Industrial Relations Commission of New South Wales in Court Session CITATION : Commander Australia Limited v Kerr [2004] NSWIRComm 74 APPELLANT: Commander Australia Limited PARTIES : RESPONDENT: David Andrew Kerr FILE NUMBER: IRC 4577 of 2003 CORAM: Wright J President; Walton J Vice-President; Staff J Appeal - Application for leave to appeal - Finding at first instance that annual remuneration was less than remuneration cap - s 108A of Industrial Relations Act 1996 - Whether annual remuneration was to be determined according to the actual amount paid to the employee in the 12 months preceding termination of employment or whether an incentive payment earned in previous financial year by reference to respondent's performance but paid during 12 months' prior to termination of the contract forms part of remuneration package for the purposes of s 108A - Purposive approach to interpretation - Importance of interpreting particular words in context - Held that remuneration package for the purpose of 108A was to be determined according to what applicant "paid" or "received" in the 12 months preceding termination of employment - Leave to appeal granted - Appeal upheld - Decision set aside. CATCHWORDS : Unfair contract - Appeal - Application for leave to appeal - Finding at first instance that annual remuneration was less than remuneration cap - s 108A of Industrial Relations Act 1996 - Whether annual remuneration was to be determined according to the actual amount paid to the employee in the 12 months preceding termination of employment or whether an incentive payment earned in previous financial year by reference to respondent's performance but paid during 12 months' prior to termination of the contract forms part of remuneration package for the purposes of s 108A - Purposive approach to interpretation - Importance of interpreting particular words in context - Held that remuneration package for the purpose of 108A was to be determined according to what applicant "paid" or "received" in the 12 months preceding termination of employment - Leave to appeal granted - Appeal upheld - Decision set aside. Industrial Relations Act 1996 s 83 s 106 s 108A s 108B LEGISLATION CITED : Industrial Relations Amendment (Unfair Contracts) Act 2002 Interpretation Act 1987 s 33 s 34 Workplace Relations Act 1996 (Cth) Austeck Pty Limited v Charalambos Atsalos [2003] NSWIRComm 290 Brasier v Link Recruitment Pty Ltd Whelan C, 13 August 2001, Print PR 907688 Carlton Brewery Limited v Federal Commissioner of Taxation (1947) 73 CLR 446 CIC Insurance Limited v Bankstown Football Club (1997) 187 CLR 384 Club Employees (State) Award and other Awards, Re (2002) 122 IR 272 Construction, Forestry, Mining and Energy Union (New South Wales Branch) v Delta Electricity [2003] NSWIRComm 135 Crowe v UCS Developments Pty Ltd [2003] NSWIRComm 234 Crown Employees (New South Wales Fisheries Salaries and Conditions of Employment) Award [2003] NSWIRComm 405 CASES CITED : Fischer v SMS Employees Pty Ltd Watson SDP, 19 September 2000, Print T0978 Flaherty v Intertan Australia Ltd [2000] NSWIRComm 225 Fox v GIO Australia Limited [2002] 56 NSWLR 512, (2002) 120 IR 410 Jones v Wrotham Park Settled Estates [1980] AC 74 Kerr v Commander Australia Limited [2003] NSWIRComm 232 Knowles v Anglican Church Property Trust (No 2) (1999) 95 IR 380 Mills v Meeking (1990) 169 CLR 214 Mitchforce Pty Ltd v Starkey (No 2) [2003] NSWIRComm 458 Police Association of New South Wales v Commissioner of Police (2002) 123 IR 301 Whittaker v Comcare (1998) 86 FCR 532 HEARING DATES: 02/23/2004 DATE OF JUDGMENT: 04/08/2004 APPELLANT: Mr P Kite SC with Mr P Moorehouse of counsel Blake Dawson Waldron, Lawyers (D Lloyd and K West) LEGAL REPRESENTATIVES: RESPONDENT: Mr A Tudehope of counsel De Mestre & Co (Mr P De Mestre) JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION FULL BENCH CORAM: WRIGHT J, President WALTON J, Vice-President STAFF J Thursday 8 April 2004 Matter No IRC 4577 of 2003 COMMANDER AUSTRALIA LIMITED v DAVID ANDREW KERR Application by Commander Australia Limited for leave to appeal and appeal against an interlocutory judgment of Justice Glynn given on 1 August 2003 in Matter No IRC 2202 of 2003 JUDGMENT OF THE COURT [2004] NSWIRComm 74 1 The present proceedings involve an application for leave to appeal and, if granted, an appeal against the interlocutory decision of Glynn J delivered on 1 August 2003 in proceedings brought under s 106 of the Industrial Relations Act 1996 in which her Honour dismissed the appellant's motion seeking the dismissal of the proceedings brought by the appellant: see Kerr v Commander Australia Limited [2003] NSWIRComm 232. The notice of motion alleged that, by virtue of s 108A of the Industrial Relations Act, the Court did not have jurisdiction to deal with the application. The decision at first instance 2 The applicant commenced employment with the appellant on 6 November 2000 and his position was made redundant as from 5 July 2002. The applicant's total remuneration consisted of a base salary of $180,000 and a management incentive payment, which was dependent on the appellant company's financial results. The relevant 12 month period, for the purposes of s 108A(1) of the statute, to which further reference will be later made, is 6 July 2001 to 5 July 2002. The issue before her Honour was whether an incentive payment of $39,860 for the period of 1 July 2000 to 30 June 2001 paid in September 2001 was part of the remuneration package, as defined in that section. 3 The evidence on the issue was set out by her Honour in the judgment under appeal in the following terms: [20] The applicant's total remuneration on appointment on 6 November 2000 (financial year 00/01), as set out in his letter of employment dated 19 September 2000, was: Base Salary $170,532 Superannuation (minimum) $ 9,468 Fixed Remuneration $180,000 Management Incentive at 100% achievement $ 60,000 Total Remuneration $240,000 [21] The applicant was also advised in that letter of employment that "[incentive] payments will be made after the audit sign-off and will generally occur in the September payroll". [22] As is clear, the nature of the incentive plan was such that the actual money amount, if any, that would be paid to the applicant as part of his remuneration for any financial year, could not be determined until that particular financial year had been closed off after 30 June i.e. the amount of his incentive payment, if any, for the period 6 November 2000 to 30 June 2001 (FY 00/01) would not be known until after 1 July 2001 (FY01/02). [23] By letter dated 4 September 2001, the applicant was advised: I am pleased to confirm the approval of your incentive payment for the period 1st July 2000 to 30th June 2001. Based on my recommendation, the payment of: $39,860-00 less tax will be included in your September 2001 pay. [24] That payment was part of his remuneration for the FY 00/01, but was paid to him in the FY 01/02. [25] By letter dated 23 July 2001, the applicant was advised: I am pleased to advise that effective July 1, 2001 your total remuneration is increased from $240,000 to $254,400 per annum. As part of this your fixed incentive (base salary, superannuation and car) will remain at $180,000 and your incentive for 100% performance under the attached 2001/2 PlesTel Management Incentive Plan will increase from $60,000 to $74,400 per annum. [26] The effect of that letter was that the applicant's remuneration for the FY 01/02, comprised $180,000 base salary, with the possibility that that amount would be increased by up to $74,400 if the conditions of the Management Incentive Plan were satisfied. [27] By letter dated 11 September 2002 (two months after his position had been made redundant), the applicant was told: Commander Communications Limited's full year results for the year ended 30 June 2002 have been announced. As you will be aware, the Management Incentive proportion of your total remuneration for the last financial year [FY 01/02] was dependant on the company's results. (My emphasis) ... Unfortunately the financial goals set for 2001/02 were significantly underachieved. Therefore you are not eligible for any Management Incentive payment. This applies without exception to all employees covered by the Management Incentive Plan. [28] The result of there being no incentive payment made to the applicant for the FY 01/02 meant that his total remuneration for that financial year was $180,000. 4 Her Honour found that the relevant remuneration package for the purposes of the s 106 application was $180,000. Her Honour's detailed analysis of the issues was as follows: [31] The words "is paid or received (or is payable and receivable)", particularly relied upon by Mr Kite, cannot be considered in isolation but must be read in context with the remainder of s 108A which includes a number of specifically defined terms: contract of employment, employment benefit, monetary remuneration, remuneration cap, remuneration package. [32] The applicant's remuneration package for the FY 00/01 comprised a base rate of $180,000 and a management incentive of $60,000. The base rate was paid during that financial year. That payment, in terms of s108A(1)(a) was not paid or received (or payable or receivable) during the period of 12 months immediately before the termination of the applicant's services. However, a management incentive payment for the FY 00/01 did become due and payable, and was paid to the applicant, in September 2002 [ sic, the relevant date should be September 2001], a date which was during the period of 12 months immediately before his termination. [33] In accordance with the applicant's contract of employment his remuneration package for the FY 01/02 comprised a base rate of $180,000 and a management incentive of $74,400. The base rate of $180,000 in that remuneration package was paid or received during the period of 12 months immediately before his termination. [34] The payment of the management incentive of $74,400 for the FY 01/02, was not guaranteed, but, if it were to become payable or receivable, payment of that component of the applicant's remuneration package for the FY 01/02, would become payable and would be paid, in accordance with past practice during September 2002 (FY 02/03), two months after the applicant's termination. [35] However, no management incentive became payable as part of the applicant's remuneration package for the FY 01/02. That had the result that the applicant, in the period of 12 months immediately before his termination received, in accordance with his contract of employment for that period, only the base rate of $180,000 included in his remuneration package for the FY 01/02. 5 Her Honour concluded that: [40] The point to be considered is whether the management incentive paid in September 2002 was an element of a remuneration package under a contract of employment paid or received (or payable or receivable) in relation to employment undertaken during the 12 months immediately before the termination of the applicant's services. … [42] The Court finds that the applicant was employed under a contract of employment under which he was not paid, for the period of 12 months immediately before the termination of that contract, a remuneration package in excess of the cap set by s 108A of the Act in relation to the making of an application pursuant to s 106. 6 Counsel for the appellant relied at first instance upon the approach taken by Grayson DP in Flaherty v Intertan Australia Ltd [2000] NSWIRComm 225 in determining the meaning of "annual remuneration" for the purposes of s 83 of the statute. Her Honour dealt with the submission in the following terms: [38] The principle applied by Grayson DP in Flaherty at pars [26] [27] was that bonuses paid consistently with obligations under employment contracts, as opposed to bonuses paid sporadically, will be included in consideration of annual remuneration even if received after the close of the financial year. In Flaherty the amount of the bonus was related back to the applicant's annual remuneration for that financial year and the resulting total took the application above the remuneration cap for the purposes of s 83(1)(b). [39] Even if it were to be assumed that the incentive payment made to the applicant in September 2001 was not payment of a sporadic bonus, when the same principle that was applied in Flaherty is applied to that September payment, the result is the same in that it would be taken into account in the applicant's remuneration received in accordance with his contract of employment for the period 6 November 2000 to 30 June 2001. [40] However, I do not take into account in this decision any distinction between a sporadic or regular bonus. Leave to appeal 7 The appellant submitted that leave to appeal should be granted since it was in the public interest that the Full Bench determine the proper construction and interpretation of s 108A of the statute, which is a new provision that has yet to receive detailed consideration at Full Bench level. Further, that there was a clearly arguable case that the Court had exceeded its jurisdiction and this consideration supports the grant of leave to appeal: Knowles v Anglican Church Property Trust (No 2) (1999) 95 IR 380. 8 It was submitted that the Full Bench should have regard to the fact that the question raised by the appeal is narrow and any appeal hearing would be brief. It was convenient and in the public interest that leave to appeal and the appeal should be dealt with together. 9 The respondent did not provide detailed submissions on leave to appeal, other than to submit that her Honour was correct in her interpretation of the application of s 108A of the statute. 10 We consider that leave to appeal should be granted. The appeal raises an important issue in the development of the Court's jurisprudence. Further, for reasons we later develop, her Honour's judgment was in error. Submissions for the appellant 11 The appellant submitted that the construction of s 108A accepted by Glynn J involves reading additional words into that provision, such as "paid for the period of 12 months immediately before termination" or "paid in respect of the period of 12 months immediately before termination". Such an approach is generally impermissible, particularly so, where the language of a statute is not ambiguous or uncertain, when the court will apply the ordinary and grammatical meaning of the words unless to do so will give the statute an operation that was obviously not intended: Mills v Meeking (1990) 169 CLR 214 at 223. 12 The appellant submitted that the proper construction of s 108A is: (a) The ordinary meaning of "paid" and "received" connotes the thing in question having actually been given and accepted, rather than an entitlement to receive at some future time. (b) The ordinary meaning of "payable" and "receivable" connotes that the thing in question is already owed, or already able to be given and accepted. 13 It was submitted that only limited assistance may be obtained from the approach adopted by the Commission as to the jurisdictional limit in s 83(1) of the Act. In Flaherty v Intertan Australia Ltd, Grayson DP held that in determining the relevant "annual remuneration", the Commission should consider amounts which became due and payable during the 12 months prior to termination rather than amounts referable to performance during that period. 14 The appellant also relied upon decisions under the federal unfair dismissal legislation, in particular Regulation 30 BC made under the Workplace Relations Act 1996 (Cth) which provides for the remuneration for employees on the basis of inclusion of commission or piece rates, to support its interpretation. In such cases, the federal Commission has held that the relevant remuneration is determined by the payments actually received during the relevant period, rather than amounts referrable to the relevant period: Fischer v SMS Employees Pty Ltd, Watson SDP, 19 September 2000, Print T0978 and Brasier v Link Recruitment Pty Ltd, Whelan C, 13 August 2001, Print PR 907688. 15 The appellant also submitted that policy considerations support the interpretation for which it contended. Although in this case there was no difficulty in determining the period to which the incentive payment applied and what component of the incentive payments actually received related to the 12 month period prior to termination, in other cases the nature of the contract and correspondence between the parties may not be as clear. Therefore, the interpretation accepted by her Honour below would not lead to a clear and objective application of s 108A and potential litigants will not have certainty regarding the application of the section. 16 The appellant submitted finally that the construction determined by her Honour would lead to ironic results. The applicant complains that it was unfair that he did not receive an incentive payment in September 2002 yet relies on that fact to bring himself within jurisdiction. That is, if the applicant had received what he seeks, he would be unable, on her Honour's construction, to make an application under s 106, as his salary would have been above the statutory remuneration cap. Submissions for the respondent 17 Mr Tudehope, counsel for the respondent, submitted that the relevant question was: what was the value of the remuneration package "paid" or "payable" to the respondent during the relevant 12 month period? The words "received" and "receivable" were inserted by the legislature to capture benefits that might not be caught by the words "paid" or "payable" and are not relevant here. 18 It was submitted that the words "paid" or "payable" (or "received" or "receivable") in s 108A(1) are limited by the words "remuneration package" and the meaning given to those words in s 108A(3) by the words "monetary remuneration…payable". Not all amounts paid or payable under an employment contract form part of the relevant "remuneration package". Only those amounts "payable" for work done, that is monetary remuneration, during the relevant 12 month period could be considered for the purposes of s 108A(1). The incentive payment of $39,860 that was paid did not form part of the remuneration package for the relevant period because it was not "monetary remuneration… payable" during the relevant period. The amount is an amount "payable" pursuant to a remuneration package referable to the previous period of employment. For example, had the respondent's employment been terminated on 1 July 2001, the sum of $39,860 would have formed part of his remuneration package as the amount was "monetary remuneration …payable" for work done during the relevant 12 month period. 19 In reply to the appellant's submission that the incentive payment was payable within the relevant period because the employment contract made clear that the incentive payment was payable after the financial year to which it related, it was submitted that it is clear from the contract that the respondent's entitlement to the benefits of the incentive payment scheme accrue at the end of each financial year. The benefits accrue if the respondent performed his side of the bargain in achieving the company goals. The contract also clearly states that although immediately payable, the parties have agreed that the benefit would not be paid until "after the audit sign off". 20 The respondent submitted that his construction of s 108A was supported by: (a) the words "during the period of twelve months" in s 108A. Clearly Parliament intended that only the monetary remuneration "payable" during that period was to be considered; (b) the second reading speeches in both Houses of Parliament, which referred to the "remuneration package" being defined to mean the total monetary value of the employee's salary and employment benefits that are payable or receivable under the contract of employment; (c) the appellant's construction of the section would lead to the extraordinary consequence that any amounts that might be outstanding to an employee over an unlimited period during the contract of employment, if paid or partly paid in the relevant 12 month period might be used to boost the remuneration package beyond the remuneration cap. Clearly, this was not Parliament's intention; and (d) although the approach adopted by the Commission to the interpretation of s 83(1)(b) of the statute was of limited assistance in this case, the Commission's interpretation of "annual remuneration" in the Full Bench decision of Austeck Pty Limited v Charalambos Atsalos [2003] NSWIRComm 290 is entirely consistent with the respondent's submissions in this case. Submissions in reply 21 The appellant submitted that there was no dispute that the management incentive payments come within the definition of "remuneration package". There is no temporal limitation expressed or implied by the definition of remuneration package. 22 As to the respondent's submission that the definition of "remuneration package" in s 108A(3), when combined with the jurisdictional test set out in s 108A(1)(a), limits the items of remuneration that can be included for the purpose of the jurisdictional test to those referable for work done during the relevant 12 month period, the appellant submits that there is no such limitation imposed by the legislation and that such an argument requires inserting additional words into the legislation such as "for work done during the 12 month period". 23 The appellant submitted that, contrary to the respondent's submissions, the ordinary meaning of "payable" refers simply to an amount which is owed. The applicable temporal limitation is set out in s 108A(1)(a) in clear terms, that is "… paid or received (or is payable or receivable) during the period of 12 months immediately before… [the termination]". 24 Contrary to the respondent's submissions that the question on appeal is the remuneration package for 5 July 2001 to 5 July 2002, the appellant submitted the correct question is to determine the remuneration package paid or received (or payable or receivable) during that period. 25 The appellant did not agree with the respondent's characterisation of the management incentive payment as becoming payable once he had performed the work which potentially entitled him to the payment. The management incentive payment was conditional on achievement of "agreed financial and non-financial goals" and only became payable upon satisfaction of these conditions and after audit sign off. The employment contract does not state that the management incentive becomes "immediately payable" after each financial year. 26 The appellant's interpretation does not lead to the extraordinary consequences as suggested by the respondent. Amounts which are owed to an employee become "payable" when the entitlement first arises, regardless of when they are actually paid. Statutory framework 27 Part 9 of Chapter 2 of the Industrial Relations Act sets out the Court Session's powers in relation to unfair contracts, in particular the power to declare an unfair contract wholly or partly void, to vary such a contract and to make subsequent money orders. The Industrial Relations Amendment (Unfair Contracts) Act 2002 inserted three provisions into Part 9 of Chapter 2 of the Industrial Relations Act, namely ss 106(5), 108A and 108B. The Amendment Act was assented to and commenced on 24 June 2002. 28 Section 106(5) required the Court to take into account, in making an order, whether the applicant had taken any action to mitigate their loss. Section 108B provided that a 12 month limitation period applied for making an application for an order under the division and that the Court did not have jurisdiction to extend the time. 29 The essential issue in this matter is the proper construction of s 108A of the Industrial Relations Act as it bears on the issues in the current proceedings. That provision is in the following terms: 108A Employment contracts in respect of which applications cannot be made (1) An application cannot be made for an order under this Division if the application relates to a contract of employment under which: (a) a remuneration package that exceeds the remuneration cap is paid or received (or is payable or receivable) during the period of 12 months immediately before the application is made (or, if the application concerned relates to a contract that has been terminated, immediately before the termination), or (b) a remuneration package is paid or received (or is payable or receivable) during a period of less than 12 months immediately before the application is made (or, if the application concerned relates to a contract that has been terminated, immediately before the termination) that would, if the remuneration package had been paid or received (or been payable or receivable) for a period of 12 months, have exceeded the remuneration cap. (2) An application cannot be made for an order under this Division by a person who is a partner carrying on a business if: (a) the application relates to a contract between that partner and the other persons carrying on that business in partnership, and (b) the share of the net profits, or payments contingent on the net profits, of the business that are paid to or received by (or payable to or receivable by) the applicant during the period of 12 months immediately before the application is made (or, if the application relates to a contract that has been terminated, immediately before the termination) exceed: (i) $200,000, or (ii) if an amount is prescribed for the purposes of paragraph (b) of the definition of "remuneration cap" in subsection (3)—that amount. (3) In this section: "contract of employment" means any contract or arrangement under which work is done by a person in the capacity of an employee, and includes a related condition or collateral arrangement with respect to such a contract. "employment benefit" means a benefit provided to an employee at the cost of his or her employer (being a benefit of a private nature) and, without limitation, includes: (a) contributions payable to a superannuation scheme by an employer in respect of the employee, including any liability of that employer to make any such contributions or to pay costs associated with that scheme, or (b) the provision by an employer of a motor vehicle for private use by the employee, or (c) any other benefit prescribed by the regulations for the purposes of this definition. "monetary remuneration" includes any performance-related bonus or incentive payment. "remuneration cap" means: (a) $200,000, except as provided by paragraph (b), or (b) any greater amount prescribed by the regulations (being a regulation that increases the amount by reference to increases in the amount referred to in section 83 (1) (b)). "remuneration package" means the total value of monetary remuneration and employment benefits payable or receivable under a contract of employment. 30 It may be observed that the legislature has imposed a particular limit on the jurisdiction of the Commission in relation to s 106 proceedings and has done so in, relatively speaking, peremptory terms. Significantly, the limitation is expressed not in respect of the capacity or power of the Commission to hear, or to hear and determine, or to make orders in, proceedings under s 106. Rather the limitation is specified on the basis that applications of a certain class or of certain classes "cannot be made"; that is, applications cannot be made which seek orders under the relevant Division of the statute; that is, relevantly, applications for orders under s 106. 31 The prohibited class of applications includes those where the application relates to a contract of employment where (specific to the present proceedings) the contract of employment is one under which "… a remuneration package that exceeds the remuneration cap is paid or received (or is payable or receivable) during the period of 12 months immediately before the application is made (or, if the application concerned relates to a contract that has been terminated, immediately before the termination) …". 32 The question that then arises is the nature or character of a contract of the prescribed class. The key phrases or expressions are "contract of employment", "remuneration package", "monthly remuneration" and "remuneration cap". The phrase "remuneration cap" does not raise any present issue since the way in which it is defined provides sufficient precision for present purposes. The contentious expressions are those defined as "contract of employment", "monthly remuneration" and "remuneration package". The question then is: is the contract the subject of the proceedings one which, during the relevant period, has a remuneration package, that is paid or received or that is payable or receivable, which exceeds the remuneration cap? Because of the interlocking nature of the relevant definitions, conceptually the enquiry commences with the definition of "remuneration package" which is defined as meaning the total value of the "monetary remuneration" and the "employment benefits payable or receivable under a contract of employment". 33 The expression "monetary remuneration" is, in turn, defined to include any performance related bonus or incentive payment and the expression "employment benefits" is relevantly defined to mean a benefit provided to an employee at the cost of the employer, provided it is a benefit of a private nature. These benefits, without limitation to the breadth of the words so defined, include superannuation contributions made by an employer; provision of a motor vehicle for private use (presumably this means to the extent that the vehicle is provided for private use) and any other prescribed benefit. 34 The next aspect to be noticed is the way in which the remuneration package is related to the contract of employment. The way in which this relationship is framed by the statute or framed in the statute is significant. The words used involve a degree of repetition. It seems to us that the intention of the legislature in using language which is both broad and somewhat circular is to emphasise the already plain intention to cover a relevant field and to prescribe, with some particularity, and in a way which is not capable of ready avoidance or evasion, prohibitions on the making of applications under s 106. 35 It is not necessary in these proceedings to refer in detail to relevant approaches to issues of statutory construction. For present purposes the principles are clear-cut and may be expressed as follows. First, to paraphrase what was said in the recent Full Bench judgment of this Court in Crowe v UCS Developments Pty Ltd [2003] NSWIRComm 234 at [63], albeit in respect of another part of the 2002 amending legislation (s 108B), the operation of the relevant provision is a question which, as with any issue of construction, may often be resolved by ascertaining the intention of the legislature from the express words of the instrument viewed in their context. 36 Second, a statutory provision must not be construed in isolation but in the context in which it appears as part of the whole instrument. Third, courts are obliged by statutory injunction to prefer a construction which would promote the purpose of a statute to one which would not. Fourth, the requirement to look to the purpose or object of the statute transcends the former obligation to adopt the traditional mischief or purpose rule in preference to the literal rule of construction because the earlier rule required the identification of an ambiguity or inconsistency before the court could have regard to purpose. Further, if the language of the statute or statutory provision is not ambiguous or uncertain, the court will apply its ordinary and grammatical meaning unless to do so will give the statute an operation that was obviously not intended: Mills v Meeking at 223. 37 The approach that is now required does not presuppose the existence of ambiguity or inconsistency; rather, it permits and requires the court to consider the purpose of the Act in determining whether there is more than one possible construction. In that respect, the context in which the relevant provision appears must be considered as part of the process of interpretation itself, and not merely at some later stage when ambiguity might be thought to arise. Finally, the reference of context is to be taken in its wider sense to include such matters as the existing state of the law and the mischief which, by reference to permissible extrinsic material such as explanatory memoranda and law reform reports, it might be discerned that the statute was intended to remedy: see, for example, CIC Insurance Limited v Bankstown Football Club (1997) 187 CLR 384 at 408; Mills v Meeking at 223; Police Association of New South Wales v Commissioner of Police (2002) 123 IR 301 at 312 - 317; Re Club Employees (State) Award and other Awards (2002) 122 IR 272; Fox v GIO Australia Limited [2002] 56 NSWLR 512; (2002) 120 IR 410 at [45] to [47]; Mitchforce Pty Ltd v Starkey (No 2) [2003] NSWIRComm 458 at [104]; Construction, Forestry, Mining and Energy Union (New South Wales Branch) v Delta Electricity [2003] NSWIRComm 135 at [44] to [46]; and Re Crown Employees (New South Wales Fisheries Salaries and Conditions of Employment) Award [2003] NSWIRComm 405 at [66]. 38 Section 33 of the Interpretation Act provides that: In the interpretation of a provision of an Act or statutory rule, a construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object. We shall approach the construction of s 108A accordingly. 39 In Crowe v UCS Developments Pty Ltd the Full Bench referred to the Explanatory Memorandum to the Industrial Relations Amendment (Unfair Contracts) Act 2002. It is plain that reference to extrinsic material, such as parliamentary debates and papers, is permissible in the process of statutory interpretation: see s 34 of the Interpretation Act 1987. The intention of the Bill and of the Explanatory Memorandum to the Bill was considered in Crowe v UCS Developments Pty Ltd at [34] in the following way: Section 108B was enacted as a part of the amendments made to the Industrial Relations Act by the Industrial Relations Amendment (Unfair Contracts) Act 2002 which took effect on 24 June 2002. The intention of the amending Act in relevant respects is reasonably plain on its face. It was intended that applications seeking orders directed towards contracts of certain identified types and satisfying certain conditions, should be removed from the scope of the unfair contracts provisions of the Act; namely, those applications which seek to vary or avoid contracts (as defined) providing a remuneration package that exceeds an identified "remuneration cap", or those which seek an order to vary or avoid the terms of certain kinds of partnership agreements. The amending Act also required that any application for an order under s 106(1) be brought within 12 months of the termination of the relevant contract or arrangement. Those observations seem to be confirmed by the objects of the amending Act, identified in this way in the Explanatory Memorandum to the Bill: (a) to prevent an application being made to set aside or vary a contract of employment by the making of an unfair contract order if the remuneration package paid or receivable under the contract during the 12 months preceding the application (or, if paid or receivable for a shorter period, that would have been paid or receivable if converted to an annual basis) exceeds $200,000 (or a greater indexed amount), and (b) to prevent an application being made to set aside or vary a contract between partners in a partnership by the making of an unfair contract order, and (c) to require the Commission to take into account whether or not an applicant (or person on behalf of whom an application is made) took any action to mitigate loss in assessing the amount of money payable in connection with a contract that is set aside or varied by an unfair contract order, and (d) to require an application for an unfair contract order in relation to a contract that has been terminated to be made within a period of 12 months after termination. 40 The intention of the Bill was stated in the Second Reading speech which introduced the relevant Bill into the Legislative Council on 11 April 2002 as addressing the issue of "the unfair contracts jurisdiction [having been] utilised overwhelmingly as a means of obtaining compensation in connection with the termination of employment of highly paid executives" (at 1398). The Minister for Mineral Resources, and Minister for Fisheries, speaking on behalf of the relevant Minister, the Hon John Della Bosca MLC, then said, at 1399: By narrowing the application of the unfair contracts provisions of the Industrial Relations Act 1996, greater certainty will be introduced into their operation, and the more extravagant and speculative claims will be prevented. The Industrial Relations Amendment (Unfair Contracts) Bill 2002 will introduce the following limitations on the operation of the existing unfair contracts provisions. An employee earning an annual remuneration package in excess of $200,000 will not be able to make an application under the unfair contracts provisions. "Remuneration package" will be defined to mean the total value of the monetary remuneration and employment benefits that are payable or receivable under a contract of employment. Bonuses and other performance-related or incentive payments will be included in the meaning of monetary remuneration. "Employment benefits" will mean all those benefits of a private nature that are provided to an employee at the cost of his or her employer. The bill spells out that this includes superannuation contributions and motor vehicles, but makes it clear that this is not an exhaustive list. The bill also empowers the making of regulations to prescribe any new types of employment benefits that might emerge. The $200,000 cap on applicants will be annually indexed by reference to the percentage increase from year to year of the cap on access to the unfair dismissal provisions. The unfair dismissal cap increases on an annual basis by reference to the increase in the Federal unfair dismissal cap. That increase is worked out on the basis of increases in weekly earnings, as published by the Australian Statistician. 41 The present appeal raises for determination the question of what were the relevant components of the remuneration package of the respondent in terms of the relevant statutory definition. The question requires the consideration of the effect of s 108A(1)(a) as earlier set out. 42 It follows that it is the provision of the amending Act to which consideration must first be given. The parties agree that the only issue on appeal is whether the incentive payment paid in September 2001 forms part of the respondent's "remuneration package" for the purposes of s 108A(1)(a) of the Act. It was common ground that the respondent's application related to a contract of employment. It was also common ground that the incentive bonus which the respondent received, and was entitled to receive under his contract of employment, came within the meaning of "remuneration package" in s 108A. The "remuneration cap" is $200,000. 43 The respondent's employment concluded on 5 July, 2002, and thus the relevant 12 month period for the purpose of s 108A(1)(a) was 6 July 2001 to 5 July 2002. The evidence before her Honour was that during this period the respondent was paid an amount of $221,194.54. That amount included the respondent's base salary of $180,000 per annum, plus an incentive payment of $39,860 paid in September 2001 calculated by reference to the appellant's financial performance and the respondent's performance for the 2000/2001 financial year. 44 Section 108A(1)(a) refers to remuneration paid or received (or payable or receivable) during the 12 months prior to termination. The $39,860 incentive payment was clearly paid to the respondent and received by him during that period. The $39,860 incentive payment was also "clearly payable" during the 12 months prior to termination. It was accepted by the parties that there was no attempt to avoid the legislation through the terms of the contract of employment; that is, in no sense was the transaction colourable. 45 The respondent's contract of employment made it clear that his incentive payment was payable after the financial year to which it related "and will generally occur in the September Payroll". The September 2001 incentive payment was in fact payable under the terms of the respondent's employment contract at the time that it was paid. The respondent suggests that the definition of "remuneration package" in s 108A(3) when combined with the jurisdictional test set out in s 108A(1)(a) limits the items of remuneration that could be included for the purpose of the jurisdictional test to those referable to work done during the relevant 12 month period. We do not agree. There is no such limitation expressed in the legislation. In order to make good this argument, the respondent's submission requires that there be read into the section additional or different words, such as "paid for the period of 12 months immediately before termination", or, "paid in respect of the period of 12 months immediately before termination" (our emphasis). 46 Such an approach involves an unnecessary and impermissible step in construction which appears to be what led the trial judge to give an incorrect meaning to the section. A court may only read into a statute words which are not expressly included in it if it is plain that Parliament had omitted to deal with an eventuality that must be dealt with for the purpose or object of the Act to be achieved, and if it is possible to state with certainty the additional words that Parliament would have used if its attention had been drawn to the defect: for example, Jones v Wrotham Park Settled Estates [1980] AC 74 at 105; Mills v Meeking at 243 - 244; and Whittaker v Comcare (1998) 86 FCR 532 at 544. 47 The ordinary meaning of "paid" and "received" refers to the amount or sum in question having actually been paid and accepted, rather than an entitlement to receive at some future time. Similarly, the ordinary meaning of "payable" and "receivable" refers that the amount in question being owed or already able to be given and received or accepted. In Carlton Brewery Limited v Federal Commissioner of Taxation (1947) 73 CLR 446 the majority of the High Court held that the words "paid" or "payable" in taxation legislation must refer to a payment that has in fact been made or one that must be made to discharge a liability (see especially per Dixon J at 455). 48 The words of s 108A(1)(a) are used disjunctively. The approach of the "draftsperson" was to use the word 'or' to separate the words 'paid' and 'payable' and then to enclose in brackets the words 'payable' and 'receivable', with the word 'or' inserted again between those words. In our view, each of the words 'paid', 'received', 'payable' and 'receivable' is to be treated for the purposes of the construction of s 108A as giving rise to separate and distinct tests to be applied in determining whether a remuneration package exceeds the remuneration cap. 49 The respondent referred to the decision of the Full Bench of the Commission in Austeck Pty Ltd v Atsalos. The judgment in Austeck dealt with the construction of s 83 of the Act and in particular the meaning of the term "annual remuneration" as found in s 83(1)(b). Although we regard the judgment in that matter as correctly decided, it is of limited assistance in the present case since it was concerned with the different statutory scheme involved in the consideration of the expression of "annual remuneration" in s 83(1)(b). The difference in the terms and structure of the statutory criteria in s 108A and s 83(1)(b) is sufficiently illustrated by para [45] of the Full Bench decision in Austek which was as follows: [45] We consider that a reference to "annual remuneration", in the literal sense of that expression, is at odds with an interpretation that favours looking at what the applicant earned in the 12 months preceding termination of employment. We consider that the expression "annual remuneration" should be construed as the rate of remuneration fixed by the contract of employment at the point of termination. The word 'annual', in the context in which it appears, conditions the word remuneration so that the expression 'annual remuneration' is given the meaning - the rate actually fixed as the contractual yearly remuneration. 50 We have set out earlier in this judgment the conclusion of Glynn J. The appellant submitted, and we agree, that her Honour did not pose for consideration the question required by the section. The question requiring determination is whether the incentive payment forms part of the respondent's remuneration package for the purpose of s 108A of the statute. 51 The evidence compellingly leads to the conclusion that the incentive payment was due and payable at the time it was actually paid, namely, as soon as practicable after 30 June 2001 when the full business year's performance of the stores under the applicant's control could be measured. Similarly, there is no difficulty in determining what component of the incentive payment that was actually received related to the 12 month period prior to termination, because of the very close correspondence between that period and the financial years to which the incentive payments referred. In other cases a termination may occur at any time during a year, and the result of her Honour's interpretation would be that the parties would need to determine the portion of a bonus payable that should be allotted to the 12 month period prior to termination. 52 We consider that, in light of the structure and effect of s 108A and its surrounding provisions, the intention of the legislature was to include all amounts paid or received during the period of 12 months immediately before the termination. Similarly, in some cases the period to which a bonus payment relates may not be specified, with the result that the parties would have great difficulty applying the interpretation accepted by her Honour. In our view, parties need to be able to determine with objective certainty whether an application may be brought. The construction proposed by the appellant gives litigants and potential litigants greater certainty regarding the application of the section. 53 We consider that it is clear that s 108A has the purpose of removing from the unfair contracts jurisdiction those contracts where the remuneration package paid or received during the 12 months preceding the application exceeds the salary cap which is presently $200,000. 54 Finally, we observe in passing that the interpretation determined by her Honour would create similar difficulties if applied to s 108A(2) of the Industrial Relations Act. That interpretation would require partners to determine what net profits are referable to the period of 12 months immediately before an application or determination of a partnership rather than simply looking at the amounts actually paid or received (or payable or receivable) during that period. 55 We therefore consider that her Honour fell into relevant error which requires correction on appeal. ORDERS 56 We accordingly make the following orders: 1. Leave to appeal is granted. 2. The appeal is upheld. 3. The orders made by Glynn J on 1 August 2003 are set aside. 4. Order made in terms of the first order sought in the motion filed by the appellant in the proceedings at first instance. 5. Liberty to apply in respect of any other orders necessary to conclude the proceedings at first instance and on appeal provided such liberty is exercised within 21 days. __________________ DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.