Industrial Relations Commission of New South Wales CITATION : New South Wales Fire Brigade Employees Union and New South Wales Brigades [2003] NSWIRComm 55 APPLICANT New South Wales Fire Brigade Employees Union PARTIES : RESPONDENT New South Wales Fire Brigades FILE NUMBER: IRC 4430 of 2002 CORAM: Boland J CATCHWORDS : Award Interpretation - Whether terms of an award required an employee to be reimbursed for a fee charged for early discharge of a mortgage - Held fee reimbursable LEGISLATION CITED : Industrial Relations Act 1996 Bryce v Apperley (1998) 82 IR 448 CASES CITED : City of Wanneroo v Michael Lindsay Holmes (1989) 30 IR 362 Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (Cth) (1981) 147 CLR 297 Geo A Bond & Co Ltd (in liq) v McKenzie [1929] AR (NSW) 498 HEARING DATES: 12/03/2002 DATE OF JUDGMENT: 03/10/2003 APPLICANT Mr G Maniatis New South Wales Fire Brigade Employees Union LEGAL REPRESENTATIVES: RESPONDENT Ms J Duncan and Superintendent Messenger New South Wales Fire Brigades JUDGMENT: - 10 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: Boland J Date: 10 March, 2003 Matter No IRC 4430 of 2002 NOTIFICATION UNDER SECTION 130 BY NEW SOUTH WALES FIRE BRIGADE EMPLOYEES UNION OF A DISPUTE WITH NSW FIRE BRIGADES RE: REIMBURSEMENT OF COSTS DECISION [2003] NSWIRComm 55 Introduction 1 On 1 August 2002 the New South Wales Fire Brigade Employees' Union ("the Union"), by its State Secretary Mr Chris Read, lodged with the Commission a notification of an industrial dispute with New South Wales Fire Brigades ("the Brigades") pursuant to section 132 of the Industrial Relations Act 1996. 2 The industrial dispute involves an interpretation of the Crown Employees' (NSW Fire Brigades Firefighting Staff) Award 2001 ("the Award"). The parameters of the dispute are set out in an agreed statement of facts tendered by the Union which was in the following terms: 1. Dean Campbell joined the New South Wales Fire Brigades (NSWFB) as a permanent firefighter on 5 December 1997. Previously he had been a retained firefighter at Temora. 2. In around September 1998, he was transferred from Woollahra Fire Station to Broken Hill Fire Station. 3. At the time of this transfer, Mr Campbell owned (in joint tenancy with his spouse, Elizabeth Brodie) a residential property at 25 Undola Road Helensburgh. 4. There was a mortgage on this property in favour of Perpetual Trustees Australia Limited (trustees for Aussie Home Loans Limited). 5. The home loan advanced to Mr Campbell and his spouse upon the mortgage commenced on 21 May 1998. Initially it was a variable home loan, but from 1 April 1999 it became a fixed rate loan until April 2004. 6. The Helensburgh property was sold in July 2001. 7. He became entitled to reimbursement of the expenses for sale of property in line with relevant provisions of Clause 29 of the Crown Employees' (NSW Fire Brigades Firefighting Staff) Award 2001 8. Mr Campbell's application for reimbursement was approved with the exception of his claim for an amount of $4103.34, which is described as a Break Cost Fee on his home loan statement for the period 1 July 2001 to 31 July 2001. 3 It may be seen from the agreed statement of facts that the dispute is over the Brigades' refusal to reimburse Mr Campbell a "break cost fee" in an amount of $4,103.34 which he incurred in the early discharge of a fixed rate home loan. The question is whether the Brigades is required by cl 29.12.3 of the Award to pay the fee. Clause 29.12.3 provides: A transferred employee entitled to the reimbursement of conveyancing and other costs is entitled to reimbursement of the cost of survey certificates, pest certificates and/or Building Society registration fees reasonably incurred in seeking financial accommodation to purchase the new residence or the land upon which to erect a new residence and the fees associated with discharging the mortgage on the former residence. The evidence 4 In addition to the agreed statement of facts Mr G Maniatis, for the Union, tendered a bundle of correspondence that related to a similar dispute in 1999 involving another firefighter, Mr Brian Aubusson. The correspondence revealed that initially the Brigades refused to reimburse Mr Aubusson a "prepayment fee" charged by a bank for early discharge of a mortgage. However, the Brigades later changed its position and agreed to reimburse the fee. I shall return to this matter later in the decision. 5 Ms J Duncan appeared for the Brigades. Ms Duncan adduced oral evidence from Superintendent Douglas Frederick Messenger who is the Manager of Operations (Personnel) for the Brigades. Superintendent Messenger's evidence may be summarised as follows: · He is responsible for conveyancing costs for transferring officers within the Brigades. · In terms of the policy and procedure governing conveyancing costs Superintendent Messenger relied upon cl 29 of the Award and a training guide entitled "Crown Employees (Transferred Officers' Compensation) Award Reimbursement of Conveyancing Costs Training Guide". · In accordance with the training guide and the Award the Brigades does not reimburse costs for the early discharge fees on home loans. · The reimbursement of the early discharge fee to Mr Aubusson was a mistake based on incorrect advice at the time. 6 The training guide was tendered into evidence by Ms Duncan together with a letter from the Brigades to Mr Read dated 14 February 1997 regarding an offer on the terms of a new consent award for permanent firefighting staff and Mr Read's acceptance of that offer. A 1998 circular from the Director-General of the Premier's Department was also tendered indicating that as from 1 April 1998 "transferred officers will no longer be required to comply with the provisions contained in paragraph (f) of subclause (ii) of Clause 11 Conveyancing and Other Costs of the Crown Employees (Transferred Officers Compensation) Award" and that all new claims (after 1 April 1998) were to be forwarded by transferring officers directly to the relevant department for assessment and payment. The Union's submissions 7 Mr Maniatis' submissions may be summarised as follows: · The Union seeks an order that the Brigades reimburse Mr Campbell the amount of $4,103.34. · The power to make the order derives from s 136(1)(d) and s 175 of the Industrial Relations Act 1996. · On the proper construction of cl 29.12.3 of the Award the Brigades is required to reimburse the amount claimed. · Payment of the break cost fee was a prerequisite to Mr Campbell discharging his mortgage. · The Award does not preclude the reimbursement of penalty fees associated with the discharge of a mortgage and the mortgage could only be discharged by payment of the penalty fee. · A precedent exists for the payment of the penalty fee in that in 1999 the Brigades reimbursed Mr Aubusson for an early discharge fee. · Clause 29.12.3 is clear and unambiguous in its terms in that it requires "fees associated with discharging a mortgage" to be reimbursed by the Brigades. · The Award must be interpreted in accordance with its terms: Bryce v Apperley (1998) 82 IR 448. Submissions for the Brigades 8 Ms Duncan's submission may be summarised as follows: · In agreeing to the new consent award for permanent firefighting staff in 1997 the Union agreed to new clauses relating to travelling compensation and transferred employees' compensation which were derived from the Crown Employees (Transferred Officers Compensation) Award . These provisions were repeated in the 2001 Award. · Prior to 1998 the reimbursement of conveyancing costs of transferred officers was processed by the Crown Solicitor's Office according to the terms of the Crown Employees (Transferred Officers Compensation) Award . In 1998 this function was devolved to individual departments including the Brigades. Part of the devolution involved training the relevant departments in processing their own conveyancing claims for transferred officers. To that end the training guide in evidence in these proceedings was circulated to the individual departments including the Brigades and is still in use today. · The training guide represents the practice in relation to the reimbursement of conveyancing costs for transferring officers. Section 6 - Processing a Claim for the Reimbursement of Costs on a Sale Transaction of the training guide nominates the various costs that are reimbursable. The costs nominated are "statutory and obligatory costs associated with the sale or purchase of the property" and include real estate agent's commission, solicitors fees and mortgage costs on discharge (specified bank fees). · Section 8 of the training guide lists the fees that are not reimbursable and the list includes "Early discharge on mortgage (penalty fees)". · An examination of the provisions of cl 29 of the Award does not indicate that penalty fees are reimbursable. The costs and charges referred to in the Award that may be reimbursed are, again, "statutory and obligatory costs necessary for the sale or purchase of the property" and do not extend to the reimbursement of costs arising out of an officer's personal choice such as the nature of the loan (fixed or variable) taken out or where the officer chooses to sell the home by auction. · The interpretation of an award begins with a consideration of the natural and ordinary meaning of its words: City of Wanneroo v Michael Lindsay Holmes (1989) 30 IR 362 at par 43. The natural and ordinary meaning of the words in cl 29.12.3 of the Award, namely, "the fees associated with discharging the mortgage" do not include fees associated with the discharge of a loan such as break cost fees. A distinction is to be made between mortgage discharges fees, which were reimbursed to Mr Campbell and the fee for early discharge of a loan, which was not reimbursed. · The words of an award are to be read as a whole and in context: City of Wanneroo v Michael Lindsay Holmes (1989) 30 IR 362 at par 43. The Award, when read as a whole, does not require the Brigades to reimburse fees associated with the early discharge of a loan. · There is no ambiguity but if there were any ambiguity in the meaning of the words in an award this may be resolved by a consideration of the history and subject matter of the award. In this case, a consideration of the history and subject matter of the award supports the Brigades' position that fees associated with the early discharge of a loan are not reimbursable. Consideration 9 In approaching the task of interpreting an award the starting point is the actual words of the award itself and their plain, ordinary English meaning: City of Wanneroo v Holmes (1989) 30 IR 362 at 378; Bryce v Apperley (1998) 82 IR 448 at 452. If the language of the award provision is clear and unambiguous and is consistent and harmonious with the other provisions of the award and can be intelligibly applied to the subject matter with which it deals, it must be given its ordinary and grammatical meaning even if it leads to a result that may seem inconvenient or unjust (see Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (Cth) (1981) 147 CLR 297 at 305 per Gibbs CJ). Although he was concerned with statutory provisions, the observations of the Chief Justice apply with equal force to an award: Bryce v Apperley at 453. However, as French J observed in City of Wanneroo, "That is not to say the words (of an award) must be interpreted in a vacuum divorced from industrial realities." French J referred to the decision of Street J in Geo A Bond & Co Ltd (in liq) v McKenzie [1929] AR (NSW) 498 at 503 where his Honour said: [I]n construing an award, one must always be careful to avoid a too literal adherence to the strict technical meaning of words, and must view the matter broadly, and after giving consideration and weight to every part of the award, endeavour to give it a meaning consistent with the general intention of the parties to be gathered from the whole award. 10 The provisions of the Crown Employees (NSW Fire Brigades Firefighting Staff) Award 2001 dealing with the reimbursement of a transferred employee for the costs associated with taking up a residence at a new location are derived from the provisions of the Crown Employees (Transferred Officers' Compensation) Award. As the evidence reveals, in 1997 the Union agreed to the terms of a new award for permanent firefighting staff which included relevant provisions taken from the Transferred Officers' Compensation Award, said to have been expressed in plain English and in the following terms in cl 13(iii): A transferred employee entitled to the reimbursement of conveyancing and other costs under Clause 11, Conveyancing and other costs, of this award, shall be entitled to reimbursement of the cost of survey certificates, pest certificates and/or building society registration fees reasonably incurred in seeking financial accommodation for the purpose of purchasing a new residence or the land upon which to erect a new residence, and the fees associated with discharging the mortgage on the officer's former residence. 11 Until 1 April 1998, claims for reimbursement of costs associated with taking up residence in a new location had been processed by the Crown Solicitor's Office but after that date the task was devolved to individual departments. In order for departments to understand how the process worked, a training guide was issued to all departments on the interpretation to be applied to the relevant provisions in the Crown Employees (Transferred Officers' Compensation) Award. The training guide makes it clear the Crown Solicitor's Office considered that the cost associated with early discharge of a mortgage, which was said to be a penalty fee, was not reimbursable. 12 Whilst it is clear that in 1997 the Union agreed to the terms of the new Award, there was no evidence that the Union was aware of the training guide and its interpretation of the provisions dealing with reimbursement of conveyancing and associated costs. Further, there was no evidence that in the making of the 2001 Award the Union was aware of the interpretation by the Crown Solicitor's Office of cl 29.12.3 of that award, which is in substantially similar terms to cl 13(iii) of the Crown Employees (Transferred Officers' Compensation) Award. Indeed, in 1999 the Union was informed that its claim on behalf of Mr Aubusson for reimbursement of an early discharge fee had been successful and the Union was entitled to assume that its submission to the Brigades, that cl 29.12.3 required reimbursement of the fee, had been accepted. 13 It seems to me, therefore, that at the time of the making of the 1997 and 2001 Awards there was no agreement or common understanding between the parties as to how cl 29.12.3 was to apply in practice. Ms Duncan contended, however, that when the Award is read as a whole it becomes clear that the costs to be reimbursed were only those "statutory and obligatory costs associated with the sale of the property" such as real estate agent's costs, solicitor's fees, stamp duty and registration costs that are "minimally necessary". It was submitted that the words in cl 29.12.3, namely, "fees associated with discharging the mortgage on the former residence" should be interpreted as excluding any costs incurred by the transferred officer that were not minimally necessary, such as a break cost fee relating to a fixed rate loan facility. Such a fee is the interest foregone by the lender by virtue of the early repayment of a fixed rate loan. It would appear from the evidence, however, that unless the break cost fee is paid by the mortgagor the mortgage cannot be discharged. 14 Let me accept for the moment Ms Duncan's contention that the Award, read as a whole, only requires reimbursement of incidental costs that are statutory or obligatory, or only those that are minimally necessary. The circumstances in this case were the transferred officer, Mr Campbell, initially took out a variable home loan but a year or so later converted it to a fixed rate loan. There is no provision in the Award relating to the type of loan that must be taken out in order to be reimbursed for the fees associated with discharging the mortgage. Clearly therefore, Mr Campbell was entitled to change to a fixed rate loan. In doing so, in order to discharge the mortgage Mr Campbell was obliged, or found it "minimally necessary", to pay the break cost fee on the fixed rate loan. Thus, even on the tests Ms Duncan contended should be applied, Mr Campbell was entitled to be reimbursed his break cost fee. 15 If one were to take the alternative view that the Award, read as a whole, does not limit reimbursable costs to those that are statutory, or obligatory, or minimally necessary, then it becomes a matter of what is the natural and ordinary meaning of the words "fees associated with discharging the mortgage on the former residence". I do not consider there is any doubt that if a lender requires a fee to be payable as a condition for discharging a mortgage, then regardless of the nature of the fee, according to the terms of cl 29.12.3, it is to be reimbursed. 16 In order to transfer the unencumbered title to a purchaser it was necessary for Mr Campbell to discharge the mortgage held over the property. To do so, Mr Campbell was required to repay the loan advanced upon the mortgage, which in turn terminated the loan early. According to the general terms and conditions of the loan contract, by repaying the loan early Mr Campbell was also required to pay the break cost fee. So closely connected was the break cost fee to the ultimate discharge of the mortgage that it could not be contended other than that the break cost fee was "associated" with the discharge of the mortgage. 17 I might say I have some reservations about the appropriateness of the Brigades being required to reimburse a transferred officer a fee which is, in effect, the amount of interest foregone on a loan, but as French J observed in City of Wanneroo at 379, "It is no part of the court's task to assign a meaning in order that the award may provide what the court thinks is appropriate". 18 For the reasons expressed, I consider that the Brigades should reimburse Mr Campbell an amount of $4,103.34 pursuant to cl 29.12.3 of the Crown Employees' (NSW Fire Brigades Firefighting Staff) Award 2001. I so order. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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