a party and has no entitlements under the award. Under Placitum (xxxv) of s.51 of the Constitution no rights against an employer can arise other than by arbitration.

But, in a Territory, the Commonwealth Parliament, in relation to the mutual rights and obligations between employers and employees, finds its legislative power not only under s.51(xxxv) but also under s.122. It is not suggested that the constitutional limits of the powers conferred upon Parliament by s.51(xxxv) operate with respect to the legislative powers of the Parliament under s.122 when it legislates for a Territory. Under s.122 the Parliament may make laws for the government of any Territory, and that power is expressed in unlimited terms.
Accordingly, the reasons which induced the High Court to hold that the intent of Parliament to authorise the Arbitration Court to declare a common rule was invalid do not apply to laws made for a Territory. And the substance of the law made for the ACT under s.49(1) of the Act is that the Commission may declare that the terms of an award shall in a Territory be a common rule of any industry in connection with which the dispute in which the award was made, arose. So to legislate was obviously within the law making power of the Commonwealth Parliament.
It is necessary then to ascertain the legal effect of a declaration that the terms of an award are to be a common rule in an industry. To my mind there is only one answer to the question. Without a common rule the award creates rights and liabilities between the parties to the award. In the absence of a common rule members of organizations which are parties to the award are themselves considered by law to be parties. As parties they are entitled to the benefits conferred by the terms of the award on parties, in the capacity in which they are parties. Thus they may sue for payments due to them under the award (section 123 of the Act). Similarly, they are bound to observe the obligations imposed on parties by the terms of the award, in the capacity in which they are parties. Accordingly, an employee who is a party has the benefit of the rights conferred by the terms of the award upon employees and an employer who is a party is bound to perform the obligations imposed upon him in his capacity as an employer. And where there is a relationship of employer and employee between individual employees and individual employers the rights and obligations created by the terms of the award where that relationship exists, are enforceable as between those two parties. In the absence of a common rule none of these rights and obligations attach to employers and employees in the relevant industry who are not parties to the award. But the concept of a common rule is that the rights and duties created by an award in respect of the relationship of employer and employee between parties thereto shall apply in respect of that relationship wherever it exists in the relevant industry whether or not the persons in that relationship are parties to the award or members of an organization. The "rule" which exists under the award, and binds persons who are parties to it by reason of membership of an organization, extends to persons in the relevant employer/employee relationship who are not parties. It is that rule which the common rule brings into operation between persons in the relevant relationship of employer and employee who are not parties to the award.
If it were the situation that a common rule meant no more than that the "rule" in an award which obliges an employer to pay to an employee, whether a party or not, the rate prescribed in the award, a provision declaring a common rule would not have contravened the Constitution in the way it was held to do in Whybrow's Case. Such a provision does not offend the Constitution. That is clear from, inter alia, Leontiades' Case. It is only when a common rule is treated as having its natural meaning, namely, that the rule for those who are parties to the award is extended to those who are not parties that the constitutional restrictions apply. They do not apply to a law made for the Australian Capital Territory.
Membership of an organization may be the avenue through which the status of being a party to an award is reached, but, once that status has been acquired the rights and liabilities created by the award, where the relationship of employer and employee is present, exist as between the parties to that relationship, individually. When the common rule is introduced it is the terms of the award, applicable between persons in the relevant relationship, that become the common rule. Those terms apply "commonly" throughout the industry to all persons in the relationship. The concept of a common rule is not that the terms of the award are to apply in respect of a relationship between parties who, might, by reason of membership of an organization, have been parties to an award depending on the constitutional power under s.51(xxxv) of the Constitution. The concept is that persons in the relationship of employer and employee on whom the award would have imposed obligations and conferred rights if they were parties, but who are not parties, shall have the obligations and the rights as between each other which they would have, if they were parties. Thus, as was said by Latham CJ, Dixon, McTiernan, Williams, Webb and Fullagar JJ. in R v. Kelly & Ors; ex Parte State of Victoria & Anor (1950) 81 CLR 64 at p82

"The award does not affect any non-disputant. It does not create, (as the common rule would create) actual rights and duties as between persons who are non-disputants."

If it is said that this was obiter, it is certainly obiter of good quality.

It is clear that when the Commonwealth legislates to authorise for a Territory a declaration of a common rule in relation to the terms or an award then the notion that there must be a dispute between the persons to whom the terms of the award extend because of that declaration, has no place. The industrial head of power which is invoked is the power to govern the Territory under s.122 of the Constitution. The defined terms and conditions of employment in an award, which, of course, has emerged from a dispute between parties are, under s.49(1) regarded as terms which conveniently and appropriately may be adopted by the Commission for all other persons in the Territory who, in the relevant industry, are in the relationship of employer and employee. If it is convenient to adopt those terms and conditions and a declaration is made then those terms and conditions apply to all persons in the relevant relationship in the industry. It is because such persons are not parties to the award, and perhaps have no entitlements on any basis to be parties of the award, that the common rule is made. In relation to a common rule the existence or non-existence of an organization of employees registered under the Act to which, if it had existed, an employee might have been a member had he chosen to join is an irrelevant matter. Where a common rule has been declared the only relevant question is whether there is as between him and his employer a relationship of employer and employee in the industry in which the award arose.
It is not to be doubted that a common rule does effect a result which is foreign to arbitration. As Isaacs J. (as he then was) speaking of the breadth of the power conferred by s.51(xxxv) said in Burwood Cinema Limited & Ors v. The Australian Theatrical and Amusement Employees' Association (1925) 35 CLR 528 at p541: "That is to say, while the 'common rule' as one extreme is excluded, so a limitation to individual contract as the other extreme is also excluded". But in and for the Territory, that which is foreign to arbitration or otherwise excluded from the scope of s.51(xxxv) may be validly enacted. And that is what has happened in s.49(1) and the declarations making the terms of the Award a common rule in the Territory throughout the relevant industry were validly made.
It was argued that before the declarations could be treated as validly made, there should be evidence that when made by the Commissioner making the same it appeared to him to be necessary or expedient to do so for the purpose of settling an industrial dispute with which he was dealing or of preventing further industrial disputes. I would regard the evidence of the making of the declarations as sufficient proof. It appears to me to be a case of omnia praesumuntur rite esse acta.
During the period of the appellant's employment the Award was varied from time to time and rates were increased from time to time. It is an attractive view that a declaration that the terms of an award shall be a common rule refers to the terms of the award as they may be from time to time. But I think that it is unlikely that Parliament would intend to impose obligations on persons without providing for such persons to have an opportunity to be heard. It appears to me therefore that the better view is that the terms of an award at the date of a relevant declaration are those which apply to persons to whom they apply by virtue of a common rule declaration until that declaration is superseded by a subsequent declaration, notwithstanding that in the meantime the terms of the award have been varied.
In the statement of claim herein, there is a claim for judgment for remuneration alleged to be recoverable in respect of work performed between the date of commencement of the proceedings, namely 21 January 1983, and the date of hearing thereof. Doubtless the principles discussed above would apply to remuneration claimed in respect of work performed at any time after 21 January 1983 during the course of the appellant's employment with the respondent. But that work is not the subject of this judgment. No doubt on the ground that the cause of action which would support such a claim had not arisen at the date of action brought, argument was not submitted to this Court that remuneration in respect of work performed after the commencement of these proceedings was recoverable in such proceedings even up to the date of hearing. Reflecting this situation the judgment entered pursuant to this judgment is for remuneration accrued due at the date of commencement of these proceedings and does not relate to remuneration in respect of any later period.
Having regard to the foregoing the appellant is entitled to recover the total of the difference as at 21 January 1983, the date of the application herein, between the amount actually paid to him as remuneration and the amount which he would have been paid under the Award operating under the common rule declarations which were made from time to time. That sum according to material supplied by the parties by agreement is $6,208.30.
Set Off
The respondent sought to set off against this amount certain sums paid to the appellant as commission in addition to wages actually paid. There was no evidence before the Court as to the actual terms in which the commission was paid. It is not further considered.
I would order that the appeal be allowed, that the decision of the trial judge be set aside and that judgment be entered for the appellant for $6,208.30. Costs be reserved.

JUDGE2

In this matter I have had the benefit of reading, in draft form, the reasons for judgment prepared by Smithers J. and Gray J.. Those reasons set out the curial history of the appeal, including the terms of the unanimous opinion of this Court, published on 28 March, 1985 which afforded the parties an opportunity to consider their position in the light of that opinion. It is unnecessary to repeat the statutory provisions, the award clauses or the terms of the declarations that all of the terms of the award should operate as a common rule; nor to repeat the various matters of fact contained in those reasons for judgment.

During the hearing I had some doubts as to whether the applicant, as a person who had not been shown by the evidence to have been a member of a registered organization of employees bound by the award, was "an employee entitled to the benefit of (the) award" within the meaning of s. 123 of the Conciliation and Arbitration Act 1904 (the Act), notwithstanding that the Conciliation and Arbitration Commission (the Commission) had declared under s. 49 of the Act that the whole of the terms of the award should "be a common rule of the retail industry in the Australian Capital Territory". In the absence of such a declaration the applicant would not be "an employee entitled to the benefit of an award" - see the reasons given in Leontiades v F.T. Manfield Pty. Ltd. (1980) 43 FLR 193 at 195-197 It appeared to me to be arguable that a declaration of the award as a common rule might not result in a non-member becoming "entitled to the benefit of (the) award" immediately upon, and by reason of, the making of the declaration under s. 49.
Since the decision was reserved, I have given the question considerable thought and researched the decisions of both Federal and State courts and arbitral tribunals but, with one exception (referred to later), I have been unable to find any authority which decides the question i.e. decides whether a non-member of a union bound by an award is "an employee entitled to the benefit of (the) award" in circumstances where the terms of the award have been declared by the Commission to be a common rule. That research has not revealed judgments dealing in any detail with the meaning of the words a "common rule" or with the legal effect of a common rule e.g. whether it confers rights upon the employers and employees as well as imposing duties. The decisions of State courts and tribunals which have been examined by me have related to State legislation in terms different from those of the Act and have not been of direct assistance in deciding the question.

The exception referred to earlier is the decision of Ellicott J. in Willis v Chew (unreported - delivered 9 October, 1981 in Canberra). In that decision his Honour said (p. 10): -

"I am satisfied that as a result of the common rule, if not otherwise, the award became binding on the defendant as an employer in the Chemist industry in the A.C.T. and on all employees as described in the common rule. Those employees included the informant. The award conferred benefits on those employees and I am therefore satisfied beyond reasonable doubt that she was, whilst employed by the defendant, entitled to the benefit of an award."

His Honour did not express any reasons for that conclusion.

Despite the absence of any authoritative decision on the question, there are several passages in the reasons for judgment of justices of the High Court which suggest that an award which has been declared to be a common rule confers rights upon all the persons employed by employers upon whom the award is binding as a common rule. In particular there is a statement of the Full High Court in R. v Kelly; ex parte State of Victoria (1950) 81 CLR 64 at 82 which reads as follows: -

"The award does not affect any non-disputant. It does not create (as the common rule would create) actual rights and duties as between persons who are non-disputants."

The words which I have emphasised in that passage are an express acknowledgment by Latham C.J., Dixon, McTiernan, Williams, Webb and Fullagar JJ. that the common rule would create rights as well as impose duties. Although that statement does not constitute an extensive examination of the nature of the rights and duties created by a common rule declaration, it is a clear, unambiguous and unanimous expression of opinion by six justices of the High Court and, in my respectful opinion, it should be accepted and applied by this Court in the absence of compelling reasons to the contrary. In my opinion there are no considerations to the contrary sufficient to outweigh that statement.

In my opinion the general scheme of the Act does not support the view that a common rule only imposes duties and does not confer rights upon non-members; nor is that scheme dependent upon the extent of the membership of organizations registered under its provisions. Although organizations of employees (irrespective of the extent of their membership) play an important part in the functioning of the arbitration system, the existence of such organizations is not essential to the creation or to the settlement of industrial disputes - see R. v Portus and Anor.; ex parte McNeil (1961) 105 CLR 537
Further, in my opinion the Act does not aim at encouraging employees to become members of organizations although it does encourage the registration of organizations which are representative bodies of employees (and of employers). The chief objects of the Act, set out in s. 2, include "(e) to encourage the organization of representative bodies of employers and employees and their registration under this Act". In my opinion that object should not be construed as positively encouraging any increase in the membership of organizations of employers or of employees. Section 144 of the Act deals with the entitlement of employees to be admitted as members of the appropriate organization but plainly that entitlement does not conflict in any way with the right of the employees to refuse to become members. Further, as Latham C.J. said in The King v Findlay; ex parte Victorian Chamber of Manufactures (1950) 81 C.L.R. 537 at 542,:- ". . . no valid award could be made prescribing compulsory unionism". I should perhaps add that in my opinion the common rule provisions apply to the employer respondents named in the original award (as well as to employers and employees not previously bound) in such a way as to confer, upon their non-member employees, the same rights as those conferred upon the employees of employers not previously bound.
There are other statements which, in my opinion, are to the same effect as the passage in R. v Kelly, quoted earlier, as to the meaning and legal effect of a common rule. In Whybrow's case (1910) 11 CLR 311, the High Court, in holding invalid the general power to make a common rule, placed some reliance upon the fact that persons who would be affected by the common rule "may be working in perfect harmony, and even desirous that their existing relations should not be disturbed. Yet the common rule may come in and disturb them" (per Griffith C.J. at 318 and see O'Connor J. at 326). Barton J. (at 323) referred to "a common rule binding the whole industry and all engaged in it, is plainly to extend the authority of the Court beyond the ambit of the dispute and to bind persons other than the disputants . . . ". O'Connor J. (at 325) referred to "a common rule of the industry, binding upon all persons engaged in it, whether as employers or employees, and whether members of an organization or not". A similar opinion was expressed by Isaacs J., who said (at 337) :-

"They were plainly intended to confer, and if validly enacted would confer, jurisdiction to establish by official pronouncement a binding rule of conduct extending over the whole industry, not merely over the whole area of the dispute in that industry, and applying to every person engaged in it, although he was in no way involved in any dispute either by personal activity, or as a member of an organization, or as a working unit of one of two opposing classes in actual contest though not formally organized." (emphasis added)

In my opinion in Whybrow's case their Honours, in speaking of a common rule binding upon all persons, whether employers or employees and whether members or not, were expressing the same opinion as that expressed (40 years later) in the passage in R. v Kelly; the members of the High Court in Whybrow's case considered that the common rule would create "actual rights and duties as between persons who are non-disputants" (R. v Kelly, supra, at 82) although they did not use those words. In my opinion those passages from the judgments in Whybrow's case show that the nature of a common rule - in contrast to an award arbitrated in a dispute between parties - is that it is binding on all persons engaged in a specified industry, whether as employers or employees and whether they are members of a registered organization or not. If employees who are non-members are bound by the terms of the award declared to be a common rule, in the sense of having duties imposed on them, then it is very difficult to imagine any reason why they would not also have rights conferred upon them. For example, if an award, the subject of a common rule declaration, imposed upon an employee, who was not a member of the organization, a duty to work overtime in certain circumstances, it is difficult to imagine any reason why that employee would not be "entitled" to be paid at the overtime rate prescribed by the award for performing that duty and have an enforceable right to such payment. Such a non-member employee would commit a breach of the award if he refused to work such overtime and would be liable to the imposition of a penalty under s. 119 of the Act.
The situation is different where there is no common rule; there the employer's duty to pay wages prescribed by an award to a non-member is a duty owed to the union and is not a duty owed to the non-member. Such a duty, with no right in the non-member to enforce it, is itself at first sight surprising. There is nothing, however, to suggest that that result stems from any policy under the Act. It stems from the constitutional limits upon the Federal industrial power in relation to the settlement of interstate industrial disputes. No such constitutional limits apply in relation to the declaration under s. 49 that the "terms of an award shall, in a Territory, be a common rule of "an industry.
In addition to the foregoing matters, there are some indications in the Act itself which, although not individually significant, when taken together tend to give some support to the opinion that the words "an employee entitled to the benefit of an award" within the meaning of s. 123 are intended to include a non-member where a term of an award has been declared to be a common rule. First, it will be noted that s. 123 does use the word "employee" and not the word "member" although, if the conclusion which I have expressed is wrong, only a member is "entitled". It may be that the word "employee" was deliberately chosen so as to permit a non-member employee to sue where a common rule declaration has been made. Second, where an employer is unable to pay an amount to which an employee is entitled under an award because the whereabouts of the employee are unknown to him, s. 124 permits the employer to pay the amount to the Commonwealth. The provision applies only where "the whereabouts of the employee are unknown" and there does not appear to be any reason why such a provision should be limited to employees who, as members, are "entitled" to an amount under an award. Section 124(2) requires the Commonwealth to hold the amount paid "in trust for the employee" and appears to assume that an employee may be "entitled" to the amount, whether he is a member or not. Third, paragraphs (a), (b) and (c) of s. 61 all use the words "all parties" and paragraph (f) reads "all members of organizations bound by the award". It will be noted, by way of contrast, that paragraph (e) refers to "all organizations and persons on whom the award is binding as a common rule"; the word "persons" does not appear in any of the paragraphs of s. 61 other than (e), which is the paragraph dealing with the common rule.
Those provisions in the Act are in my opinion at least consistent with an intention that, where a common rule applies to the employment of a non-member employee, that person is "an employee entitled to the benefit of the award". In my opinion, having regard to the passages quoted from the judgments of the High Court, the Court should hold that the applicant is "an employee entitled to the benefit of an award" within the meaning of s. 123
I agree with the opinions expressed by Gray J. as to the following matters, in rejecting submissions made by the respondent, and with the reasons given by him for those opinions:-

1. There is nothing in the form of the declarations made by Mr. Commissioner Brack that in any way suggests that the Commissioner was not performing these functions under s. 49 or that he misconstrued his power to make a common rule declaration.

2. The common rule did not have to be made as part of a process of arbitration and accordingly the respondent's submission that it was not bound by each of the declarations made by the Commission must be rejected.

3. Upon the coming into operation of each of the common rule declarations, the respondent became obliged to pay to the appellant the amounts specified in each preceding variation to the wage rate for the relevant classification in cl. 5 of the Award. In the period between each such variation, and the next common rule declaration, the wage rate which the respondent was obliged to pay to the appellant remained unvaried.

Lastly, in my opinion there is no substance in the respondent's contention that it is entitled to set off commission payments to the appellant against any entitlement to wages.

Accordingly, the appeal should be allowed. I agree with the orders proposed by Smithers J.

JUDGE3

This appeal is brought from the judgment of a single judge of the Federal Court of Australia, given on 10th February 1984. The appellant claims, pursuant to s. 123 of the Conciliation and Arbitration Act 1904 ("the Act"), wages alleged to be due to him pursuant to the Retail and Wholesale Shop Employees (Australian Capital Territory) Award 1968 ("the Award"). The claim is based on an allegation that the appellant fell within the classification "orderperson and outdoor orderperson, namely employees engaged in collecting orders and/or soliciting business and/or selling away from the employer's place of business", in cl. 5 of the Award, which deals with wages.

The learned trial judge held that the appellant did not fall within that classification. Although he recognized that it was unnecessary to do so, his Honour went on to consider other questions which had been argued. He expressed the view that the appellant had, in any event, no right of action in respect of the Award under s. 123 of the Act.
The appeal first came before this Court on 28th March 1985. On the following day, the Court expressed its conclusion that the learned trial judge had erred on the first issue, in the following terms:

"This is an appeal against an order by the trial judge dismissing a claim by the appellant under s. 123 of the Conciliation & Arbitration Act 1904 for a sum said to be due to him as wages pursuant to the provisions of the Retail & Wholesale Shop Employees (Australian Capital Territory) Award 1968. Subject to questions of law the critical question is whether the work proved to have been performed by the appellant for the respondent was work which falls within classification number 4 in clause 5 of the Award. The terms of that classification are

"orderperson and outdoor orderperson, namely employees engaged in collecting orders and/or soliciting business and/or selling away from the employer's place of business" The finding of the learned Judge was that the work performed by the appellant was not work within this classification. He said: "What he is employed to do is to go to houses and measure and quote for floor covering. Although he may in some instances be the first point of contact with a potential customer (as, for example, when he attends to a person who comes to the respondent's retail store enquiring about floor coverings at a time when the applicant is acting as a salesman behind the counter), that is the exceptional rather than the normal course of events." His Honour took the view that the appellant was required to establish that the dominant feature of his duties answer the description in the classification. It is our view that the question is not to be resolved by reference to what features of the work performed were the dominant ones but rather whether the work performed was work of the nature and quality fulfilling the terms of the classification. The evidence of the appellant was uncontradicted and no reason was suggested by the learned Judge nor submitted to us by counsel why that evidence should not be accepted. From that evidence it is in our view established that the work of the appellant included the following operations, namely:

(a) attending the homes of potential carpet purchasers to measure the amount of carpet required for the customers' purposes;

(b) offering advice as to the types of floor coverings available from the respondent and most suitable for the customer;

(c) calculating and quoting the prices of the various options open to the customer;

(d) advising the customer as to the credit and terms of credit available;

(e) obtaining the signature of the customer to an order if the transaction was concluded. The evidence does not disclose the proportion of visits of the appellant to customers' homes on which an order was actually signed. But it is clear that this was always an object which it was the appellant's duty to pursue and that he was successful in this on occasions. The evidence was that in some cases an order resulted straight away and in others an order never resulted in further cases it resulted after some delay. It was not suggested that the number of cases in which the appellant obtained an actual order on the spot was insignificant. But the important factor is that it was his duty to obtain one if he could but, in any event to promote an ultimate sale. The argument put to us on this appeal by the respondent was that accepted by the learned judge, namely, that in the grat majority of cases, the initial approach on behalf of the respondent to a potential customer was by what is called a "traveller caller" or some other member of the respondent's staff. The conclusion from this was that the work performed by the appellant was not in the nature of collecting orders or soliciting business or selling. In truth, however, the fact that the first contact was by another member of staff has no bearing on the question of whether what was done by the appellant fitted the classification. Clearly in most cases after the initiating action of the traveller caller the real process of inducing a sale had yet to be performed. But for the follow up by the appellant with all the advice and information which he gave to the customer, with a view to causing her or him to purchase carpet, it may be that a sale would not have eventuated. The work of the appellant was inevitably that of collecting orders, soliciting business or selling. It is also clear of course that it was carried on away from the employer's place of business.

Having regard to the above it is our view that the work performed by the appellant falls within the relevant classification.

Accordingly, questions of law remain to be decided. The principal of such questions concerned the effect of the making of a declaration that the terms of the award be a common rule in the Australian Capital Territory. For reasons which were valid, counsel for the respondent is unable at this stage to deal with this issue satisfactorily. In the circumstances we publish the foregoing conclusion and adjourn the appeal to a day to be fixed on the application of either party on notice to the other."

The remaining questions were argued on 10th and 11th September 1985. Mr. Sheils Q.C. appeared with Mr. Dodson for the Appellant and Mr. McKeand appeared with Mr. Hatcher for the Respondent.
The appeal is dealt with on the footing that the Appellant was not at any relevant time a member of the Shop, Distributive and Allied Employees' Association, the only organization of employees on which the Award is expressed to be binding. Counsel for the Appellant made a formal application for leave to call fresh evidence on this point on the appeal, but did not support the application, which was refused. The Court also acts on the footing that the Respondent was not at any relevant time a member of The Australian Capital Territory Employers Federation, or The Retail Traders Association of N.S.W. Those organizations were the only respondents which the evidence discloses as having been expressed to be bound by the Award. It was conceded at the trial that the respondent was then a member of the latter organization, but no admission was made as to membership at an earlier date.
The appellant was employed by the respondent from 20th November 1978. On 31st October 1978, the Award had been issued by the Australian Conciliation and Arbitration Commission in a consolidated form, as applicable from that date (print number D8725). Clause 4(a) of the Award provided as follows:

"(a) This award shall be binding upon the employers named in the Schedule of Respondents attached hereto, who are engaged in or in connection with the retail and/or wholesale shop industry in the Australian Capital Territory, in respect of and upon each and every employee as defined in this award, whether or not members of the Shop, Distributive and Allied Employees' Association and upon the said Association and the members thereof."

The opening words of cl. 5 of the Award were:

"Employees of the classifications mentioned herein (other than an employee in respect of whom a certificate under section 48 of the Act is in force) shall be paid the wages set out opposite each such classification."

There is then set out a table of classifications, each of which is numbered. The classification numbered 4 is that which has already been quoted, into which the appellant fell. Beside each classification, a weekly wage rate is specified. The first sentence of cl. 28 of the Award read:

"All wages shall be paid weekly in addition to any commission, bonus or premium to which the employee is entitled."

From time to time, the wage rates specified in the table in cl. 5 of the Award have been varied by the Australian Conciliation and Arbitration Commission. In most cases, the variation was by way of an order deleting the whole of cl. 5 and inserting a clause in the same form, save for changes to the wage rates. In some cases, only the figures in the table were deleted, and other figures substituted. In one case, the order is expressed in the form of additions to the amounts of wage rates. It is unnecessary for present purposes to set out the dates and amounts of the variations.
From time to time also there were made by the Australian Conciliation and Arbitration Commission declarations that all of the terms of the Award should operate as a common rule. These declarations were substantially in two forms. The form of declaration made by Mr. Commissioner Brack on 2nd April 1982 and 15th March 1983 was as follows:

"The Commission, as it appears to be necessary or expedient for the purpose of preventing or settling industrial disputes or of preventing further industrial disputes DECLARES that the whole of the terms of each of the following awards shall, in the Australian Capital Territory, subject to the specified exclusions, be a common rule of the industry in respect of which the dispute or disputes arose which led to the making of each such award."

There then followed a list of awards, including the Award. The declarations made by Mr. Commissioner Stanton on 26th September 1979 and 26th September 1980, by Coldham J. on 26th May 1980 and by Mr. Commissioner Bain on 20th April 1983 were in the following form:

"That the whole of the terms of the Retail and Wholesale Shop Employees (Australian Capital Territory) Award 1968 be a common rule of the retail industry in the Australian Capital Territory and shall be binding on all employers in the said industry in respect of the employment by them of employees in the classifications for which provision is made in the said award and shall be binding on all such employees.

The dates of operation expressed in these declarations do not coincide with the dates of operation of the variations to the Award, nor do the dates of operation of the declarations appear to bear any relationship to the dates of operation of the variations. All that can be said is that, from time to time, declarations have been made after one or more variations to the Award have occurred.

Section 123 of the Act is in the following terms:

"123 An employee entitled to the benefit of an award may, at any time within 6 years from any payment becoming due to him under the award, but not later, sue for the amount of the payment in the Court, or in any other court of competent jurisdiction."

In the ordinary course, an employee who is not a member of an organization of employees party to an award, is unable to sue for wages in reliance on that award and s. 123. It was held in Leontiades v. F.T. Manfield Pty. Ltd. (1980) 43 FLR 193 that such a non-member employee was not "entitled to the benefit of . . . an award" within the meaning of s. 5(1)(b) of the Act. It should be noted that the words used in s. 123 are identical with those used in s. 5(1)(b). A similar conclusion has been reached, that s. 119(3) does not permit the Court to order payment to a non-member employee of any arrears of pay, because such arrears is not an amount to which the non-member employee is "entitled" within the meaning of that sub-section. See Industrial Relations Bureau v. Hassan (1982) 62 FLR 169, Australian Insurance Employees Union v. W.P. Insurance Services Pty. Ltd. (1982) 42 A.L.R. 598, and Seymour v. Stawell Timber Industries Pty. Ltd. (Receiver and Manager Appointed) (Full Court of the Federal Court of Australia, Northrop, Keely and Gray JJ., 5th July 1985, unreported).
The reasoning which leads to this apparently unusual conclusion derives from the limits of the legislative power in s. 51(xxxv) of the Constitution. The relevant limits are that laws can only be made by the Parliament with respect to conciliation and arbitration, and for the prevention and settlement of industrial disputes.
From its earliest days, the Act has contained some provision for the application of awards as common rules. In its original form, as s. 38(f) of the Act, such provision empowered the then Court of Conciliation and Arbitration:

"to declare, by any award or order, that any practice, regulation, rule, custom, term of agreement, condition of employment or dealing whatsoever determined by an award in relation to any industrial matter shall be a common rule of any industry in connexion with which the dispute arises:

Provision was made for notification by advertisement of the proposal to declare a common rule, and for the hearing of interested persons and organizations. In Australian Boot Trade Employees' Federation v. Whybrow & Co. (1910) 11 CLR 311, the High Court of Australia held that such a provision was not a valid exercise of the legislative power contained in s. 51(xxxv) of the Constitution. The reasoning of the Court was based on the view that, because a common rule extended the application of an award beyond the parties to a dispute, a common rule could not be characterized as the process of conciliation or the process of arbitration. Notwithstanding this decision, the provision remained, and as the Act stood after Act No. 10 of 1947, it contained what was then s. 43B. Sub-section (1) of that section contained a general power to declare any term of an order or award to be a common rule of any industry in connection with which the relevant dispute arose. Sub-section (2) contained a power to declare a common rule in a territory of the Commonwealth. This last-mentioned power was in terms similar to that given by the present s. 49(1). In R. v. Kelly; ex parte State of Victoria (1950) 81 CLR 64, an attempt was made to argue that Whybrow's case should be overruled, and that the general power to make a term of an award a common rule in an industry should be regarded as validly granted to the Court of Conciliation and Arbitration. This attempt failed, and the High Court of Australia again held that the general power was improperly granted.

It has been recognized in a number of decisions that an organization of employees is able to create a dispute, in settlement of which an award can be made, concerning the terms and conditions of employment of persons who are not members of that organization. The reason for this conclusion lies in the interest which such an organization has in protecting the standards of wages and other terms and conditions of employment of its members, by preventing those standards from being undercut by non-member employees contracting with employers on inferior terms. It is well recognized that an award made in this fashion obliges an employer bound by it to pay the wages and afford the terms and conditions prescribed by the award to employees who are not members of the relevant organization. Such an obligation is enforceable pursuant to s. 119 of the Act, by a proceeding for a pecuniary penalty, commenced by one or other of the persons or organizations listed in sub-s. (2) of that section. No right, however, lies in a non-member employee to enforce the award by claim for pecuniary penalty, or to claim the payment of wages or other sums in accordance with the award. The authorities on which these conclusions are based are collected conveniently in the judgment of the Court in Leontiades v. F.T. Manfield Pty. Ltd., referred to above, at pages 194-197. These authorities give rise to a situation which is most unfamiliar to lawyers, namely that of the existence of a legal obligation without any corresponding right in the person to whom the obligation is owed to enforce the obligation.
Clause 4(a) of the Award has already been set out. Apart from the effect of any common rule declaration, that clause would have been operative to oblige an employer bound by the Award to apply to all its employees, whether members of the Shop, Distributive and Allied Employees' Association or not, the terms and conditions of employment laid down by the Award. An employee who was not a member of the organization would have had no right to sue under s. 123 for an amount which his or her employer was bound to pay to him or her. The principal question which arises in this appeal is whether the various common rule declarations give to an employee, who is not a member of any relevant organization, any greater entitlement than he would have had if his employer had been named in the Award as a respondent, rather than being bound to observe it by virtue of a common rule declaration.
Section 49 of the Act provides, and has provided throughout the relevant period, as follows:

"49(1) The Commission may, if it appears to be necessary or expedient for the purpose of preventing or settling an industrial dispute with which it is dealing or of preventing further industrial disputes, declare that any term of an award shall, in a Territory, be a common rule of any industry in connection with which the dispute arose.

49(2) Before a common rule is declared under sub-section (1), the Commission shall, by notification published in the Gazette and in such other publications (if any) as the Commission thinks fit, specifying the industry and the industrial matter in relation to which it is proposed to declare a common rule, make known that all persons and organizations interested and desiring to be heard may, on or before a specified date, appear or be represented before the Commission and the Commission shall hear all interested persons and organizations so appearing or represented."

By s. 12 of Act No. 115 of 1983, there was inserted into the Act a new section 49(A) as follows:

"49A(1) Subject to this section, where the Commission varies a term of an award, being a term that is a common rule of an industry in a Territory, the variation is, by force of this sub-section, a common rule of that industry in that Territory with effect from the date of effect of the variation.

(2) Before the Commission varies a term of a kind referred to in sub-section (1), the Registrar shall, in accordance with the regulations, give notice of the place where, and the time when, it is proposed to hear the matter involving that term.

(3) Where the Commission varies a term of a kind referred to in sub-section (1), the Registrar shall forthwith, in accordance with the regulations, publish a notice inviting any person or organization interested and desiring to be heard to lodge, within 28 days after the date of the decision of the Commission, notice of objection to the variation binding that person or organization.

(4) If a notice of objection in relation to a variation is lodged by a person or organization to a accordance with sub-section (3), the Commission shall hear the objection and, if it thinks fit, may declare that the variation is not binding on that person or organization.

(5) Where the Commission makes a declaration under sub-section (4), the Registrar shall give notice of that fact in accordance with the regulations.

(6) A variation that is a common rule under this section -

(a) is not enforceable before the expiration of the period of 28 days referred to in sub-section (3); and

(b) if a notice of objection in relation to the variation is lodged by a person or organization in accordance with that sub-section - is not enforceable against that person or organization before the hearing of the objection is finally disposed of."

This section came into operation on 27th February 1984. Its operation was, therefore, too late to affect any of the matters directly the subject of this appeal. As will be seen, however, both parties relied upon s. 49A in support of their arguments as to the effect of a common rule declaration.

The other relevant provision of the Act is s. 61(e). That provision is:

"61 An award determining an industrial dispute is binding on -

. . .

(e) all organizations and persons on whom the award is binding as a common rule; and . . . "

Nowhere in the Act is the term "common rule" defined. Its precise meaning is not easy to ascertain. It is not defined as an expression by the Oxford Dictionary. The most appropriate meaning of the word "common" given by that dictionary is "of general application". This suggests that a common rule is a rule of general application. The phrase is defined by the Macquarie Dictionary in the following terms:

"a provision of an award of an industrial tribunal which has general application throughout the whole of the industry in which the award is operative."

The term was used in a number of places in Sidney & Beatrice Webb, Industrial Democracy, first published in 1897. That work was a study of trade unionism in the United Kingdom. Instances of the use of the phrase "Common Rule", which always appears with initial capitals, follow. At page 179 it is said:

"Without a Trade Union in the industry, it would be almost impossible to get a Common Rule extending over a whole district, and hopeless to attempt a national agreement."

At page 224 it is said:

"Yet arbitration has one characteristic feature in common with the higgling of employers and workmen which it supersedes. The arbitrator's award is a general ordinance, which, in so far as it is accepted, puts an end to Individual Bargaining between man and man, and thus excludes, from influence on the terms of employment, the exigencies of particular firms. It establishes, in short, like Collective Bargaining, a Common Rule for the industry concerned."

At page 554, when speaking of industries controlled by monopoly or oligopoly employers, the authors said:

"Against the unlimited resources, the secured monopoly of custom, and the absolute unity of will enjoyed by these modern industrial leviathans, the quarter of a million accumulated funds of the richest Trade Union, and the clamor of even one or two hundred thousand obstinate and embittered workmen, are as arrows against ironclads. In such cases the only available method of securing a Common Rule is Legal Enactment--difficult, in the face of interests so powerful, for the Trade Unions to obtain, but once obtained, in so highly organised an industry, easy of application and enforcement."

A further reference appears at pages 560 and 561.

It may be seen from these references that a Common Rule is intended to be a rule of general application in the industry concerned. This conclusion, however, does not answer some important questions about the declaration of an award as a common rule. Does such a declaration only extend the award by imposing obligations on employers, as if they had been made respondents to it? Does it in addition give rights to members of any organization of employees originally party to the award, or to members of any other organization of employees? Or, does it give rights to all employees in the industry concerned?
The passages quoted from the Webbs may well be instructive as to the meaning of the phrase "common rule" generally understood in 1904, when the Act was passed. Those passages suggest that what was contemplated by the Webbs as a common rule was something which imposed an obligation on employers, but did not give an enforceable right to employees. Unless the relationship of principal and agent existed between a trade union and each of its members, no member would have acquired any right to sue upon a common rule established by collective bargaining between the union and employers. Similarly, if arbitration of the kind contemplated by the Webbs occurred, a resulting common rule would not have given rise to a right in any employee to sue for its benefits. Of course, the common rule might have become part of each individual's contract of employment, in which case the employee could have enforced it. The right to enforce, however, would have arisen from an event separate from the common rule itself. Similarly, if a common rule were to have been embodied in legislation, as the Webbs contemplated it might, the legislation itself would have provided the means of enforcement. Again, the means of enforcement may be regarded as separate from the common rule itself.
The term "common rule" was also current in the industrial arbitration legislation of New South Wales in 1904. Section 37 of the Industrial Arbitration Act 1901 (N.S.W.) provided, so far as is relevant:

"37. In any proceeding before it the court may do all or any of the following things with a view to the enforcement of its award, order, or direction -

(1) declare that any practice, regulation, rule, custom, term of agreement, condition of employment, or dealing whatsoever in relation to an industrial matter, shall be a common rule of an industry affected by the proceeding;

(2) direct within what limits of area and subject to what conditions and exceptions such common rule shall be binding upon persons engaged in the said industry, whether as employer or as employee, and whether members of an industrial union or not;"

The presence of specific powers to extend the binding effect of a common rule to employees, including non-member employees, is significant. The term is still used in s. 94 of the Industrial Conciliation and Arbitration Act 1961 (Qld.), which provides as follows:

"The Commission may declare that any industrial agreement shall have the effect of an award and be a common rule of any calling or callings to which it relates, and the agreement shall thereupon, subject as hereinafter provided, become binding on all employers and employees, whether members of an industrial union or not, engaged at any time during its currency in any such calling within the locality specified in the agreement, but before acting under this section the Commission shall give all parties, likely in its opinion to be affected, notice by advertisement or otherwise of its intention to extend the operation of such agreement, and shall hear any parties desiring to be heard in opposition thereto."

It will be noted that this section contains its own provision as to the binding effect of a common rule. Apart from Queensland, the States appear to have abandoned the use of the term "common rule" in their industrial legislation. Each State act contains specific provisions as to the binding effect of awards and industrial agreements.

It would have been open to the Parliament, in enacting common rule provisions for territories, to make such specific provisions as to their binding effect on employees. Section 61(e), for instance, could have provided specifically for such effect. Comparison may be made with s. 61(f), under which an award is made binding on "all members of organizations bound by the award". The form of s. 61(e) really begs the question, upon which persons is the award binding as a common rule? Nor does s. 123 of the Act assist in answering this question, when it refers to an "employee entitled to the benefit of an award". The general scheme of the Act does support the view that a common rule only imposes obligations, without giving rights to non-member employees. Among the chief objects, set out in s. 2 of the Act are the following:

"(e) to encourage the organization of representative bodies of employers and employees and their registration under this Act; and

(f) to encourage the democratic control of organizations so registered and the full participation by members of such an organization in the affairs of the Organization."

The whole scheme of the Act is heavily dependent upon membership of organizations registered under its provisions. Such organizations may create disputes, by the service of logs of claims; they then participate in the processes of conciliation and arbitration with respect to those claims. They and their members are bound by the resulting agreements (see s. 28) or awards (see s. 61). An employer upon whom an award is made binding as a common rule would not be expected to have the same rights to seek a variation of the award as would an employer bound as a result of being a party to the dispute, or a member of an organization which was such a party. It is hardly consistent with the aim of encouraging membership of organizations to give to non-member employees rights against employers, which those employees would not have had if their employers had been parties to the award. Indeed, such a result would be anomalous; non-member employees of respondents named in the award would have no rights, whereas non-member employees of employers bound by the award as a common rule would. This last-mentioned anomaly might be thought to be overcome if the common rule were seen as applying to the original parties to the award (so far as they carry on their operations within the territory concerned), so that employees of the original employer respondents would acquire rights against their employers, on the making of a common rule declaration. This approach, however, would lead to a result which is difficult to justify logically. Each such respondent would be bound by the award by virtue of s. 61(a), (b) or (c) of the Act, as a party to the dispute settled by the award. Additionally, each such respondent would be bound by the award as a common rule. Different consequences, with respect to non-member employees, would attach to the two methods of binding. In a case such as the present, where variations have been made to the Award, and common rule declarations have been made subsequently, an employee might, at one point in time, have rights against an employer with respect to some award matters, but not with respect to others. There seems to underlie the common rule provisions of the Act the notion that a common rule declaration extends an award to participants in an industry who would not otherwise be bound. Section 49(2) makes provision for notification by advertisement of the intention to make a common rule declaration; it does not provide expressly for notification to the existing parties to the award of that intention. Parliament seems to have assumed that existing parties would not have an interest in resisting the making of a declaration. The preferable view, therefore, is that a common rule declaration extends the operation of an award to those not already parties to it, but leaves untouched those who are parties.
Some difficulty then arises as to the position of employees who are members of a relevant organization, and whose employers are not parties to the award. Is the position of such member employees any different from that of non-member employees? The answer to this question lies in s. 61(f) of the Act. That provision extends the binding force of an award to members of organizations, that is to persons who have never themselves been parties to a dispute, but whose connection with the dispute arises from their membership of an organization which itself is a party. When the binding effect of an award is extended by s. 61(e) to an employer not party to the dispute, the binding force of the award with respect to a member of an organization which is bound by the award is not taken away. No difficulty is caused by the simultaneous operation of s. 61(e) and (f).
Regard should also be given to the terms of s. 49(1). A declaration under that provision may only be made if it appears to be necessary or expedient for one of the purposes referred to, namely the purpose of preventing or settling an industrial dispute, or the purpose of preventing further industrial disputes. Higgins J., as President of the Court of Conciliation and Arbitration, in The Merchant Service Guild of Australasia v. The Commonwealth Steam-Ship Owners' Association (No. 2) (1907) 1 C.A.R. 53, at p. 57, saw the purpose of a common rule in the following terms:

"The object of the Common Rule is to insure that the employer who is compelled under an Award to incur increased expenditure in relation to his employees shall not be at a disadvantage with his trade competitors. Its aim is, as far as possible, to place all competitors on comparatively the same level of expenditure in relation to their employees."

A common rule may aid the settlement of an existing dispute by preventing employees of employers who are not parties to the dispute from contracting on terms less favourable than the award. Such undercutting is thought to lead to the risk that employers who are parties to the award will be driven to attempt to engage employees at rates or on conditions less than the award rates and conditions, and thereby to attempt to re-open the award. New disputes may be prevented from arising if other employers are bound to observe the standards laid down in the award; it will then be unnecessary for any organization of employees to make claims on those employers, and to create disputes with them. Each of these purposes may be accomplished without giving to non-member employees of non-party employers any rights to sue to recover wages, or in respect of other conditions, in an award. It is true that the meaning of a term in a statute is not necessarily governed by the purpose for which that term may be brought into play. In this case, however, the purposes for which a common rule declaration may be made do appear to throw light on the meaning of the phrase "common rule".
The traditional meaning of "common rule", the objects of the Act, the general policy of the Act, and the immediate context of s. 49, all tend to suggest that a common rule declaration imposes obligations on employers in the relevant industry, but does not give rights to employees who are not members of organizations. It remains to be seen whether there is any authority on the subject.
It is difficult to find any examination of the nature of a common rule in any decision of the Australian Conciliation and Arbitration Commission, or its predecessor, the Court of Conciliation and Arbitration. Nothing in the Merchant Service Guild of Australasia v. The Commonwealth Steam-Ship Owners' Association (No. 2) (referred to above) indicates that Higgins J. turned his mind to the question whether a declaration of an award to be a common rule gave rights to non-member employees. In The North Australian Workers Union v. The Northern Territory Pastoral Lessees Association (1933) 32 CAR 5, Dethridge CJ declared that an award should be a common rule of the cattle station industry in the Northern Territory. His Honour expressly limited the operation of the declaration as far as employees were concerned to employees who were members of the applicant union. The express purpose of this limit was to promote membership of that union. Nothing in the decision suggests that any attention was directed to the question whether, if the declaration had extended to all employees, non-member employees would have a acquired rights against their employers.
Nor do the judgments of the High Court of Australia which have discussed common rules cast much light on this difficult question. There is one short passage in the judgment of the High Court in R. v. Kelly; ex parte State of Victoria, referred to above, at page 82. That passage is as follows:

"The award does not affect any non-disputant. It does not create (as the common rule would create) actual rights and duties as between persons who are non-disputants."

This brief passage is all the High Court authority which can be found to suggest that an award declared to be a common rule may create rights and duties as between employers and their employees. Although entitled to very great weight, the passage is not binding on this Court. The question of the entitlement of a non-member employee was not before the court in that case. No argument appears to have been addressed to it. The comment is a passing one, not essential to the reasoning of the High Court, and certainly does not constitute an extensive examination of the nature of rights and duties created by a common rule declaration. Against the weight of such a remark must be set all of the matters referred to above, which suggest that a common rule does not create rights in non-member employees. The view expressed by the High Court does not outweigh those considerations.

In Willis v. Chew (Federal Court of Australia, Ellicott J., 9th October 1981, unreported), a question arose whether an employer was guilty of an offence, under s. 5(1)(b) of the Act, in dismissing an employee by reason of the circumstance that she was entitled to the benefit of an award. The relevant employment was in a shop conducted by the employer, in the Australian Capital Territory. There was in force a declaration that the relevant award was a common rule in that territory. At pages 10-11 of the print of the judgment, Ellicott J. said:

"I have already referred to the Chemists (Australian Capital Territory) Award 1968 and to the common rule made by Mr. Commissioner Stanton. The award was made under the Act and the common rule pursuant to s. 49 thereof. I am satisfied that as a result of the common rule, if not otherwise, the award became binding on the defendant as an employer in the Chemist industry in the A.C.T. and on all employees as described in the common rule. Those employees included the informant. The award conferred benefits on those employees and I am therefore satisfied beyond reasonable doubt that she was, whilst employed by the defendant, entitled to the benefit of an award.

I am therefore satisfied beyond reasonable doubt that on 5 December 1980 the defendant dismissed the informant, his employee, that at the time she was a member of the union, that it was an organization registered pursuant to the Act and that whilst she was an employee of the defendant, the informant was entitled to the benefit of an award."

It does not appear from this passage, or from any other in the judgment, that the earlier decision in Leontiades v. F.T Manfield Pty. Ltd. (already referred to) was drawn to his Honour's attention. Nor does it seem that his Honour was made aware of the difficult issues of law surrounding the question whether a person is entitled to the benefit of an award. Indeed, the repeated statement that his Honour was satisfied beyond reasonable doubt that the informant was entitled to the benefit of an award tends to suggest that his Honour saw the question as one of fact only. There is no discussion of the possible different effects of a common rule declaration. If the reasoning which I have set out earlier is correct, and if, as his Honour found, the informant had become a member of the relevant registered organization prior to her dismissal, she had thereby become entitled to the benefit of the relevant award, by reason of s. 61(f) of the Act. A consideration of the effect of a common rule declaration would, therefore, have been unnecessary to his Honour's conclusion. I am unable to regard Willis v. Chew as authority for the proposition that an employee, not a member of a registered organization, is entitled to the benefit of an award, by virtue of a common rule declaration.

Because, on the evidence before the Court in the present case, the appellant was not a member of the Shop Distributive and Allied Employees Association at any relevant time, none of the common rule declarations with respect to the Award created any right enforceable by him. At no time was he a person entitled to the benefit of the Award, within the meaning of s. 123 of the Act. From this conclusion, it follows that the appeal must be dismissed.
In normal circumstances, it would be unnecessary to deal with other arguments which were put on behalf of the respondent. The present case, however, is unusual. Even though the appellant is unable to sue for any amount of arrears of wages under the Award, it must be recognized that the respondent, if it is bound by reason of the common rule declarations, was and remains obliged to make payments to the appellant in accordance with the Award. It should not be assumed that the respondent will neglect its obligations; to the contrary, the appellant is entitled to expect that he will be paid any amounts which the respondent is obliged to pay him by the Award. There may be proceedings, brought by a competent person or organization, for recovery of a penalty pursuant to s. 119 of the Act, to enforce the payment of such amounts. For these reasons, it is appropriate to determine the extent of the respondent's obligation, if any, to the appellant.
Counsel for the respondent drew attention to the limitations on the power to declare a term of an award to be a common rule, which are expressed in s. 49(1) of the Act. Such a declaration can only be made with respect to an industry in connection with which a particular dispute arose. That dispute must be one with which the Commission is dealing at the time when it makes the declaration. In addition, the Commission must be satisfied that it appears necessary or expedient for the purpose of preventing or settling the particular dispute, or preventing further industrial disputes, to make a declaration. Counsel did not contend that the declaration must show on its face that each of these requirements have been satisfied. Indeed, it is to be expected that any party seeking to show that a common rule declaration was made without power would carry the onus of proving that the Commission was not performing its function in some relevant respect. It was contended, however, that the declarations made by Mr. Commissioner Brack, in the form which is set out above, showed that the Commissioner had not observed the requirements of s. 49(1). Attention was drawn to the identification in those declarations of the industry in which the common rule was to operate as being the industry in respect of which the dispute or disputes which led to the making of the relevant award arose. It was said that those disputes were not disputes with which the Commission was then dealing, and that accordingly the Commissioner has misconceived his function and failed to make a valid declaration.
This argument involves a fundamental misunderstanding of the manner in which the Australian Conciliation and Arbitration Commission deals with disputes. By far the great majority of disputes coming before that Commission are "paper disputes", which arise from the service of logs of claims on the one hand, and a failure to grant those claims on the other. It is rare for such a dispute to be settled entirely by the making of an award; the dispute is only partly settled, and subsequent variations to the award are made within the ambit of the original dispute. It is, therefore, possible for the Commission to be dealing with a dispute when it has before it the question whether a term of an award should be made a common rule in a territory. As I have already pointed out, the making of a declaration that a term of an award shall be a common rule in a territory can be regarded as conducive to the settlement of the existing dispute. Nor should it be forgotten that the Commission may make a declaration if to do so would be necessary or expedient for the prevention of further disputes. There is nothing in the form of the declarations made by Mr. Commissioner Brack that in any way suggests that the Commissioner was not performing these functions, or that he misconstrued his power to make a common rule declaration.
It was further contended that the power given by s. 49(1) of the Act was no more than an aspect of the general powers of the Commission, which were limited to conciliation and arbitration for the settlement of actual disputes. In other words, counsel for the respondent argued that a common rule could only be made as part of the process of arbitration, and only with respect to identifiable parties to a dispute, or interveners in relation to that dispute. If this argument were correct, it is hard to see why s. 49 is to be found in the Act. The structure of the section makes obvious its intent. It pre-supposes that there is already in existence an award. It empowers the Commission to extend a term of that award to be a common rule in a particular industry. That power is a clear departure from the process of conciliation and arbitration. This was recognized by the High Court of Australia in both the Whybrow and Kelly cases, in which it was held that the power to make a common rule did not fall within the constitutional power with respect to conciliation and arbitration.
The respondent is, therefore, bound by the Award by virtue of each of the declarations of the terms of the Award as a common rule in the industry in which the respondent conducts its business in the Australian Capital Territory. There remains a question as to the effect of variations to the Award upon its operation as a common rule, and of the successive common rule declarations in relation to the variations. Three alternative propositions were raised in argument. In the first place, counsel for the appellant argued that any common rule declaration automatically picked up all subsequent variations to the Award, so that the respondent became obliged to pay to the appellant the amount of the wages specified in each variation, from the date on which that variation became operative. The primary contention of counsel for the respondent was that, upon the making of a variation to a term of the Award which was a common rule, the original term ceased to exist altogether, and the respondent had no obligations towards the appellant at all until the next common rule declaration was made. If this primary submission were not accepted, the respondent argued that any variation to a term of the Award was not applicable to the respondent until the next subsequent common rule declaration became operative. Each side relied upon the provisions of s. 49A of the Act as showing what Parliament understood to have been the law with respect to variations of common rule terms, before the passage of that section.
It would be surprising if Parliament had intended that variations to a term of an award should bind all employers in an industry, without those employers having any opportunity to make submissions on such variations. The provisions for advertisement and a right to be heard, which appear in s. 49(2) of the Act, indicate an intention of Parliament that employers should have a means of ascertaining what obligations it was proposed to place on them, and being heard with respect to such proposed obligations. If the argument of the appellant were correct, until s. 49A was enacted, it would be possible for variations to become obligations upon persons, without their having had any opportunity to be heard in relation to such variations. Counsel for the appellant argued that s. 49A's only function was to give such an opportunity, it being recognized that variations were already binding as soon as made. The better view, however, is that s. 49A was enacted to do away with the time lag between a variation and the next common rule declaration, and to resolve the questions which arise from the existence of such time gaps in the facts of the present case.

It would be equally surprising if an employer's obligations were to disappear entirely, simply because a variation was made to a term of an award binding on that employer by reason of a common rule declaration. A variation does not render null and void the pre-existing term, where no common rule exists. It is difficult to see why it should do so where a common rule declaration has been made.
There is nothing difficult about the continued operation of the original common rule term upon those bound by a common rule, even after a variation, operative between parties to the Award, has been made. Nor is there any difficulty in seeing that the next common rule declaration should make operative all variations to the relevant terms which have occurred since the last common rule declaration. Indeed, it is only this view which would explain the successive common rule declarations which have been made in relation to the Award. Upon the coming into operation of each of those common rule declarations, the respondent became obliged to pay to the appellant the amounts specified in each preceding variation to the wage rate for the relevant classification in cl. 5 of the Award. In the period between each such variation, and the next common rule declaration, the wage rate which the respondent was obliged to pay to the appellant remained unvaried.
One final argument was raised on behalf of the respondent. It was put that the respondent was entitled to set off against any wages it was bound to pay the appellant payments made by way of commission to him. In truth, the defence was one of satisfaction, rather than one of set-off; there was no allegation of any debt owed by the appellant to the respondent.
This argument ran foul of cl. 28 of the Award, which required the payment of wages to be in addition to any commission. Even in the absence of this clause, it would have been doubtful whether an employer could plead satisfaction in this way. It has been held that it is not open to an employer to claim that its obligations to an employee in respect of one period have been satisfied by over-award payments made in another period. See Lynch v. Buckley Sawmills Pty. Ltd. (1984) 3 FCR 503, at page 509. It may be that payments made expressly for one purpose cannot be relied upon as having satisfied obligations under another head altogether. It is not necessary finally to decide this point, however, which should await full argument on another occasion.
The appeal should be dismissed.

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Citations

Poulos, Peter Anthony v Waltons Stores (Interstate) Ltd [1986] FCA 159 (15 IR 313)

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[1986] FCA 159

22 APRIL 1986