United Water International Pty Ltd v Brown

[2010] FCAFC 105

FEDERAL COURT OF AUSTRALIA

United Water International Pty Ltd v Brown [2010] FCAFC 105

Citation:		United Water International Pty Ltd v Brown [2010] FCAFC 105
Appeal from:		Brown v United Water International Pty Ltd [2009] SAIRC 57
Parties:		UNITED WATER INTERNATIONAL PTY LTD  v GRANT BROWN
File number(s):		SAD 194 of 2009
Judges:		GRAY, TRACEY AND BROMBERG JJ
Date of judgment:		26 August 2010
Catchwords:		INDUSTRIAL LAW – underpayment of wages – claim by employee that wrongly classified and thus underpaid – whether Industrial Magistrate erred by considering and determining the correct classification for the employee – whether Industrial Magistrate entitled to take into account particular evidence – whether ultimate finding was sustained by the primary facts found.
Legislation:		Workplace Relations Act 1996 (Cth), ss 717, 720
Date of hearing:	25 May 2010
Place:	Adelaide
Division:	FAIR WORK DIVISION
Category:	Catchwords
Number of paragraphs:	33
Counsel for the Appellant:	Mr P Slattery QC with Ms Smith
Solicitor for the Appellant:	EMA Legal
Counsel for the Respondent:	Mr M Evans QC
Solicitor for the Respondent:	Duncan Basheer Hannon

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
FAIR WORK DIVISION	SAD 194 of 2009

ON APPEAL FROM THE INDUSTRIAL RELATIONS COURT OF SOUTH AUSTRALIA

BETWEEN:	UNITED WATER INTERNATIONAL PTY LTD Appellant
AND:	GRANT BROWN Respondent

JUDGES:	GRAY, TRACEY AND BROMBERG JJ
DATE OF ORDER:	26 AUGUST 2010
WHERE MADE:	ADELAIDE

THE COURT ORDERS THAT the appeal be dismissed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
FAIR WORK DIVISION	SAD 194 of 2009

ON APPEAL FROM THE INDUSTRIAL RELATIONS COURT OF SOUTH AUSTRALIA

BETWEEN:	UNITED WATER INTERNATIONAL PTY LTD Appellant
AND:	GRANT BROWN Respondent

JUDGES:	GRAY, TRACEY AND BROMBERG JJ
DATE:	26 AUGUST 2010
PLACE:	ADELAIDE

REASONS FOR JUDGMENT

INTRODUCTION

1. The appellant, United Water International Pty Ltd (“United Water”), is the employer of the respondent (“Mr Brown”).

2. In a proceeding before the Industrial Relations Court of South Australia, Mr Brown claimed that he had been underpaid by United Water over the period October 2003 to May 2007.  Mr Brown claimed that he was paid at the wrong rate of pay because the position he held was not correctly classified in accordance with the industrial instruments which applied to his employment over the period of his claim.

3. The learned Industrial Magistrate accepted Mr Brown’s contention that he had been wrongly classified and thus underpaid and made orders requiring United Water to pay the sum of $32,101.12 together with interests in the sum of $6,420.20 to Mr Brown: Brown v United Water International Pty Ltd [2009] SAIRC 57.  United Water challenges the orders made by the Industrial Magistrate on the basis that the Magistrate exceeded his jurisdiction and also on the basis of alleged errors in the facts found and weight given to the evidence before the court below.

4. For the reasons which follow, we have determined that the appeal should be dismissed.

   THE RELEVANT LEGISLATIVE AND OTHER PROVISIONS

5. Over the period of Mr Brown’s claim, his employment with United Water was the subject of several industrial instruments, the last of which was the United Water Employees’ Union Collective Agreement 2007 (“the 2007 Agreement”).  The 2007 Agreement is a collective agreement made pursuant to the Workplace Relations Act 1996 (Cth) (“the WR Act”).

6. At the relevant time, the WR Act included s 720. The terms of s 720 are relevant to what United Water referred to as its jurisdictional challenge. Section 720 of the WR Act was in the following terms:

   If an employer is required by an applicable provision (except a term of an ITEA) to pay an amount to an employee or to pay an amount to a superannuation fund on behalf of an employee, the employee, or an inspector on behalf of the employee, may, not later than 6 years after the employer was required to make the payment to the employee or fund, sue for the amount of the payment in an eligible court.

7. The phrase “applicable provision” in s 720 includes a term of a collective agreement. In relation to a provision of a collective agreement which requires an employer to pay an amount to an employee, s 720 of the WR Act enables an employee to sue for the amount due. Section 720 confers upon an eligible court (defined in s 717 to include the Industrial Relations Court of South Australia) jurisdiction to determine claims of that nature.

8. Several provisions in the 2007 Agreement are relevant to the arguments before the Court. 

9. Clause 5.1.4 of the 2007 Agreement is as follows:

   5.1.4     Wage rates are provided in Appendix C of this Agreement

10. Clause 5.2.1 provides that:

    5.2.1     Classification structures are contained in Appendix A of this Agreement.

11. Appendix C of the 2007 Agreement is headed “Wage Rates” and is divided into a number of sections reflective of the classification streams established by Appendix A. For employees in the Operational Services Stream, Appendix C sets out the rates of pay payable to those employees, including by identifying separate rates of pay for employees in each of the classification levels within that stream.  Those rates of pay include the rates for employees at the Operational Services Stream – Level 3 (“OPS-3”). 

12. Appendix A is headed “Classification Structures” and contains a section dealing with the Operational Services Stream. The kinds of employees who are covered by this stream are identified together with the 8 level classification structure for those employees.  Each of the

    
    

    8 levels is defined by what are called “stream work level descriptions”.  They are as follows:

    Level 1 (OPS-1) A
    First level of operation. Employees at this level are subject to close direction and undertake functions requiring the practical application of basic skills and knowledge. Training is a predominant feature at this level.

    Level 1 (OPS-1) B
    At this level the employee has completed a significant amount of off the job training at Australian Qualification Framework Level 2 and are competent to undertake a range of tasks unsupervised in accordance with relevant Quality Assurance and Environmental Management System procedures.

    Level 2 (OPS-2)
    Second level of operation. Employees at this level are subject to general direction and undertake a range of functions requiring the practical application of acquired skills and knowledge.

    Level 3 (OPS-3)
    First level of supervision/third level of operation. Employees at this level are subject to general direction and undertake a range of functions requiring the practical application of a high level of skills and knowledge, and/or the supervision of a small work group.

    Level 4 (OPS-4)
    Second level of supervision/fourth level of operation. Employees at this level are subject to general direction and undertake a range of functions requiring the application of a very high level of skills and knowledge, and/or the supervision of a large work group.

    Level 5 (OPS-5)
    First level of operational management/fifth level of operation. Employees at this level are subject to limited direction and exercise responsibility for a large work program in the Company or apply a very high level of practical skills, which by their nature, are more demanding than level 4 and involve a high level of creativity and/or a range of unique abilities.

    Level 6 (OPS-6)
    Second level of operational management. Employees at this level are subject to limited direction and exercise Managerial responsibility for a very large work program or operation in the Company.

    Level 7 (OPS-7)
    Third level of operational management. Employees at this level are subject to limited direction and exercise managerial responsibility for a major work program or operation in the Company.

13. It is not necessary to identify or set out the classification structure or work level descriptors in the earlier industrial instruments applicable over the whole period of Mr Brown’s claim.  The Industrial Magistrate did not refer to those provisions, nor have we been referred to them.  We were told by counsel that the proceeding in the court below was conducted on the basis that it was accepted that the relevant classification structures in the earlier industrial instruments were the same as or so similar to those in the 2007 Agreement, that the issues before the court below could be determined by reference to those provisions alone.  It is apparent from the decision of the court below that, once the court made its findings by reference to the 2007 Agreement, the parties were able to apply those findings to the entirety of the period of Mr Brown’s claim in order to arrive at an agreed monetary amount. That amount was then reflected in the order made by the court.

    DID THE INDUSTRIAL MAGISTRATE EXCEED HIS JURISDICTION?

14. Ground 4 of the notice of appeal contends that the Industrial Magistrate erred in determining that the Industrial Relations Commission of South Australia had jurisdiction to determine Mr Brown’s claim. The basis for that challenge is not clearly spelled out in the notice of appeal. In argument (both written and oral) counsel for United Water explained that United Water contended that the Industrial Magistrate exceeded the jurisdiction conferred upon him by s 720 of the WR Act by examining the correctness of Mr Brown’s classification. United Water contends that s 720 of the WR Act contemplates that, as a first step, an amount required to be paid by an employer under an applicable provision be identified. On that premise, United Water then contends that s 720 does not contemplate “a hearing to determine whether an employee has been correctly classified before the amount said to be owed can be identified”. United Water says that the Industrial Magistrate engaged in a reclassification exercise rather than the exercise required by s 720 of the WR Act.

15. These contentions suffer from a misunderstanding of the operation of the 2007 Agreement, together with a misunderstanding of the purpose of the task engaged in by the Industrial Magistrate in examining the appropriate classification level for Mr Brown.

16. Mr Brown made a claim under s 720 of the WR Act. By his summons of 13 August 2008, he claimed that he had been underpaid an amount of $51,476.09. He asserted that the cause of that underpayment was that he had been paid at the Operational Services Stream Level 2 (OPS-2) classification when he should have been paid at the Operational Services Stream Level 4 (OPS-4). When his claim was argued before the Industrial Magistrate, Mr Brown did not press his contention that he should have been paid as an OPS-4 but argued that he should have been paid as an OPS-3.

17. The 2007 Agreement operates to set the wage rates payable by United Water to its employees.  Clause 5.1.4 of the 2007 Agreement together with Appendix C specifies the rate of pay which is payable under the 2007 Agreement to employees of United Water at various classification levels, including the OPS-3 classification.  A necessary element in identifying the rate of pay which clause 5.1.4 and Appendix C require a particular employee to be paid, is the identification of the classification level applicable to the employee by reason of the provisions in Appendix A.  As earlier set out, in the 2007 Agreement classification levels are dealt with in Appendix A where work level descriptors for each classification level are specified.  The 2007 Certified Agreement operates to classify at each particular classification level, employees whose skills, knowledge, experience and functions match the work level descriptors for that classification level. 

18. It was in that context that the Industrial Magistrate compared the work level descriptors for the OPS-2 and OPS-3 levels in Appendix A with the evidence of the skills and knowledge of Mr Brown and the functions required of him in his position as a Network Technician. It was necessary for the Industrial Magistrate to undertake that analysis in order to determine the rate of pay which the 2007 Agreement required United Water to pay Mr Brown. A determination of the rate payable to Mr Brown under the 2007 Agreement was necessary in order to determine (in the words of s 720) if United Water was “required by an applicable provision…to pay an amount to” its employee Mr Brown.

19. The Industrial Magistrate was not involved in an impermissible reclassification exercise, as United Water contends. He was simply identifying the rate of pay applicable to Mr Brown in order to determine whether or not United Water had paid to Mr Brown all of the amounts required to be paid under the 2007 Agreement. In so doing, the Industrial Magistrate did not exceed the jurisdiction conferred upon him by s 720 of the WR Act.

    FINDINGS OF FACT AND WEIGHT OF EVIDENCE

20. Grounds 1, 2 and 3 of the notice of appeal challenge the judgment of the court below on the basis that, if it was permissible for a finding to be made as to the appropriate classification level for Mr Brown, the Industrial Magistrate erred in finding that

    
    

    OPS-3 rather than OPS-2 was the appropriate level.

21. Ground 1 of the notice of appeal challenges the ultimate finding that Mr Brown was classified at the OPS-3 level. It is not particularised and was only pressed by a contention (to which we shall return) that the finding was “against the weight of the evidence”.   Grounds 2 and 3 challenge particular constituent or primary facts found by the Industrial Magistrate in arriving at his ultimate finding that Mr Brown’s correct classification level was OPS-3.

22. On the hearing of the appeal, only one of the many primary facts identified in grounds 2 and 3 was pressed.  This was the contention that the Industrial Magistrate erred in relying upon evidence contained in a training manual in making findings as to the level of knowledge and skill held and the functions performed by Mr Brown.  The training manual in issue is a document titled “United Water, Contract Inspection in the Networks – Training Manual” (“the training manual”).  That document was tendered by Mr Brown and became exhibit A13 in the proceedings before the court below.

23. It is clear from the reasons for judgment of the Industrial Magistrate that reliance was placed upon the training manual: see in particular [87], [88], [99]-[107].  That reliance occurred in the context of the Industrial Magistrate comparing the work level descriptors for the OPS-3 classification level and in particular the “high skills and knowledge” requirement, with the skills and knowledge actually required of Mr Brown in his position as a Network Technician.

24. The Industrial Magistrate relied upon the training manual as being “illustrative of the high skills and knowledge required of a network technician”: at [105].

25. The Industrial Magistrate was well entitled to do so, upon the following evidence and for the following reasons:

    ·Network Technician positions were created as a result of a restructure that occurred in 2003 when the positions of Network Operator, Service Locator and Contract Inspector were combined.

    ·Upon that restructure, Mr Brown moved from a Network Operator position to that of a Network Technician.

    ·To accommodate Mr Brown’s move to the position of Network Technician (and that of other Network Operators), the new Network Technicians were trained to perform contract inspecting.  Each of the Network Technicians was provided with the training manual and undertook an in-house course provided by United Water.  The training manual identifies that its content was presented at a training course held on 2, 3 and 9 December 2003.

    ·In the “Overview of Training Course” section of the training manual, the manual states:

    “This course is designed to equip Network Technicians with the required knowledge base to undertake contract inspections in the Networks.  It presents information and assesses understanding of:

    -Fundamental contractual principles and terms

    -   Schedule of Rates (SOR) contract documentation, obligations and technical terms, including the Water and Sewer Manuals (Blue and Red Books)

    -Quality assurance and contract inspections to be performed

    -Dispatch of work for contract inspections

    -Water & sewer main testing

    -Environmental, Health & Safety and Customer Service aspects

    -A contractor’s perspective of work conducted.

    ·Each of the subject matters identified in the Overview is dealt with extensively by the training manual, including the knowledge required for an understanding of the subject matter concerned.

    ·The training manual (at page 57) sets out a number of responsibilities of United Water Network Technicians, including:

    Conducting inspections in accordance with Training Manual and other applicable documentation” (emphasis added)

    ·Mr Brown gave evidence confirming that the responsibilities identified at page 57 of the training manual were the responsibilities of a Network Technician.

    ·The training manual was tendered without objection.

    ·Mr Brown was not cross examined in relation to the training manual or in relation to any of the matters set out above.

    ·United Water called no evidence in relation to any of these matters.  In fact, it called no evidence at all and told the court below that it was “content with the evidentiary material as it currently stands”.

26. In those circumstances, there can be no doubt that the Industrial Magistrate did not err by relying upon the training manual.

27. Finally, we return to United Water’s contention that the finding that the classification level for Mr Brown’s position was OPS-3 was against the weight of the evidence.  The contention was first raised in United Water’s Outline of Argument.  However, apart from a reference to the reliance on the training manual (a matter we have already dealt with), the Outline of Argument does not specify why the finding was against the weight of the evidence.   

28. At the hearing, Counsel for United Water all but formally abandoned this challenge, acknowledging that it was United Water’s hardest task, given that it had not called any evidence and had largely accepted Mr Brown’s evidence as uncontroversial.  No further submissions were made by United Water in support of this contention.

29. It is not the task of this Court to find substance for a contention left unsubstantiated. 

30. For the sake of completeness, however, we do make the following observations.  Whilst an ‘against the weight of the evidence’ challenge may be appropriate as a form of challenge in an appeal to a finding made by a jury, when a finding is made by a judge and detailed reasons are given including as to primary findings of fact, it is not appropriate for an appellant to attack an ultimate finding by such a generalised and unspecific form of challenge.  In those circumstances, an appellant must demonstrate that either the primary findings are wrong or that the ultimate finding is not sustained by the primary facts found.

31. We suspect that United Water’s real complaint is that the primary findings made by the Industrial Magistrate about the level of skill and knowledge required of Mr Brown do not sustain the ultimate finding that Mr Brown satisfied the OPS-3 work level descriptor’s requirement of a “high level of skills and knowledge”.  Such a challenge may have succeeded if United Water had demonstrated that there was error in the manner in which the phrase “high level of skills and knowledge” was construed.

1. When that phrase is examined in the context of the entirety of the OPS work level descriptors, no error of construction is apparent.  At the lower end of the Operational Services Stream classification scale are the OPS-1A and the OPS-1B levels, which are training and basic competence levels.  At the upper end of the scale, OPS-5, OPS-6 and OPS-7 are managerial levels.  In the middle of the classification scale are the OPS-2, OPS-3 and OPS-4 levels, into which experienced non-managerial employees like Mr Brown are to be allocated.  In relation to skills and knowledge held by experienced non-managerial employees, the scale moves from “acquired skills and knowledge” (OPS-2) to “high level of skills and knowledge” (OPS-3) and then to “very high level of skills and knowledge” (OPS-4).  In that context, the OPS-3 requirement for skills and knowledge for experience non-managerial employees is at the mid-point of the scale.  On that construction and given the primary findings made by the Industrial Magistrate, no error is apparent in the ultimate finding made that Mr Brown’s position matched the work level descriptors for the OPS-3 level.

   DISPOSITION

2. For all of those reasons, we have determined that this appeal should be dismissed. This Court is not empowered to make an order as to costs in a proceeding such as this unless it has been instituted vexatiously or without reasonable cause, or costs have been incurred by an unreasonable act or omission: s 824 WR Act. Mr Brown has not contended that either of these preconditions has been met. Therefore, we will make no order as to costs.

I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Gray, Tracey and Bromberg.

Associate:

Dated:        26 August 2010