Silver Fern Farms Ltd v New Zealand Meat Workers & Related Trades Union Inc

[2009] NZCA 394

IN THE COURT OF APPEAL OF NEW ZEALAND

CA229/2009
[2009] NZCA 394

BETWEENSILVER FERN FARMS LIMITED

Applicant

ANDNEW ZEALAND MEAT WORKERS & RELATED TRADES UNION INCORPORATED

Respondent

Hearing:21 July 2009

Court:Hammond, Robertson and Baragwanath JJ

Counsel:T P Cleary for Applicant

I D Matheson for Respondent

Judgment:9 September 2009 at 10am

JUDGMENT OF THE COURT

A        LEAVE TO APPEAL IS GRANTED.

B        THE QUESTIONS OF LAW ARE:

(1)       Was there ambiguity in the plain meaning of the words?

(2)If not, was the interpretative approach adopted by the Employment Court incorrect in factoring in historical negotiations and contracts when there was no ambiguity in the plain meaning of the words?

C        Costs are reserved.

____________________________________________________________________

REASONS OF THE COURT

(Given by Baragwanath J)

[1]       An employer, Silver Fern Farms Ltd, applies for leave to appeal against the judgment of the Employment Court on an application by the respondent union as to the meaning and effect of the annual holiday clauses in two successive collective agreements. 

[2]       The 2004 collective agreement contained the following clause:

10.1Except as specified in this clause, annual holidays shall be allowed in accordance with the Holidays Act 2003.

10.2At the end of each year of employment with the Company, an employee shall be entitled to three weeks annual holiday.

10.3Annual holidays shall be paid in accordance with the Holidays Act 2003.

10.4An employee covered by this clause shall, upon completion of 6 years current continuous service with the Company, be entitled for the sixth and subsequent years to an additional week of annual holiday.  The fourth week’s holiday may be taken in conjunction with or separately from the first three weeks holiday as agreed between the Plant manager and the employee, provided that the employee may elect to be paid in lieu if [sic] taking the fourth weeks holiday.

…

[3]       The equivalent clause in the 2007 agreement which expires on 30 September 2009 was identical except that in cl 10.2 “three weeks” became “four weeks” and, with proceedings pending, there was added at the end of cl 10.4 “[Subject to Court Final Decision]”. 

[4]       The issue is whether, under each agreement, the relevant employees are entitled to four or five weeks annual holiday.  In the case of the 2004 agreement, the issue arises following the coming into force on 1 April 2007, at which time the 2004 agreement was in force, of the entitlement under the amended s 16(1) of the Holidays Act 2003 to four weeks annual holiday.  In the case of the 2007 agreement, the issue arises out of the references to the “fourth week’s holiday” in cl 10.4, following reference to long-serving employees receiving an additional weeks holiday, despite the entitlement in cl 10.2 of all employees to four weeks holiday.

[5]       The judgment of the Employment Court, delivered by Judge Shaw, contained the following passage:

Predecessor awards and collective agreements

[25]  Mr Cleary submitted that the parties’ mutual intent can be ascertained by objectively analysing the words used.  If the meaning of the words are clear, evidence of previous agreements or negotiations may not have a bearing on the interpretative question.  For that reason he submitted that apart from providing some context [the evidence about those agreements or negotiations] cannot assist in resolving the interpretation.

[26]  I hold that this is a case where the history of predecessor documents is relevant and useful because it explains the setting against which the 2004 and 2007 agreements were made.  The earlier clauses in the predecessor documents point to the genesis and aim of the clauses in their latest manifestation.  This is not evidence of negotiations which led up to the finalising of these particular clauses which would be prohibited from being considered in interpreting collective agreements.  Instead it is part of the factual matrix and is an objective guide to the intention of the parties.

[27]  In this case history shows that, from its earliest appearance, the continuous service clause was intended to reward employees for a specified period of serviced by giving them either 1 extra week’s holiday a year or 1 week’s extra pay.

[28]  From 1966 the awards provided for an additional week’s holiday.  From 1970 they expressly gave 3 weeks’ holiday to employees with continuous service instead of the 2 weeks provided by the holidays legislation.

[29]  It is apparent that the aim of the earlier awards was to give an additional or extra entitlement either by way of holiday or money to recognise years of continuous service.  This same aim was evidence in the 2004 collective agreement.  When that collective agreement was entered into, the 2003 Act gave a minimum annual holiday of 3 weeks and all employees were entitled both in law and under the collective agreement to 3 weeks’ annual holiday.  Clause 10.4 gave those with 6 years’ continuous service an additional entitlement of 1 week of annual holiday.

[6]       Mr Cleary submits for the applicant that the Employment Court erred in rejecting his submission reproduced at [25] of the judgment.  He submits that the Employment Court infringed the principles as to construction of contracts stated by Lord Wilberforce in Prenn v Simmonds [1971] 1 WLR 1381 at 1384 (HL), recently confirmed in Chartbrook Ltd v Persimmon Homes Ltd [2009] 3 WLR 267 (HL).

[7]       Mr Cleary submits that the Employment Court erred in ruling that the wording of cl 10.4 was ambiguous and in varying the clause (of the 2007 version) “the fourth week” to read “the fifth week”.  He challenged that Court’s reasoning that:

The earlier clauses in the predecessor documents point to the genesis and aim of the clauses in their latest manifestation.  This is not evidence of negotiations which led up to the finalising of these particular clauses which would be prohibited from being considered in interpreting collective agreements.  Instead it is part of the factual matrix and is an objective guide to the intention of the parties

[8]       He invited us to give leave to appeal on the question:

was the interpretative approach adopted by the Court incorrect in factoring in historical negotiations and contracts when there was no ambiguity in the plain meaning of the words?

[9]       Mr Matheson supported the reasoning of the Employment Court and opposed the grant of leave.

[10]     The jurisdiction of this Court under s 214 of the Employment Relations Act 2000 does not extend to “a decision on the construction of … a collective employment agreement”: s 214(1).  But the limitation on appeal rights does not extend to questions of principle going beyond the particular terms of the contract: Lowe Walker Paeroa Ltd v Bennett [1998] 2 ERNZ 558 at 566 (CA) per Richardson P; Secretary for Education v Yates [2004] 2 ERNZ 313 (CA) McGrath J at [20] and per William Young J at [82].

[11]     The true approach to the construction of such agreements is of general and public importance (s 214(3)).  We prefer to break Mr Cleary’s single question into two.  Leave to appeal is given to argue the following questions:

(1)Was there ambiguity in the plain meaning of the words of the collective agreements?

(2)If not, was the interpretative approach adopted by the Employment Court in error in factoring in historical negotiations and contracts?

[12]     Costs are reserved.

Solicitors:

Silver Fern Farms Ltd, Dunedin for Applicant
Reeves Middleton Young, New Plymouth for Respondent