Townsend v General Motors-Holden's Ltd

No judgment structure available for this case.

Re: LEONARD CECIL TOWNSEND; MICHAEL FREDERICK HUGH TUMBERS
And: GENERAL MOTORS-HOLDEN'S LIMITED
Nos. V18, V19, V20 of 1981
Industrial law
4 IR 358

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
INDUSTRIAL DIVISION
Morling J.

CATCHWORDS

Industrial law - breach of award - "stand-down" clause - strike - "employees who cannot be usefully employed" - meaning of "usefully" - whether employer's economic position relevant consideration - large industrial undertaking - employer bona fide - onus of proof - breach of award in minor respects

Conciliation and Arbitration Act 1904, s. 119

General Motors-Holden's Limited (Part 1) General Award 1978

HEARING

SYDNEY

#DATE 26:8:1983

ORDER

THE COURT determines that the respondent on 10 and 11 March 1981 committed a breach of the General Motors-Holden's Limited (Part 1) General Award 1978 in that it failed to pay to some of its employees the wages to which they were entitled under the Award. The matters are stood over to a date to be fixed for the purposes of determining the question of penalty and making formal orders.

JUDGE1

In these applications, which were heard together by consent, the applicants seek the imposition by the court of penalties upon the respondent General Motors-Holden's Limited ("G.M.H.") for alleged breaches of the General Motors-Holden's Limited (Part I) General Award 1978 ("the Award"). The proceedings are brought pursuant to s.119 of the Conciliation and Arbitration Act 1904, as amended ("the Act"). The applicants also seek orders pursuant to s.119(3) of the Act that G.M.H. pay to a great number of its employees amounts to which it is alleged they are entitled but which they have not been paid.

The applicant Townsend is the Secretary of the Vehicle Builders Employees Federation of Australia, an organization of employees registered pursuant to the Act. The applicant Tumbers is the Secretary of the South Australian branch of the Amalgamated Metal Workers and Shipwrights Union another organisation of employees registered under the Act.

The basis of the allegations made against G.M.H. is that on 10 and 11 March 1981 it wrongly stood down the employees in purported compliance with the terms of the Award. Because of the size and variety of G.M.H's industrial operations and the great number of employees stood-down complex questions of fact and matters of important general principle fall to be decided.

GENERAL-MOTORS HOLDEN'S SOUTH AUSTRALIAN OPERATIONS

G.M.H. is a substantial manufacturer of motor vehicles. It has plants in several States of the Commonwealth. Two of its plants are located in South Australia, one at Elizabeth and the other at Woodville. In March 1981 G.M.H. employed approximately 7500 workers in South Australia.

The Elizabeth plant covers some 306 acres. As might be expected in such a large-scale enterprise, a number of individual but inter-related activities are carried out within the plant. There is a motor vehicle assembly plant where motor vehicles are assembled on a moving assembly line. There is a hardware plant housing, inter alia, a press shop where small parts for motor vehicles are stamped out. Another part of the hardware plant is given over to the assembly of locks, and yet another to minor pressings. There is a trim fabrication plant where the trim components for the Holden range of vehicles are fabricated. Trim components include items such as door trims, seat pads and roof linings. The trim components manufactured at the plant are despatched to G.M.H's vehicle assembly plants at Dandenong, Victoria, and Acacia Ridge, Queensland, as well as to the assembly plant at Elizabeth. There is a press shop where components such as engine hoods, fenders, and car panels are pressed. The components manufactured in this shop are welded together and then stored in a large warehouse on the site. The press shop makes components not only for G.M.H.'S own assembly plants, but also for other vehicle manufacturers. Many other manufacturing activities are carried out at Elizabeth. The above brief description does not by any means give a complete picture of all of the operations at the plant.

The Woodville plant occupies a 50 acre site. Included within it is a large tool room where dies are manufactured. There is a large press shop where the company presses major components such as roof and floor panels for almost the entire range of G.M.H. vehicles. There is a plating plant where bumper bars are plated. There is also an automatic transmission plant in which transmissions are manufactured, not only for the complete range of G.M.H. vehicles, but also for vehicles manufactured by other manufacturers.

G.M.H.'s spare parts division is also located at Woodville. In this division manufactured parts are treated before being despatched to the company's motor spare parts division headquarters in Victoria. This description of the activities at Woodville, like the description of the activities at Elizabeth, is by no means comprehensive.

In addition to the motor vehicle assembly plant at Dandenong in Victoria G.M.H. has a large plant at Fishermen's Bend in that State. At this plant the company manufactures engines, rear axles, automatic transmissions, steering columns and other items. These are supplied to all G.M.H.'s assembly plants.

The Acacia Ridge plant is an assembly plant only at which vehicles are assembled from components manufactured at the Fishermen's Bend, Woodville and Elizabeth plants and elsewhere.

THE STAND-DOWN CLAUSE

On 10 and 11 March 1981 G.M.H. stood-down about 3000 of its employees at Elizabeth and Woodville. It is G.M.H.'s case that the Award gave it the right to stand-down the employees on the days in question. Clause 6(g) of the Award provides, in part, as follows:

"(g) Standing down of employee Notwithstanding anything elsewhere contained in this clause -

(i) The Company shall have the right to deduct payment for any day an employee cannot be usefully employed because of a strike or through a breakdown in machinery or a stoppage of work by any cause for which the Company cannot reasonably be held responsible."

It will be convenient hereafter to refer to cl.6(g)(i) as "the stand-down clause".

THE NIPPONDENSO STRIKE AND THE SHORTAGE OF HEATER BOXES

In order to understand why the employees were stood-down it is necessary to have regard to two circumstances that had an important bearing on G.M.H.'s production schedules at the time. The first of these circumstances arose out of an industrial dispute at the works of one of G.M.H.'s suppliers. In March 1981 G.M.H. was manufacturing Commodore VC model vehicles. An integral part of these vehicle was a heater box. A heater box is a plastic box with a coil in it which is fixed in the centre of and behind the dashboard of a motor vehicle. It performs the task of providing heated air which serves the purpose, inter alia, of demisting the windscreen of the vehicle. It is connected with the motor and is a requirement of the design specifications for all motor vehicles.

G.M.H. does not manufacture heater boxes itself but acquires them from Nippondenso Limited, whose factory premises are in Victoria. On 11 February 1981 a strike commenced at Nippondenso's factory. The strikers included members of the Amalgamated Metal Workers and Shipwrights Union and of the Storemen and Packers Union. The strike completely shut down Nippondenso's operations. At the time of the strike Nippondenso had about 100 heater boxes in stock but it was unable to deliver these to G.M.H. because of the strike by the members of the Storemen and Packers Union. When the Storemen and Packers returned to work on 20 February Nippondenso was able to deliver the heater boxes which it had on hand and thus G.M.H. was able to replenish its dwindling stock of boxes. However, the strikers who were members of the Amalgamated Metal Workers and Shipwrights Union remained on strike until 18 March 1981 and in consequence Nippondenso was unable to continue manufacturing heater boxes.

G.M.H. learned of the strike at Nippondenso on 23 February and immediately set about taking steps to arrange for alternative supplies of heater boxes. A number of boxes that had been packed ready for delivery to G.M.H's New Zealand plant were brought back from the wharves and added to the stock available in Australia. Urgent steps were taken to ascertain whether suitable boxes were available from the Opel company, G.M.H's German affiliate. Unsuccessful attempts were made to obtain heater boxes from the Vauxhall company (another G.M.H. affiliate) in the United Kingdom and also from South Africa. Evidence was given, which I accept, that every source of possible supply was investigated with the utmost expedition.

As a result of these efforts suitable boxes were eventually located in Germany. At the time, a G.M.H. executive happened to be at the Opel works in Germany. His services were enlisted to ensure that boxes were obtained without delay. But, due to circumstances beyond G.M.H's control, there were delays in obtaining delivery of the boxes in Australia. Arrangements were made for them to be carried by Qantas from Frankfurt airport. However, a strike by Qantas employees made it necessary to make alternative arrangements. It was decided to airfreight them from Stuttgart on a Lufthansa flight but a bomb scare at that airport led to a temporary delay in the loading of the aircraft. Eventually supplies of the boxes arrived in Australia, but G.M.H's efforts were further bedevilled by a strike by Australian customs officers, who declined to clear the goods. Eventually supplies of the boxes became available to G.M.H. and it allocated these between the vehicle assembly plants at Elizabeth, Dandenong and Acacia Ridge. G.M.H. spent some $43,000 in airfreight charges on the boxes.

I am satisfied that as soon as the strike at Nippondenso interrupted the supply of heater boxes G.M.H. took every step reasonably open to it to obtain alternative supplies. I am further satisfied that although there were delays in obtaining alternative supplies, those delays were not the fault of the company and could not have been avoided by it. Indeed, I did not understand counsel for the applicants to assert the contrary. This being so, it is unnecessary to refer in any further detail to the considerable body of evidence led by G.M.H. to establish that it acted prudently and expeditiously in finding an alternative supply of boxes.

However, Mr Ryan Q.C., senior counsel for the applicants, submitted that even if G.M.H. could not be criticized for its efforts in obtaining an alternative supply of heater boxes, it was at fault in sending some of them to Acacia Ridge. It was argued that the assembling of Commodore vehicles at Acacia Ridge could have temporarily stopped in March 1981 and that the heater boxes should have been sent to the Elizabeth plant, thus avoiding all, or some, of the stand-downs. I do not think this criticism of G.M.H's actions is justified on the evidence. In the light of the trouble and expense to which the company went to obtain urgent supplies of the heater boxes, it would have been extraordinary if it had not utilized the boxes, when they eventually arrived, in the most efficient way. Mr Vincent McDonald, who was G.M.H's supervisor of materials control at the time, took a leading part in obtaining supplies of the heater boxes. He was well aware of the number of Commodore vehicles produced on a daily basis in G.M.H's assembly plants. He gave evidence that he considered whether heater boxes should be sent to Acacia Ridge. He said that at the time G.M.H. was assembling both Commodore and Gemini vehicles at Acacia Ridge. Apparently consideration was given to operating the Acacia Ridge plant so as to assemble only Gemini vehicles. But a decision was taken to continue assembling Commodore vehicles as well. It was not put to Mr McDonald in cross-examination that the decision was unreasonable, and I do not think there is any basis for saying that it was.

A decision to change the mix of vehicles on the Acacia Ridge assembly line would have involved a consideration of a number of commercial and technical factors of some complexity. There is no basis in the evidence for a finding that G.M.H. did not efficiently handle the problems thrown up by the shortage of heater boxes. I am satisfied that it acted reasonably in allocating some of the heater boxes to the Acacia Ridge plant and that it made a proper allocation of boxes to the assembly plant at Elizabeth.

FALLING SALES OF VEHICLES AND BUILD-UP OF INVENTORY

Another circumstance that affected G.M.H's production schedules at the time of the stand-downs was a reduced level of vehicle sales. During 1979 G.M.H. had set production levels on a fairly optimistic basis. But there was a downturn in the market towards the end of that year and this necessitated adjustments to production schedules.

The affects of these adjustments were widespread. The reduction in the number of vehicles produced inevitably led to fewer workers being required in the assembly plants. It also led to reduced demand for parts made or assembled in other G.M.H. plants. The reduced demand for parts also led to a reduced demand for labour. The turnover of employees in G.M.H's operations in South Australia was very low compared with that in other States. The plants in the eastern States had very high labour turnovers. Whereas in South Australia turnover of employees was typically under 20% per annum, it reached 50% per annum elsewhere. The turnover of labour as at May 1979 in some of G.M.H's South Australian operations was as low as 10% per annum or even lower.

When there is a high turnover of labour it is not always necessary to retrench staff consequent upon a fall in production. This is because natural attrition of the work force may reduce the number of workers so as to match the reduced demand for labour. But when there is a small labour turnover, a reduced demand for vehicles makes it necessary to take positive steps to reduce the work force. This was the position that existed in South Australia for at least twelve months prior to March 1981. In an effort to reduce the labour force in that State at that time, G.M.H. asked employees to take outstanding accrued long service leave. Other employees were asked to undertake training programmes which took them away from their regular work. By taking such steps, the company avoided retrenching employees at Elizabeth and Woodville.

G.M.H. is by far the largest employer of labour in Elizabeth. Elizabeth was described by one of the witnesses as a "company town". Indeed, G.M.H. is one of the largest employers of labour in South Australia and it took this matter into account when deciding to avoid, so far as possible, retrenching labour in that State.

Because of falling sales of vehicles G.M.H's production schedules were adjusted downwards on a monthly basis. This led to a particular problem in South Australia. On the one hand fewer vehicles were being produced and sold, but on the other hand production levels of parts fabricated in the company's plants were not reduced to the same extent. This in turn led to an increase in the inventory of parts held in stock. G.M.H's terminology for inventory is "pre-build". Mr Barlow, the company's manager for industrial and employee relations, described the problem in these words:

". . . . it meant that the company was maintaining a pre-build of fabricated inventory at a higher than desired level - much higher than desired level - but it meant, when we first looked at the problem late in 1979, we anticipated that a small pre-build would exist, but we would be able to reduce that quickly with the initiatives that we took in taking production out of the system. Unfortunately, the way the market continued to decline, the pre-build did not come down in the way we expected it to and the way it should have and it meant that the excess inventory remained over 18 months or so." (Transcript p. 496)

As 1980 progressed G.M.H. monitored the financial impact of its falling sales and the maintenance of its labour force. Mr Barlow said that the problem in South Australia engaged the attention of the company's senior management. He said that "the company, in fact, was running at a quite substantial loss right throughout 1980, and we were aware to finance that inventory position we had to borrow money at the prevailing interest rates; in fact, we were borrowing money to keep the company going in those days." (Transcript p.498).

G.M.H. made a loss in 1980 of some $130 million. Mr Barlow said that interest, holding and storage charges on pre-build was of the order of 21% per annum. The increase in inventory in South Australia was much greater than in other States. According to Mr Barlow "the excess was in the vicinity of $15,000,000 to $20,000,000". (Transcript p.500).

The adverse consequences to G.M.H. of an excessive level of pre-build were not limited to the financial impact of interest and holding charges. In addition, there were storage problems and there was a risk that stock would deteriorate or be damaged. These problems were recognised well before March 1981. Mr Barlow said that it had been decided that if the assembly plant was not operating, then employees in other plants would be stood-down. Because Mr Barlow's evidence gives an indication of the attitude adopted by the company to the stand-down of its employees it is useful to refer to the following extract from it:

"HIS HONOUR: When was it you said senior management took this decision to stand down if the assembly lines were brought to a halt? - - - It would have been in October or November of 1980. MR BARNARD: What was the view as to whether it was economic or uneconomic to carry on with fabrication if assembly lines were stood down? - - - It was considered that it was uneconomic to carry on with fabrication in those circumstances. Involved in that decision as to whether there could be a stand down of course was the provisions of the award? - - - That is correct. You yourself had a knowledge of the experience of the industry in that regard; is that correct? - - - Yes, I had discussed the position with Mr Ellison, the director of personnel, on a number of occasions. This industry has had a long history in which stand-downs have occurred for varying reasons, either due to internal industrial disputes or external disputes. I was also aware of, and have been involved in, matters (that) have either been litigated in the then industrial court or have been subject to the jurisdiction of the Conciliation and Arbitration Commission by agreement of the parties involved. It could be said that some custom and practice had evolved in the industry based on the precedents that we were aware of. What precedents were you aware of that you were talking about? - - - I was aware of a number of stand-down cases that had been dealt with by the Conciliation and Arbitration Commission by agreement in the late 40s and early 50s when those types of clauses first came into awards. They mainly turned around the post-war power restrictions and things like that where the commissioners dealing with these matters tended to look at the stand-down clause in terms of an employer having the right to stand down people if they could not be usefully employed because it was not an economic benefit of the employer to keep them on. Then, in the 1960's there were one or two cases in this industry that went to the industrial court. One involved the Ford Motor Company at Geelong and one involved the British Motor Corporation. Those cases did not turn much on the question of useful employment, but they gave some reinforcement to the stand-down provisions in the awards. In the early 1970's there was one case involving this company that was dealt with by Commissioner Hood in the Conciliation and Arbitration Commission. Is that the one that involved the automatic transmission section?---Yes, that is correct. The concept of the economic benefit of the employer was raised in that issue and commented upon by the commissioner in his decision. There was one, I think in the same year, involving Mr Commissioner Portus at Chrysler where he referred to similar concepts. We were also aware of many instances of stand-downs that had occurred in the industry which have not been challenged in any form. One that I can recall that affected the fabrication side of operations involved the Ford company when the supply of axles to that company was stopped following a strike at Borg Warner in Sydney. Ford stood down their assembly operations and subsequently stood down their fabrication operations. We were aware that that had happened and there were similar exercises in other companies. Apart from that, we have had a number of internal disputes where stand-downs had occurred in the assembly plants and had not been challenged, if you like, by the unions. Ford had the same, too?---Yes. In fact, all the companies did, for one reason or the other. Was your knowledge of the history of this contributed at this meeting which you attended?---Yes. I should also say we had some legal opinions in the early stages of the 1970s, which we did again refer to at that time, but there was extensive discussion on the subject at the time. It was our general conclusion that, based on our understanding of the legal requirements, we were required to fulfil, that we could stand down in those circumstances, because to continue production in the fabrication areas would not be to the economic benefit of the employer." (Transcript pp. 506-8)

Mr Barlow made it plain in his evidence that from G.M.H's point of view it was preferable to continue full production if that were possible. He said:

". . . the preferred position is to avoid a stand-down . . . we knew the material was there to build vehicles, apart from the heater boxes; all other materials were there to continue production; we had the labour there. There are costs involved in standing down because we still have to carry overheads and any fixed burden in the business - the staff people are not involved in standing down - and there is the cost of maintaining the business while there is no production going on. While we can produce and sell some vehicles, a cash flow is being generated and it is preferable to continue the production than to stand down. To continue full production? ---To continue full production." (Transcript p. 515)

The evidence to which I have referred gives a fair indication of the approach taken by G.M.H. to the standing down of its employees on 10 and 11 March 1981. It would have preferred to have worked the whole work force on those days. Being unable to do so, it decided to stand down those employees who, in its opinion, could not be usefully employed in the sense that their work on those days would not be of economic benefit to it.

It was contended by counsel for the applicants that this approach to the stand-down clause was impermissible and much of the argument in the case turned upon this issue. The parties called many witnesses to establish, or to refute, that those employees who were stood down could not have been employed to carry out work of economic benefit to the company on 10 and 11 March 1981. I shall refer to some of this evidence later in these reasons but before doing so it is necessary to consider the question of the onus of proof.

THE ONUS OF PROOF

Mr Ryan Q.C. contended that the onus lay upon G.M.H. to prove that employees who were stood down could not have been usefully employed on 10 and 11 March 1981 because of one or other of the circumstances referred to in the stand-down clause. Mr Barnard Q.C., senior counsel for G.M.H. contended that this was not so. To understand the rival contentions it is necessary to refer to some of the provisions of the Award.

Clause 6, which is headed "Contract of Employment" provides, inter alia, that except as provided in the Award, "employment shall be by the week" vide cl. 6(a). Clause 7(a) provides that all wages are to be paid weekly, but provision is made for payment fortnightly if the company and the employee shall agree. Clause 8 provides, in part, as follows:

"8 - WAGE RATES

(a)(i) The actual wage to be paid to an employee of a classification specified in the table of classifications in sub-clause (b) of this clause, except apprentices and juniors below the age of 18 years of age, shall be at the rate per week assigned to that classification."

A table of wage rates payable to employees is then set out in the Award. The rates vary according to the employee's grade and years of service and to the State in which he works.

In the Points of Claim the allegation is made that G.M.H. "has committed a breach or alternatively a non-observance of a term of the Award in that it has failed to pay to each of (the persons named in an appendix to the Points of Claim) in respect of either or both of 10th and 11th days of March 1981 or any of them remuneration payable to such person pursuant to Clause 8 of the Award in respect of each of the said days . . . .".

Thus the applicants found their case upon the alleged failure by G.M.H. to comply with cl.8(a)(i) of the Award. Mr Barnard contended that if his client was in breach of the Award at all, it was in breach of cl.6(g)(i) and not cl.8(a)(i). He submitted that whilst cl.8(a)(i) fixes the rate per week at which employees are to be paid, it does not, in terms, impose an obligation on G.M.H. to pay wages to employees. That obligation, so he argued, arose out of G.M.H's obligations at common law. If G.M.H. stood-down employees otherwise than in accordance with cl.6(g)(i) then, so it was argued, there was a breach of that clause only. An employee could sue for the wages wrongly deducted by G.M.H., but the wrongful deduction would not constitute a breach of cl.8(a)(i).

I think this approach to the construction of the Award is over technical. In my opinion, cl.8(a)(i) plainly imposes upon G.M.H. the obligation to pay a week's wages at the appropriate rates to its employees if they are ready, willing and able to work for each day of the week. It is common ground that all the employees who were stood down on 10 and 11 March were ready, willing and able to work on those days. No doubt the engagement of each employee by G.M.H. gave rise to a common law relationship of master and servant in each case. But I do not think this is inconsistent with the obligation to pay wages which, as I think, is contained by implication in cl.8(a)(i) of the Award.

Moreover it seems inappropriate to construe cl.6(g)(i) so as to render an employer who does not observe its terms liable to a penalty under s.119(1) of the Act. Clause 6(g)(i) gives G.M.H. the right to make a deduction from an employee's wages in certain specified circumstances. If those circumstances do not exist, then G.M.H. does not have the right to make the deduction. But the non-existence of the right is hardly the basis for the imposition of a penalty. The basis for the imposition of a penalty is a failure to pay wages, i.e. a failure to comply with the obligations found in cl.8(a)(i).

If Mr Barnard is correct in his submission that failure to pay an employee a wage at the rate specified in cl.8(a)(i) does not of itself constitute a breach of the Award, the consequence would be that G.M.H. would not be in breach of the Award if it failed to pay a full week's wages to an employee who had performed a full week's work. If that were the true position proceedings could not be taken under s.119 of the Act. That would be a surprising result. Of course, in such circumstances, no question of a breach of cl.6(g)(i) would arise as the employee would not have been stood-down.

It seems to have been accepted in other cases in which employers have been proceeded against for failing to pay wages to employees who have been improperly stood-down, that it is the breach of the relevant award provision dealing with payment of wages which gives rise to the liability to a penalty under s.119. See, for example, Jarrad v Melbourne and Metropolitan Tramways Board (1978) 31 A.L.R. 201.

On the assumption that a failure to pay wages in accordance with cl.8(a)(i) of the Award may give rise to the imposition of a penalty under s.119 of the Act, the question arises whether the onus lies on G.M.H. to prove that it had the right to deduct payment in respect of days when employees were stood down, or whether it is incumbent upon the applicants to show that G.M.H. wrongly stood-down the employees on those days.

In my opinion the onus of proof lies on G.M.H. The question can, I think, be best resolved by considering the position of an employee if he were to sue the company for unpaid wages. If he sued at law for his wages, would it be sufficient for him to lead evidence that he had been ready and willing to work for a full week but had been paid for part only of the week? Or would he have to go further and show that G.M.H. deducted some part of his weekly wage although there was useful work upon which he could have been usefully employed? I cannot think that it was the intention of the draftsman of the Award that an employee should be required to prove that there was useful work for him to perform on the days when he was stood-down, i.e. that he was wrongly stood-down. The stand-down provision in the Award is not part of the prescription of the conditions under which employees become entitled to be paid their wages. Rather it is in the nature of an exception to G.M.H's prima facie liability to pay a week's wages to employees who are engaged on a weekly basis.

In Darling Island Stevedoring and Lighterage Co. Limited v Jacobsen (1945) 70 C.L.R. 635, the question for determination was whether, in proceedings under s.7(1)(b) of the Workers' Compensation Act 1926-1942 (N.S.W.) the worker or his dependants must prove affirmatively that he received an injury without his own act or default or whether it is enough for him to prove that he received injury while on a periodic journey referred to in the section. Dixon J. said of this question:

"The answer depends upon the interpretation of the provision. For the burden of proof is a legal consequence of the nature of the qualification placed by the words 'without his own default or wilful act' upon the general conditions of liability stated in the clause. If these words are but part of the legislative attempt to define the conditions upon which the worker's right to compensation arises, then, like all other ingredients or elements in a cause of action or title to claim, proof of the fulfilment of the conditions they describe must lie with the claimant. But if the true nature of the qualification is to introduce new matter, not as part of the primary grounds of liability, but as a special exception or condition defeating or answering liability otherwise existing, then the onus of proof lies with the party setting up default or wilful act by way of answer." (70 C.L.R. 635 at p.643).

In Vines v Djordjevitch (1955) 91 C.L.R. 512, the High Court considered where the onus of proof lies when there is an exception or proviso to an enacting provision. The Court said:

"In the end, of course, it is a matter of the intention that ought, in the case of a particular enactment, to be ascribed to the legislature and therefore the manner in which the legislature has expressed its will must remain of importance. But whether the form is that of a proviso or of an exception, the intrinsic character of the provision that the proviso makes and its real effect cannot be put out of consideration in determining where the burden of proof lies. When an enactment is stating the grounds of some liability that it is imposing or the conditions giving rise to some right that it is creating, it is possible that in defining the elements forming the title to the right or the basis of liability the provision may rely upon qualifications exceptions or provisos and it may employ negative as well as positive expressions. Yet it may be sufficiently clear that the whole amounts to a statement of the complete factual situation which must be found to exist before anybody obtains a right or incurs a liability under the provision. In other words it may embody the principle which the legislature seeks to apply generally. On the other hand it may be the purpose of the enactment to lay down some principle of liability which it means to apply generally and then to provide for some special grounds of excuse, justification or exculpation depending upon new or additional facts. In the same way where conditions of general application giving rise to a right are laid down, additional facts of a special nature may be made a ground for defeating or excluding the right. For such a purpose the use of a proviso is natural. But in whatever form the enactment is cast, if it expresses an exculpation, justification, excuse, ground of defeasance or exclusion which assumes the existence of the general or primary grounds from which the liability or right arises but denies the right or liability in a particular case by reason of additional or special facts, then it is evident that such an enactment supplies considerations of substance for placing the burden of proof on the party seeking to rely upon the additional or special matter: see Morgan v. Babcock & Wilcox Ltd. (1929) 43 C.L.R. 163; Pye v. Metropolitan Coal Co. Ltd. (1934) 50 C.L.R. 614, (1936) 55 C.L.R. 138; Darling Island Stevedoring & Lighterage Co. Ltd. v. Jacobsen (1945) 70 C.L.R. 635; Barritt v Baker (1948) V.L.R. 491, at p. 495; Dowling v. Bowie (1952) 86 C.L.R. 136." (91 C.L.R. 512 at pp.519-520)

Applying the test adopted by Dixon J. in Jacobsen's Case I do not think it can be said that G.M.H's right under cl.6(g)(i) to deduct payment in the circumstances therein referred to is in any sense part of the condition upon which an employee's right to payment of wages depends. The true nature of cl.6(g)(i) is (as Dixon J. said of the words with which he was concerned) "to introduce new matter, not as part of the primary grounds of liability, but as a special exception or condition defeating or answering liability otherwise existing . . . ". This being so, the onus lies on G.M.H. to establish facts giving it the right to make deductions from its employee's wages.

That the onus of proof in a case such as the present lies on the employer seems to have been accepted by the High Court in Pickard v John Heine & Son Limited (1924) 35 C.L.R. 1 - see per Gavan Duffy J. at p.11 and per Starke J. at p.13.

In Vehicle Builders Employees Federation of Australia v British Motor Corporation (Aust.) Pty. Limited (1966) 8 F.L.R. 70, the Commonwealth Industrial Court (Spicer C.J., Joske and Eggleston JJ.) considered the terms of the Vehicle Industrial Award 1953 which, by cl.7(a), provided for employment by the week and, by cl.7(b) gave the employer a right to "deduct payment for any day an employee cannot be usefully employed because of any strike or through any breakdown in machinery or any stoppage of work by any cause for which the employer cannot be held responsible". The Court said:

"The award provides for engagement by the week, and in the absence of any express provision an employee is entitled to a week's wages for each week of his employment even if there is no work for him to do. Clause 7(b). of the award provides, however, that the employer's right 'to deduct payment for any day the employee cannot be usefully employed because of any strike or through any breakdown in machinery or any stoppage of work by any cause for which the employer cannot be held responsible' is not affected by the provision for weekly employment. "We start, therefore, from the position that an employee who is on a weekly engagement is prima facie entitled to a week's wages. If, being ready and willing to work, he is told by his employer that he need not report for work the next day as there is no work for him to do, he is nevertheless entitled to be paid for that day, unless the employer can show that the employee cannot be usefully employed on that day for a reason falling within the clause above quoted." (8 F.L.R. 70 at pp. 74-75)

In my opinion cl.6(g)(i) assumes the existence of the right of an employee to the weekly wage rate applicable to his grade as specified in cl.8(a)(i). What cl.6(g)(i) does is to deny that right in particular cases if G.M.H. can show that the employees cannot be usefully employed by reason of one of the special circumstances referred to in the clause. In these circumstances, the Award should be construed as placing the burden of proof on G.M.H. if it seeks to rely upon such a special circumstance.

Considerations of fairness lead to the same result. To require an employee to assume the burden of proving that G.M.H. could usefully employ him on a given day might well make it virtually impossible for him to prove his case. Whether or not a particular employee could be usefully employed by G.M.H. might well depend upon factors known only to the company itself. It cannot have been intended by the draftsman of the Award that an employee should carry the onus of proof in those circumstances.

The same view was taken of a similar provision by Dethridge C.J. in Harris Scarfe Limited v Federated Storemen and Packers Union of Australia (1928) 26 C.A.R. 392. In that case an award contained the following provision:

"Engagements of weekly employees shall only be terminable by notice of not less than a week, which notice shall be given so as to expire on a usual pay day; but nothing herein shall affect an employer's right to dismiss an employee for misconduct or incompetence. Any employer may deduct payment for any day on which an employee cannot be usefully employed because of (a) any strike, (b) any breakdown of machinery, or (c) any stoppage of work unavoidable by the employer."

Of this provision Dethridge C.J. said:

"The burden of showing that the employees could not be usefully employed is on the employer. If he fails to sustain that burden he has to pay." (26 C.A.R. 392 at p. 395)

The same view has been taken in the Federal Court - see Poultney v Hydro-Electric Commission of Tasmania (1981) 52 F.L.R. 427 at 437 per Evatt J. And in the New South Wales Industrial Commission the same approach has been taken to broadly similar award provisions. See, for example, In re Steel Works Employees (Broken Hill Pty. Co. Limited) Award and Anor. (1949) A.R. 941 at 961; In re Electricians (State) Award 82 I.G. 165 per Kinsella J. and In re Dispute - Australian Iron & Steel Pty. Limited re Stand-down of Bricklayers (No. 1) (1972) A.R. 285 per Sheppard J. at 286-287.

THE INTERPRETATION OF THE STAND-DOWN CLAUSE

I turn now to consider the meaning of the stand-down clause. Much debate ranged around the meaning of the words "usefully employed". Mr Ryan argued that these words did not mean "economically employed" or "advantageously employed". He accepted that whether an employee is usefully employed has to be determined from the employer's point of view. But he contended that if no work was available to employees on 10 and 11 March 1981 because of the economic situation into which G.M.H. had progressively drifted, it could not be said that such employees could not have been "usefully employed" within the meaning of the clause. He submitted that it was not proper to have regard to the economic consequences to G.M.H. when deciding whether one of its employees could be usefully employed. What had to be looked at, so it was argued, was whether work was scheduled to be done by employees on 10 and 11 March. If work was so scheduled, then it must be assumed that it was useful work. It was work which, under their contracts of employment, the employees were obliged to carry out. G.M.H. having engaged employees to perform work, could not be heard to say that those employees could not have been usefully employed in performing that work.

Clauses similar to cl. 6(g)(i) are to be found in many awards and the meaning and application of such clauses have been considered in several cases. The meaning which has been given to the words "usefully employed" in those cases has been attributed to them against the background of the special facts of each case. None of the cases have been concerned with facts as complex as those which arise for consideration in the present proceedings. Nevertheless it is instructive to consider what has been said about similar clauses in other awards.

In Re Carpenters and Joiners Award (1971) 17 F.L.R. 330 the clause under consideration provided, inter alia, that:

"the employer may deduct payment for any day upon which an employee cannot be usefully employed because of any strike . . ."

The Commonwealth Industrial Court (Spicer C.J., Joske and Smithers JJ.) was requested by counsel for the applicant to define the meaning of the expression "usefully employed" so that the obligations of an employer might be clear whatever circumstances might arise. The court not unnaturally declined this invitation and stated that its function in the case in hand was to say what rights and duties arose under the clause in the particular factual circumstances under consideration. In that case a strike by crane drivers and other workers led to the standing-down of carpenters. In their joint judgment, Spicer C.J. and Smithers J. said (at p. 334):

"The expression 'usefully employed' necessarily connotes that by the employment in contemplation there will be a net benefit to the employer's business by reason of the performance of the particular work done. If the performance of the work done will prejudice the conduct of the employer's business then it is not useful to him although the work in itself would probably, to some extent, contribute to production."

This statement was made in the context of a situation in which the employment of some only of a number of employees normally engaged on a class of work would have caused such industrial trouble as to materially disrupt the conduct of the employer's business. But nevertheless the passage which I have quoted seems to me to be of general application. Their Honour's adoption of the notion of "net benefit" seems to indicate that they accepted that factors affecting the economics of the employer's business must be considered in deciding whether an employee can be usefully employed. That this is so seems to me to be basic to the meaning and operation of cl.6(g)(i). The reason for the inclusion of the clause in the Award is to afford G.M.H. financial relief from the consequences of a strike or a breakdown in machinery or a stoppage of work for which it cannot reasonably be held responsible. In that context the words "usefully employed" must surely justify, indeed require, consideration of the question whether employment of an employee would be of economic advantage to G.M.H.

However, some of the dicta in the Carpenters and Joiners Case cannot be applied directly to the facts of the present case. The applicants contend that the strike at Nippondenso and the stoppage of work in the assembly plant at Elizabeth did not lead to an absence of useful work for employees working in the fabrication plant. In support of this contention Mr Ryan relied upon the following passage in the judgment of Spicer C.J. and Smithers J. in the Carpenters and Joiners Case:

"In circumstances where it is reasonable to anticipate that consequent upon the cessation, of the strike by reason of which (the stand-down clause) is brought into operation, or for some other reason, production in the employer's business will be resumed within a time that will permit continuance of relevant production - . . .

(d) Where work which may be usefully performed by an employee on a particular day can be performed on that day notwithstanding that other workers are on strike, it cannot be said that that employee cannot be usefully employed on that day by reason of the fact that if he does so perform it the amount of work available to be performed on the day of resumption of work on the cessation of the strike will thereby be reduced." (17 F.L.R. at pp. 333-4)

It seems to me that the statement made by their Honours in paragraph (d) is intended by them to have application where the employer's business returns to its normal operations after cessation of the relevant strike. Their Honours were not concerned with one of the major factors relied upon by G.M.H. in the present case, namely, an excessive build-up in stock if employees in fabrication plants work while assembly lines are stopped. That their Honours did not intend that matters affecting the profitability and viability of the employer's business should be excluded from consideration when determining whether an employee can be usefully employed also appears from the following passage in their judgment:

"It cannot be said that an employee cannot be usefully employed on a particular day if there is a day's work available to him which, if performed on that day, will, having regard to the probable course of employer's business, contribute beneficially to the reasonable and efficient conduct thereof." (17 F.L.R. at p.334 - the emphasis is mine.)

Mr Ryan also relied on the decision of Keely J. in Re Technical Staff (TAA) Award 1974, 1978 L.B. Co., I.A.S. Current Review 141. In that case his Honour was asked to interpret a provision of an award which read, in part as follows:

"The employer shall have the right to deduct payment for any day an employee cannot be usefully employed because of a strike or stoppage of work through any cause for which the employer cannot reasonably be held responsible."

The case arose out of the circumstance that a strike by air traffic controllers grounded all TAA's aircraft. TAA thereupon stood-down a number of employees whose work was primarily concerned with the operation and maintenance of the aircraft. The men were stood-down notwithstanding, as Keely J. found, that in respect of each employee stood-down there was work which was proper to be done by him, which would be done by him at some time, and which could have been done on the day of the stand-down. In those circumstances Keely J. held that the men had been wrongly stood-down. He held that when the men were informed on the afternoon before the stand-down that they were stood-down in respect of a definite period commencing the following day there was work waiting to be done by each employee and that such work could have been done on the following day, as part of the normal work of the employees concerned, and would have been performed at some future date if not done on the following day. In these circumstances his Honour held that the men had been wrongly stood-down. He said (at p.145):

"In my view under the stand-down provision an employer is not entitled to 'deduct payment for any day an employee cannot be usefully employed' where on the day in question there is work available for performance by that employee which work the employer could as a matter of law ask the employee to perform as being work pursuant to or reasonably incidental to his contract of employment. In my view where such work is available to be performed the employer cannot 'deduct payment' even though:-

1. the performance of that work on the day in question will necessarily result in there being less work available for that employee to perform at the cessation of the strike upon which the employer relies as leading to his claimed 'right to deduct payment';

2. looking at the question (of whether to 'stand down' an employee) as a matter of commercial management, it would be in the employer's financial interests to stand down the employee and thereby avoid having to pay him for the day or days in question, e.g. where, as in this case, the employer is suffering a loss of all or virtually all of its revenue. I point out that the provision does not confer upon an employer 'a right to deduct payment . . . where it would be in the employer's financial interests to do so' but 'a right to deduct payment for any day an employee cannot be usefully employed . . ."

On one view of this passage from his judgment Keely J. may appear to have expressed the opinion that matters affecting the value to an employer of the work carried out by an employee are irrelevant in considering whether the employee can be usefully employed. I doubt whether that was his Honour's view as, if it were, I would have thought that he would have expressed his dissent from the dicta of Spicer C.J. and Smithers J. in the Carpenters and Joiners Case to which I have referred. From my reading of Keely J's decision, he found that the work which could have been done by the employees on the day they were stood down was the same work as they would have performed (and no doubt did perform) at a later date. In those circumstances, a finding that the relevant employees could have been usefully employed on the day of the stand-down is readily understandable. But it would be an over-simplification of the facts of the present case to treat the work available to be done in the fabrication plants on 10 and 11 March as the same work that was done subsequently. Work performed in producing stock that results in a build up of an excessive inventory has a quality different from work performed in producing stock which will not result in an excessive inventory. Physically the work may be the same, but this is not the only relevant consideration.

In my opinion the question whether an employee cannot be usefully employed because of a strike is largely a question of fact. No doubt, as a matter of law, some considerations will be irrelevant in determining the question of fact. But I reject the argument that the economic consequences to the employer are to be ignored in deciding whether employees can be usefully employed. I accept that it is a material matter that work has been scheduled to be done by an employee on a day when, in fact, he is stood-down. In many cases that will be a powerful indication that the work which was scheduled to be done was work which would have been useful to the employer. If the employee is stood-down in those circumstances the employer will necessarily have to establish that because of circumstances that arose after the work was first scheduled to be done, the employee could not be usefully employed.

What I have so far said does not mean that c.6(g)(i) of the Award gives G.M.H. the right to unilaterally stand-down its employees whenever there is a strike and it is convenient for it to do so. An employee may be able to be usefully employed although, as a matter of convenience, G.M.H. would prefer him not to be at work. Questions of fact and degree will always be involved in determining whether, on the one hand, an employee cannot be usefully employed or whether, on the other hand, he can be usefully employed but it is not convenient to G.M.H. to employ him. Whether a particular set of facts falls on one side of the line or the other will itself be a question of fact. In deciding that question I think it is proper to take the approach which Sheppard J. thought appropriate in a somewhat similar context - see In re Dispute - Australian Iron & Steel Pty. Limited re Stand-down of Bricklayers (No. 1) (1972) A.R. 285 at 296. That is to say, if it is shown that an employer has acted upon proper principles and in good faith, "the evidence . . . will not . . . be gone through with a tooth-comb in order to apply to its actions a standard of perfection which in cases such as this will always be impossible to achieve."

Having thus determined the approach that I think should be taken to the facts of this case, I now turn to consider whether G.M.H. has discharged the onus which rests upon it of showing that it was not able to usefully employ the employees who were stood-down on 10 and 11 March 1981.

VEHICLE ASSEMBLY PLANT AT ELIZABETH

It is logical to consider the position at this plant first because it was the interruption of the vehicle assembly operations that led G.M.H. to stand-down employees not only in the vehicle assembly plant but also in other plants at Elizabeth and Woodville.

Vehicles are assembled in the vehicle assembly plant on a production line or conveyor system. Floor panels are mounted on a conveyor and they are subsequently loaded with a variety of panels by a side gate system that works in conjunction with the conveyor. There is a pre-determined mix of vehicles on the conveyor. In March of 1981 the mix consisted of 90 Commodore models, 60 commercial vehicles and 15 Statesman models. The gigs and other equipment on the production line are so arranged that they provide an even work-load for the workers on the line. Much pre-planning is undertaken before an actual production schedule is implemented. For this reason it is not possible, at very short notice, to change the mix of vehicles.

After vehicles on the production line leave the body shop they proceed to a paint shop on an overhead conveyor system. They are taken from the conveyor and placed on paint trucks. There are places along the production line at which vehicles can be taken off the line and stored. Vehicles are occasionally taken off the line to correct defects or to enable rescheduling due to shortage of parts. There are various stations along the assembly line, each bearing a number. Heater boxes are inserted into vehicles at station 27, which is located in the trim shop. The trim shop is where the whole of the interior fittings of passenger vehicles are installed. Various items are installed at progressive stations along the production line. There is, of course, a strict sequence in which the various items are installed.

From the start of the assembly line in the body shop until the end of the line there are over 700 vehicles on the line at the one time. In March of 1981 some 165 vehicles came off the line every day. Each of these vehicles was on the production line for about five days.

I have already found that the Nippondenso strike cut off G.M.H's supply of heater boxes and that it took all reasonable steps to find an alternative source of supply. In view of these findings, and of the finding that the company acted reasonably in allocating to its Acacia Ridge plant some of the heater boxes that it was able to obtain overseas, I am satisfied that employees engaged on the assembly lines at the Elizabeth plant could not have been usefully employed on 10 and 11 March.

As I understand the evidence the assembly lines were in the vehicle assembly, trim assembly, paint shop and body assembly sections of Plant 2 at Elizabeth. About 1100 employees were engaged in these sections and of these the majority were stood down on 10 March and nearly all on 11 March. It is plain that if those employees who were stood-down had attended at work there would not have been any work, let alone useful work, for them to perform.

AUTOMATIC TRANSMISSION PLANT AT WOODVILLE

The employees in this section of the plant were stood-down on 11 March. About 400 transmissions were built each day in this plant, in two working shifts. Mr Ryan submitted that there was nothing to stop the employees who were stood-down on 11 March performing work which had been scheduled to be done on that day. That was so, but the result of the day's operations would have been to increase the level of pre-build of transmissions. The work performed on 10 March had put this section a half-day ahead of schedule. Automatic transmissions are an unusually expensive component. If the employees had not been stood-down on 11 March some $200,000 of unwanted inventory would have been manufactured. Having regard to the poor sales record of G.M.H. vehicles at that time, the inventory would have remained swollen indefinitely. Mr Lucio Galvani, G.M.H's general superintendent of production control and material handling at Woodville said, in effect, that production of automatic transmissions on 11th would have resulted in the company having "a day's production ahead of schedule that we would never have had . . . use for." (Transcript p.336).

There was a re-work area in this section of the plant. The employees in this area were also stood-down on 11 March. Whilst there was remedial work to be done on automatic transmissions on that day, the result of it being performed would have been to add to the level of pre-build of transmissions. Hence the same considerations as apply to the main work force in this section of the plant also apply to those engaged in the re-work area.

G.M.H. led evidence that, quite apart from the effect on the level of inventory, it would have been uneconomical for other reasons to employ men in the re-work area on 11 March. For instance, it was said that although there were only about ten men employed in this area, it would have been necessary to employ a tea lady to service their needs had they worked. I do not find this evidence sufficiently persuasive to justify a finding that, apart from the increase in the level of inventory, it would have been uneconomical to employ the men in the re-work area.

The critical question is whether the increase in the level of inventory which would have resulted if the employees in this section had not been stood-down justify a conclusion that they could not have been usefully employed on 11 March. I confess that I have not found this an easy question to determine. G.M.H. is, of course, a very large corporation. It must necessarily carry a large inventory of items to be built into its motor vehicles. Plainly it could not carry on its operations in an efficient manner without such an inventory. It did not dispute this, but it claimed that there was a level above which it was not economic to hold inventory. That level had been reached, so it was contended, when the employees were stood-down. In the case of a company whose operations are as large and complex as those conducted by G.M.H. it is not easy to demonstrate whether such a level has been reached. But, on balance, I accept G.M.H's evidence that the level had been reached when the effects of the Nippondenso strike led to the stoppage of work in the vehicle assembly plant.

I was impressed with the evidence led from several G.M.H. senior executives. There is no doubt that over a period of time the company had sought to find useful work for its employees, notwithstanding dwindling sales of motor vehicles. I am satisfied that it acted in good faith in standing-down its employees. Certainly it had regard to its own economic interests but in the view I take of the law it was not obliged to disregard them.

It was not merely a matter of convenience to G.M.H. that employees in the automatic transmission plant should not work on 11 March. It was more than that. I am satisfied that having regard to the market conditions which prevailed at the time and to G.M.H's financial and economic position, those employees who were stood-down in this section of the plant could not have been usefully employed on 11 March 1981.

HARDWARE PLANT AT ELIZABETH

G.M.H. employed several hundred employees at its hardware manufacturing complex at Elizabeth. Items such as generator brackets, engine mountings, brackets, air cleaners, ball joints, rocker valves and door frame were manufactured at the plant. Most of the manufactured items were sent to the main warehouse at Elizabeth for storage purposes, but some were sent direct to Woodville. Spare part were also made in the hardware plant, and after manufacture these were packaged and then sent to the main warehouse. In early 1981 the situation had been reached where there was a substantial inventory of goods manufactured in the hardware complex. Mr Matthews, the general superintendent of the hardware complex, said that at the beginning of 1981: "I was so far in front I did not know where to put the gear". (Transcript p.357). He said that employees were taken off the shop floor from time to time and sent on training courses "in an attempt to try to keep the people down on the floor to an absolute minimum." (Transcript p.357).

According to Mr Matthews, whose evidence I accept, there was an acute storage problem at the hardware plant. He said the situation had been reached where parts were being stored in an area outside the plant itself. This area was known as Box City. G.M.H. used a form of container known as a tote-pan for handling materials. Many tote-pans were stacked outside in boxes in Box City. As a result, some goods suffered damage from rust. If a part was found to be rusted it was necessary to de-rust it. Because there was a shortage of tote-pans some goods which would otherwise have been kept in them were tipped into crates. There was a canopy on the western side of the hardware complex and parts were stored underneath this canopy. However, this area was not really satisfactory for storage purposes as it was open to the elements. There was a storage area in the centre of the complex, but this area was very nearly full at the time of the stand-down.

Mr Matthews gave the following evidence:

"Were you yourself involved in the decision as to whether you could carry on if the assembly plant was stood down? - - - My manager told me to have a look at our situation. I called together my four superintendents, we had a look at our overall situation in relation to a schedule and whatever work was around at that particular time, and I was convinced that there was really no need for us to continue. I then reported back to my manager that in my opinion, if the assembly plant closed down we would match their schedule without any problems. By that you mean when they started up you were capable of matching their schedule and providing the parts? - - - Exactly; more than capable of matching their schedule. Did you have the view that there were any people within the hardware plant who could be usefully employed while the assembly plant was shut down? - - - In my own personal opinion? Yes? - - - In my opinion, we had no necessity to work anybody. The assembly plant was shut down and you were not able to pass hardware over to the warehouse: what do you say as to whether you could have carried on, even though it might have been uneconomic to do so? Could you have carried on and properly stored goods and had enough tote-pans, and done things of that sort? - - - No. (Transcript p.364)

I accept that Mr Matthews' evidence accurately states G.M.H's position so far as the hardware plant was concerned. I have no doubt that work could have been found for many of the employees who were stood-down. But having regard to the whole of the evidence I think it has been established that (except in one respect to which I shall presently refer) the employees in the hardware plant were properly stood-down.

I have reached this conclusion with some hesitation. I am not unmindful of the evidence that there was no direct or exact correlation between the rate at which particular items were produced in the hardware plant and the rate at which those items were built into vehicles in the assembly plant. I refer particularly to items such as door channels and seat tracks. Thus as at March 1981 some 1500 door channels were produced in a normal day's production, but less than 200 were required for a day's assembly operations at Elizabeth. Other instances of such non-correlation are to be found in the evidence. Hence even if the assembly plant had been operating there would still have been an increase in the level of inventory of some parts produced in the hardware plant. But it is plain that the schedules for production of individual items of hardware were based on the assumption that the vehicle assembly plant would be operating. Having regard to the economic problems G.M.H. was experiencing at the time, to its reasonable desire to avoid any increase in inventory, and to the storage and other problems to which I have referred, I am of the opinion that those employees in the hardware plant who were stood-down on 10 and 11 March could not have been usefully employed.

It is true that there may well have been a few men who could have been usefully employed if their positions had been looked at in isolation from the rest of the hardware section. For instance, there may well have been work for two storemen unpacking a supply of parts that arrived not long before 10 March. But in the context of the overall situation I do not think it would have been economic for the company to make special provision for these men to have worked when nearly all the work force in this section was stood-down.

As I have said I have reached this conclusion with some hesitation. I would have arrived at a different conclusion had I thought that G.M.H. seized the opportunity presented by the Nippondenso strike to stand-down its own employees even though they could have been usefully employed. To the contrary, I think the true position was that the company was not anxious to stand-down any of its employees and only did so after it arrived at the decision that, having regard to the circumstances in which it then found itself, they could not be usefully employed. It was the Nippondenso strike, with the consequences which it had for G.M.H'S assembly operations, which led to that result. Had it not been for the strike the company would have been prepared to live with the inventory, storage and other problems it was experiencing in the hardware plant. But the consequences of the strike constituted an additional factor which effectively brought about the result that the employees could not be usefully employed.

However what I have so far said in relation to employees at the hardware plant is subject to a qualification. A special situation obtained in relation to the manufacture of oil filters. Prior to March 1981 G.M.H. had taken a decision to transfer the oil filter manufacturing operations to one of its New Zealand plants. The transfer was scheduled to take place late in 1981. The transfer involved dismantling the appropriate equipment at Elizabeth and shipping it to New Zealand. Hence G.M.H. knew that, for a time, there would be an interruption to the production of oil filters. This made it desirable for the inventory of oil filters to be increased, rather than diminished. In these circumstances it was obvious that men could have been usefully employed on 10 and 11 March in manufacturing oil filters. The evidence does not permit me to say how many or which men could have been thus employed. But it is plain that, as no men were given work of this kind, G.M.H. was in breach of the stand-down clause in this respect.

TRIM FABRICATION PLANT AT ELIZABETH

Mr Whittenberg was the general superintendent of the trim fabrication plant at Elizabeth. Most of the interior trim items in vehicles were made in this plant. The items included seating, head restraints, head lightings and inner door trims. Goods manufactured in this plant were sent to the warehouse at Elizabeth for shipment to other plants, except in the case of items that were to be used in assembling vehicles at Elizabeth itself. In the latter case, goods were sent straight to the assembly plant. There was a very limited storage facility at the trim fabrication plant itself. Mr Whittenberg said that there would have been problems in storing further goods at the plant. He said:

"Had suitable baskets been available we would have had to store them in this storage area. However, it would have been an unsafe practice because we would have had a stack of baskets higher than is normally allowed by fire limits and fire underwriters. If we go higher with the baskets and if there should be a fire we would not get the spread from the overhead sprinkler system, so it is not an allowable practice." (Transcript p.1177)

The general tenor of Mr Whittenberg's evidence was that as at March 1981 the prefabrication plant was in a substantial pre-build situation. This had led to problems of storing trim materials. Mr Whittenberg said that the pre-build situation had occurred because G.M.H. had been producing ahead of schedule so as to use available labour. The effect of this was to avoid retrenchments. As at March 1981 the storage position had become so troublesome that G.M.H. had looked at the possibility of leasing a warehouse outside the main plant. Mr Whittenberg said that he had tried to overcome the storage problem by storing material in other plants. He said:

"I had shipped excess material beyond the shipping requirements to other plants to the point where they were ringing and saying, 'Please do not send us any more', because they did not have the storage room to hold the excess of shipping that we were sending them." (Transcript p.236)

According to Mr Whittenberg production was some two or three weeks ahead of schedule in the trim fabrication plant. Quite apart from the cost of holding excessive inventory it was necessary to avoid a situation where items produced in advance of demand became obsolete. The popularity of a car model might change and hence it was not desirable to have too great a stock of trim fabrication items of a particular kind. Mr Whittenberg said that had his section of the plant operated on 10 and 11 March 1981 there was "always a possibility that we could have ended up carrying a heap of redundant material which may at some later stage have to be scrapped". (Transcript p.244).

There are passages in Mr Whittenberg's evidence which, looked at in isolation, might convey the impression that the stand-downs in the trim fabrication plant were related solely to the excessive pre-build, and that they had no connection with the shortage of heater boxes. For instance he gave the following evidence:

"It is fair to say, is it not, that the need to contain your pre-build had nothing to do with the shortage of heater boxes which occurred at the beginning of March 1981?---No. You say it is not fair to say that?---Could you rephrase the question? HIS HONOUR: Do you agree there was no connection between the two?---No, that is correct. There is no connection. MR RYAN: No connection between the two: the need to stand down in your department was solely a consequence of what had become by then an excessive pre-build?---Yes. HIS HONOUR: Perhaps my question misled you. If there had not been a shortage of heater boxes and if the production line had continued at its ordinary rate of production there would have been no need for stand downs in your department?---That is correct." (Transcript p.254)

When Mr Whittenberg's evidence is read in its entirety, his answer to the last question in the above extract from the transcript gives a better guide to the true situation. It was not just a question of the excessive pre-build causing difficulty. It was that situation, as exacerbated by the difficulties caused by the Nippondenso strike, which led to the stand-down decision. Mr Whittenberg said that he was asked to determine whether he could gainfully employ any of the employees in his section and a determination was made as to whether useful work could be found for some of them.

It was suggested that there were some particular jobs which could have been usefully carried out by a few employees on 10 and 11 March. Mr McKerron, a leading hand employed in this section of the plant, said that there was audit work that could have been usefully performed on those days. He also claimed that it was, in fact, better for this work to be done when production was not in progress. But Mr Whittenberg said that in most cases auditing involved random sampling which could be done whilst ordinary production was in progress. He agreed that auditing could have been done if the rest of the production employees had not been working, but said this would have created difficulties. For instance, audit staff often needed to call upon leading hands for clarification of part numbers to help them in their audit. In the absence of such assistance, the auditing would have been much more difficult and less efficient.

It was also suggested that useful work in the form of inspecting weather strips was available for a few men. But Mr Dredge, a foreman in the trim fabrication plant, gave evidence, which I accept, that it was not desirable to employ untrained men on inspection work. He said that it would have been necessary to provide special facilities to enable the inspection work to be done, e.g. a fork lift truck and a driver would have been required to enable goods to be moved. It needs to be borne in mind when considering whether a few men could have been usefully employed in this area that there were nearly 300 employees engaged in the trim fabrication plant. I have already said that I am satisfied that the company acted bona fide in deciding whether or not it could find useful work for its employees. In these circumstances, to use a phrase that I have quoted from Sheppard J's judgment in In Re Dispute - Australian Iron & Steel Pty. Limited Re Stand-down of Bricklayers (No. 1) (supra) I do not think it is appropriate to go through G.M.H's decisions with a fine-tooth comb in order to apply to its actions a standard of perfection which cannot reasonably be expected of it. In this respect it should be borne in mind that a large proportion of the total work force at Elizabeth was not stood-down on 10 and 11 March.

Not all items manufactured in the trim fabrication plant were destined for Commodore and other cars produced on the assembly lines at Elizabeth. Some were for Gemini vehicles. Mr Whittenberg said that he explored the possibility of identifying employees whose work related solely to Gemini parts but this task proved too difficult. Nevertheless work was found for a dozen or so such employees.

Having regard to all the evidence, to only some of which I have found it necessary to refer, I am of the opinion that G.M.H. has established that the employees in the trim fabrication plant who were stood-down on 10 and 11 March could not have been usefully employed on those days.

CENTRAL WAREHOUSE AT ELIZABETH

Mr Michael Trow was the superintendent in charge of the central warehouse at Elizabeth. Some 65 persons were employed in this warehouse and of these 59 were stood-down. The 6 who were retained were kept on to deal with any emergencies that might have arisen and to receive materials which were in transit to the Elizabeth plant from outside suppliers.

Fabricated parts manufactured by G.M.H. at Woodville and Elizabeth were received into the central warehouse. They were kept there for safe storage and despatched to G.M.H's assembly divisions throughout Australia. Parts stored in the warehouse included large sheet metal stampings, roofs, door panels, engine hoods, and a great variety of smaller parts, such as door locks and hinges. Automatic transmissions manufactured at Woodville were also housed in the central warehouse. Production from the trim fabrication plant was received by the warehouse on a daily basis and was shipped out on virtually a same day basis. Mr Trow said that there was a high fire risk associated with holding large quantities of trim fabrication items and for this reason stocks of these items were kept at a low level.

Goods stored in the central warehouse were shipped out daily both to the Elizabeth assembly division and to the assembly plants in Victoria and Queensland. Shipments were also made to G.M.H's accessories division at Dandenong. Parts were received into the warehouse from Fishermen's Bend and from outside suppliers.

It was G.M.H's policy to keep from seven to ten days' supply of parts in the warehouse. Mr Trow said that as at March 1981 - "We were full and had been full for many many weeks prior to that". (Transcript p.151).

According to Mr Trow the six employees who worked on 10 and 11 March were easily able to cope with the available work. He was asked what the other 59 employees would have done had they been at work on those days. He said they could have done very little. No goods were coming to the warehouse in from the Woodville and Elizabeth plants on those days and there was nothing going out. He said that one of the central warehouse's functions was to send parts to places other than G.M.H. plants but that on 10 and 11 March there was no work of that kind to be done.

Mr Trow said that the warehouse's work was scheduled so that it was known how much material was coming in each day. Each item that came in to stock was pre-assigned a storage point. He said the warehouse could never be 100% full of racks of materials because some space had to be kept free for rotating stock. With respect of the situation in the warehouse as at 10 March 1981, he said:

---At that particular point we were in a completely over-capacity situation to the extent that we could not store all parts in the warehouse. We had various areas outside under canvas. We had stored parts, unfortunately, above the recommended height and we had in fact had parts temporarily being held in aisle-ways. HIS HONOUR: Why was that?---It was because we were trying to put in more fabrication plants. They were delivering to me more than I was shipping out to the assembly plants. Why was that? Was that a temporary situation or what?---It was a situation that the company had been faced with since earlier or later in 1980. I seem to remember that August or September were the months of 1980 when we were in a critical position - we had manufactured far more parts than we could assemble. That was because of the market situation?---I guess so." (Transcript pp.188-9)

According to Mr Trow the congestion in the warehouse meant that it was not running efficiently. It caused double-handling of parts. In March 1981 there was an overflow of goods, not only to the canopy outside the warehouse but also to the loading bay. Mr Trow said that under normal operating conditions the loading bay was an area which should be kept clear at all times.

Mr Trow was asked what the position would have been in the warehouse on 10 and 11 March if the assembly plant had not operated, but the fabrication plant had operated normally. He replied:

"We would have been in a chaotic state probably midway during the first day. We would not have freed up any room by midday to bring further parts in. So we would have been forced into a return to the previous months problems. In fact, could you physically operate or physically cope with two days?---I believe not. At that time the fab plants were fully into racks again, so all the parts they were sending to us had to go into the warehouse. I believe two days would have thrown us into chaos. (Transcript p.197)

Evidence was given by other witnesses, including Mr Johnson and Mr Robiano, that the problems in the warehouse were not as great as Mr Trow claimed. Thus Mr Johnson said (Transcript p.717) that as at 9 March the warehouse was quite full but - "We were still able to receive a couple of days' shipment, we had room to receive it". And Mr Robiano said that in respect of one section of the warehouse there was "stacks of room" (Transcript p.770). But I think Mr Trow's evidence is generally reliable and gives a fair overall picture of the conditions pertaining in the warehouse at the beginning of March 1981.

Mr Trow considered which men were able to be usefully employed in the warehouse on 10 and 11 March. He said that he discussed that matter with the supervisors who reported to him. They estimated the work required to be done and then decided the number of employees required to do the work. Some six or seven men were not stood-down and they were able to perform the available work.

Except in the respect of two categories of work to which I shall now refer, I am satisfied that there was no useful work in the warehouse on 10 and 11 March for those employees who were stood down. The first category consisted of work involved in oiling stored parts to prevent them from rusting. I think the evidence makes it plain that this work was available to be done on 10 and 11 March and needed to be done. At p. 1143 Mr Trow gave the following evidence:

"MR RYAN: You told the court yesterday about the work which was done on the oiling of parts as part of the routine maintenance in your store?---Yes. You indicated that you considered in the context of the stand-down whether oiling should continue on the 10th and 11th. You said that it was a never-ending job but the demand for it was diminishing?---Yes. And that you looked at it but considered that the extra one or two days would not make any difference to the oiling programme?---That is correct. The situation was that the work was there and had to be done at sometime as part of a regular cycle?---That is correct. As I mentioned before, it was on a reducing need and we were getting to that point when we could afford to make decisions on the day whether we needed to do that job or not. The judgment which you made was that while the work was there, no harm would come if it were done after 10 and 11 March?---That is correct." (Transcript p.1143)

It may well have been convenient for G.M.H. to have this work done after 10 and 11 March. But that did not mean that the work could not have been usefully performed on those days. I am not unmindful of the fact that, as I have already found, G.M.H. acted bona fide in deciding which employees should be stood-down. Accordingly, I have hesitated in concluding, as I have, that it acted in breach of Award in standing-down employees who could have been given oil spraying work. The evidence does not permit me to find that only one or two employees could have been usefully employed on such work. If that had been the case, I might have reached a different conclusion because to find that there had been a breach of the Award in those circumstances would be to require the company to observe an unreasonable standard of perfection in its decision making. Mr Trow said that up to eight men were employed on the afternoon shift carrying out oil spraying work (Transcript p.196) and this is not an insignificant number when compared with the total workforce engaged in the warehouse.

The oil spraying work was useful work and men would have been usefully employed on 10 and 11 March if they had been required to perform it on those days. I am therefore of the opinion that G.M.H. was in breach of cl. 6(g)(1) in standing-down those employees in the warehouse who were normally engaged to perform work of this kind.

A distinction is to be drawn between oil spraying work and, for example, repair work performed in the re-work area of the automatic transmission plant. The effect of carrying out work of this latter type on 10 and 11 March would have been to have added additional transmissions to the already adequate stock of those items. But the oiling of parts to prevent them rusting was work of a different character and was of immediate use to the company. It prevented goods which had already been manufactured and which were of good quality from becoming useless. Moreover, the warehouse had to be kept open to receive goods already in transit from outside suppliers. Hence it was not a question of keeping the warehouse open for the sole purpose of permitting oil spraying to permit oiling work to continue. That may well have been uneconomic and if so, may have resulted in the oil spraying work being of no net benefit to the company.

The other category of work that could have been usefully performed on 10 and 11 March was the shipping of parts from the central warehouse to other locations. At least one man (Mr Robbiano) worked on those days attending to urgent shipping work. Mr Trow agreed that there was also non-urgent work which could have been done on those days. He agreed that it was work which had to be done after the stand-down, but said that it was not urgent that it be performed on 10 and 11 March. There is evidence that on 12 March some 300 containers of parts were shipped from the warehouse compared with the normal daily tally of 200. There was a continuing need to ship parts out to places such as Acacia Ridge where G.M.H. Gemini vehicles were assembled. In my opinion there would have been useful shipping work which could have been performed by some employees on 10 and 11 March. The evidence does not enable me to identify the names of such employees. However, it appears from Mr Johnston's evidence that some three storemen-drivers, three storemen and one leading hand were engaged in this class of work (Transcript p.719) and that they were all stood-down (Transcript p. 721). In my opinion the standing-down of those employees was not justified.

PRESS SHOPS AT WOODVILLE AND ELIZABETH

The panels produced in the press shops were used, in the main, in the assembly of bodies in the body shop. Because of the shortage of heater boxes, the body shop was unable to operate on 10 and 11 March. Hence, had the press shops worked on those days the greater proportion of the panels produced would have been added to inventory. It should be noted in passing that the fact that the vehicle assembly plant operated on 10 March did not alter this position, since panels were not assembled in that plant.

I need not repeat what I have already said as to the relevance of the level of inventory and to the economic desirability, from G.M.H's point of view, of not increasing inventory. The views that I have already expressed on these matters leads me to the conclusion that there was not useful work to be performed by employees in the press shops on 10 and 11 March.

Quite apart from economic considerations, there would have been serious storage problems had the press shops continued to work. Mr Moffatt was the manager in charge of sheet metal fabrication. He said that if the body shops had continued to work they would have produced panels to the point where work would have had to stop because racks to house them would not have been returning from the assembly lines (Transcript p. 268-9). He also said that the position had been reached as at March 1981 where production was unable to run in an orderly manner because the necessary racks were not available.

According to Mr Moffatt there was no work that could have been economically done in the press shops. He took the same view as to work in the re-work section. He said that the re-work section was rectifying panels which had been produced in advance of what was required by the respondent. He said:

"There was no shortage or requirement. The production run had been done. The production run itself was surplus and the re-work was those panels at the end of that production run that needed rectification, so there was no need or requirement and it was economically best not to work the re-work." (Transcript p.279)

Mr Galvani said that the body shops were 20 days ahead of their scheduled production. He said there was a cyclic lead time of 20 days in the press shop and this meant that the production of panels was 47 days ahead of planned requirements (Transcript p.329). He also said it would have been "almost impossible" to store two days' further production at the Woodville plant. In this respect he gave the following evidence:

"Is there room within the press shop at Woodville to store the parts which are manufactured? ---Within the press shop limits, no. I take it some quantity of parts can be stored before the trucks cart them away?---Usually on a normal, routine operation we will have no more than one or two containers ready to be shipped out from the press shop line at the end of it. If there is still material there, people would not be able to operate. The material would be next to the conveyors and other things that would be in the way. If for any reason the production in the press shop at Woodville could not be carried away from the press shop, how long could you continue to store the production for, as it came off the lines?---It depends on the size of the panel. If we are talking, say, fender openings which come off O line or fenders which come off P line, no more than a couple of hours at most. If smaller parts were being manufactured - - - ? ---Smaller parts we could take longer, because there is more quantity goes in one container. It could be up to 200, 300. When you are taking a fender for a body, there are only about 17 in a container. We are making a couple of hundred an hour. You soon find out how many containers you start to store in an hour. If a couple of hours of production of, say, fenders did accumulate in the loading area of the press shop at Woodville, what effect would that have on the other operations which are carried on in that area?---They will have to stop. We will have to stop that line, because then the trucks which service the line would not be able to go in and out any more." Is there any provision at all made in that press shop to store completed parts?---No. (Transcript p.1210-11)

On the other hand Mr Noack, a press operator at Elizabeth, said that he did not think there were any particular problems with storage. He said:

"There is always space where crates can be stored. They can be stored on top of each other. There are areas within the press shop where they can be stored, and there are areas within sub-assembly where they can be stored." (Transcript p.913)

I think the evidence of Mr Moffatt and Mr Galvani gives a more accurate and more complete picture of the storage problems which would have occurred had the press shops worked on 10 and 11 March. Having regard to their evidence and to the economic undesirability of further increasing the level of pre-build of panels I am of the opinion that G.M.H. has established that the employees in the press shops were properly stood-down.

TRANSPORT DRIVERS

A few of G.M.H's employees were engaged as transport drivers. Their duties included conveying goods to and from the plants at Woodville and Elizabeth. Goods were conveyed to Birkenhead for export, and were collected from outside suppliers and brought to the plants. Some, but not all, of these drivers were stood-down on 10 and 11 March. Not all the work normally performed by these men would have been affected by the stoppage in the assembly plant. Mr Trahar, a driver employed at the Woodville plant, said that there would have been no problem in storing goods which might have been transported to Elizabeth on the days of the stand-down. However I think he was mistaken in this view and I do not think his knowledge of the storage problems was nearly as great as that of other witnesses.

Mr Fines, G.M.H's shipping superintendent, gave evidence that at the time when the stand-downs occurred the company employed about 32 drivers. These drivers not only drove trucks but also performed other services such as driving courtesy cars for visitors to the plants. Mr Fines gave the following evidence:

"On the day of the stand down, the day before the stand down, you decided how many were to be kept on; is that so?---Yes. Do you recollect approximately how many were kept on?---12 or 13. In deciding who was to be kept on, what did you look for?---I was told by our traffic manager which departments would be working during the close down, and we then decided - taking that into consideration - which drivers could be usefully employed, and we worked out a list and those were the people who worked on that day. How did you choose the drivers that were kept on as opposed to those who were stood down?--- Generally all of the drivers had a regular job. Occasionally they could be switched according to demand, but generally they had their normal job; so we took the areas that were working. We took the drivers that normally did that work and kept those drivers on. You yourself worked on the days of the stand down? ---Yes. Were you aware of what the drivers were doing on those two days?---In general, yes. What do you say? Were they able to cope with the work available; was it too much, or too little - what was the situation?---Yes, they would have been able to cope quite satisfactorily. You were not short of drivers?---No. Could you have employed any more to do the work that was available on those two days, usefully employed any more?---I do not think so." (Transcript p.1058-59)

Mr Fines gave detailed evidence of the transport operations carried out by the employees under his control. Obviously the amount of work which could have been usefully performed by his men on 10 and 11 March was, to an extent, dependent upon the level of activity in the plants and warehouses at Woodville and Elizabeth. It would be exceedingly difficult, if not impossible, to identify every task that was normally carried out by the drivers and then to ascertain which part of that work could have been usefully performed on 10 and 11 March. I see no reason to doubt the accuracy of Mr Fines' evidence, which was to the effect that sufficient employees were kept at work on 10 and 11 March to perform all driving work which could usefully be performed.

It is true that when Mr Fines was cross examined as to his recollection of particular jobs which might have been performed by drivers, he was not always able to recall the situation as it existed in March 1981. Having regard to the passage of time, this failure of recollection is understandable. However I am satisfied that on the days of the stand-down Mr Fines made a bona fide attempt to identify all work which could usefully be performed and that only those drivers for whom there was no useful work were, in fact, stood down.

LOWER MILL AT WOODVILLE

At the Woodville plant there was a mill which was divided into two parts. The upper mill worked exclusively with timber. None of the employees at the upper mill were stood down. The lower mill performed various jobs including spot welding and drilling. Some 30 or 40 employees in the lower mill were stood-down. When they returned to work on 12 March they resumed the jobs which they had in hand when they were stood-down on the afternoon of 9 March.

Mr Bubric, a leading hand employed at the mill, said that he could not see any reason why the men were stood down. He said that there was no storage problem at the mill. Some of the employees in the lower mill were not stood down, but the majority were. G.M.H. did not call evidence from which a finding can be made that there was no useful work available to the employees who were stood down. I see no reason to reject Mr Bubric's evidence and since G.M.H. bears the onus of proof, I find that the employees in the lower mill who were not given work on 10 and 11 March were improperly stood-down.

CONCLUSION

It follows from what I have written that, although G.M.H. has been substantially successful in the proceedings, there must be a finding that it acted in breach of the Award in the limited respects to which I have referred. Accordingly I formally determine that the company on 10 and 11 March 1981 committed a breach of the Award in that it failed to pay to some of its employees the wages to which they were entitled under the Award.

At the conclusion of argument it was agreed by counsel that I should not make any formal orders until the parties had been given the opportunity of reading these reasons. The matter will therefore be stood over to a date to be fixed. It is possible that I have not dealt specifically with all categories of employees who were stood-down. If this is the case and the parties cannot reach agreement as to the position of employees who may not be covered by these reasons, any outstanding issues can be determined when the matter is relisted for hearing.

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Citations

Townsend, Leonard Cecil v General Motors Holdens Ltd Tumbers, Michael Frederick Hugh v General Motors Holdens Ltd [1983] FCA 212 (4 IR 358)

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26 AUGUST 1983