Yarra Ranges Shire Council v Geoffrey Grimshaw and Ors [1995] IRCA 438

IN THE INDUSTRIAL RELATIONS ) COURT OF AUSTRALIA ) No. VI 5002 of 1994 VICTORIA DISTRICT REGISTRY ) ON REMITTAL FROM THE HIGH COURT OF AUSTRALIA BETWEEN YARRA RANGES SHIRE COUNCIL Applicant and GEOFFREY GRIMSHAW a Commissioner of the Australian Industrial Relations Commission First Respondent and PACIFIC WASTE MANAGEMENT PTY. LTD. Second Respondent and TRANSPORT WORKERS' UNION OF AUSTRALIA Third Respondent 28 JULY 1995 REASONS FOR JUDGMENT KEELY J. Yarra Ranges Shire Council ("the Shire") applied to the High Court of Australia for an order nisi for writs of prohibition and certiorari against Mr. Geoffrey Grimshaw, a Commissioner of the Australian Industrial Relations Commission ("the Commission"), Pacific Waste Management Pty. Ltd., ("Pacific Waste") and the Transport Workers' Union of Australia ("the T.W.U."). That application was remitted to this court by Dawson J. Factual matters The admissions in the contentions filed by Pacific Waste, the concessions by its counsel and the evidence established the following facts:- A. At all material times the Shire and Pacific Waste were parties to a contract ("the contract") under which Pacific Waste was to collect and dispose of garbage. Pacific Waste employed members of the T.W.U. ("the employees") to perform the work required. The contract was to end and did end on 30 September 1994. B. In about April 1994 a dispute ("the dispute") arose between Pacific Waste on the one hand, and its employees and the T.W.U., on the other hand.

C. On behalf of its members the T.W.U. made the following demand on Pacific Waste: "CLAIM FOR REDUNDANCY PACKAGE FOR LILYDALE PACIFIC WASTE EMPLOYEES * 10 weeks pay in lieu of notice. * 6 weeks pay for every year of service or part thereof. * Payment of all annual leave, sick days and rostered days. * Continuity of service dating back to starting dates with Transwaste. * Holiday loading at the rate of 25%. * Superannuation to be topped up at current yearly rate for every year of service or part thereof. * Long Service Leave to be paid at pro rata. * Absolute minimum of 2 years. Casuals * 10 weeks pay in lieu of notice, excluding annual leave, RDO and sick days. * 6 weeks for every year of service or part thereof. * Other casuals to get pro rata with absolute minimum of 2 years." D. The employees, with the support of the T.W.U., engaged in industrial action in the nature of bans and limitations which resulted in a backlog of garbage accumulating within the Shire. E. Under the Industrial Relations Act 1988 (Cth) ("the Act") the dispute was notified by the Victorian Employers' Chamber of Commerce and Industry to the Commission and came before it in May and June 1994. The text of that notification was as follows: "Concerning work limitations imposed in relation to a claim for redundancy benefits: The facts of the matter are: 1. Pacific Waste Management's contract with the Shire of Lilydale expires in approximately 6 months time. 2. The TWU had lodged a claim on the company for redundancy benefits. 3. The members have applied `limitations' on performance of garbage collection as a result of which garbage is accumulating in the Shire of Lilydale. 4. Negotiations with the TWU to resolve the matters have not been successful. 5. The Shire has advised that, unless the matter is resolved by midday tomorrow, 18 May 1994, it will lodge notification of an industrial dispute with the Commission. 6. The relevant award is the TWU (Refuse) Award 1988. 7. The Company seeks an urgent listing of this matter by the Commission and the assistance of the Commission to resolve the dispute." It is convenient to refer in these reasons to the T.W.U. (Refuse) Award 1988 as the 1988 Award. F. The words "redundancy package", which appear in the demand set out in C above, were used on 23 May 1994. The transcript reports the Commissioner as saying that the employees should return to normal work and that "if they do . . . I will entertain addressing the issue of redundancy"; further, that "I will relist the matter and we will talk . . . on the dollars and cents of appropriate and proper redundancy packages for all the employees". On the next page he referred to "appropriate redundancy packages". G. The words "redundancy package" also appear in the transcript of later proceedings before the Commissioner, examples of which are italicised in the following extracts:- (3 June 1994) Mr De Leacy [for Pacific Waste]: " And we would like to continue now and discuss a fair and reasonable redundancy package, if possible." Mr Lester [for the T.W.U.]: "Our dispute is with Pacific Waste Management because they are the employer of our members, and their contract of employment is with Pacific Waste Management and not with the Shire of Lillydale. We would be seeking to negotiate a redundancy package with Pacific Waste Management to take effect from the termination of the contract." The Commissioner: "Yes, and of course I am mindful, Mr. D'Abaco, of your advice to the commission on the previous occasion about the award in question having sufficient ambit to entertain redundancy package." (10 June 1994) Mr Lester: "Now, we are going to meet again on Wednesday next, and have further negotiations in relation to the redundancy package. . . . . And hopefully from out of that we will have a redundancy package in place for when the contract is terminated." Mr Michie [for Pacific Waste]: "At this stage we intend to hold negotiations next Wednesday in relation to this redundancy package." H. On 28th June 1994 Pacific Waste and the T.W.U. asked the Commission to certify an agreement and the Commission did so. The agreement did not provide for any redundancy payment to be made to the employees by Pacific Waste or by any other person consequent upon the termination of their employment. Instead, the agreement provided that, from June 1994 until termination of their employment on 30 September 1994, there were to be wage rates for the employees which were to be more than doubled for category A employees (an increase of $590 per week), increased by 39% for category B and by 11% for category C. I. Pacific Waste agreed, in its contentions, that there was no legal or practical impediment to agreeing with the T.W.U. that redundancy payments could be made to its employees but contended that such matters are irrelevant to the legal issues raised in these proceedings. It added that "equally there was no legal or practical impediment to it agreeing, as in fact it did, with the T.W.U. that a redundancy package at an overall level . . . . would be agreed and given effect to by way of a wage rise to various categories of employees (broadly reflective of broad bands of years of service) over the remainder of the term of the contract;" (italics added). J. Senior counsel for Pacific Waste formally admitted that "it was . . . a purpose of the certification of the agreement that Pacific [Waste] should secure payment from the Shire under the rise and fall clause" and that "the agreement would not have been for wage increases were it not for the desire to take advantage of the rise and fall clause." K. Pacific Waste accepted that the contract entitled Pacific Waste to "an adjustment in the contract price under the `rise and fall' provisions thereof in the case of increases in wage rates, but not in the case of redundancy payments." (italics added) The contentions In its contentions the Shire stated that the dispute was as to the redundancy payments, if any, which should be made to the employees when they were retrenched upon the ending of the contract, saying that the dispute was described to the Commission as, and treated by the parties as, one concerning redundancy payments. Pacific Waste denied that the dispute was described and treated "as one solely concerning redundancy payments" (italics added) and described the subject matter of the dispute as "the detrimental impact upon employees of the loss of the contract in all the circumstances and arrangements by either Pacific Waste and/or the Shire to ameliorate that impact." The Shire contended that: - "10. . . . The agreement did not relate to bona fide remuneration for workers remaining in the employ of Pacific. 11. In the circumstances, . . . one of the following situations arose in connection with the certification of the said agreement: (a) the Commission was informed that, although the real dispute between the parties related to redundancy payments, the agreement had to refer in terms to wage rates in order to secure a commercial advantage for Pacific; or (b) the Commission was not so informed. 12. If (a) applied, the certification of the said agreement was done for an ulterior purpose. If (b) applied, the certification was based upon the withholding of relevant information from the Commission, and was, in that sense, a fraud upon the Commission." In his address senior counsel for the Shire added that it was an ulterior purpose qua the Commission even if the Commission was not so informed; and certification was not authorised by the Act. Pacific Waste denied each of those contentions and added that ". . . upon the hearing of the application for certification of the agreement the Commission was informed, inter alia, that: (i) the agreement had been reached in part settlement of the industrial dispute in Matter No. C2917 of 1987; (ii) the terms of the agreement were in recognition of the fact that employees then employed by the Second Respondent in connection with the carrying out of garbage collection services for the Shire would have their employment terminated on 30 September 1994 as a consequence of the loss of the contract; (iii) such employees would not be offered alternative employment by the incoming contractor and the parties recognise that the employees would have difficulty in finding alternative employment; (iv) it was in the public interest to ensure that the services continued to be performed under the contract in a proper and efficient manner until the completion of the contract; (v) employees would not be entitled to be paid redundancy payments; (vi) the nature of the agreement in settlement of the dispute was to provide for increased wage rates to apply for the balance of the contract at the rate specified in the agreement." The extent of the increases The affidavit of Mr. Corrie exhibited transcripts of the proceedings before the Commissioner and established that the certified agreement did not provide for redundancy payments for the employees. Instead it provided for wage rates, payable from 27 June 1994 until 30 September 1994, which constituted "a weekly increase in wages of $590 or 132.5% for category A employees, $180 or 39.1% for category B employees and $50 or 11% for category C employees." The position of the T.W.U. An affidavit by Mr. Lester, an organiser of the Victorian Branch of the T.W.U., included the following passages: "I have read the Prosecutor's Contentions of Fact and Law filed in this matter. It is alleged in point 11 that the Union and Pacific Waste may not have informed the Commission of the true intent of the Agreement. It is alleged in point 12 that if this is the case then a fraud has been committed upon the Commission by the Union and Pacific Waste. I deny the allegation that the Commission was not informed of the true intent of the Agreement. In all my dealings with the Commission I had been completely open about the Union's objectives (as set out above) in participating in the Agreement. In my view during the actual hearing to certify the Agreement, the Commission was aware of our objectives in having the Agreement certified. I deny the allegations that the Union has committed a fraud upon the Commission. The union was open and honest in its dealings with the Commission. We had an objective which was clear and open which the Agreement met. The Union had no interest in assisting Pacific Waste in having a commercial advantage over the Shire by avoiding the payment of the compensation. Indeed it was the Union's objective that it be Pacific Waste, as the employer, which made payments of compensation." The basis for the agreement The affidavit exhibited a letter to Mr. Lester from Pacific Waste dated 20 June 1994, which he deposed "set out" the terms of a redundancy package which was to be embodied in the agreement. The letter read as follows: "20 June 1994 Mr M Lester Transport Worker's Union MELBOURNE VIC 3000 Dear Mr Lester RE: Lilydale Redundancy Dispute Agreement Please find attached the basis for agreement between the Transport Worker's Union of Australia, Victorian Branch, and Pacific Waste Management with respect to the recent Lilydale Redundancy Dispute. It is understood that this agreement is peculiar to the Lilydale Contract and creates no platform for further claims. It is agreed that the certified agreement known as Pacific Waste (Shire of Lilydale - Completion of Contract) Award shall be used to increase the wages of those employees on the above contract from the date of certification until September 30, 1994. The difference between the total cumulative increase and the attached redundancy agreement shall be paid out to those employees so entitled at the completion of the contract, the expected date of which is September 30, 1994. The four categories contained in the above mentioned certified agreement are designed to ensure maximum benefit to the Lilydale employees for the remainder of the contract but so as not to exceed that amount to which they would be entitled at the contract's end. Yours faithfully PACIFIC WASTE MANAGEMENT [Signed] Mike De Leacy Human Resources Manager" The attached "basis for agreement" was in the following terms: "The redundancy package to be paid to employees of Pacific Waste Management at the termination of services to Lilydale Council:- * 3 weeks payment in lieu of notice * 3 weeks pay for year or part year of service * Payment for unused accrued sick leave entitlements. * Payment for unused annual leave plus 171/2 % loading. * Long Service Leave pro rata from commencement with TNT Waste (2 October 1989) for those employees engaged full-time from this date. * Casuals used on a regular basis for a period exceeding 3 full time months. * 3 weeks in lieu of notice (at average hours). * 3 weeks per year of service (or part year) at average hours. to be paid at current rate of pay. PACIFIC WASTE MANAGEMENT [Signed] Mike De Leacy Region Human Resources Manager" Cross-examination of Mr. Lester by Pacific Waste's senior counsel was directed to the last paragraph of the letter (as distinct from the attachment) and was as follows: "The idea was this, was it not, that people would receive the greatest possible amount of the package as a wage increase but not so much that they would get more than the package represented? --- Yes. And it was an alternative way, was it not, of meeting the package? --- Yes. Two of the features of the settlement were that the bulk of the payments would be as wage increases and that they would be recorded in a certified agreement? --- Yes. (italics added) The Contract Question The Shire in applying for prerogative writs was seeking to prevent Pacific Waste from relying upon the certified agreement in seeking reimbursement from the Shire of the additional amounts paid by Pacific Waste to the employees by reason of the agreement which was certified. The Shire's counsel stated that the Shire contends that the contract does not oblige it to reimburse Pacific Waste in respect of those amounts. Counsel for Pacific Waste stated that "Our client asserts a right under the contract, but does not propose with respect to argue it in these proceedings". It is convenient to refer to that aspect as "the contract question". The court referred to the contract question at a very early stage in the hearing, making it clear that it might be necessary for it to determine the contract question before deciding whether it should, as a matter of discretion, issue the prerogative writs sought by the Shire. Senior counsel for Pacific Waste informed the court that he did "not propose to direct submissions on the question of the construction of the contract, although some of what I will say if accepted may have some consequences in that area." He tendered a letter to Pacific Waste from his instructing solicitors informing it that they could not act "for the Company in relation to recoveries and monies due under the collection contract pursuant to the provisions of the rise and fall clause." On the third day of the hearing counsel for the Shire sought leave to add a claim for a declaration. After hearing the parties the court refused the application for leave. The refusal was because of the late stage in the hearing at which the Shire's application was made and the fact that Pacific Waste, which opposed the application, would apply for and would appear to have good grounds for an adjournment if the court granted leave. It was made clear to the parties that, although the court had refused leave, it might find it necessary to reach a conclusion on the contract question and express it in its reasons for judgment. The contract included the following provisions: "29. Award Rates of Wages The contractor shall pay all workmen employed by him on this contract not less than the minimum wage awarded by the Arbitration Court and all prescribed conditions of any such award in existence must be complied with. . . . . 38. Industrial Action In the event of any strike or other industrial action, whether by the employees of the contractor or not, preventing any of the collections required from being carried out, the contractor shall, if it is within his control, arrange an alternative collection(s) at times and/or on days to the approval of the Manager, Health Services, and provide such notification to the residents as requested by the Manager, Health Services. No allowance or compensation in any form whatsoever shall be made by Council for additional costs arising from this alternative collection. In the event of any strike or any industrial action preventing the execution of any works required by the contract, the contractor shall forfeit all payments due for such works. If any garbage and refuse collections are not executed for any length of time due to industrial disputes involving the contractor and his employees, upon eventual return to work all accumulated refuse by residents left out for collection shall be removed irrespective of whether offensive garbage is contained in receptacles or plastic bags. The contractor shall utilise, if necessary, his own staff or supervisors or other personnel to ensure this requirement is complied with. 39. Rise and Fall (italics added) (1) `Rise and Fall' adjustments will be made to the contract rate in respect of the labour component only and on the following basis. (2) Tenders are sought on the basis of a contract rate where the labour component is tied to industrial award changes. (3) Claims for increases in costs will be submitted to Council's Manager, Admin and Finance within one (1) month of the incurrence of costs. Claims not made within one (1) month of incurrence may not be recognised. (4) Claims for increases in labour under this clause will be payable on Award increases only from the date at which the costs were effectively incurred by the contractor. Changes to award conditions other than the rate of wage payment stated in the Award shall not be taken into account in any form for the purposes (sic) of calculating increases in the contract rate. (5) Where increases in labour costs take the form of percentage increases, these increases will be paid on the basis of the application of the percentage to the labour component of the tendered labour rates as set out in the Tender Schedule submitted in conjunction with this document. . . . ."