Short v. FW Hercus Pty Ltd, Re
40 FCR 5111993 - 0223A - FCA; No. S I3 of 1992 Fed No. 72
(Judgment by: Burchett J)
Between: Short
And: FW Hercus Pty Ltd
Judges:
Keely J
Burchett JDrummond J
Subject References:
Industrial Law
Judgment date: 23 February 1993
Adelaide
Judgment by:
Burchett J
On 14 May 1986, an order was made by the Australian Conciliation and Arbitration Commission varying the Metal Industry Award, 1984 - Part II - Draughtsmen, Production Planners and Technical Officers, inter alia, by the insertion of a new clause 30, headed "INTRODUCTION OF CHANGE", and a new clause 31, headed "REDUNDANCY". Clause 31 contained elaborate provisions in respect of redundancy, among which was a general obligation to provide severance pay, relieved by a capacity to apply to the Commission "to have the general severance pay prescription varied on the basis of the employer's incapacity to pay". But this appeal is concerned with the opening words of sub-cl. (a)(i), upon which the whole clause depends-
"Where an employer has made a definite decision that the employer no longer wishes the job the employee has been doing done by anyone and this is not due to the ordinary and customary turnover of labour and that decision may lead to termination of employment, the employer shall ... ."
By these words the draftsman of the clause sought to define the concept of redundancy for the purposes of the award.
In the present case, there is no dispute that the appellant was an employee and the respondent an employer bound by the award. The appellant claimed severance pay under cl. 31. His employment had been terminated by a definite decision of the employer, unrelated to the ordinary and customary turnover of labour. The sole question with which the appeal is concerned is whether the respondent's decision fell within the words "the employer no longer wishes the job the employee has been doing done by anyone".
The appellant's application (couched as a claim for a redundancy payment of $3,376) came before an Industrial Magistrate. Evidence was given on behalf of the respondent of the circumstances in which the appellant had been retrenched, as follows:
"No section was closed, no line of business was off-loaded or abandoned, no new process was introduced enabling the work to be done with fewer people. Our company is still in the same line of business, making the same products by substantially the same methods. We are tendering for the same type of work. There is just not enough of it and we are not winning a big enough share of it to keep the same number of people gainfully employed. The drawing office is still there, the drawing board and the related equipment (are) still there, we still want the work done, we just have not got it to be done and this was not due to any decision made by us. This was a retrenchment due to our having insufficient work to do and not a redundancy through our not wanting it done. We do want it done and we are using all of our efforts to gain the necessary orders in order that it can be done again."
The Industrial Magistrate rejected an argument that cl. 31 did not apply in these circumstances. The respondent then appealed to a judge of the Court, who upheld its appeal. His Honour founded on the use of the word "wishes" in cl. 31, holding that the clause is concerned with the subjective desires of an employer who wishes to change his mode of operation, and not with the consequences of economic necessity. From this ruling, the appellant now appeals.
In my respectful opinion, the better view of the clause is to see it as objectively, and not subjectively, framed. It is concerned with the fact of a change brought about by the making of a decision in circumstances unrelated to the ordinary and customary turnover of labour. The wide spectrum of technological and economic reasons for the decision is restricted only by the exclusion referring to the ordinary and customary turnover of labour. That an economic downturn is not excluded is, of course, consistent with the express right of the employer to apply to the Commission for a variation of severance pay on the ground of incapacity to pay. The contrary argument rests entirely on the word "wishes". But the clause is not made conditional upon the employer wishing to retrench an employee. The clause simply postulates the cessation of the employer's wish to have the particular job done by anyone. That may be because some delightful alternative has enticed the employer; because the job has just come to an end; because of the employer's insolvency; or for any one of a number of other reasons. The clause does not say that the employer must be happy about his decision; only that he must have made it.
The question was raised whether it is legitimate, for the purpose of construing a clause of an award, to look at what was called the history of the provision. In The Merchant Service Guild of Australia v. Sydney Steam Collier Owners and Coal Stevedores Association (1958) 1 FLR 248 at 251, 254 and 256-7, the Commonwealth Industrial Court construed an industrial agreement containing a clause which had appeared in a succession of similar agreements over a period of about 25 years. The clause being perhaps ambiguous, the court relied on its adoption by the parties from the series of prior agreements, under which a particular interpretation had been accepted, as showing its true construction. There was authority to support this approach: the decision of Fair J. in O'Donnell v. Walter Buchanan, Limited (1947) NZLR 906 at 910; Jack v. The Fairymead Sugar Company Limited (1917) 11 QJPR 109 at 115; and see Pickard v. John Heine and Son Limited (1924) 35 CLR 1 at 9-10, Nurses (South Australia) Award (Interpretation) Case (1981) 48 SAIR 151 at 153-157, Knox v. Grace Brothers Holdings Ltd (1985) 8 FCR 497 at 501, 505-509, Australian Iron and Steel Limited v. Atkins (1938) 37 AR 196 at 198-199, Goldstein v. Maloney (1940) 39 AR 343 at 351, City of Wanneroo v. Holmes (1989) 30 IR 362 at 378-379, and D.C. Pearce and R.S. Geddes, Statutory Interpretation in Australia (3rd ed., 1988) s. 3.12. But as the construction of the clause which appealed to the court had also been acted upon after the parties had entered into the industrial agreement, the court referred to Watcham v. Attorney-General of the East Africa Protectorate [1919] AC 533 , a decision of the Privy Council which is no longer regarded as good law: F.L. Schuler A.G. v. Wickman Machine Tool Sales Ltd [1974] AC 235 .
So far as Merchant Service Guild is concerned with conduct after the making of the industrial agreement, it was accordingly not followed in Seamen's Union of Australia v. Adelaide Steamship Co. Ltd. (1976) 46 FLR 444 at 445; but I do not think that decision affects its authority in relation to the use which may be made, in appropriate circumstances, of the history of a clause found in an industrial agreement. Nor do I think Seymour v. Stawell Timber Industries Pty Ltd (1985) 9 FCR 241 is of assistance. That was a special case concerned, as appears most clearly from the dissenting judgment of Keely J. at 254-255, not with the history of an award provision, but with the effect of a prefatory statement made by the parties at the time when it was introduced into the award. The question that divided the court was whether the statement was any clearer than the award itself, a question reminiscent of the difficulties which often arise in relation to the analogous explanatory memoranda presented by ministers to the Parliament.
No one doubts you must read any expression in its context. And if, for example, an expression was first created by a particularly respected draftsman for the purpose of stating the substance of a suggested term of an award, was then adopted in a number of subsequent clauses of awards dealing with the same general subject, and finally was adopted as a clause dealing with that same general subject in the award to be construed, the circumstances of the origin and use of the clause are plainly relevant to an understanding of what is likely to have been intended by its use. It is in those circumstances that the author of the award has inserted this particular clause into it, and they may fairly be regarded as having shaped his decision to do so. The rules of construction, Mason and Wilson JJ. said in Cooper Brookes (Wollongong) Proprietary Limited v. The Commissioner of Taxation of the Commonwealth of Australia (1981) 147 CLR 297 at 320, are really rules of common sense. Common sense would be much offended by a refusal to look at the facts I have summarized. As Isaacs J. said in Australian Agricultural Company v. Federated Engine-Drivers and Firemen's Association of Australasia (1913) 17 CLR 261 at 272, citing Lord Halsbury L.C.:
"The time when, and the circumstances under which, an instrument is made, supply the best and surest mode of expounding it."
The context of an expression may thus be much more than the words that are its immediate neighbours. Context may extend to the entire document of which it is a part, or to other documents with which there is an association. Context may also include, in some cases, ideas that gave rise to an expression in a document from which it has been taken. When the expression was transplanted, it may have brought with it some of the soil in which it once grew, retaining a special strength and colour in its new environment. There is no inherent necessity to read it as uprooted and stripped of every trace of its former significance, standing bare in alien ground. True, sometimes it does stand as if alone. But that should not be just assumed, in the case of an expression with a known source, without looking at its creation, understanding its original meaning, and then seeing how it is now used. Very frequently, perhaps most often, the immediate context is the clearest guide, but the court should not deny itself all other guidance in those cases where it can be seen that more is needed. In literature, Milton and Joyce could not be read in ignorance of the source of their language, nor should a legal document, including an award, be so read.
That much is fairly clear. Where there is seen to be a difficulty, the court can often go to the history of the matter. A number of illustrations will be found in Nurses (South Australia) Award (Interpretation) Case (ubi supra). But an ambiguity or obscurity may not be immediately seen on the face of a document. Both the problem and its solution may appear only when the wider context from which an expression first sprang is brought to notice. Is the court then forbidden to look past the document itself that is before it? The respondent says the instant award is clear, and we must shut our eyes to what went before. I think there are two answers to this argument. On the one hand, I do not accept that the award is clear on its face. The fact that I have given it a meaning by a process of construction (as it happens, contrary to the respondent's contention) cannot disguise the possibility of understanding the language, as the learned judge understood it, differently. (Cf. Pickard v. John Heine and Son Limited (1924) 35 CLR 1 at 9, per Isaacs A.C.J.) That is certainly sufficient to justify a reference to its source. Where the circumstances allow the court to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in its present form, only a kind of wilful judicial blindness could lead the court to deny itself the light of that history, and to prefer to peer unaided at some obscurity in the language. "Sometimes", McHugh J. said in Saraswati v. R (1991) 172 CLR 1 at 21, the purpose of legislation "can be discerned only by reference to the history of the legislation and the state of the law when it was enacted". Awards must be in the same position.
But even if the language, read alone, appeared pellucidly clear, the tendency of recent decisions - and this is the other answer to the argument put - would seem to require the court to look at the full context. Only then will all the nuances of the language be perceived. The judgment of Mason J. (with which Stephen and Wilson JJ. expressed agreement) in Codelfa Construction Proprietary Limited v. State Rail Authority of New South Wales (1982) 149 CLR 337 at 347-353 contains an extended discussion of the principles upon which a court may take account, when construing a contract, of the circumstances surrounding the agreement of the parties upon those particular terms. In the course of that discussion, Mason J. suggested (at 350) that "perhaps ... the difference ... is more apparent than real" between the view that evidence is admissible only to resolve an ambiguity, not to raise it, and the view that extrinsic evidence is receivable both to raise and to resolve an ambiguity. He concluded (at 352):
"The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although ... if the facts are notorious knowledge of them will be presumed."
(Emphasis added.) The fact is that words are frequently susceptible of more than one meaning. Paradoxically, ambiguity may be born of the reader's clarity of thought which perceives a potentiality for an alternative meaning. But in many cases only evidence of extrinsic facts can show that the potentiality has substance. The old case Macdonald v. Longbottom (1859) 1 El and El 977 (120 ER 1177), to which Mason J. referred, is an example, since there is nothing necessarily ambiguous in the expression "your wool" (indeed Erle J. at 986 described it as "most explicit") - only evidence that at the time the vendor had both wool of his own growing, and also wool which he had bought in from others, could raise an ambiguity, while at the same time solving it once the other party was shown to have known the facts.
Mason J. returned to the subject in his dissenting judgment in K. and S. Lake City Freighters Proprietary Limited v. Gordon and Gotch Limited (1985) 157 CLR 309 at 315, when he said:
"Problems of legal interpretation are not solved satisfactorily by ritual incantations which emphasize the clarity of meaning which words have when viewed in isolation, divorced from their context. The modern approach to interpretation insists that the context be considered in the first instance, especially in the case of general words, and not merely at some later stage when ambiguity might be thought to arise."
This is a broad proposition, applicable to problems of construction generally, although it was put forward in the context of statutory interpretation. In that context, this court said (in the joint judgment of Neaves, Burchett and Lee JJ.) in Busby v. Chief Manager, Human Resources Department, Australian Telecommunications Commission (1988) 20 FCR 463 at 468:
"(A)s Dixon CJ said in Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 at 397, 'the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed'. See also the dissenting judgment of Mason J. in K. and S. Lake City Freighters Pty Ltd v. Gordon and Gotch Ltd (1985) 157 CLR 309 at 315, where he referred to 'the cardinal rule of statutory interpretation that requires the words of a statute to be read in their context'. If that mode of interpretation is truly followed, there must be occasions when it leads to a passage being understood in a sense it would not bear upon a reading in isolation. This is not a shiny new rule, but an approach embedded in the law at least since Lord Coke: see S.G.G. Edgar, Craies on Statute Law (7th ed., 1971), pp 96-101."
The principles of statutory interpretation referred to are not inapplicable to an award which seeks, in a way, to legislate for the terms and conditions of employment of a number of persons engaged in a particular industry. (Cf. Geo. A. Bond and Co. Ltd. (In Liquidation) v. McKenzie (1929) 28 AR 498 at 503.) Their application to the present problem would require the court to consider the wider context of the award provision as the product of a series of decisions which might reveal plainly its general purpose and policy. When the provision is read against that background, as I shall show, there can be no doubt that it was not intended to have a restricted meaning, but rather to have a wide operation in cases of redundancy, for whatever reason.
The starting point may be taken to be the decision of the Full Court of the Supreme Court of South Australia in The Queen v. The Industrial Commission of South Australia; ex parte Adelaide Milk Supply Co-operative Limited (1977) 16 SASR 6, although it would certainly be possible to go back much further. The Supreme Court of South Australia was concerned with the question of the jurisdiction of the state's Industrial Commission to make provision by award for redundancy. There was no issue about the substance of the proposed provision, but members of the Court made clear their understanding of what was involved. It is convenient to look first at the judgment of Mitchell J., who cited (at 34) the following statement from a decision in the previous year of the New South Wales Industrial Commission:
"It can fairly be said that in industrial circles the term redundancy payment has come to mean compensation for losses of various kinds suffered by employees who have given substantial services to an employer and whose services are terminated because, for one reason or another, the employer no longer needs them."
Mitchell J. accepted this statement. Bright J., who dissented on the jurisdictional issue, said (at 26-27):
"The word 'redundant' does not occur in the Act. In its industrial sense it is not defined in the Oxford Dictionary. The application which I have already set out attempts a definition for the purpose of the proposed award. A consideration of the cases leads me to think that the question of the redundancy of an employee is linked to the question of the continued utility of the job which he is performing. In other words it does not relate to the personal competence of the employee in the job which he is performing. If I am right in this, then in its widest form the concept of redundancy connotes that an employee becomes redundant whenever (and for whatever reason) his employer no longer desires to have performed the job which that employee was doing. A wide variety of instances are contained in the definition clause in the application but they all seem to fit into this connotation, even the reference to retrenchment of employees for any reason whatsoever."
The definition clause to which Bright J. referred embraced (as appears at 16) dismissal by reason of diminishment of the requirements of a business for work of a particular kind through
"technological automation, mechanization change, re-organization, rationalization or centralization in the processing industry; fall in demand of products for whatever reason; or retrenchment of employees or an employee for any reason whatsoever."
It was in connection with this statement of Bright J. and the passage quoted by Mitchell J. (to each of which he referred at 8-9) that Bray C.J. made (at 8) a statement that has since become in part embedded in a number of awards, including the subject award:
"I should begin by saying that I agree with Bright J. that the concept of redundancy in the context we are discussing seems to be simply this, that a job becomes redundant when the employer no longer desires to have it performed by anyone. A dismissal for redundancy seems to be a dismissal, not on account of any personal act or default of the employee dismissed or any consideration peculiar to him, but because the employer no longer wishes the job the employee has been doing to be done by anyone."
Here the expression containing the words "no longer wishes" was first composed. In its original setting, it is plain that it was not meant to convey the limitation for which the respondent contends. On the contrary, it was meant to capture the full breadth of the concept elaborated by Bright J. and referred to in the passage quoted by Mitchell J.
When the Termination, Change and Redundancy Case (1984) 8 IR 34 came before the Australian Conciliation and Arbitration Commission, what Bray C.J. had said was highlighted in the submission presented by the Australian Council of Trade Unions. The reasons make it plain that no narrowing of the concept of redundancy was intended. In the course of them (at 55-56), the Commission stated:
"(The ACTU) contended that redundancy protection should apply essentially where an employee is dismissed through no fault of his own and relied on ILO Convention 158 which referred to terminations for reasons which relate to the operational requirements of the business, namely, reasons of an economic, technological, structural or similar nature. It also relied on the definition of the Chief Justice, Mr Justice Bray in the South Australian Supreme Court which, it contended, was the commonly accepted meaning of redundancy in Australia ... . This definition:
- (a)
- refers to a job becoming redundant and not to a worker becoming redundant;
- (b)
- recognizes that redundancy situations may not necessarily involve dismissals; and
- (c)
- emphasizes that the job or work has disappeared through no fault on the part of the employee. A key element in that definition is that the employer no longer requires to have the work done by anyone."
(Emphasis added.) It will be noted that the Commission substituted an unambiguous word for Bray C.J's choice of "wishes", but the Commission did not suggest that it was changing the meaning at all; it was simply using a more appropriate word.
Following the decision of the Australian Conciliation and Arbitration Commission, the precise words with which we are now concerned, formulated by Bray C.J. in Ex parte Adelaide Milk Supply Co-operative and accepted by the Commission in the Termination, Change and Redundancy Case, became incorporated in a standard form of clause: see the later Termination, Change and Redundancy Case (1984) 9 IR 115; Re Operative Plasterers Workers Federation of Australia; Ex parte Brown (1992) 67 ALJR 179; McGarry v. Boonah Clothing Pty Ltd (Gray J., unreported, 17 May 1988) at 3-4 and 22; and Municipal Officers Association of Australia v. City of Bayswater (1987) 22 IR 45 at 48-9 - it may be noted that McGarry is partly reported at 80 ALR 284 , but this report does not include p 22 of the judgment.
Any ambiguity in the expression of cl. 31 is clarified when its sources are examined. In the nature of the industrial process, the draftsman of the variation of the award must have been acquainted with those sources. It is not to be thought that the words of Bray C.J. were deliberately chosen to convey a meaning quite other than his meaning. Especially is this so when his meaning had been examined in detail by the Australian Conciliation and Arbitration Commission in the Termination, Change and Redundancy Cases.
I agree in the orders proposed by Keely J.