Local Court of New South Wales CITATION: Kapmeyer v Damstra Mining Services Pty Ltd [2007] NSWLC 28 JURISDICTION: Civil PARTIES: Thomas Kapmeyer Damstra Mining Services Pty Ltd FILE NUMBER: 2290/07 PLACE OF HEARING: Downing Centre DATE OF DECISION: 08/17/2007 MAGISTRATE: Magsitrate B A Lulham CATCHWORDS: Contract - privity of contract - construction - which term can be implied - whether term of enterprise agreement implied in contract between employer/employee not parties to enterprise agreement LEGISLATION CITED: Toll v Alphapharm (2004) 219 CLR 164 CASES CITED: BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 Byrne v Australian Airline Ltd (1995) 185 CLR 410 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 42 Plaintiff's Counsel: Mr A.M. Slevin REPRESENTATION: Plaintiff's Solicitors: Morris Blackman Cashman Lawyers Defendant's Counsel: Mr S.R. Meehan Defendant's Solicitors: Blake Dawson Waldron ORDERS: Judgment for the defendant. Costs to follow the event. BACKGROUND TO DISPUTE 1 Thomas Kapmeyer (plaintiff) was employed by Damstra Mining Services Pty Ltd (defendant) (hereinafter referred to as 'Damstra') from 18 July 2002 to 24 October 2003. Damstra provided labour to mine sites in the Hunter Valley. Mr Kapmeyer alleged that he was employed on the basis of an oral agreement reached in June 2002 which included a condition that if working at the Bulga open cut mine, he would be paid the same as the miners at Bulga. Mr Kapmeyer alleged that he wasn't paid his proper entitlements and claimed the sum of $10,284.43. The amount claimed was reduced to $6,354.11 following a payment by the defendant of $3,930.32. The hearing proceeded on the basis that no admission or inference of any kind was to be taken from such payment. Damstra alleged that the plaintiff was employed on the basis of a written offer of casual employment dated 18 July 2002, which Mr Kapmeyer signed on the same day. Damstra claimed that it had paid Mr Kapmeyer his entitlements pursuant to that agreement and he was not entitled to any additional payments. 2 Mr Kapmeyer, whilst employed by Damstra, worked at three Mines being the Bulga Open Cut Mine, the Ravensworth East Coal Mine and Narama Coal Mine. He worked predominantly at the Bulga Mine. The Bulga Surface Enterprise Agreement 2001 (Bulga Enterprise Agreement) applied from 6 June 2001 to 6 June 2003. The parties to the agreement were the Bulga Coal Management Pty Ltd (Bulga Coal) and the Construction Forestry Mining and Energy Union (CFMEU) and its members, who were employed by Bulga Coal. The Bulga Enterprise Agreement provided that employees of companies supplying supplementary labour were to be paid according to the rostered salary rate applicable to the roster on which he/she was engaged, plus some additional entitlements. 3 Mr Kapmeyer claimed that he was entitled to be paid when working at the Bulga Mine in accordance with Clause 25 of the Enterprise Agreement. The defendant argued that the only parties to the Enterprise Agreement were Bulga Coal and the members of the CFMEU, employed by the company at Bulga. The defendant argued that Clause 25 could not bind the plaintiff nor the defendant as they were not parties to the Agreement. APPLICABLE LEGAL PRINCIPLES RE CONSTRUCTION OF THE CONTRACT 4 In Toll v Alphapharm (2004) 219 CLR 164 the High Court set out the proper approach to the construction of the contract. It said at [40]: 'It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.' 5 I propose to apply those principles when determining the contractual agreement reached between Mr Kapmeyer and Damstra. THE ISSUES 6 The determination of this matter will require me to consider the following issues: 1. What was the basis upon which the plaintiff was paid by Damstra when engaged at Bulga? 2. What were the terms of the contract of employment between Mr Kapmeyer and Damstra? 3. Was Mr Kapmeyer entitled under the contract of employment to be paid pursuant to Clause 25 of the Enterprise Agreement? 4. Quantum. 1. What was the basis upon which the plaintiff was paid by Damstra when engaged at Bulga? 7 I have decided that I should examine carefully the provisions and applicability of Clause 25 and the basis upon which Mr Kapmeyer was paid by Damstra when he was working at the Bulga Mine. I am satisfied that an examination of those issues will highlight the basis of the plaintiff's contractual claim in these proceedings and the legal difficulties confronting that claim. 8 I am satisfied that Mr Kapmeyer was an employee of a supplementary labour provider, namely Damstra. I am further satisfied that as between Bulga Coal and the members of the CFMEU employed by Bulga Coal, Mr Kapmeyer was entitled to be paid in accordance with Clause 25. I make those findings based on the clear wording of Clause 25. The reason that the Union would require Clause 25 to be inserted to govern the rates of pay for labour hire employees, was referred to in evidence by Mr Kapmeyer. He agreed that his employer Damstra, was not a party to the Bulga Enterprise Agreement. Mr Meehan who appeared for the defendant, referring to the Bulga Enterprise Agreement, asked the following question (Tp21, L20): Q. It just applies to them, is that what you're saying? A. Yes, that's what I'm saying yes, it's part of the agreement that they supply labour so the miners get paid the same as the miners, so it's part of the miners' agreement to let contractors in there. 9 Mr Kapmeyer's understanding was confirmed by the evidence of Lloyd Owen Hill. Mr Hill was called by the plaintiff. He is the Lodge Secretary of the CFMEU. He said that his understanding was that Damstra employees who were sourced by Bulga Mines were to be paid in accordance with Clause 25 (statement para 9). He confirmed the view expressed in his statement (T,p26, L53) where he said: "My understanding of the supplementary labour clause that those third parties would work under the provisions of that in the agreement. That's what the supplementary labour clause was put in there for." He explained the reasoning behind Clause 25 in the following answer (T25, L20): A. Well when we went through the Enterprise Agreement and I was involved in the Enterprise Agreement and during those negotiations with the company, it was clear as negotiated, that that was the understanding. That was that any third party that was employed under the supplementary clause, would come under there and be paid as if it was us. 10 I am satisfied that the reasonable inference from that evidence is that the CFMEU in negotiating the Bulga Enterprise Agreement were concerned to protect the position of miners employed by Bulga, and the Union required that if labour hire employees were employed, that they should be paid the same rate as Bulga miners would receive for the same roster, so as to protect Bulga miners jobs. The Union did want labour hire employees employed at a cheaper rate than Bulga Miners. 11 It was apparent from Mr Kapmeyer's Statement of Claim that his main complaint was that when working on the seven day, twelve day, twenty minute shift, he was paid at an hourly rate of $42.31 whereas Bulga employed miners were paid $50.63 per hour. There were similar but less differences in the overtime rate. 12 William John Damstra, the Managing Director of Damstra gave evidence that whilst Damstra's Personnel Manager Robert Martin hired employees and offered them shifts according to the requests of the mines, he (Mr Damstra) negotiated with the mine owners the rates of pay for workers supplied to the mine for work hire or supplementary labour. He said Damstra would pay that rate if such rate was above the basic rate upon which Damstra employees were employed. Everyone agreed that the Bulga Mine rate was above the basic rate payable by Damstra to its employees. 13 In cross examination Mr Damstra said (Tp38, L5) that Damstra was told by the mine site the rates of pay to be paid by Damstra to its employees. He said it was a stipulated rate which was given to Damstra verbally (Tp38, L20). 14 In further cross examination Mr Damstra agreed that he received correspondence from the Union alleging that Mr Kapmeyer was being paid less than what he was entitled to under the Bulga Enterprise Agreement. Mr Damstra said in cross examination (T40,L30): "Yeh, well the argument was which rate applied and we applied the rate we were instructed to pay, that's all I can go with." Q. But they were always rates that were in the certified agreement? A. Well they were the rates given to us by Bulga to pay and whether they were in the certified agreement at that time, we were still looking into. That's, it was the rate given to us by Bulga Coal that we had to pay. That's all. Q. You didn't ever provide the Union with a copy of a document from Bulga Coal that said you could pay a rate other than the certified agreement did you? A. No. 15 Mr Damstra claimed in his statement that Mr Kapmeyer was seeking that Damstra pay a higher base rate than that referred to in the Bulga Enterprise Agreement (statement para 20). He submitted that the Bulga Enterprise Agreement did provide for an hourly rate and that calculating an hourly rate based on the amounts paid to Bulga Mine employees could not properly be done because Bulga's employees were paid on the basis of an annualised salary. I reject that evidence and argument. The evidence established that Damstra paid the rate of $42.31 an hour, which must have been calculated on an hourly basis from the wages paid to Bulga Mine employees – that is on the same basis but at a different rate to the $50.63 per hour. 16 There appeared to be a contradiction between the evidence of Mr Martin and his employer Mr Damstra as to whether or not Mr Kapmeyer worked on a permanent roster 'A' at Bulga from February 2003. I am not satisfied that there was a real contradiction. I am satisfied that as from February 2003 Mr Kapmeyer did work on the 'A' shift as a casual employee. I am satisfied that on at least six occasions between 28 February 2003 and 23 August 2003 he did not complete a shift as he was requested by Bulga Coal (as it was entitled to do) to cease work because of a problem at the mine, such as weather conditions, machinery breakdown etc. I am satisfied that he did not in that period work on about ten shifts in accordance with the roster. As a casual employee of Damstra he did not have to work all shifts as provided by Bulga Coal. Generally however he did work on the 'A' roster. 17 The evidence in relation to the rates of pay on various shifts was somewhat unsatisfactory. There was little evidence given by or for the plaintiff, although the position was explained by Mr Slevin, Counsel for the plaintiff, in his submissions. 18 I am satisfied however on the balance of probabilities, that on the roster which Mr Kapmeyer was working between February and August, that the hourly rate of pay which he was entitled under Clause 25, was $50.63 per hour and not the $42.31 per hour he was paid. I am satisfied, on the balance or probabilities, that $50.63 per hour was 'the rostered salary rate applicable to the roster on which he was engaged' in accordance with the wording of Clause 25. 19 I am therefore generally of the view that the plaintiff would be entitled to succeed in his claim if he can satisfy me that he was employed by Damstra under an agreement under which he was entitled to be paid in accordance with Clause 25, either by an express condition to that effect or by an implied condition to that effect. 2. What were the terms of the contract of employment between Mr Kapmeyer and Damstra? 20 Mr Kapmeyer's witness statements dated 2nd April 2007 and 9th May 2007 were tendered as Exh.1 and Exh.2. Mr Kapmeyer said that on 8 July 2002 he went to the offices of Damstra, taking with him his resume intending to drop it off at the office. He said he spoke to Robert Martin, the operations manager for Damstra. He said he handed him a copy of his resume and he was then asked questions about his school and previous work experience. He said the following conversations then took place: Martin: We can give you some work at Bulga with your skills. Kapmeyer: What's the money? Martin: It's top dollar, about forty something dollars an hour. Kapmeyer: How come? Martin: It's because of the Mine Agreement. You'll be paid at the same as the miners at Bulga. You'll work twelve hour, twenty minute shifts on over burden and eight hour shifts on coal. You'll be employed as a casual. We might need you to work three or four days or nights in a row, or as required. Kapmeyer: Okay then I'll take the job. 21 Mr Kapmeyer said he was given a number of documents on that day and perhaps also on another day. He said he signed the documents, none of which included any reference to the rate of pay. 22 He commenced work on Friday 19 July 2002 with Damstra at the Bulga Colliery on a casual basis. He said he became aware that other contractors were receiving a higher rate of pay and were also receiving a bonus. He said approached the CFMEU. 23 He said on 5 February 2003 he was advised by Mrs Damstra that he had been selected for transfer onto a permanent shift roster at Bulga. He was to commence work on 8 February 2003 with the A Crew. He said he then worked in accordance with the roster. 24 In about August 2003 he was given a further document to sign by Robert Martin acknowledging the adjustment of his rate of pay as a result of the certification of the new Bulga Surface Operations Agreement 2003. He said he did not keep a copy of the letter. A copy of the same letter forwarded to Mr Greg Schultz, was tendered as Exh.10. The letter was in the following form: 'Mr Greg Schultz Unit 1, 20 George Street BRANXTON 2335 Dear Greg As you would be aware the new Enterprise agreement has been ratified and signed at Bulga Operations Mine. As a consequence of this your hourly pay rate is required to be adjusted in accordance with the new Agreement. A discussion has been held with site Management and Damstra Mining Services with the following hourly rates being agreed to . Base rate of $21.50 per hour, effective 24 August 2003 . Casual loading of 25% is still applicable on base hours . Site Bonus is no longer applicable however the district average bonus is applicable as per the new Bulga site agreement terms. Thank you for your understanding of this matter as I am sure you are aware that we must comply with the sites requirements under their Enterprise Agreement. 25 Mr Kapmeyer kept copies of his pay advices and they were tendered as Exh.4. They confirm that after 20 August 2003 (date of the above letter) the basis on which Mr Kapmeyer was paid, was different. Whereas previously he was generally paid at a basic hourly rate of $42.31, he was then paid at an hourly rate of $21.50. However, after 20 August 2003 he was paid a bonus of $319.17 per pay, irrespective it would seem of the amount of hours worked. 26 Mr Slevin for Mr Kapmeyer made the point that Damstra felt obliged to comply with Bulga's requirement under the Enterprise Agreement when it lessened the workers' entitlement, but not to be bound by Clause 25 when it increased the amount payable to Mr Kapmeyer. 27 In cross examination Mr Kapmeyer agreed that he was sent for a medical examination by Mr Martin. When shown a medical examination report (Exh.6) dated 1 July 2002, Mr Kapmeyer conceded that the conversation he had with Mr Martin must have occurred in late June and not on 8 July as he alleged. I considered Mr Kapmeyer made the concession that his recollection of the date was wrong as soon as the documents were shown to him. I am satisfied that Mr Martin, having the benefit of the written documents, had a better recollection as to the date of the original conversation. 28 Mr Meehan put to Mr Kapmeyer the following question and obtained the following answer in cross examination (Tp13,L10): Q. And what Mr Martin said to you in June 2002 was that Damstra should be able to offer you work at Bulga provided you met those criteria? A. That's true. 29 Mr Kapmeyer denied that he was told that he would be paid a base rate of $20.00. He agreed however in cross examination (T.p13,L50) that the base rate paid to him by Damstra for work at other mines was at a base rate of $20.00. He said he was told a figure of $40.00 and said the original conversation centred on working at Bulga because he was only experienced in mechanical trucks and could not work at the other mines which used electric trucks. He agreed (Tp15,L35) that he was told by Mr Martin at their meeting in June that he would be paid overtime at weekends, but denied that he was told of other overtime rates. 30 Although not recalling the telephone call, Mr Kapmeyer conceded that he probably went into Mr Martin's office to sign documents in relation to his employment. He said he signed it even though on his version of the agreement it didn't apply, because he understood that he would be working at Bulga. He said (T.p19,L15) he didn't refer to the 18 July agreement in his witness statement because it was irrelevant to his work at Bulga. He agreed the agreement did form the basis of his employment by Damstra (T.p20,L15). It was suggested to Mr Kapmeyer that correspondence by the Union to Damstra did not allege that Damstra had breached the Bulga Enterprise Agreement. Mr Kapmeyer replied that Damstra should have paid in accordance with Clause 25 of the Enterprise Agreement. He agreed that such clause dealt with supplementary labour and did not apply to permanent employees. In re-examination (T.p23,L25) Mr Kapmeyer said that at the first meeting Mr Martin did mention 8 hour shifts or 12 hour 20 minute shifts, but did not mention a rate of $20.00 per hour. 31 Alexander Robert Martin (aff. 3/4/07 Exh.9) deposed that he was the personnel manager of the defendant and had been in such position since January 2001. He set out the procedure he adopted when engaging casual employees for Damstra. He said that he advised all applicants that Damstra paid a base hourly rate, plus a casual loading in shift loading, but also explained that if a Mine required them to pay more than the above base rates, Damstra would pay the rate required by that Mine when employees work at that Mine. He said that the Bulga Mine for example, had three blocks of shifts per week and he would usually be contacted by the Mining Superintendent three times per week if Bulga required labour. 32 Mr Martin deposed that he had an interview with Mr Kapmeyer towards the end of June 2002. He said during that interview he said words to the effect of: "You will be paid a base hourly rate of twenty dollars. You will also be paid casual loading on top of that as well as shift loading. You will be paid overtime rates on weekends and you will also be paid overtime after ten hours on a week day if you are working a 12.33 hour shift. Overtime is paid at double the base hourly rate. If there is a difference between our base rate and the base rate that a mine requires us to pay, we will pay you in accordance with the mine site's requirements." 33 He said subsequently Mr Kapmeyer completed the medical assessment induction programme and other requirements, and that following his telephone request Mr Kapmeyer signed a letter of offer of casual employment. The offer of casual employment included the following provisions: 'Date: 18.7.02 DAMSTRA MINING SERVICES PTY LTD OFFER OF CASUIAL EMPLOYMENT Employee: THOMAS KAPMEYER Damstra Mining Services Pty Limited is a contractor supplying casual labour to various coal-mining operations in the Hunter Valley of NSW. Rates of pay and conditions of employment are generally in accordance with the relevant Coal Mining Industry Awards which apply in the state of NSW. As a casual employee, there is no entitlement to Annual Leave, Sick Pay or Long Service leave, however, monetary compensation for these components is included in the hourly wage rate for ordinary time. Time worked in excess of ordinary hours, and shift allowances, where applicable, are paid in accordance with Coal Mining Industry Awards, and there shall be no additional claims. Superannuation at the rate of 8% is paid on the standard hourly rate, casual loading and nightshift allowance, (not overtime rates) to C.O.S.A.F. or the fund of your choice. You are not covered by death & disability with C.O.S.A.F. Disclaimer…. ... ... Please indicate your acceptance of this offer of casual employment by signing both copies of this offer.' 34 Mr Martin said he did not have any further discussion with Mr Kapmeyer in relation to his rate of pay. He said that at the time he offered Mr Kapmeyer employment and during his employment at Damstra, he had no knowledge of the terms of the Bulga Enterprise Agreement and that he had never seen such agreement. He said he was aware that Bulga Mine required Damstra to pay its employees a higher base rate than the standard rate paid by Damstra. However he did not know what the Bulga rate was. 35 Mr Martin said that as a casual employee Mr Kapmeyer could decide which shifts he would work and whether he would work on weekends or on public holidays. On the other hand, he only received payment for the hours he worked and could be sent home if he was unable to work due to wet weather or machinery breakdown, or some other reason that meant work was no longer available. 36 He said Mr Kapmeyer worked at the Bulga Open Cut Mine, Ravensworth East Coal Mine and Narama Coal Mine. 37 He said that in February 2003 he received a request from the Bulga Mine that they had a position on one of the rosters for a few weeks or until further notice. He suggested Mr Kapmeyer and the person from Bulga agreed. He said he then telephoned Mr Kapmeyer who agreed to take the position. 38 He said the terms and conditions of Mr Kapmeyer's employment remained the same. He could decline to work certain shifts and was not required to work in the event of a machinery breakdown or wet weather. He said on occasions Bulga Mines contacted him to advise that Mr Kapmeyer was not required for a particular shift. On some occasions he said Mr Kapmeyer called to say he was not able to attend a shift, and on those occasions Mr Martin arranged for someone else to do the shift. 39 Mr Martin (T.p47,L15) confirmed that when he spoke to Mr Kapmeyer on the first occasion that he was not aware of the detail of the rate and how it was calculated at Bulga, but knew that they paid a higher rate than Damstra's base rate. He said when Mr Kapmeyer was employed by Damstra the company had approximately 40 to 50 employees. 40 Mr Martin said that if a Damstra employee wanted to know the rate paid by Bulga, he would have to make enquiries. He said (T.p50,L25) that he did not know that the rate at Bulga was significantly higher when he was talking with Mr Kapmeyer, but he did become aware subsequently. He said when doing the interviews he did not even give potential employees an estimate of what they could earn at Bulga. Mr Martin denied that it was unusual for a personnel manager employing labour hire employees to work at Bulga mines not to know its rate of pay. 41 Mr Martin agreed that a copy of the letter forwarded to Mr Schultz advising him that a new Enterprise Agreement had been ratified and signed at Bulga Mine was forwarded to all employees of Damstra affected by the new Enterprise Agreement. He agreed that the base hourly rate was reduced from $42.31 to $21.50. In re-examination Mr Martin agreed that the letter forwarded to the employees indicated that Damstra had held discussions with Bulga Coal and that following the new Enterprise Agreement, new rates had been agreed between Damstra and Bulga Coal as a commercial negotiation. CONCLUSION RE FINDING AS TO TERMS OF AGREEMENT Was there an express term incorporating Clause 25 into the Agreement between Mr Kapmeyer and Damstra? 42 Mr Slevin for the plaintiff contended that an agreement for employment was reached between the parties on 8 July 2002 during the first conversation which Mr Kapmeyer had with Mr Martin. It quickly became obvious that such conversation occurred probably in the last day or two of June and not on 8 July. That fact emerged from Mr Meehan's cross examination of Mr Kapmeyer and to the fact that the medical examination and report was carried out and prepared on 1 July (Exh.6). The induction was carried out on 5 July 2002. Confronted with those documents Mr Kapmeyer conceded that his recollection as to the date was incorrect. Mr Meehan submitted strongly that Mr Kapmeyer's error as to the date of the conversation was highly significant. I do not agree. I am not satisfied that much turns on the incorrect date at all. Mr Kapmeyer's recollection as to the date was incorrect and to that extent his credit was affected. Mr Slevin's submission that a concluded and binding agreement for employment was reached during the first discussion, remained his principal submission. He relied on the reference to Mr Martin's statement that "It's top dollar, about forty something dollars an hour. It's because of the mine agreement, you'll be paid at the same as the miners at Bulga" as incorporating Clause 25 of the Bulga Enterprise Agreement as an express term of the contract between Mr Kapmeyer and Damstra. 43 There is no doubt there was a discussion between Mr Kapmeyer and Mr Martin when Mr Kapmeyer attended Damstra's office armed with his resume. I am not satisfied that there is much significant difference between each man's version as to what was said. I am satisfied that the conversation was more extensive than that deposed to by Mr Martin as set out in para 15 of his statement. I am satisfied that Mr Kapmeyer's experience in driving only mechanical trucks did cause the conversation to concentrate on the Bulga Mine which was the only place where Mr Kapmeyer could work, based on his then experience. 44 I am satisfied that a conversation along the lines recalled by Mr Kapmeyer occurred. I am equally satisfied that Mr Martin said words to the effect that the base rate was $20.00 per hour and setting out overtime rates and adding that if the mine requires Damstra to pay a higher rate than Damstra's rate, that Damstra would pay that rate. I am very comfortably satisfied that the conversation went much longer than each man indicated. Clearly for instance there was conversation about Mr Kapmeyer attending a medical assessment on 1 July and attending the induction on 5 July. I do not think it unusual at all that Mr Kapmeyer can recall the fact that he would be earning about "forty something dollars an hour, "but would not recall the particulars as to how his base wage would generally be calculated and not recall the reference to a base rate of $20.00 per hour. 45 Mr Martin deposed that he had no knowledge of the terms of the Bulga Enterprise Agreement and that he had not seen the Agreement. It followed that he was not aware of the provisions of Clause 25 of the Agreement. I found that somewhat surprising, but he was not cross examined as to that knowledge. I was however not impressed at all with Mr Martin's statements in cross examination that he had no idea of the rate of pay Damstra paid to its employees engaged at the Bulga Mine. I do not accept that evidence. I am satisfied that he did have a general knowledge and I am satisfied that he did mention a rate of 'forty something dollars an hour' during his first conversation with Mr Kapmeyer. That stated rate was generally in accordance with Bulga's rates. 46 I am satisfied that Mr Kapmeyer was not aware of the provisions of Clause 25 of the Bulga Enterprise Agreement when he spoke to Mr Martin. He made no reference to it in that conversation and indeed asked questions about how the rate was 'forty dollars something an hour' which indicated that he was not aware of the existence of the clause. 47 I am satisfied that Mr Martin did telephone Mr Kapmeyer and that he attended Damstra's office on 18 July 2002. I am satisfied that he signed the offer of casual employment and he was bound by the provision of that clause as to his base pay when working for mines where the base rate pay applied. 48 However, as is often the case, the written offer on 18 July did not contain all of the conditions. That proposition is supported by use of the word 'generally' in the clause specifying the rates of pay and conditions of employment. The written offer did not refer to the rate of pay when Mr Kapmeyer was working at mines which required Damstra to pay a rate in excess of Damstra's base rate. I am satisfied that the terms of pay in relation to that situation was set out by Mr Martin during his discussion with Mr Kapmeyer wherein he said: "If there is a difference between our base rate and the base rate that a mine requires us to pay, we will pay you in accordance with the mine's site requirements." 49 Applying the approach and principles stipulated in Toll v Alphapharm, I am satisfied that each party by its words and conduct would have led a reasonable person in the position of the other party to believe that Mr Kapmeyer and Damstra reached an agreement partly oral and party written to the following effect: 1. That Mr Kapmeyer would be employed by Damstra as a casual employee and would be offered work at various mines on conditions usually applied to such casual employees, e.g. only offered work if work available, not obliged to take work etc. 2. That Mr Kapmeyer would be paid a base rate according to the written offer that: Rates of pay and conditions of employment are generally in accordance with the relevant Coal Mining Industry Awards to apply in the State of New South Wales. As a casual employee there is no entitlement to annual leave, sick pay or long service leave. However, monetary compensation for these components is included in the hourly wage rate for ordinary time. 3. That if there is a difference between Damstra's base rate as set out in 2. and the base rate that a mine requires Damstra to pay, then Damstra will pay in accordance with the mine site's requirement. 50 I am satisfied that Mr Martin did indicate that at the Bulga Mine, Mr Kapmeyer could earn about forty something dollars an hour, because under the Mine Agreement, he would be paid the same as the miners at Bulga. I am satisfied that the reasonable objective observer would not regard those statements as terms of the contract, so as to bind Damstra, but merely an indication of the type of money and the reason why Mr Kapmeyer could earn that sort of money at Bulga Mines. 51 I am satisfied that the reasonable objective person, considering the words used and the actions of the parties, would find that there was not a binding employment agreement entered into by the initial conversation between Mr Martin and Mr Kapmeyer. The initial conversation was in the nature of preliminary discussions and whether or not Mr Kapmeyer was offered a job, would depend on the medical examination, the completion of the induction programme and signing the offer of employment. Mr Kapmeyer virtually conceded that position when the following evidence was given (T.p13,L10): "And what Mr Martin said to you in June 2002 was that Damstra should be able to offer you work at Bulga provided you met those criteria? A. That's true." I am satisfied that the employment agreement was not concluded until 18 July 2002. 52 I am satisfied that Mr Kapmeyer was informed that he would be offered employment at a number of mines and was aware that the amount which he would earn would vary, depending on the mine at which he worked. He was therefore employed on the basis of the base pay payable by Damstra but with the opportunity to earn more money, depending on the base rate which the particular mine required Damstra to pay. 53 I am satisfied that Mr Martin was not involved with negotiating the amount to be paid to employees who worked at Damstra and the task was done by Mr Damstra. That finding would be taken into account by the objective reasonable person in finding that when referring to the fact that Mr Kapmeyer could earn forty something dollars per hour, and be paid the same as the miners, Mr Martin was making general statements in the discussion with Mr Kapmeyer, and not making statements on the basis of their forming terms of the employment contract. That finding would lead to the finding that when Mr Martin stated "Damstra will pay in accordance with the mine site's requirement", he was not referring to Clause 25, but to the arrangement reached between Mr Damstra and each mine as to the rate to be paid in accordance with the mine's requirement. 54 For all of the above reasons, I am not satisfied that it was an express term of the employment entered into between Mr Kapmeyer and Damstra, that the defendant would be paid in accordance with Clause 25 of the Bulga Enterprise Agreement. 55 I have already found that neither Mr Kapmeyer nor Mr Martin was aware of the existence of Clause 25 of the Bulga Enterprise Agreement. It would be most unusual for an oral agreement to have incorporated into a contract Clause 25, of which neither of them was aware. 56 For all of the above reasons I am not satisfied that it was an express term of the employment agreement entered into between Mr Kapmeyer and Damstra that Mr Kapmeyer would be paid in accordance with Clause 25 of the Bulga Enterprise Agreement. Should the Court imply a term in the employment contract that Clause 25 of the Bulga Enterprise Agreement set the rates for work performed under the contract between Mr Kapmeyer and Damstra 57 Mr Slevin, for the worker, contended that the court is able to imply a term into the employment contract if it is necessary to give effect to the actual terms of the contract. He submitted that the principles governing the implication of such a term are set out in the majority judgment of the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283. I accept that case sets out the applicable principles. 58 Mr Slevin helpfully included an extract from the decision of Byrne v Australian Airline Ltd (1995) 185 CLR 410. I propose to set the extract out in full. I found the further extract from the decision of Deane J in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 42 AT 121 particularly instructive: 'The implication which the appellants seek to make is based upon the presumed or implied intention of the parties. In that context, the remarks of the majority in the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (65) are frequently called in aid: (1) (the implication) must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying': (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract". In laying down those criteria, it was recognised that there was a degree of overlap. Further, as Deane J has observed (66) in Hospital Products Ltd v United States Surgical Corporation , the cases in which the criteria in BP Refinery (Westernport) Pty Ltd v Shire of Hastings have been applied in this Court are cases in which there was a formal contract, complete on its face. He pointed out that a rigid approach should be avoided in cases, such as the present, where there is no formal contract. In those cases the actual terms of the contract must first be inferred before any question of implication arises. That is to say, it is necessary to arrive at some conclusion as to the actual intention of the parties before considering any presumed or imputed intention. And the test is to be then applied was in a later case formulated by Deane J in these terms (67): "The most that can be said consistently with the need for some degree of flexibility is that, in a case where it is apparent that the parties have not attempted to spell out the full terms of their contract, a Court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. That general statement of principle is subject to the qualification that a term may be implied in a contract by established mercantile usage or professional practice or by a past course of dealing between the parties." 59 Mr Slevin submitted that Mr Kapmeyer was entitled to know the rate at which he would be paid. He submitted that for the employment contract to operate reasonably or effectively, the Court should imply the condition that Mr Kapmeyer was to be paid in accordance with Clause 25. 60 That submission would have considerably more weight if there were only two rates of pay to be ascertained, that is, Damstra's base rate and the Bulga Enterprise Clause 25 rate. There were however two other mines Ravensworth East and Narama, one of which at least had another different rate. 61 In this case the parties did not set out all the terms in a formal contract. I have found the contract to be partly oral and partly written. I have set out my finding as to the terms of the contract (para. 49 hereof). I found that the terms of the contract regarding payment was that the rates of pay and conditions of employment were generally in accordance with the relevant Coal Mining Industry Awards. The usual rate was calculated in accordance with Mr Martin's statement at the initial interview and confirmed in the written offer. If there was a difference between Damstra's rate and the base rate that a Mine required Damstra to pay, then Damstra would pay that amount in accordance with the Mine Site's requirement. 62 In the circumstances where Mr Kapmeyer was required to work at various Mines, and where the amount required by each Mine to be paid might vary, I am satisfied that those conditions are definite. Mr Kapmeyer was aware of the base amount which he would be paid by Damstra and it would not be difficult for him to work out his expected pay, based on a 35 hour week. His terms of employment provided that if a particular Mine required Damstra to pay a rate over the base rate, then Damstra would pay that amount in accordance with that mine's requirements. I am satisfied Mr Kapmeyer started with Damstra at the Bulga mine on those conditions. 63 Mr Damstra's evidence was that the additional amount to be paid was negotiated between Damstra and the particular mine in commercial negotiations. That evidence confirmed Mr Martin's statement that the amount payable would be in accordance with the mine company's requirements. 64 It was not submitted and I did not consider whether there was any legal obligation to be implied in the agreement between Mr Kapmeyer and Damstra requiring Damstra to pay Mr Kapmeyer in accordance with the agreement between Bulga Mine and the CFMEU. I have not considered the matter on that basis. I would be surprised if the law would require such a wide term to be implied. In other words, it was not argued that Damstra was under any implied legal obligation to its employee to ensure that the agreement which it reached with Bulga Coal complied with the requirements of Clause 25 of the Bulga Enterprise Agreement. 65 There was not in this case any evidence of the type referred to by His Honour Deane J in Hospital Products Ltd to the effect that Clause 25 could be implied by established mercantile usage or professional practice or by a past course of dealing between the parties. 66 In Byrne v Australian Airlines the plaintiff sought to include as an implied term in the contract of employment between himself and his employer Australian Airlines, a clause in the Award which covered his employment. Clause 11A of the Award provided: 'Termination of employment shall not be harsh, unjust or unreasonable." Mr Byrne sought to have that clause of the Award included as an implied condition in his contract of employment, and to then assert that a breach of that clause by his employer, entitled him to bring a claim for damages. The High Court held that the relevant provision of the Award was not an implied term of the contract of employment, because its implication was not necessary for the reasonable and effective operation in all the circumstances. 67 In this case of course Mr Kapmeyer seeks to incorporate in his contract of employment with Damstra, a clause an Enterprise Agreement to which neither he nor his employer were parties. I am not satisfied that there is any findings in the decision or reasoning in Byrne v Australian Airlines which assisted the plaintiff. 68 I am not satisfied that the term sought to be implied by the plaintiff should be implied in accordance with the principles in BP Refinery (Westernport) Pty Ltd. I am not satisfied that as between Mr Kapmeyer and Damstra, that the clause is required to make the agreement effective and reasonable. 69 I received very helpful submissions from Mr Slevin and Mr Meehan. I have taken all of the submissions into account, even though I may not have referred to them in my judgment. I note that Mr Slevin's principal submission was that a concluded agreement was reached during the first conversation between Mr Martin and Mr Kapmeyer. Mr Meehan submitted that the contract was to be found in the written offer signed by the parties on 18 July. I have accepted neither of those submissions and I have found that the contract was partly oral and party written and in the terms that I have set out. I am satisfied on the basis that the matter was conducted, that I am able to come to that finding without seeking any further submissions from the parties. I adopted Mr Slevin's submissions in relation to the pleadings and I have endeavoured to determine the matter on the merits between the parties. 70 I have come to the view that the plaintiff is unable to succeed on a contractual basis to recover the amount sought from the defendant. 71 I make the following order: There will be judgment and verdict for the defendant. 72 I would propose the following order in relation to costs: Costs follow the event. The plaintiff is to pay the defendant's costs and disbursements on an ordinary basis as agreed. In default of agreement within 28 days, the costs are to be assessed under the Legal Profession Act. 73 I shall hear from the parties in relation to the proposed cost order. B.A. LULHAM 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.