Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union v Ardmona Foods Limited - [2006] FCA 1039 - FCA 2006 case summary — Zoe

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Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union v Ardmona Foods Limited

[2006] FCA 1039

Federal Court of Australia|2006-08-11|Before: Ryan J

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Court

Federal Court of Australia

Decision date

2006-08-11

Before

Ryan J

Source

Original judgment source is linked above.

Judgment (106 paragraphs)

[1]

REASONS FOR JUDGMENT 1 This is an application by the applicant, the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union ("the Union") for the imposition on the first respondent Ardmona Foods Limited ("Ardmona") and the second respondent SPC Ardmona Operations Limited ("SPC") of penalties under s 178 of the Workplace Relations Act 1996 (Cth) ("the Act") for a contravention respectively of cl 7.3(viii) of the Ardmona Foods Limited Certified Agreement AMWU (Food and Confectionery Employee) 2001 ("the Ardmona Agreement") and cl 15.5.5 of the SPC Operations Limited Certified Agreement AMWU (Food and Confectionery Employees) 2001 ("the Shepparton Agreement").

[2]

The alleged breach of cl 15.5.5 of the Shepparton Agreement affecting Mr Duncan 2 Mr Duncan has been employed as a seasonal worker at the food processing factory of Ardmona at Mooroopna and that of SPC at Shepparton. He has worked at one or other of those factories in each season over most of the last thirty years. The "season" is the period beginning in summer when large quantities of fruit are available for processing. The rest of the year is referred to as the "off-season." In the ten seasons or so in which he did not work for Ardmona or SPC, Mr Duncan was employed as a mortician at the local hospital. In the course of working at the factories, Mr Duncan undertook a wide range of jobs, encompassing almost every processing machine, and also performed, at times, the duties of a leading hand. 3 During 2000, Mr Duncan worked intermittently for Ardmona during the off-season and he obtained more regular work into the summer of that year after the season had commenced. Towards the end of the season in 2001, he sustained a leg injury which was unrelated to his work for Ardmona. As a result of his injury, he elected not to work for either company during the 2001-2002 summer season. However, at the end of 2002, he applied to each of Ardmona and SPC for work in the 2002-2003 season and accepted an offer from SPC to work at its plant early in 2003. Work during that period was intermittent and, for a time, Mr Duncan was transferred to night shift which he found uncongenial. Nevertheless, he carried out the duties assigned to him until he was returned to work on day shift under the supervision of Mr Maskell. At the end of the 2002-2003 season Mr Duncan was given by Mr Maskell a "ratings slip" which effectively accorded him a "B" rating. Mr Duncan disputed the appropriateness of that rating and pressed Maskell to change it. After that request was declined, Mr Duncan arranged for Mr Campbell, the Union's organiser, to attend a meeting with Mr Ottrey, who was then the Human Resources Manager for SPC. 4 The meeting occurred on 29 May 2003 and was attended by Mr Duncan, Mr Campbell, Mr Driver, who was the Union's shop steward at the Shepparton site, and Mr Ottrey. Representations were made to Mr Ottrey to the effect that Mr Duncan's rating should be changed from "B" to "A". There is a dispute on the evidence about what happened next. According to Mr Duncan, Ottrey said that he would see what he could do but would first have to confer with Mr Maskell and left the meeting for a short time before returning to say that Duncan's rating had been upgraded to an "A". Mr Campbell's recollection accorded with that of Mr Duncan. Mr Driver's account was in these terms; 'Towards the end of the meeting Mr Ottrey said words to the effect, "I'll have to go out and call Graeme Maskell and Leo Hegarty and I'll come back in 10 minutes". After so saying, Mr Ottrey left the meeting and he returned about 10 minutes later. On Mr Ottrey's return to the meeting he said words to the effect of, "I have spoken to Leo Hegarty and Graeme Maskell and I'll change the rating to an "A" rating."' 5 Mr Driver was at first disposed to believe that the meeting had occurred on 19 May rather than 29 May and that he had made a record in the diary which he kept as a shop steward of what had happened at the meeting. However, when the diary was produced on the second day of the hearing it was devoid of a relevant entry for either 19 or 29 May 2003. 6 Mr Ottrey has denied that he said that he had to confer with Maskell before he could do anything about the rating or that, on returning to the meeting, he said that he had spoken to Maskell. As well, Mr Ottrey has sworn that he did not speak to either Maskell or to Leo Hegarty who, as Shift Controller, was Maskell's direct supervisor. According to Mr Ottrey, all he did was to instruct Ms Bennett to issue an "A" rating slip which was sent to Mr Duncan under cover of a letter dated 29 May 2003 in the following terms; 'Please find enclosed your Seasonal Employment Report which has been completed by your Supervisor at the Shepparton Site. It summarises our Company's assessment of your work performance during the season and also gives you an indication of your prospects for re-employment next season, should you choose to re-register your availability. If you have any queries, or would like to discuss your assessment, please telephone the Human Resources Department on (03) 58333814. If you wish, you can ask us to arrange a meeting with your supervisor and/or Shop Steward to clarify any problems you may have, or discuss your appraisal further.' The letter was signed by Ms Bennett for "Roger Ottrey, HUMAN RESOURCES MANAGER." 7 In the "Remarks" section of the new slip, which was dated 28 May 2003, it was noted "amended rating as per instructions by Roger Ottrey 28/5/03." In the space for a supervisor's signature the word "per" was written followed by Ms Bennett's signature. 8 It is common ground that, despite the revision at the instance of Mr Ottrey of his rating to an "A", Mr Duncan was not offered re-employment as a seasonal worker for the 2004 season. That apparently occurred because Mr Bertolus who, in January 2004, succeeded Mr Ottrey as Group Employee Relations Manager, contacted Mr Maskell and put Mr Duncan's rating "back to the status that it was - as it should have been". When Mr Duncan complained of SPC's failure to offer him employment for the new season, Mr Bertolus was unconcerned about the events which had led to the substitution of the "A" rating which he regarded as "irrelevant". Subsequently, a meeting was held on 17 March 2004 attended by Mr Campbell of the Union, Mr Duncan and his daughter, Fiona Duncan, and Ms Close who was a leading hand on the line on which Mr Duncan had formerly been employed as a seasonal worker. The principal purpose of the meeting was to canvass Ms Duncan's prospects of re-employment but, in the course of it, Mr Campbell adverted to Mr Duncan's situation, whereupon Mr Bertolus said words to the effect that he or the company retained the right to decide, or the final say, as to who should be offered re-employment regardless of any rating. 9 The narrow question raised by these facts is whether SPC contravened cl 15.5.5 of the Shepparton Agreement when it declined to re-employ Mr Duncan in spite of his rating having been raised, at the direction of Mr Ottrey, from a "B" to an "A". However, SPC does not concede that, had Mr Duncan been treated in January 2004 as the holder of an "A" rating, he would have been offered re-employment for that season. On the other hand, it has not been suggested that anything in respect of Mr Duncan was not "considered equal" in terms of cl 15.5.5 of the Shepparton Agreement so as to disentitle him to the higher opportunity for employment which would have attached to an "A" rating had he been treated as holding it. 10 Clause 15 of the Shepparton Agreement was in these terms: '15. SEASONAL RECRUITMENT PROCESS

[60]

Respondent's submissions 14 Dr Jessup QC, who appeared with Mr P Wheelahan of Counsel for the respondents contended that the relevant period at the end of which Mr Duncan was to receive his rating was that which ended on 10 April 2003 when Mr Maskell assigned him a "B". In a related way, it was said that the "supervisor" who was to assign a rating was, in the context of cl 15 of the Shepparton Agreement, a "persona designata", so that a rating could not be assigned or changed by anybody other than a "supervisor" of the relevant employee. "Supervisor" in that sense was claimed to connote an employee having "line level responsibility", such as a foreman or leading hand. In no sense, so the argument went, could it comprehend a human resources manager. The same distinction was preserved, in the respondent's submission, by cl 7.3 of the Shepparton Agreement which provided for an employee to have discussions at three levels, first with his or her immediate supervisor, then with the department manager and finally with "senior management." Even if "senior management" were to direct that an employee's rating be changed, that could only be effected if "the hand that held the pen" were that of an operational supervisor who was the "persona designata" under cl 15. 15 It was next contended on behalf of the respondent that the meeting on 20 May 2003 was not a "disputes procedure meeting" but was simply an initiative taken by Mr Campbell to fix an industrial problem. 16 Finally in relation to Mr Duncan, Dr Jessup argued that SPC could not be estopped from denying that his rating had been changed from "B" to "A" because to recognise an estoppel of that kind would be tantamount to permitting the parties to contract out of the Shepparton Agreement; see eg Welsh v Commercial Travellers Association [1940] VLR 259 and Metropolitan Health Service Board v Australian Nursing Federation (2000) 99 FCR 95. In the latter case, French J said, at 103 [18] and [20]; '… The award is independent of contract. It is neither incorporated by statute nor by implication into the contract of employment - Byrne v Australian Airlines Ltd (1995) 185 CLR 410. Nor can those bound by an award contract out of it - Josephson v Walker (1914) 18 CLR 691 at 700 (Isaacs J) approved in Byrne at 421. That is not to say that a contract may not be made which confers benefits upon an employee over and above those conferred by the award - Byrne at 421. Nor does it prevent parties from expressly agreeing to incorporate the terms of an award into their contract of employment thus providing remedies over and above those provided by statute - True v Amalgamated Collieries of WA Ltd [1940] AC 537 adopted in Byrne at 420 and 444.

[62]

17 Goldberg J in Textile Clothing and Footwear Union of Australia v Givoni Pty Ltd (2002) 121 IR 250 similarly emphasised that it is not possible to contract out of award obligations and the principles of estoppel and waiver do not apply in relation to those obligations. 18 The corollary of Dr Jessup's argument in this respect, he acknowledged, is that, if an award or an agreement contemplates the taking of some step such as the change of a "B" rating to an "A", the party seeking to enforce the award or agreement must first compel that step to be taken in the manner stipulated in the award. That was said to be a reasonable requirement because of the potential impact on other applicants for employment of a change in a rating. 19 The respondents disputed that Mr Ottrey had ostensible authority to change Mr Duncan's rating. The limits on his ostensible authority were indicated by cl 15.5.1 which required assessments to be made by "supervisors" as was well-known to Mr Campbell and Mr Duncan. 20 As an alternative to his argument that estoppel did not avail the applicant in this case, Dr Jessup contended that if, contrary to his primary position, estoppel were theoretically available, some of the requirements enumerated by the High Court in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 had not been satisfied. In that case Brennan J identified the six matters which a plaintiff must prove in order to establish equitable estoppel. His Honour there said; 'In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.' 21 On behalf of the respondents, it was contended that the third, fourth and fifth of those requirements had not been made out in respect of Mr Duncan. He had not acted, or refrained from acting, on the assumption that he had an "A" rating. Nor had he shown that SPC knew or intended that he should act on that assumption. Finally, Mr Duncan had not been shown to have suffered any detriment as a result of the assumption that he possessed an "A" rating not having been fulfilled. 22 An independent argument advanced on behalf of SPC in relation to Mr Duncan was that if, contrary to its principal argument, Mr Ottrey, as Human Resources Manager, had the power to change a rating from "B" to "A" "by the stroke of a pen" then Mr Bertolus, as his successor, could equally easily reverse the effect of Ottrey's action. 23 It was also contended on behalf of SPC that cl 15.5 of the Shepparton Agreement attached no consequences to the possession of an "A" rating in the event that a selection had to be made between two former employees each holding an "A" rating or between a former employee holding an "A" rating and an applicant with no prior history of employment who, consequently, held no rating at all. Because Mr Maskell had made a selection for the ensuing 2004 season from a cohort of former employees who all held "A" ratings, Mr Duncan could not have complained of his non-selection even if he had been regarded as having held an "A" rating. 24 Against the possibility that all its exculpatory arguments might be rejected, SPC contended that any contravention of cl 15.5.5 which could be found to have occurred was a merely technical breach arising out of the same course of conduct and ought, accordingly, to be treated as a single breach for the purposes of s 178(2) of the Act.

[63]

Reasoning 25 I do not accept that, on the proper interpretation of the Shepparton Agreement, the rating assigned to a seasonal employee during, or at the end of, a particular season cannot afterwards be changed. In my view, the practice recognised in cl 6 of the 1987 Agreement clearly contemplates that a grievance by a former employee about the rating or grading which he or she had been allocated may be resolved by invocation of the agreed disputes procedure and, if necessary, that resolution may occur during the "off season" after which the employee is to be advised of his or her "final grading." This view is also consistent with cl 7 of the Shepparton Agreement which was substantially identical with cl 7 of the Ardmona Agreement reproduced at [44] below. That clause provided for an ascending hierarchy of steps for the resolution of "any grievance of concern to an employee" (emphasis added). The first step involved "constructive discussion" between the employee and his or her immediate supervisor. The available steps then progressed from reference to the relevant departmental manager and shop steward through a review by the State Secretary (or appointed representative) of the Union and Senior Management on site to a reference to a mutually acceptable independent mediator or arbitrator and, in default of agreement on such a person, to the Australian Industrial Relations Commission ("the Commission") by means of notification of a dispute. There is nothing to suggest that the procedure laid down by cl 7 was inapplicable to a grievance which a seasonal employee harboured about the allocation to him or her under cl 15.5.1 of a grading less than "A". Since it was highly unlikely that the whole procedure ordained by cl 7 could be completed between the allocation of the original grading and the end of the season to which it referred, it follows that a change could have been effected to such a grading at any time or, at least, before recruitment was completed for the next season. 26 Similar reasoning has led me to conclude that a change of grading could be effected by an authorised representative of SPC other than the "supervisor" who made the original "assessment" contemplated by cl 15.5.1. Were it otherwise, a resolution reached at any of the stages other than the first of the settlement of disputes procedure described at [25] above could only be implemented by having the matter referred to the original supervisor or somebody at an equivalent level for the issue of a new or amended assessment or rating slip. That would import into the agreement an unnecessary and unduly formal requirement inconsistent with the practical considerations which have been held to be at the forefront of the minds of those responsible for framing industrial instruments of this kind; see Kucks v CSR Limited (1996) 66 IR 182, where Madgwick J observed at 184; 'It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.

[65]

27 That approach to interpretation of instruments of this kind has been endorsed by Kirby J and Callinan J in Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 214 ALR 56and by a Full Court of this Court in Ansett Australia Limited v Australian Licenced Aircraft Engineers' Association [2003] FCAFC 209 at [8] and most recently in United Firefighters' Union of Australia v Metropolitan Fire And Emergency Services Board [2006] FCAFC 84 at [51]. 28 This construction does not detract, I consider, from the commonsense expectation articulated by Counsel for the respondents that the original assessment or allocation of an "A", "B" or "C" grading would be made by the foreman, leading hand or other "line supervisor" of the employee concerned as a "persona designata". 29 I have also concluded, for reasons similar to those outlined at [25]-[26] above, that rigid adherence to the formal mechanisms involved at a given stage of the settlement of disputes procedure is not necessary to give rise to an effective agreement to change the grading of a particular seasonal employee or former employee. In other words, appropriately authorised representatives of the Union and SPC could have informally agreed on a resolution of a dispute about grading even though their deliberations did not fit squarely within the description of one or other of the stages noted at [25] of these reasons. That, I find, is what happened at or immediately after the meeting of 29 May 2003 when Mr Ottrey had actual or ostensible authority to represent SPC and to make on its behalf any commitment necessary to resolve the dispute. 30 I regard the issue of whether Mr Duncan held an "A" grading when the selection of seasonal employees for the 2004 as essentially one of fact to be resolved in light of the interpretation of cl 15.5.1 which I have already discussed. Doctrines of estoppel bear on the resolution of that question only in the sense used by Brennan J in Waltons Stores at 415 where his Honour noted that "It has been said that estoppel in pais is merely a rule of evidence and not a cause of action." 31 To apply the doctrine in that way is not to countenance either party's contracting out of the Shepparton Agreement. All it does is to impose an evidentiary constraint on the proof of a matter relevant to the application of the Shepparton Agreement according to its terms. By contrast, resort to estoppel to deny one party a benefit prescribed by an award or agreement, or to deflect from another party a liability imposed by an award or agreement would be "unconscientious" in the sense discussed in this context by Lee and Carr JJ in their joint judgment in Metropolitan Health Services Board v Australian Nursing Federation (supra)at 113 [59]-[60]. As Dixon J observed in Thompson v Palmer (1933) 49 CLR 507, at 547; 'The object of estoppel in pais is to prevent an unjust departure by one person from an assumption adopted by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that other's detriment. Whether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party. He may be required to abide by the assumption because it formed the conventional basis upon which the parties entered into contractual or other mutual relations, such as bailment; or because he has exercised against the other party rights which would exist only if the assumption were correct, as in Yorkshire Insurance Co. v. Craine (1922) 2 A.C. 541, at pp.546-547; cp. Cave v. Mills (1862) 7 H. & N. 913, at pp. 927-928; 158 E.R. 740 , at pp. 746-747; Smith v. Baker (1873) L.R. 8 C.P. 350, at p.357; Verschures Creameries Ltd. v. Hull and Netherlands Steamship Co. (1921) 2 K.B. 608, at p. 612; and Ambu Nair v. Kelu Nair (1933) 60 I.A. 266, at p.271; or because knowing the mistake the other laboured under, he refrained from correcting him when it was his duty to do so; or because his imprudence, where care was required of him, was a proximate cause of the other party's adopting and acting upon the faith of the assumption; or because he directly made representations upon which the other party founded the assumption. But, in each case, he is not bound to adhere to the assumption unless, as a result of adopting it as the basis of action or inaction, the other party will have placed himself in a position of material disadvantage if departure from the assumption be permitted.' 32 In the present case SPC, through Mr Ottrey and Ms Bennett, directly made representations upon which the Union and Mr Duncan founded an assumption that the latter's grading had been changed from a "B" to an "A". They acted upon that assumption by ceasing to press for a resolution of the dispute to which the original allocation of a "B" had given rise, and by Mr Duncan's presenting for selection for the 2004 season in the belief that he would be accorded the priority or preference attaching to the holder of an "A" grading. 33 I am further satisfied that SPC, through Mr Ottrey and Ms Bennett, knew or intended that the Union and Mr Duncan should act in the ways just described on the representations made at the meeting on 29 May 2003 and contained in the letter of the same date. 34 It follows that SPC is estopped from denying that Mr Duncan was, after 29 May 2003, the holder of an "A" grading. In that sense the doctrine is applied as an exclusionary rule of evidence preventing SPC from establishing one fact relevant to its defence to the present prosecution. It does not operate to permit either party to the Shepparton Agreement to "contract out" of that agreement or to deny its application according to its terms to the relevant facts proved by admissible evidence. 35 The interpretation which I have placed on the events of 29 May 2003 also precludes SPC from relying on the notion that Mr Bertolus was able to change Mr Duncan's grading back from an "A" to a "B" "by the stroke of a pen". Implicit in the assumptions which Ottrey's representation induced was that the substituted "A" grading would remain operative at least until the selection of seasonal employees for the 2004 season had been completed. 36 It is true that, since all the seasonal workers for the 2004 season selected by Mr Maskell in the area for which Mr Duncan was qualified for appointment also held "A" gradings, the substituted "A" grading would not have guaranteed Mr Duncan selection for that season. 37 However, SPC's refusal to recognise him as possessing the substituted "A" grading meant that he lost the chance of being considered for selection on an equal footing with other applicants holding a similar grading. It is unnecessary to try to measure the value of that loss of a chance in monetary terms because there has been no suggestion that the breach which I have found gave rise to a requirement on SPC to pay any amount to Mr Duncan under the Shepparton Agreement. 38 I regard the breach which occurred when Mr Duncan was treated for the 2004 season as the holder of a "B" grading, as a single breach occurring once and for all, or, at worst, as arising out of a course of conduct within s 178(2) of the Act. The breach was at the lower end of the spectrum of breaches of certified agreements indicated by the maximum penalty of 300 penalty units for a body corporate stipulated by s 178(4)(a)(iib) of the Act. I consider that it resulted primarily from a breakdown of communication including that between SPC and the Union, which was a consequence of the transfer of responsibility for human resources from Mr Ottrey to Mr Bertolus. I am not persuaded that it reflected a high-handed determination by the latter to set at naught the agreement which had been reached on 29 May 2003. In view of SPC's good record, as attested by the absence of any prior convictions, I shall impose a penalty of four penalty units or $440.

Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union v Ardmona Foods Limited

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