FEDERAL COURT OF AUSTRALIA

Treasury Wine Estates Vintners Limited v Pearson [2019] FCAFC 21

Appeals from: Pearson v Treasury Wine Estates [2017] SAET 182 Pearson v Treasury Wine Estates [2017] SAIRC 11 File numbers: SAD 74 of 2018 SAD 197 of 2018 Judges: RARES, PERRY AND CHARLESWORTH JJ Date of judgment: 13 February 2019 Catchwords: CONSTITUTIONAL LAW – Constitution Ch III – where eligible State court vested with federal jurisdiction under s 539(2) of Fair Work Act 2009 (Cth) to hear claims by employee against employer for underpayment of amount due under enterprise agreement in contravention of s 50 – where industrial magistrate of Industrial Court of South Australia heard matter using the small claims procedure under s 548 of Fair Work Act 2009 (Cth) – where s 565(1A)(a) of Fair Work Act 2009 (Cth) provided for internal appeal to a judge of Industrial Court from judgment or order of industrial magistrate exercising summary jurisdiction – whether internal appeal lay under s 565(1A)(a) from judgment or order of industrial magistrate sitting as a court of summary jurisdiction when applying small claims procedure in s 548 CONSTITUTIONAL LAW – where s 565(1A)(a) Fair Work Act 2009 (Cth) gave right of appeal to Industrial Court as eligible State or Territory court to hear and determine appeal from judgment or order of eligible State or Territory court exercising federal jurisdiction – where State Act subsequently dissolved Industrial Court and replaced it with South Australian Employment Tribunal in Court Session – where State Act purported to transfer unresolved appeal in Industrial Court to Tribunal in Court Session – whether State had legislative power to transfer jurisdiction to hear instituted appeal in federal jurisdiction from Industrial Court to Tribunal in Court Session – whether Tribunal in Court Session had jurisdiction to decide appeal or appeal remained in dissolved Industrial Court INDUSTRIAL LAW – Fair Work Act 2009 (Cth) – principles of construction of enterprise agreement Legislation: Acts Interpretation Act 1901 (Cth) s 2B Conciliation and Arbitration Act 1904 (Cth) Constitution Ch III Fair Work Act 2009 (Cth) ss 12, 50, 186, 539, 545, 546, 548, 565 Fair Work and Other Legislation Amendment (South Australian Employment Court) Regulations 2017 (Cth) s 69 Fair Work Regulations 2009 (Cth) reg 1.05 Federal Proceedings Costs Act 1981 (Cth) Judiciary Act 1903 (Cth) ss 38 and 39 Employment Tribunal Act 2014 (SA) s 67 Fair Work Act 1994 (SA) ss 14, 58, 187 Statutes Amendment (South Australian Employment Tribunal) Act 2016 (SA) Cases cited: Agtrack (NT) Pty Ltd v Hatfield (2005) 223 CLR 251 Altintas v O’Dea Lawyers [2018] FCAFC 165 Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 Baxter v Commissioner of Taxation (NSW) (1907) 4 CLR 1087 Energy Australia Yallourn Pty Ltd v Automotive, Food, Metal, Engineering, Printing and Kindred Industries Union [2018] FCAFC 146 Ex parte Mathews (1918) 18 SR (NSW) 316 Federated Sawmill, Timberyard and General Woodworkers’ Employés’ Association v Alexander (1912) 15 CLR 308 Felton v Mulligan (1971) 124 CLR 367 Goward v The Commonwealth (1957) 97 CLR 355 John L Pierce Pty Ltd v Kennedy (2000) 104 FCR 225 John L Pty Ltd v Attorney-General (NSW) (1987) 163 CLR 50 Kronen v Commercial Motor Industries Pty Ltd (trading as CMI Toyota) [2018] FCAFC 136 Kucks v CSR Limited (1996) 66 IR 182 LNC Industries Limited v BMW (Australia) Limited (1983) 151 CLR 575 Mathews v Burns (1918) 25 CLR 322 MZXOT v Minister for Immigration and Citizenship (The Remitter Case) (2008) 233 CLR 601 Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357 Qantas Airways Limited v Ardlie [2018] FCAFC 154 Qube Ports Pty Ltd v Maritime Union of Australia [2018] FCAFC 72 R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 Re Wakim; Ex parte McNally (1998) 198 CLR 511 Rizeq v Western Australia (2017) 262 CLR 1 Wickman Machine Tool Sales Ltd v L Schuler AG [1974] AC 235 Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530 Dates of hearing: 23 August 2018; 26 November 2018 Registry: New South Wales Division: Fair Work Division National Practice Area: Employment & Industrial Relations Category: Catchwords Number of paragraphs: 86 In SAD 74 of 2018 Counsel for the Appellant: Mr R Dalton Solicitor for the Appellant: Ema Legal Counsel for the Respondent: Mr S Blewett Solicitor for the Respondent: United Voice In SAD 197 of 2018 Counsel for the Appellant: Mr S Blewett Solicitor for the Appellant: United Voice Counsel for the Respondent: Mr R Dalton Solicitor for the Respondent: Ema Legal

ORDERS

SAD 74 of 2018 BETWEEN: TREASURY WINE ESTATES VINTNERS LIMITED Appellant AND: BARRY PEARSON Respondent

JUDGES: RARES, PERRY AND CHARLESWORTH JJ DATE OF ORDER: 13 February 2019

THE COURT ORDERS THAT:

1. The appeal be dismissed as incompetent for want of jurisdiction.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

SAD 197 of 2018 BETWEEN: BARRY PEARSON Appellant AND: TREASURY WINE ESTATES VINTNERS LIMITED Respondent

JUDGES: RARES, PERRY AND CHARLESWORTH JJ DATE OF ORDER: 13 February 2019

THE COURT DECLARES THAT:

1. The purported orders made by the Full Bench of the South Australian Employment Tribunal, that the appellant’s appeal to the Industrial Court of South Australia filed on 13 April 2017 be allowed and that the respondent pay the appellant $232.36, were made without jurisdiction and are of no force or effect.

THE COURT ORDERS THAT:

2. The appeal be dismissed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

Background

1 Barry Pearson, the respondent, had been employed by Treasury Wine Estates Vintners Limited, the appellant, as a vineyard worker at Treasury’s Kalimna vineyard in the Barossa Valley since February 2005.

2 On 8 October 2014 the Fair Work Commission approved the Treasury Wine Estates Central SA Region Vineyards Enterprise Agreement 2014-2017 (the agreement) under s 186 of the Fair Work Act 2009 (Cth). The agreement governed some of Mr Pearson’s terms and conditions of employment, including his hours, remuneration and other workplace entitlements.

3 In 2016, the Parliament of South Australia chose an unusual, and unwise, course in the way in which it implemented a substantial reform of its industrial law. That is because it enacted the Statutes Amendment (South Australian Employment Tribunal) Act 2016 (SA) (the Amendment Act). That Act provided that when it commenced on 1 July 2017, the Industrial Court of South Australia was dissolved and all of its judicial officers were removed from their offices, even though those judicial officers exercised both State and federal jurisdiction, the latter because the Fair Work Act (Cth) invested the Industrial Court with federal jurisdiction.

4 In a trilogy of cases, Kronen v Commercial Motor Industries Pty Ltd (trading as CMI Toyota) [2018] FCAFC 136, Qantas Airways Limited v Ardlie [2018] FCAFC 154 and Altintas v O’Dea Lawyers [2018] FCAFC 165, White, Perry and Charlesworth JJ held that the Amendment Act had not vested, and could not vest, jurisdiction in the newly created Employment Court in existing matters in which the Industrial Court was exercising federal jurisdiction under the Fair Work Act (Cth). The decision in Kronen [2018] FCAFC 136 was delivered on 23 August 2018, the day before Treasury’s appeal was first listed for hearing.

The issues

5 Treasury seeks to appeal from a decision of the Full Bench of the South Australian Employment Tribunal in Court Session (the Employment Court) delivered on 21 December 2017 (the Employment Court decision). The Employment Court allowed Mr Pearson’s appeal, that he had filed in the Industrial Court from the decision of an industrial magistrate in the Industrial Court exercising the small claims jurisdiction under s 548 of the Fair Work Act 2009 (Cth) that his Honour delivered on 31 March 2017 (the Industrial Court decision).

6 The Industrial Court had dismissed Mr Pearson’s claim under ss 50 and 545 of the Fair Work Act (Cth) that Treasury had contravened cl 34.7 of the agreement because it had underpaid him what he was due for work between 12 and 17 January 2015. The Employment Court held that his Honour erred and ordered that Treasury pay Mr Pearson $232.36.

7 On 24 August 2018, when Treasury’s appeal was listed for hearing, by consent we granted Mr Pearson an extension of time in which to file a notice of appeal from the Industrial Court decision. The parties wished to have an authoritative decision on the construction of cl 34.7 of the agreement as it affected the rights of Treasury and many of its employees.

8 Clearly enough, if the Employment Court lacked jurisdiction to decide Mr Pearson’s appeal to the Industrial Court, the Industrial Court’s decision dismissing his claim remains in force and effect, subject to Mr Pearson’s appeal to this Court. The parties did not challenge the correctness of the three recent Full Court decisions but jointly sought to distinguish them so that we could decide Treasury’s appeal. Sensibly, however, they also agreed to Mr Pearson being able to bring his appeal directly from the Industrial Court decision in the event that the Employment Court had no jurisdiction to hear his appeal to it. On 24 August 2018 we adjourned Treasury’s appeal and set it, together with Mr Pearson’s then anticipated appeal, down for hearing in the November 2018 Full Court sittings.

9 In those circumstances, there are two questions for decision, first, whether Treasury’s appeal is competent (the jurisdictional issue) and, secondly, what is the proper construction of cl 34.7 (the construction issue).

10 For the reasons set out below, we find that Treasury’s appeal from the Employment Court is not competent and the appeal from the decision of the Industrial Court must be dismissed. The construction of cl 34.7 adopted by the Industrial Court was correct.

The jurisdictional issue – the relevant provisions of the Fair Work Act (Cth)

11 Relevantly, s 50 of the Fair Work Act (Cth) provides that a person must not contravene a term of an enterprise agreement. Item 4 in the table to s 539(2) of the Fair Work Act (Cth) confers jurisdiction on an “eligible State or Territory court” to hear a claim that a person had contravened s 50. Section 545(3) provides that an eligible State or Territory court may order an employer to pay an amount to one of its employees if it is satisfied that the employer was required to pay that amount under, relevantly, an enterprise agreement and had contravened s 50 in not doing so.

12 Paragraph (c) of the definition of “eligible State or Territory court” in s 12 of the Fair Work Act (Cth) included the Industrial Court and par (d) allowed regulations to be made to prescribe any other State or Territory court as eligible. The Fair Work and Other Legislation Amendment (South Australian Employment Court) Regulations 2017 (Cth) which came into force on 1 July 2017 added reg 1.05 to the Fair Work Regulations 2009 (Cth). The new reg 1.05 provides that the Employment Court is prescribed for the purposes of par (d) of the definition of “eligible State or Territory court” in s 12. Thus, the Industrial Court was and remains an eligible State court for the purposes of s 545(3) of the Fair Work Act (Cth), as is the Employment Court with effect from 1 July 2017.

13 Relevantly, ss 548 and 565 of the Fair Work Act (Cth) provide:

548 Plaintiffs may choose small claims procedure

(1) Proceedings are to be dealt with as small claims proceedings under this section if:

(a) a person applies for an order (other than a pecuniary penalty order) under Division 2 from a magistrates court or the Federal Circuit Court; and

(b) the order relates to an amount referred to in subsection (1A); and

(c) the person indicates, in a manner prescribed by the regulations or by the rules of the court, that he or she wants the small claims procedure to apply to the proceedings.

(1A) The amounts are as follows:

(a) an amount that an employer was required to pay to, or on behalf of, an employee:

(i) under this Act or a fair work instrument;

….

Procedure

(3) In small claims proceedings, the court is not bound by any rules of evidence and procedure and may act:

(a) in an informal manner; and

(b) without regard to legal forms and technicalities.

(4) At any stage of the small claims proceedings, the court may amend the papers commencing the proceedings if sufficient notice is given to any party adversely affected by the amendment.

Legal representation

(5) A party to small claims proceedings may be represented in the proceedings by a lawyer only with the leave of the court. (emphasis within section added)

565 Appeals from eligible State or Territory courts

Appeals from original decisions of eligible State or Territory courts

(1) An appeal lies to the Federal Court from a decision of an eligible State or Territory court exercising jurisdiction under this Act.

(1A) No appeal lies from a decision of an eligible State or Territory court exercising jurisdiction under this Act, except:

(a) if the court was exercising summary jurisdiction—an appeal, to that court or another eligible State or Territory court of the same State or Territory, as provided for by a law of that State or Territory; or

(b) in any case—an appeal as provided for by subsection (1).

Appeals from appellate decisions of eligible State or Territory courts

(1B) An appeal lies to the Federal Court from a decision of an eligible State or Territory court made on appeal from a decision that:

(a) was a decision of that court or another eligible State or Territory court of the same State or Territory; and

(b) was made in the exercise of jurisdiction under this Act.

(1C) No appeal lies from a decision to which subsection (1B) applies, except an appeal as provided for by that subsection.

The jurisdictional issue – background

14 Mr Pearson began his proceeding in the Industrial Court by summons filed under s 14 of the Fair Work Act 1994 (SA) (the State Fair Work Act) invoking the small claims procedure under s 548 of the Fair Work Act (Cth). He claimed that his employer, Treasury, was liable to pay him an amount under the agreement. The agreement was a fair work instrument within the meaning of s 548(1A)(a) of the Fair Work Act (Cth). When exercising jurisdiction in small claims proceedings, s 548(3) provided that the Industrial Court was not bound by the rules of evidence and procedure. It could act in an informal manner, without regard to legal forms and technicalities, and a party needed leave of the court hearing the matter to be represented by a lawyer.

15 The industrial magistrate, in the Industrial Court, heard evidence and argument from the parties over a day in November 2016. His Honour dismissed Mr Pearson’s application on 31 March 2017: Pearson v Treasury Wine Estates [2017] SAIRC 11.

16 Mr Pearson filed his notice of appeal in the Industrial Court on 13 April 2017 pursuant to s 187, which was in Ch 5, of the State Fair Work Act. Section 187 provided that an appeal lay from a judgment, order or decision of the industrial magistrate to that Court constituted by a single judge, who, in turn, had power to refer such an appeal to the Full Court if there were questions of importance or difficulty to justify such a hearing. The appeal was heard by Judge Gilchrist on 30 May 2017, at which time his Honour reserved his decision.

17 As noted above, the Amendment Act caused the Industrial Court to be dissolved on 1 July 2017. The Amendment Act repealed the whole of Ch 5 (including s 187) of the State Fair Work Act (see s 58), with effect from 1 July 2017 and established the Employment Court. Transitional provisions in s 69 of the Amendment Act provided that the expression ‘industrial authority’ included the Industrial Court (s 69(1)), and s 69(11) and (13) provided:

(11) A determination of an industrial authority under the principal Act in force immediately before the relevant day will, on and from the relevant day, be taken to be a determination of the Tribunal.

(13) Any proceedings before an industrial authority under the principal Act immediately before the relevant day will, subject to such directions as the President of the Tribunal thinks fit, be transferred to the Tribunal where they may proceed as if they had been commenced before that Tribunal. (emphasis added)

18 Under s 67(1) of the South Australian Employment Tribunal Act 2014 (SA) an appeal lies against a decision of the Tribunal, other than a decision of a Full Bench, to a Full Bench of the Employment Court (that section was substituted by s 33 of the Amendment Act). Accordingly, the legislative intention was that an appeal against a decision of an industrial magistrate (which s 69(11) of the Amendment Act deemed to be a decision of the Tribunal) would lie to the Employment Court under s 67(1) of the Tribunal Act, in place of the repealed s 187 of the State Fair Work Act.

19 As at 1 July 2017 Mr Pearson’s appeal had not been determined, although Judge Gilchrist had heard argument and reserved his decision. Mr Pearson’s unresolved appeal in the dissolved Industrial Court appeared to have been treated as if it had been transferred to the Employment Court by force of s 69(13) of the Amendment Act. The parties agreed to the Full Bench of the Employment Court hearing, and determining, Mr Pearson’s appeal on the material before Judge Gilchrist.

20 As the Employment Court recorded in its reasons, Judge Gilchrist considered that the appeal from the industrial magistrate should be treated as if it were an appeal from a decision of a Deputy President of the Tribunal, so that it should be determined by a Full Bench of the new Employment Court, that included Deputy President Judge Gilchrist as presiding member. With the consent of the parties, the Full Bench appears to have considered the appeal on the basis of the materials and transcript of the hearing before Judge Gilchrist when he constituted the Industrial Court at the hearing of the appeal on 30 May 2017: Pearson v Treasury Wine Estates [2017] SAET 182 [3]. The Full Bench delivered the Employment Court decision on 21 December 2017 without conducting any further hearing. It allowed Mr Pearson’s appeal and entered judgment for him against Treasury in the sum of $232.36.

The jurisdictional issue – the parties’ joint submissions

21 The parties filed a joint submission that argued that Treasury’s appeal from the Employment Court decision was competent under s 565(1B) of the Fair Work Act (Cth). They contended that Kronen [2018] FCAFC 136 and Qantas [2018] FCAFC 154 did not apply here because in both those cases the Industrial Court “was exercising original [scil: State] and federal jurisdiction”. They submitted that Altintas [2018] FCAFC 165 did not apply here because the Full Court had not considered the effect of (the now repealed) s 187 of the State Fair Work Act that, they argued, had conferred “original and federal” jurisdiction on the Industrial Court to hear an appeal from an industrial magistrate’s decision. They argued that because Mr Pearson had appealed under s 187 to the Industrial Court before 1 July 2017, s 69(13) of the Amendment Act had the effect of deeming that his appeal had been transferred to the Employment Court.

The jurisdictional issue – consideration

22 When Mr Pearson filed his appeal from the Industrial Court decision in the Industrial Court, he did so under s 187 of the State Fair Work Act. However, he could only have done so if the industrial magistrate was sitting as a court of summary jurisdiction within the meaning of s 565(1A)(a) of the Fair Work Act (Cth).

23 The Fair Work Act (Cth) does not define a court of summary jurisdiction or otherwise deal with such courts beyond what s 565(1A)(a) provides. However, s 2B of the Acts Interpretation Act 1901 (Cth) defines “court of summary jurisdiction” as “any justice of the peace, or magistrate of a State or Territory, sitting as a court of summary jurisdiction.” The latter definition has the following features: first, it applies only to justices of the peace and magistrates; secondly, the justice or magistrate must be sitting as a court – that is, he or she must be exercising the judicial power of the Commonwealth invested in a court as such under s 77(iii) in Ch III of the Constitution; and thirdly, the nature of the proceeding must be that of a court “exercising summary jurisdiction”.

24 In John L Pierce Pty Ltd v Kennedy (2000) 104 FCR 225 at 232 [24], Whitlam J, with whose reasons O’Connor J (at 226 [2]) and Madgwick J (at 232 [26]) agreed, said that summary proceedings within the meaning of the expression “a court of summary jurisdiction”, in the now repealed s 26(d) of the Acts Interpretation Act, are not confined to summary proceedings that are criminal in nature but also “extend to proceedings under statute for the payment of money” in the exercise of civil jurisdiction. In his additional reasons, with which O’Connor J also agreed, Madgwick J said (104 FCR at 237 [46]) (at a time before s 2B was inserted into the Acts Interpretation Act with the current definition (and that in s 26(d) repealed)) that the expression should be “understood as including any court for the giving of civil relief which operates by way of summary, that is to say, relatively informal procedures”.

25 In Ex parte Mathews (1918) 18 SR (NSW) 316 at 318, Cullen CJ, with whom Gordon and Ferguson JJ agreed, held that a magistrate who had ordered the payment of money under an enactment giving a Court of Petty Sessions jurisdiction to hear and determine claims for small debts in a summary way, sitting as a court, was “undoubtedly” a court of summary jurisdiction. (Special leave was refused: Mathews v Burns (1918) 25 CLR 322). That case concerned a debt recovery action under the Conciliation and Arbitration Act 1904 (Cth). The Chief Justice applied Griffith CJ’s well known dictum in Federated Sawmill, Timberyard and General Woodworkers’ Employés’ Association v Alexander (1912) 15 CLR 308 at 313, namely that when the Parliament conferred a new jurisdiction on an existing State court, it took that court as it found it “with all its limitations as to jurisdiction, unless otherwise expressly declared.” Cullen CJ said of the intention of the Parliament (18 SR (NSW) at 320):

Being minded to give jurisdiction in such matters to magistrates’ Courts in the different States, it could not have been unaware that there might be a very great variety in the codes of local legislation affecting those Courts in the different States. They might differ as to many points in their procedure; they might differ as to the range and extent of their jurisdiction; they might differ as to the methods whereby their orders could be carried into effect, and I think the Federal Parliament did precisely what the Chief Justice pointed out in the Federated Sawmillers’ case – it took the State Courts as it found them. (emphasis added)

26 Gray J followed John L Pierce 104 FCR 225 in Plancor Pty Ltd v Liquor, Hospitality and Miscellaneous Union (2008) 171 FCR 357 at 365-367 [23]-[29]. He held that an industrial magistrate, sitting as the Industrial Court of South Australia, was exercising summary jurisdiction (Branson and Lander JJ did not discuss that question in their reasons). A superior court also can exercise summary jurisdiction, such as when hearing a criminal charge without a jury, as illustrated in John L Pty Ltd v Attorney-General (NSW) (1987) 163 CLR 508. There Mason CJ, Deane and Dawson JJ discussed the process by which a prosecutor commenced such a proceeding by summons under Rules of the Supreme Court of New South Wales (see at 516-518).

27 The essence of the Parliament’s use of the adjective “summary” to describe a court’s jurisdiction is that it encapsulates a mode of procedure that the court applies in exercising its jurisdiction. Although, historically, courts of summary jurisdiction in England tended to be justices of the peace and magistrates hearing criminal matters, Australian courts of summary jurisdiction for over a century have made orders and judgments also in civil matters, as Ex parte Mathews 18 SR (NSW) 316 demonstrated.

28 The Parliament must have intended that small claims proceedings under s 548 would fall within the meaning of “summary jurisdiction” in s 565(1A)(a) of the Fair Work Act (Cth). The small claims procedure is apt to fall within the expression “summary jurisdiction”: Ex parte Mathews 18 SR (NSW) at 318.

29 It follows that Mr Pearson’s appeal in the Industrial Court was validly instituted under s 565(1A)(a) as an appeal from a court exercising summary jurisdiction.

30 In our opinion, the joint submissions misconceived the existence of “original” (which, we understood as meaning State) jurisdiction as separate from federal jurisdiction. Once a matter involves any aspect of federal jurisdiction, ordinarily, the whole of the controversy will be in federal jurisdiction and there will be no residue in respect of which the court could or would exercise State jurisdiction to the extent it is applicable.

31 This is because ss 38 and 39(1) of the Judiciary Act 1903 (Cth) operate to remove the jurisdiction of State courts in all nine classes of matters identified in ss 75 and 76 of the Constitution as ones in which the High Court has, or can exercise, original jurisdiction. However, s 39(1) of the Judiciary Act invests the several courts of the States with federal jurisdiction in the classes of matters in s 76 of the Constitution, in which, pursuant to s 38, the High Court does not have exclusive jurisdiction. The consequence of the vesting of federal jurisdiction in a State court by s 39(1) of the Judiciary Act or another Act of the Parliament (such as ss 548 and 565(1A)(a) of the Fair Work Act (Cth)) is that “no State jurisdiction can exist” in respect of a matter within the vested federal jurisdiction (per Isaacs J in Baxter v Commissioner of Taxation (NSW) (1907) 4 CLR 1087 at 1142). In MZXOT v Minister for Immigration and Citizenship (The Remitter Case) (2008) 233 CLR 601 at 619 [23]-[24] per Gleeson CJ, Gummow and Hayne JJ; and 657-658 [180] per Heydon, Crennan and Kiefel JJ, their Honours approved the reasoning of Barwick CJ in Felton v Mulligan (1971) 124 CLR 367 at 373 when he said:

if federal jurisdiction is attracted at any stage of the proceedings, there is no room for the exercise of a State jurisdiction which apart from any operation of the Judiciary Act the State court would have had. In my opinion, s. 109 of the Constitution, working with the Judiciary Act, ensures that there is no State jurisdiction capable of concurrent exercise with the federal jurisdiction invested in the State court.

32 In Goward v The Commonwealth (1957) 97 CLR 355 at 360-361, Dixon CJ, Williams, Webb and Kitto JJ explained that when the Parliament expressly confers jurisdiction on a State court in an enactment (such as in ss 548 and 565(1A)(a) of the Fair Work Act (Cth)) it does so on the implied assumption that s 39 of the Judiciary Act operates to fix the general nature of the State court’s jurisdiction in such a matter and that the State court will give the relief that the new provision (such as those in the Fair Work Act (Cth)) prescribes in the exercise of federal jurisdiction under s 39.

33 The expression “federal jurisdiction” simply means that a law made by the Parliament of the Commonwealth or the Constitution itself is, in fact, the source of a court’s authority to adjudicate in a particular matter is: Rizeq v Western Australia (2017) 262 CLR 1 at 23-24 [52]-[54] per Bell, Gageler, Keane, Nettle and Gordon JJ. As they explained (262 CLR at 24 [55]-[56], [58]):

Thus, it is commonplace that resolution of a matter within federal jurisdiction may involve application both of Commonwealth law and of State law. Indeed it can happen that a matter in federal jurisdiction is resolved entirely through the application of State law…. There is but one matter and that matter is entirely within federal jurisdiction, as distinct from State jurisdiction.

The simple constitutional truth is that State laws form part of the single composite body of federal and non-federal law that is applicable to cases determined in the exercise of federal jurisdiction in the same way, and for the same reason, as they form part of the same single composite body of law that is applicable to cases determined in the exercise of State jurisdiction – because they are laws.

…

The incapacity of a State law to affect the exercise of federal jurisdiction by a State court is a manifestation of the general incapacity of any Parliament or legislature other than the Parliament of the Commonwealth to affect the exercise of federal jurisdiction conferred by or conferred or invested under Ch III of the Constitution.

34 Their Honours concluded (262 CLR at 26 [61]):

Just as State Parliaments have no power to add to or detract from federal jurisdiction, State Parliaments have no power to command a court as to the manner of exercise of federal jurisdiction conferred on or invested in that court [Alqudsi v The Queen (2016) 258 CLR 203 at 266 [171]; R v Todoroski (2010) 267 ALR 593 at 594-595 [8]].To use the language of s 107 of the Constitution, the entire subject matter of the conferral and exercise of federal jurisdiction is a subject matter of legislative power that is, by Ch III of the Constitution, “exclusively vested in the Parliament of the Commonwealth”.

35 Here, the only controversy litigated between Mr Pearson and Treasury concerned the question of how the agreement should be construed and whether Treasury had contravened s 50 of the Fair Work Act (Cth) by not paying Mr Pearson in accordance with it. That controversy was wholly in federal jurisdiction at all times.

36 Mr Pearson had sought a remedy in the Industrial Court, as an eligible State court within the meaning of s 545(3) of the Fair Work Act (Cth) based on his allegation that Treasury had breached s 50 of that Act because it has contravened a term of the agreement, namely cl 34.7. Sections 539(2) (in item 4) and 545(3) conferred (federal) jurisdiction on an eligible State court to order an employer to pay an amount to an employee to whom a fair work instrument, such as the agreement, required such a payment to be made, if the failure to pay contravened a civil remedy provision in that Act.

37 The agreement was an enterprise agreement that had legal effect because the Fair Work Commission had approved it under s 186 of the Fair Work Act (Cth) and s 50 required that Treasury not contravene its terms. Thus, any dispute about Mr Pearson’s rights and Treasury’s obligations, under the agreement, inevitably arose, first, under a creation of federal law, namely the enterprise agreement and, secondly, because ss 539(2) and 545(3) conferred jurisdiction under the Fair Work Act (Cth) on the Industrial Court to grant the civil remedy that Mr Pearson sought, including under the small claims procedure in s 548. In addition, s 565(1A)(a), in turn, created a right of appeal to the Industrial Court under the Fair Work Act (Cth).

38 It follows that in Mr Pearson’s appeal to it, the Industrial Court could never have exercised any appellate jurisdiction other than federal jurisdiction. As Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ explained in LNC Industries Limited v BMW (Australia) Limited (1983) 151 CLR 575 at 581 (applying what Latham CJ had held in R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 154), a matter arises under a federal law (within the meaning of s 76(ii) of the Constitution) if a right, duty or obligation in issue in the matter “owes its existence to federal law or depends upon federal law for its enforcement” including where the right claimed is in respect of a right or property (in that case an interest in an import licence issued under a federal Act) that is the creation of federal law. And in Agtrack (NT) Pty Ltd v Hatfield (2005) 223 CLR 251 at 262-263 [32] Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ said:

Whether federal jurisdiction with respect to one or more of the matters listed in ss 75 and 76 of the Constitution has been engaged in a legal proceeding is a question of objective assessment. If a party on either side of the record relies upon a right, immunity or defence derived from a federal law, there is a matter arising under s 76(ii) of the Constitution. It is not a question of establishing an intention to engage federal jurisdiction or an awareness that this has occurred. (emphasis added)

39 Earlier, their Honours explained (223 CLR at 261 [26]):

In Hume v Palmer [(1926) 38 CLR 441 at 451] , Isaacs J observed of the decision of a magistrate convicting the appellant in a summary prosecution, despite an objection that the State law in question was invalid by operation of s 109 of the Constitution:

“The Police Magistrate, consequently, whether he intended or not, or whether he knew it or not, was exercising Federal jurisdiction within the meaning of s 73 of the Constitution.”

40 The joint submissions did not identify any completely separate controversy in the appeal before the Industrial Court between the parties that involved State (and not federal) jurisdiction. That appeal was made under a federal Act, invoking federal jurisdiction conferred on the Industrial Court to hear and determine an appeal under s 565(1A)(a) of the Fair Work Act (Cth).

41 In addition, ordinarily, once a matter arising out of common transactions and facts, or a common substratum of facts, is in federal jurisdiction (as was Mr Pearson’s case before the industrial magistrate), the court seized of it has authority under Ch III of the Constitution to determine all of the issues, even if there are third party proceedings involved. That is because there is usually only one “matter”, being the single justiciable controversy between the parties, including any claims that arose under State or Territory law: Re Wakim; Ex parte McNally (1998) 198 CLR 511 at 585-588 [138]-[147] esp. [140] per Gummow and Hayne JJ; Gleeson CJ at 546 [25] and Gaudron J at 546 [26] concurring.

42 Here, not only did Mr Pearson bring both a claim and an appeal to enforce a right to a civil remedy under a federal law in a court invested by federal law with jurisdiction to hear and determine it, he did so on a claim that depended on a creation of federal law, namely an enterprise agreement that had force and effect because of its approval by the Fair Work Commission under s 186 of the Fair Work Act (Cth).

43 In those circumstances, the Employment Court had no jurisdiction to decide Mr Pearson’s appeal that he, earlier, had filed in the Industrial Court. That is because, first, the distinction that the parties sought to make between “original” or State jurisdiction and federal jurisdiction is unsound and, secondly, in that situation the reasoning in Altintas [2018] FCAFC 165 at [28]-[34] is indistinguishable from the facts here. There, the Full Court held that s 69(13) of the Amendment Act only transferred to the Employment Court a proceeding that had been in the Industrial Court “under the principal Act” (that is: under the State Fair Work Act). Accordingly, a proceeding under a different Act, namely the Fair Work Act (Cth) was not transferred to the Employment Court. Here Mr Pearson’s appeal was filed in the Industrial Court pursuant to s 565(1A)(a) of the Fair Work Act (Cth) invoking the exercise of the judicial power of the Commonwealth to resolve the controversy between him and Treasury, necessarily, was wholly in federal jurisdiction.

44 For these reasons, Treasury’s appeal must be dismissed as incompetent. However, it will be appropriate for us to make a declaration in Mr Pearson’s appeal that the Employment Court decision is of no force and effect for want of jurisdiction.

The relevant provisions of the agreement

45 The agreement provided that Treasury’s employees involved in wine production had differing terms and conditions that varied across two distinct periods, being the “vintage period”, typically between February and April when grapes are picked or harvested, and the “non-vintage period”, being the remainder of the year. During the vintage period there would generally be two shifts, day and night, and during the non-vintage period there would be a day, afternoon and night shift. Ordinarily, Treasury released work rosters on the preceding Thursday for the following week. The agreement also provided terms and conditions for other classes of Treasury’s employees not directly involved in wine production.

46 Section 1 of the agreement, comprising cll 1 to 56, was headed “General Conditions of Application to All Employees Engaged Pursuant to this Agreement”. Clause 6 in section 1 provided that section 1 would prevail to the extent of any inconsistency over any other section in the agreement. Section 1 included the terms described in [44]-[53] below.

47 The agreement provided that its parties recognised that, in order to achieve Treasury’s expressed ambition of being “recognised as the world’s most successful and celebrated wine company”, they had to attain, among other matters, higher cost control with the commitment and proactive contribution of a flexible and highly skilled workforce (cl 9). The parties identified that the objectives of the agreement were to improve and reward performance in five categories, namely, safety, quality, customer service, cost and sustainability (cl 10).

48 Clause 11 dealt with consultation processes and cl 11.3 set out the process for consultation about changes to rosters or hours of work. It provided that, where Treasury proposed to change an employee’s regular roster or ordinary hours of work it had to consult with each employee affected and their representatives, if any, about the proposed change (cl 11.3(a)) and specified elements of the consultation process, except in certain situations (cl 11.3(b) and (c)). Relevantly, cl 11.3(d), provided that cl 11.3 itself was to be read with other terms of the agreement concerning the scheduling of work and notice requirements. Clause 19 defined a full time employee, such as Mr Pearson, as one engaged for 38 ordinary hours per week and whose conditions were governed by the agreement including in section 2.

49 Part 6 of section 1 of the agreement was headed “Hours of work, breaks and related matters” and comprised cll 31 to 38. Clause 31 dealt with hours of work. It stated:

31.1 Employees shall work an average of 38 ordinary hours each week. The weekly span of ordinary hours for employees other than shift workers, shall be between 6.00am and 6.00pm, Monday to Friday, both inclusive. (emphasis added)

50 Next, cl 31.2 commenced with a concept that appeared often in other provisions in Pt 6 of section 1 of the agreement, namely that the general provision operated unless the employee and Treasury “mutually agreed” an alternative. Clauses 31.2, 31.3 and 31.4 provided:

31.2 By mutual agreement between the employee and the Company the span of ordinary hours may be varied to between 4.00am and 8.00pm, Monday to Friday.

31.3 By mutual agreement between the employee and the Company up to 10 ordinary hours can be performed on any single day within the span of ordinary hours.

31.4 Work commenced outside the span of ordinary hours shall be deemed to be overtime and shall continue to be paid as overtime until such work ceases or until the work passes the employees notified starting time, at which time the work shall be paid at ordinary time. (emphasis added)

51 Thus, cll 31.2 and 31.3 allowed Treasury and the employee to agree to individual situations where the employee’s ordinary hours of work or their span could be varied to fall within the hours of 4am to 8pm so that up to 10 hours of work done in that agreed span of hours was not overtime.

52 Next, cl 32 dealt with the vintage period. It commenced by acknowledging that this period was crucial to wine production and that “it is essential that there be additional workplace flexibilities in this demanding period” (cl 32.1). The provisions of cl 32 operated to the exclusion of other terms during the vintage period (cl 32.2). Again, like cll 31.2 and 31.3, cl 32.4 adopted the concept that by mutual agreement between Treasury and the employee, he or she could perform up to 10 ordinary hours on any single day within the span of ordinary hours. However, cl 32.5 changed the span of ordinary hours during the vintage period to between 7pm on Sunday to 12 noon on Saturday “provided that those ordinary hours worked before midnight on a Sunday are paid at double time and after midnight at the appropriate shift work rate specified in this Agreement.” Shift workers were to be paid time and a quarter for all ordinary hours worked on a Saturday (cl 32.6) and cl 32.7 stated:

Notice for changing an employee’s starting time is 12 hours, unless otherwise mutually agreed.

53 Next cll 32.8 and 32.9 specified overtime rates for classes of employees. Clause 32.10 mirrored cl 31.4. Importantly cl 32.11 provided:

Where a shift does not continue for 5 consecutive starts and an employee works part of all of their ordinary time outside the vintage span of ordinary [hours], those hours will be paid at the rate of time and a half for the first two hours and double time thereafter. (errors in original; emphasis added)

54 Clause 33 dealt with rostered days off and cl 34 with shift work. Clause 34.3 provided, once again, that by mutual agreement the first night shift of a week could commence at or after 7pm on a Sunday and provided that (like cl 32.5) those ordinary hours worked before midnight were paid double time, and those after at the appropriate specified shift work rate. Clause 34.7 substantially mirrored cl 32.11, except that it applied outside the vintage period. Clause 34.7 provided:

34.7 Where a shift does not operate for 5 consecutive starts and an employee works part or all of their ordinary time outside the span of ordinary hours, those hours will be paid at the rate of time and a half for the first two hours and double time thereafter. (emphasis added)

55 Clause 35 dealt with meal breaks and cl 36 provided:

NOTICE OF STARTING TIMES (Non Vintage)

36 Unless otherwise agreed between the employee and the Company, no change in a weekly employee’s starting time shall be made unless 48 hours notice is given to the employee affected by the change, except during vintage when Clause 32.7 of this Agreement will apply. (emphasis added)

56 Clause 37 dealt with time off in lieu of overtime and cl 38 with make-up time.

57 Section 2 of the agreement covered South Australian wine and spirit industry employees. Clauses 5 and 6 dealt with wage rates and hours of work. Unlike Pt 6 of section 1, cll 6.1.11 and 6.4.4 in section 2 provided that, unless agreed between Treasury and the employees, no change in a weekly employee’s ordinary or shift starting time could be made unless the employee affected was given 7 days’ notice.

Background

58 Mr Pearson’s work roster for the week beginning 12 January 2015 scheduled him to work day shifts between 6.30am and 3.00pm. However, following rain over the weekend of 10 and 11 January 2015, on 12 January 2015 Treasury’s assistant manager, Tim Malone, asked Mr Pearson whether he would work night shifts between 14 to 16 January 2015 to treat the vines with a chemical spray in order to counter any risk of botrytis infection developing from the rain. Mr Pearson gave unchallenged evidence in chief of his conversation with Mr Malone on 12 January 2015:

In the morning time, he came to us and asked us if we would be prepared to work, if the direction was made to do the spray round, and I said yes. He said he would confirm later that day and he confirmed in the afternoon. (emphasis added)

59 Mr Pearson said that he understood, as a result of those conversations, that his working hours on each of 14, 15 and 16 January 2015 would start “at 7pm and go through to 6am the following morning”. That evidence suggests Mr Pearson had agreed with Mr Malone to the change in his starting time for the 3 days commencing on 14 January 2015 for the purposes of cl 36. Treasury appears to have given Mr Pearson the benefit of payment under cl 34.7 on the basis that it had required the change on less than 48 hours’ notice. Thus, the dispute between the parties is limited to whether cl 34.7 applied to govern Mr Pearson’s entitlements to payment for 15 and 16 January 2015.

The proceeding before the industrial magistrate

60 Before the industrial magistrate, Mr Pearson submitted that the natural and ordinary meaning of the words in cl 34.7 was that where a shift did not operate for five consecutive starts, cl 34.7 was triggered. He contended that, therefore, if an employee worked part or all of his or her shifts outside the span of ordinary hours during that week (i.e. outside 6.00am to 6.00pm Monday to Friday (cl 31.1)), those hours should be paid at the rate of time and a half for the first two hours and double time thereafter. Clause 34.7, he argued, was not subject to, or affected by, the notice requirements in cl 36.

61 Treasury submitted that the requirement to give 48 hours’ notice under cl 36 alleviated the need to pay the “onerous penalties” prescribed in cl 34.7 and that “such a construction is unremarkable” when interpreting industrial instruments. It contended that once it was accepted that Treasury had the power to allocate night shifts to employees, subject to the provision of adequate notice under cl 36, the span of Mr Pearson’s “ordinary hours” in the non-vintage period to which cl 34.7 referred changed from 6.00am to 6.00pm Monday to Friday (as set out in cl 31.1) to 12.00 midnight Sunday to 12.00 midnight Friday (as set out in cl 6.4.2.1 of section 2).

62 In the Industrial Court decision, his Honour found that, having regard to the plain and ordinary meaning of the words in cl 34.7, construed in light of the agreement as a whole, Mr Pearson’s contention that cl 36 had no application to cl 34.7 could not be correct (applying Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241). He said that the “concept of workplace flexibility underpins the agreement” and that it was common ground that, during the vintage and (to a much lesser extent) non-vintage periods, “situations may suddenly arise necessitating a change of roster” ([86]). He concluded that:

88 [Treasury] is not prevented from making changes to shift arrangements by the terms of the agreement. It is however required to give, in non-vintage periods, 48 hours’ notice. If it does not give such notice the penalty rates prescribed by cl 34.7 apply to an employee who “works part or all of their ordinary time outside the span of ordinary hours”. …

89 The application of cl 36 to cl 34.7 as contended for by the respondent is preferred.

63 The industrial magistrate accordingly dismissed Mr Pearson’s application.

The proceeding before the Employment Court

64 Mr Pearson’s notice of appeal to the Industrial Court set out two overlapping grounds, namely that the industrial magistrate had erred in first, failing to give effect to the natural and ordinary meaning of cl 34.7 in finding that cl 34.7 was qualified by cl 36, and secondly, failing to find that Mr Pearson was entitled to the overtime loading provided in cl 34.7 for the hours worked on 15 and 16 January 2015.

65 The Employment Court held that, read literally, cll 34.7 and 36 dealt with different subject matters and neither made any reference to the other ([42]-[44]). They found that if Treasury’s submissions were correct, then the expression “does not continue for 5 consecutive starts” in cl 34.7 “has no work to do” ([44]).

66 The Employment Court noted that the viticultural industry is “subject to the vagaries of weather and the like” and that the agreement contained an acknowledgement that Treasury required a flexible workforce ([51]). Further, their Honours said that although cl 34.7 was “a surprisingly high surcharge”, “surprisingly generous” and “out of step” with the other clauses in the 2014 Agreement that dealt with shift penalties, and that “read literally cl 36 diminishes [Treasury’s] general managerial prerogative to alter both the pattern and structure of employee’s shifts”, the industrial magistrate had impermissibly strained the natural and ordinary meaning of cll 34.7 and 36 and thereby misconstrued them. Their Honours sought to apply what Madgwick J had held in Kucks v CSR Limited (1996) 66 IR 182 at 184 in arriving at that result.

Mr Pearson’s submissions

67 Mr Pearson argued that the Employment Court’s interpretation of the agreement was correct. He contended that “the span of ordinary hours” was that in cl 31.1, namely 6am to 6pm Monday to Friday. He submitted that when he worked a night shift on each of 15 and 16 January 2015, cl 34.7 applied to all of the time that he worked outside the span of ordinary hours in cl 31.1. He also argued that the exception in cl 31.1 for shift workers, properly construed, did not apply to him because the vineyard employees did not work shifts outside the vintage period. He contended that the word ‘shift’ in cl 34.7 meant an afternoon or night shift and that ‘consecutive’, as used in it, meant successive.

68 He submitted that where an employee worked an afternoon or night shift that first, did not operate on successive occasions and, secondly, operated outside the span of ordinary hours in cl 31.1 (6am to 6pm Monday to Friday), all of the hours that the employee worked in those shifts outside that span attracted overtime under cl 34.7. Mr Pearson argued that this construction could be seen as achieving an industrial purpose of compensating an employee for disrupting his or her life and ordinary domestic arrangements, including his or her sleeping patterns and family or domestic participation temporarily and at short notice. He also contended that his construction was supported by the different provisions in cl 32 that applied to the vintage period, where cl 32.7 allowed Treasury to give only 12 hours’ notice of a change to starting times and cl 32.11 used a much wider span of ordinary hours than cl 31.1.

69 Mr Pearson submitted that there was no indication in the agreement that cl 36 governed cl 34.7. Rather, he argued cl 36 operated to give Treasury the right to change an employee’s starting time after 48 hours’ notice while, independently, cl 34.7 entitled him or her to a penalty rate of pay where that employee, for any reason, worked hours of ordinary time outside the cl 31.1 span on a shift that did not operate for 5 consecutive starts. He also relied on similar clauses to cl 34.7 and 36 in incomplete versions of industrial agreements that had, in the past, covered some or all of the vineyards that Treasury now owned or other companies, which it had taken over, had owned previously.

Consideration

70 We reject Mr Pearson’s argument. In our opinion, the Industrial Court came to the correct conclusion. Clause 36 in section 1 was a general provision (as its heading conveys) that the parties intended would operate throughout Pt 6 of section 1 of the agreement, except where some specific provision applied, such as cl 32.7 relating to the vintage period.

71 Moreover, cl 36 itself expressly provided that a change to a weekly employee’s starting time could be made either by Treasury and the employee concerned mutually agreeing to it or by Treasury giving the employee 48 hours’ notice where a change occurred under cl 36. The employee’s new starting time would operate once the notice period expired or from the agreed commencement time. And, once the 48 hours or other agreed period of notice expired, cl 34.7 would cease to apply to that new shift starting time.

72 The Employment Court acknowledged that its literal construction of cl 34.7 “seems surprisingly generous and out of step with other provisions that deal with shift penalties” and that its construction of cl 36 “diminished the employer’s general managerial prerogative to alter both the pattern and structure of employees’ shifts”. Their Honours also said that this “might be thought to be surprising in an industry that is subjected to the vagaries of weather and the like.” They construed cl 34.7 as having no work to do if it were affected by cl 36.

73 The Employment Court’s construction of the agreement was erroneous. That is because it failed to read the agreement as a whole and construe it in accordance with established principle. In Energy Australia Yallourn Pty Ltd v Automotive, Food, Metal, Engineering, Printing and Kindred Industries Union [2018] FCAFC 146 at [56]-[58], Rares and Barker JJ said (and see also at [133] per Flick J and Qube Ports Pty Ltd v Maritime Union of Australia [2018] FCAFC 72 at [65] per White J, with whom Mortimer and Bromwich JJ agreed):

It is important to have regard to the industrial purpose of the Yallourn agreement and the commercial and legislative context in which it applies when construing it, including cl 28 itself as a whole: Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at 249 [13] per Gleeson CJ and McHugh J, 270-271 [96] per Kirby J, 282-283 [129]-[131] per Callinan J, and see too at 253 [30] per Gummow, Hayne and Heydon JJ. Both Kirby J and Callinan J expressly approved (at [96], [129]-[130]) and Gleeson CJ and McHugh J applied (at [13]), what Madgwick J had said in Kucks v CSR Ltd (1996) 66 IR 182 at 184, namely:

It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand. (emphasis added)

Although that decision concerned an award, Madgwick J’s observations have equal application to the construction of enterprise agreements made under the Fair Work Act.

An enterprise agreement must be construed in its industrial and legislative context as an agreement made between parties engaged in an employment relationship in which employee organisations, such as the five unions, can, and often will, have a workplace right under ss 341(1) and or 183(1) of the Fair Work Act to play a part, including as a party to it. Those persons may not have been assisted by lawyers in the precise framing and expression of its terms.

74 The Employment Court’s construction of cll 34.7 and 36, as it recognised, did not give effect to the evident, indeed express, purposes of the agreement (in cll 9 and 10 in section 1), of attaining higher cost control with the commitment and proactive contribution of a flexible and highly skilled workforce, and of improving and rewarding performance in, among other categories, cost. The purposes of flexibility and cost control would not be achieved if the parties could not agree to changes of an employee’s starting time or Treasury could not give 48 hours’ notice of a change of starting time under cl 36, unless it accepted that it had to pay the employee at the rates in cl 34.7 for the first 4 days of the new starting time arrangements.

75 In our opinion, cl 34.7 should be read as part of the agreement as a whole. The agreement must be read having regard to the industrial and legislative context in which it was made, its industrial and stated purposes, and how reasonable persons in the position of the parties would have understood it, so as to give cl 36 the capacity to affect the operation of cl 34.7. In that way, cl 36 can operate to limit or exclude what would otherwise have been the automatic application of cl 34.7 to the circumstances to which cl 36 itself was addressed.

76 Indeed as Lord Reid said in Wickman Machine Tool Sales Ltd v L Schuler AG [1974] AC 235 at 251 D-E:

No doubt some words used by lawyers do have a rigid inflexible meaning. But we must remember that we are seeking to discover intention as disclosed by the contract as a whole. Use of the word “condition” is an indication — even a strong indication — of such an intention but it is by no means conclusive.

The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear. (emphasis added)

77 Further, in Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530 at 559 [82], Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ said:

It was necessary to construe the Deed Poll so as to avoid it making commercial nonsense or working commercial inconvenience [Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 313-314, per Kirby P]. Its commercial purpose — the purpose of reasonable persons in the position of TOC and the plaintiff — was relevant [Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 351, per Mason J]. That, in turn, required attention to “the genesis of the transaction, the background, the context, the market” in which the parties were operating, as known to both parties [Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 350, per Mason J, quoting Reardon Smith Line v Hansen-Tangen [1976] 1 WLR 989 at 995-996; [1976] 3 All ER 570 at 574, per Lord Wilberforce]. (emphasis added)

78 Here, reasonable persons in the industrial and legislative context to which the agreement applied, would have understood that cl 34.7 had to operate in harmony with provisions such as cl 36, and the other provisions of cll 31 and 34, to give the parties as much flexibility as possible in managing employees’ working hours either by agreement or on 48 hours’ notice so as to avoid Treasury incurring liability to pay unusual penalty rates. The rates in cl 34.7 would apply if the change were not agreed or less than 48 hours’ notice were given. Such a rate was calculated to compensate the employee during the period in which the imposed revision of his or her starting times disrupted the employee’s entitlement to organise his or her affairs so that he or she could be at work as rostered.

79 In any event, the literal construction adopted by the Employment Court and Mr Pearson produces an incongruous result. As Madgwick J said in Kucks 66 IR at 184:

meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand. (emphasis added)

80 It is not necessary to strain for the construction of the agreement and the interaction between cll 34.7 and 36 at which we have arrived. It is important to read cl 31 with cll 34 and 36. Notably, cl 31.1 does not apply its span of ordinary hours to shift workers and cl 31.4 provides for work commenced outside the span of ordinary hours to be paid as overtime. In contrast, cl 34.7 applies to shifts that do not operate for 5 consecutive starts. And, cl 36 applies to a change in a weekly employee’s starting time. Moreover, cll 34.1 and 34.2 provided specific loadings for afternoon and night shifts respectively. Each part of cl 34 dealt specifically with entitlements of shift workers.

81 Mr Pearson was a weekly employee who, at least outside the vintage period, was not, ordinarily, a shift worker. Rather he worked a normal 38 hour week outside vintage period. As cl 6.2.1 in section 2 recognised, the agreement drew a distinction between an “employee other than a shift worker”, who was entitled to unpaid breaks of between 30 and 60 minutes each for meals during their working day, on the one hand, and shift workers, who were entitled to a paid 20 minute meal break, on the other hand.

82 Clause 36 entitled Treasury to change a weekly employee’s starting time in non vintage periods. The “ordinary hours” to which cl 34.7 referred must be the ordinary hours to which cll 34.1, 34.2 and 34.3 refer, namely those hours that applied to the shift to which Treasury had rostered the employee. If Treasury required an employee to work an afternoon or a night shift (as defined in cll 6.4.1.2 or 6.4.1.3 of section 2 as starting between, respectively, 2pm to 6pm and 10pm to 2am), then cll 34.1 and 34.2 entitled him or her to a 15% or 20% loading “for all ordinary hours worked”.

83 Mr Pearson commenced work on the night shift on 14 January 2015 before the 48 hour notice period had expired after Treasury had required him, on 12 January 2015, to work nights on the following Wednesday, Thursday and Friday. In those circumstances, the parties agreed, at the hearings below and on appeal, that cl 34.7 applied to his remuneration entitlements for the day’s work on 14 January 2015. However, by Thursday, 15 January 2015, he had had 48 hours’ notice of his change in starting time and then cl 34.2 governed his entitlement to remuneration for his work on those two night shifts.

84 Treasury had the right under cl 36 to change Mr Pearson’s starting time for 14-16 January 2015. On 15 and 16 January 2015, he was required to, and did, work night shift within the meaning of cl 34.2 and was entitled to be paid for all ordinary night shift hours that he worked on those two days in accordance with cl 34.2. Since cl 34.2 applied to those ordinary hours on those 2 days, cl 34.7 did not apply. Clause 34.7 only applied where both of its preconditions were met, namely, first, a shift did not operate for 5 consecutive days and, secondly, when the employee worked on that shift part or all of his or her ordinary hours outside the span of ordinary hours for that shift.

85 On each of 15 and 16 January 2015, Mr Pearson worked on night shift, and Treasury paid him as he would have been entitled had he been a weekly employee working night shift under cl 34.2. In our opinion, in so deciding, for the reasons above, the industrial magistrate correctly found that Treasury had not contravened the agreement and that Mr Pearson’s claim failed.

Conclusion

86 We will dismiss Treasury’s appeal as incompetent. We will also dismiss Mr Pearson’s appeal from the decision of the Industrial Court because its construction of cl 34.7 of the agreement was correct, and make a declaration that the Employment Court’s orders were made without jurisdiction and are of no force or effect.

I certify that the preceding eighty-six (86) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Rares, Perry and Charlesworth.

Associate:

Dated: 13 February 2019