Bourke Air Charter v Easton

RESPONDENT/CROSS APPELLANT Daniel Easton FILE NUMBER: IRC 4787 & 5838 of 2000 CORAM: Wright J President; Glynn J; Boland J CATCHWORDS : Appeal and cross appeal - Leave to appeal - Unfair contract - Judicial intervention in proceedings - Whether overtime payable - Offer of compromise - Costs - Appeal dismissed except as to overtime payments - Cross appeal dismissed except as to costs - Subject to further order the Appellants/cross respondents to pay respondent's costs of proceedings at first instance - Appellants/cross respondents to pay 80 per cent of respondent/cross appellant's costs of appeal Industrial Relations Act 1996 s106 LEGISLATION CITED : Industrial Relations Commission Rules 1996 rule 216 Supreme Court Rules 1970 Ace Business Brokers Pty Ltd v Phillips-Treby (2000) 100 IR 420 Burwood Municipal Council v Harvey (1995) 86 LGERA 390 David Jones Limited v Cukeric (1997) 78 IR 430 Huskisson RSL v Sullivan (1990) 31 IR 404, 20 NSWLR 332 CASES CITED : Jones v National Coal Board [1957] 2 QB 55 Kekatos v The Council of the Law Society of New South Wales [1999] NSWCA 288 Pawel v Australian Industrial Relations Commission (1999) 94 FCR 231 Perrott v Excellenet Australia Limited (1998) 84 IR 255 Vision Publishing Pty Limited v PK Holdings Pty Limited (1998) 84 IR 277 HEARING DATES: 04/17/2001; 04/18/2001 DATE OF JUDGMENT: 11/29/2001

APPELLANT: Mr A G Rogers of counsel Solicitor: Mr S Ewer Webb & Boland LEGAL REPRESENTATIVES: RESPONDENT: Mr I C Latham of counsel Solicitor: Ms D Banks Gilbert & Tobin Lawyers

JUDGMENT: - 26 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION FULL BENCH CORAM: WRIGHT J, President GLYNN J BOLAND J Thursday 29 November 2001 Matter No IRC 4787 of 2000 BOURKE AIR CHARTER PTY LIMITED & ORS v DANIEL EASTON

Application for leave to appeal and appeal against a decision of Justice Kavanagh given on 6 September 2000 in Matter No. IRC 6040 of 1998

Matter No IRC 5838 of 2000 DANIEL EASTON v BOURKE AIR CHARTER PTY LIMITED & ORS

Application for leave to appeal and appeal against decisions of Justice Kavanagh given on 6 September 2000 and 1 November 2000 in Matter No. IRC 6040 of 1998 JUDGMENT OF THE COURT

1 These proceedings involve applications for leave to appeal and, subject to leave being granted, an appeal and cross-appeal from two judgments of Kavanagh J given on 6 September 2000 ([2000] NSWIRComm 155) and 1 November 2000 and consequential orders made by her Honour. The appeal was brought by the respondents at first instance, namely Bourke Air Charter Pty Limited (first respondent), Bourke Aerial Spraying Pty Limited (second respondent) and Peter Ronald Smart (third respondent) who was a director of the first and second respondents. For the purpose of these appeal proceedings, we shall refer to the respondents at first instance as the appellants or cross-respondents as the context requires. Daniel Easton, the applicant at first instance, brought the cross-appeal. We shall, for the purpose of these appeal proceedings, refer to him as the respondent except where the context requires that he be referred to as the cross-appellant. Background Facts 2 The claim at first instance arose from the employment of the respondent by Bourke Air Charter Pty Limited. In July 1996, the respondent drove into Bourke Airport and requested employment. He was searching for a position with a view to "clocking up" his flying hours to further a career as a pilot. He had sent hundreds of letters and travelled to a number of airports prior to his arrival at Bourke Airport. In his previous employment Mr Easton had been a carpenter earning between $800 and $1500 per week. 3 Following a discussion with Mr Smart, Bourke Air Charter employed the respondent. There was no written contract and the terms of his employment were vague. Mr Easton was initially paid $10.00 per hour to perform a number of tasks, including flying charter, serving fuel, maintaining fuel facilities, assisting in aircraft maintenance and using his carpentry skills to carry out building and repairs. Overtime was paid at $12.00 per hour. In February 1997 the hourly rate increased to $12.00 per hour. This was to be paid for all hours worked with no separate rate for overtime.

4 Some time after his initial employment Mr Easton attended a course to enable him to become a crop dusting pilot. This work required specialist qualifications and skills and paid more than the work Mr Easton had been doing. He finished this course in August 1997. Mr Easton paid $9,565.00 from his own funds to gain the required qualification, being the Agricultural Pilot Rating (APR). He also attended the course during his holiday period. In order to put the training into effect and become an agricultural pilot, Mr Easton was required to have insurance and an endorsement from his employer, which was to be arranged by Mr Smart. 5 After having waited for some time to be endorsed by Mr Smart, the respondent, under stress, took some time off from work. When he returned he presented Mr Smart with a list of grievances. Those grievances were not addressed to Mr Easton's satisfaction. Later, Mr Smart informed Mr Easton that the endorsement for agricultural flying would not be forthcoming. Eventually, Mr Easton resigned his employment on 5 January 1998 and continued to work until 30 January 1998. He has not flown since leaving his employment with Bourke Air Charter. Findings at first instance 6 Kavanagh J found that the contract was unfair on a number of grounds: a) Remuneration After finding that Mr Easton was employed foremost as a pilot, her Honour found that Mr Easton's remuneration was inadequate and gave no credit for his skills as a qualified pilot or carpenter. Taking into account these qualifications and the Pilots (General Aviation) Award 1984, an award of the Australian Industrial Relations Commission, her Honour found that "there was unfairness in the contract from the day it was struck as to the level of pay to Mr Easton….". This was the case in relation to his ordinary and overtime pay, her Honour noting, in reference to the latter, that the overtime rate, on a fortnightly calculation, was less that the ordinary rate. Referring to Huskisson RSL v Sullivan (1990) 31 IR 404; 20 NSWLR 332, Kavanagh J considered that the Pilots (General Aviation) Award , was an important consideration in assessing Mr Easton's pay. In this respect her Honour noted that because an employee receives less than a relevant award, it did not automatically mean a contract was unfair. All of the circumstances must be assessed. Her Honour also considered that the application of public interest considerations was relevant to the matter including the need to train and support young pilots.

It should be noted that the appellants were not bound by the Pilots (General Aviation) Award. The Award was simply used as a benchmark by the respondent for the purpose of claiming "rates of pay and conditions prevailing in the industry". b) APR Training Kavanagh J found that the training for an Agricultural Pilots' Rating (APR) was at the instigation of the employer and, therefore, was required to be paid by the employer. As a result, her Honour found it both unfair and contrary to the public interest that Mr Easton completed the training in his holiday time and with his own money.

c) Delays in Endorsement of Mr Easton Mr Easton had expected to gain full insurance and endorsement to enable him to carry out agricultural duties in time for the October 1997 - April 1998 crop dusting season. Her Honour found that the delays by Mr Smart in organising the endorsement contributed to the frustration and dissatisfaction Mr Easton felt in the workplace. 7 Mr Easton had also submitted that he had been constructively dismissed. In dealing with this submission, Kavanagh J had regard to Pawel v Australian Industrial Relations Commission (1999) 94 FCR 231, and did not consider the situation as one of "resign or be sacked". Rather, Mr Easton was a dissatisfied employee who resigned due to dissatisfaction with employment. The delays in gaining insurance and the giving of the endorsement were not calculated to force a resignation. 8 Because there was no constructive dismissal, her Honour did not deal with the issue of notice of termination, nor did she deal with a submission that further financial loss resulted from the failure to become a fully qualified agricultural pilot in the amount of $150,000 per year. This claim, her Honour noted, could only be considered as part of a claim for notice. 9 Kavanagh J determined to void the contract of employment ab initio "except in relation to payments made thereunder or in relation thereto." Consequently, the following orders were made: · Payment to be made to Mr Easton at the fair rate of $600 per week with credit for payments already made. · Payment to Mr Easton of overtime at a rate of time and a half. · Reimbursement of training expenses and annual leave. · Payment of 3 days of pay while stood down at the end of Mr Easton's employment. · Interest from the date of filing, according to the Supreme Court Act 1970. 10 These orders were made in respect of all three appellants on the basis that they were interlinked, and that Mr Easton had carried out work for all of them. 11 On 1 November 2000 Kavanagh J heard further argument concerning costs. The main issues concerned, firstly, an offer of compromise made by the appellants on 3 September 1999 and the impact of that offer on costs and, secondly, when it was that the appellants became aware of the overtime claim. Her Honour stated that on the pleading it may have been unclear that Mr Easton was to claim overtime, however, it became clear on the second day of the trial, namely 12 April 2000. 12 Her Honour then made orders for costs as follows: 2(b) The Respondent to pay the Applicant's costs: (i) on a party/party basis to 3 September 1999; and (ii) on a party/party basis from 12 April 2000. (c) The Applicant to pay the Respondent's costs: (i) on a party/party basis from 4 September 1999 to 11 April 2000, inclusive.

13 In the course of the appeal proceedings it was agreed by Mr A G Rogers of counsel for the appellants and Mr I C Latham of counsel for the respondent that there were seven issues to be determined on appeal. The issues were as follows:

The respondent's claim for overtime. It was the appellants' contention that there was no separate claim for overtime and no amendment to the summons was ever sought to claim overtime. Mr Rogers submitted that the claim for overtime sprang from Kavanagh J in the course of questioning of witnesses during the trial, questioning that took place over the objection of counsel for the appellants. Mr Rogers further submitted that if the Court were against the appellants in relation to the grant of overtime, her Honour's decision was in any event in error as to quantum.

Reimbursement of the respondent for moneys expended on obtaining an APR rating. Mr Rogers contended that the appellants did not require the respondent to undergo the necessary training to obtain the rating and, therefore, her Honour had erred in concluding on the evidence that there was such a requirement.

Kavanagh J erred in ordering that Mr Easton be remunerated as if he were a full time pilot. Mr Rogers contended that it was not credibly open to her Honour to determine the matter on the footing that Mr Easton "was first and foremost employed as a pilot". Mr Rogers submitted that most of Mr Easton's work was not the work of a pilot.

Kavanagh J's finding of an unfair contract. Mr Rogers contended that her Honour did not take into account all relevant matters and therefore did not take a balanced approach to the question of unfairness.

The intervention of Kavanagh J in the proceedings at first instance. It was contended for the appellants that Kavanagh J persistently and at length acted as if she were an advocate in the proceedings. Such an approach, it was submitted, was illegitimate for a judge and led to the raising of matters that did not form part of the case, namely, the question of overtime and Mr Easton's skills as a tradesman.

The costs orders of 1 November 2000. It was contended for the appellants that they had substantial success in relation to matters argued on 1 November 2000 and therefore her Honour's order that the appellants should pay the costs was a misapplication of her discretion and did not accord with general principle. It was contended by Mr Latham for the cross appellant that the cross-respondents were always aware of the claim for overtime and that the order of her Honour that the cross appellant pay the cross- respondents' costs on a party/party basis from 4 September 1999 to 11 April 2000 should be quashed. Further, that the cross respondents should be ordered to pay the cross-appellant costs on an indemnity basis from 3 September 1999.

The cross appeal against her Honour's finding that there had been no constructive dismissal of Mr Easton. Mr Latham contended that her Honour had erred in failing to find that Mr Easton had been constructively dismissed.

Leave to appeal 14 As to the appeal, the parties were provided with the opportunity, which they took, of putting their respective submissions on the merits of the appeal. Mr Latham also put his substantive submissions on the cross-appeal as well as submissions on leave to appeal in respect of the appeal. The Court, having heard those submissions, called on Mr Rogers to make submissions in reply on why leave should be granted as to the second, third and fourth issues identified above.

15 Having heard Mr Rogers on the question of leave, the Court refused leave to appeal in relation to the second, third and fourth issues as well as the seventh issue, that is, the cross-appeal relating to the question of constructive dismissal. The conclusions arrived at by her Honour on these issues were properly open to her on the evidence and we do not propose to interfere with her findings in respect of those issues.

16 This leaves for consideration the first, fifth and sixth issues. Leave to appeal pursuant to s 188 of the Industrial Relations Act 1996 is never granted lightly or automatically in respect of any issue: see Perrott v Excellenet Australia Limited (1998) 84 IR 255. However, this appeal and cross-appeal raise the important question of a judge's role in trial proceedings. The appellants contended that the role adopted by Kavanagh J was one of excessive intervention that, over the objection of the appellants, led to overtime being raised at first instance as an issue in the proceedings in circumstances where it had not been pleaded nor particularised by the respondent. Her Honour, having raised the issue of overtime in the course of questioning of witnesses, it was submitted, then proceeded to determine the matter in favour of the respondent without any proper foundation for doing so. Moreover, it was contended that even if her Honour had been entitled to go beyond the pleadings, she was not entitled to award amounts for overtime in excess of those sought by counsel for the respondent in his final submissions at first instance. Thus, it can be seen that the first and fifth issues are linked.

17 Whilst an Appeal Bench may be reluctant to interfere with a single judge's exercise of discretion in relation to costs unless there is a manifest error, in these proceedings the question of costs is closely linked to the first and fifth issues. This is because, for example, if it were held on appeal that overtime was never an issue in the proceedings and, therefore, should not have been part of any orders made by Kavanagh J, this would have implications for her costs orders that take into account an offer of compromise filed by the appellants on 3 September 1999. To be more specific, on 3 September 1999 an offer of compromise was filed by the appellants. The offer was to pay the respondent $22,516.76 plus interest (giving a total of $26,140.48) from 5 January 1998 (date of Mr Easton's resignation). The respondent did not accept the offer. Judgment was then entered for the respondent for an amount of $28,543.00 plus interest of $4,987.02, making a total of $33,530.02. The overtime component of the judgment was $5,118.00. If one were to subtract the overtime component from the judgment of $28,543.00 on the basis it should not have been ordered by her Honour, the judgment would have been $23,425.00. If interest was then added to that figure in accordance with her Honour's judgment for the period from 13 November 1998 (date of filing summons) to 3 September 1999 (date of filing offer of compromise), the judgment amount would have been, according to Mr Rogers, $25,217.48, which is $923.00 less than the amount offered to the respondent in the offer of compromise. In those circumstances, pursuant to r 216(6) of the Industrial Relations Commission Rules 1996, the appellants would be entitled to an order against the respondent for costs in respect of the claim for the period after 3 September 1999 when the offer of compromise was made.

18 In the circumstances, we grant leave to appeal in relation to the first, fifth and sixth issues.

Nature of the Appeal 19 The principles applying to appeals from discretionary decisions were cited in Ace Business Brokers Pty Ltd v Phillips-Treby (2000) 100 IR 420 at 428, where the Full Bench stated: Nevertheless, and notwithstanding the grant of leave, this appeal falls to be considered in accordance with the ordinary principles as an appeal stricto sensu and having in mind the statutory requirement in s 191(3) of the Industrial Relations Act obliging the Full Bench to follow the principles applying to appeals from discretionary decisions: see Big W Discount Stores v Donato (1995) 58 IR 239 at 242-244 ; Re Solicitors (State) Award (No 3) (1997) 72 IR 225 at 234-235 and the cases cited therein. In the result, it is only open for us to view the challenged decision on appeal in accordance with the proposition that the exercise of a discretion by the primary judge has long required that an appellate court is not justified in interfering with the decision made unless it reaches the clear conclusion that by reason of some error, whether of fact or of law, the primary judge not only has taken a different view but has failed properly to exercise the discretion conferred: see also Mace v Murr ay (1955) 92 CLR 370 at 378; and Port Macquarie Golf Club Ltd v Stead ( 1996) 64 IR 53 at 58-60. The principle was restated by a Full Bench (Wright J, President, Walton J, Vice-President and Peterson J) of the Court in Drake Personnel Ltd t/as Drake Industrial v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 432 at 446 and again in Abboud v The State of New South Wales (Department of School Education) (1999) 92 IR 32 at 42-43 (per Wright J, President, and Walton J, Vice-President); it needs no further elaboration here.

20 We respectfully agree with and adopt this statement of the Full Bench as to the principles applying to appeals from discretionary decisions.

21 The appellants make both a general and specific complaint against Kavanagh J concerning her intervention in the proceedings at first instance. The general complaint was that her Honour "persistently and at length acted as if she were an advocate in the proceedings". The specific complaint was that the question of payment for overtime was not raised in the pleadings nor particularised in any way and that it only surfaced as an issue in the proceedings as a consequence of her Honour's questioning of witnesses during the course of the trial. The respondent, it was submitted, then took advantage of the opportunity that had been presented and made a claim for overtime in its final submissions. Her Honour's intervention, it was submitted, was over the consistent objection of the appellants.

22 We deal firstly with the general complaint by the appellants. A judge who conducts an examination of witnesses during proceedings is entitled to do so for the purposes of clearing up ambiguities. Questions are also entitled to be addressed towards the merits of the matter provided the examination or cross-examination is not taken out of the hands of counsel, preventing the proper presentation of the parties' cases.

23 The approach to be adopted at appellate level to claims of excessive or inappropriate judicial intervention, including claims that an appearance has been given that the case has been decided on issues selected by the trial judge, is well settled in this Court: David Jones Limited v Cukeric (1997) 78 IR 430 at 450 - 451 and Vision Publishing Pty Limited v PK Holdings Pty Limited (1998) 84 IR 277 at 301 - 302; and also in the general courts: Jones v National Coal Board [1957] 2 QB 55 at 64, Burwood Municipal Council v Harvey (1995) 86 LGERA 390 at 395 - 398 and 409 - 411 and Kekatos v The Council of the Law Society of New South Wales [1999] NSWCA 288 at paragraphs [60] - [63]. It is not necessary to restate the relevant principles here save to emphasise the statement by Giles JA in Kekatos at [60] that: As was said by Kirby P in Burwood Municipal Council v Harvey (1995) 86 LGERA 389 at 397, determining whether judicial intervention had crossed the line from the permissible to the impermissible requires an exercise of judgment by the appellate court, and the ultimate question is whether the conduct complained of has undermined the fairness of the trial so as to render it, in law, no trial at all. 24 Although our view on this matter has fluctuated we do not consider that we should conclude that the intervention on the relevant issue, although inappropriate, could be said to have been such as to have undermined the fairness of the trial to the extent that it rendered it, in law, no trial at all. Nevertheless, the extent and effect of the intervention on the relevant subject matter considered with other relevant circumstances have resulted in the situation where her Honour's conclusion and order in respect of it cannot stand. We shortly state our reasons for this conclusion.

25 In the present proceedings, an examination of the transcript reveals that on at least four occasions the trial judge, over the objection of counsel for the appellants, engaged in lengthy questioning of witnesses. Much of this questioning, however, was for the purpose of clarifying matters or addressing ambiguities. Whilst we do not consider that Kavanagh J overstepped the line between advocate and trial judge and, therefore, did not fall into general error by her intervention in the proceedings, we think that in one particular area her intervention did involve error and this brings us to the specific complaint by the appellants concerning her Honour's intervention in the proceedings. In his summons for relief the respondent made a number of claims, none of which specifically mentioned overtime - that is, payment at overtime rates. In respect of salary, the respondent claimed "payment of salary at the rate of pay prevailing in the industry for the period August 1996 to January 1998" (the period of the respondent's employment). The rates of pay and conditions prevailing in the industry were claimed to be those in the Pilots' (General Aviation) Award 1984. This Award contained no provision for the payment of overtime worked. It did, however, contain provisions to the effect that where a pilot had completed five days' duty, the pilot was entitled to receive two days free of duty. Provision was made for deferral of duty-free days by mutual agreement. The Award also contained the following provisions in cl 42: (b)(v) Where, at the point of termination, a pilot has accrued under this clause an entitlement to a day or days off, he shall receive payment in lieu of such day or days at his normal rate of salary. ……… (b)(viii) A pilot shall not be required to work on a rostered duty-free day. Provided that in the event of unforeseen circumstances an employer may request a pilot to work on a rostered duty-free day. If a pilot agrees so to work: (1) a date within a month of the day to be worked shall be forthwith agreed on as the pilot's substitute duty-free day; and (2) the pilot shall receive in addition to his normal salary an allowance of $67.30 for each such day. 26 There were no pleadings or particulars provided by the respondent relating to either a claim for overtime pay or a claim under either cl 42(b)(v) or cl 42 (b)(viii) of the Award other than the general reference in the summons to the terms of the Pilots' (General Aviation) Award as representing rates of pay and conditions of employment in the industry. 27 At the opening of proceedings Kavanagh J asked counsel for Mr Easton: Her Honour: Mr Latham …. Your summons is filed 13 November 1998. Do you wish to amend that in any way? Latham: No. Her Honour: I can assume your claim is as particularised in paragraph D, the sum of $143,000. Mr Rogers , you understand that is the claim you are meeting? Rogers: Yes, the claim is identified in the summons.

28 On the first day of the proceedings, in the course of the examination in chief of Mr Easton by his counsel, the following exchange took place: Q: You were being paid overtime? A: Yes. Q: At what rate? A: $12 an hour. Q: For the overtime? A: Yes. Q: What were you getting for the ordinary rate? A: $12.10. Q: How was the rate struck? A: There was never any discussion about it. That was it. Q: $12 for overtime and $12.10 for ordinary hours? A: And it didn't matter whether it was 3 o'clock in the morning or 12 o'clock at night. Say, for example, that the way the wages were set up, we could work 4 to 9 in the morning, go home and sleep all day and then start again that evening and if we only worked seven hours for the day that was still paid in ordinary time. Q: That was after three months? A: Yes. Rogers: I object. There is no claim for overtime pay. 29 Counsel for Mr Easton did not contest Mr Rogers' objection that overtime was not part of the respondent's claim and no amendment was sought to claim overtime. The respondent did not formulate a claim for overtime until it appeared in final submissions on 12 May 2000, a month after the evidence closed.

30 Later, on the first day of proceedings, after extensive questioning of Mr Easton by her Honour, the following exchange took place: Her Honour: In that period of time did you do this overtime work that you have described for us? A: Yes, up until the time of the sick leave. After that I was not given any more overtime. Her Honour: Up to about 22 December? A: It would have been a week before that. Rogers: May I cautiously interrupt and I say this with great hesitation, your Honour is tending to ask some--- Her Honour: To find out what went on. Rogers: The Commission is a court of record. It is sitting in court session. Her Honour: I am just making enquiries. …… Her Honour: I will give you any amount of time you need if you deny the facts I have been told but the affidavit does not tell me exactly what went on and I am trying to find out and I will give you any amount of time if any of it causes you any difficulty. Her Honour (directed to the witness): Just so I understand absolutely from 22 December you were given no overtime after that? Rogers: Your Honour, I really do press this. Your Honour is asking questions that I would not and my friend could not ask. Her Honour: I have got to know whether there was fairness in the performance in the performance of the contract and it is very unclear at the moment. Rogers: The difficulty your Honour is this that your Honour, again I say with great reluctance, your Honour is not entitled to cross-examine the witness. Her Honour: I am not cross-examining him. I am asking him information. This is nothing to do with cross-examination. It is information. Rogers: Your Honour is entitled to clear things up but not if I may say so entitled to go beyond that and as it were extract what is "the truth". That is a matter for the parties. Her Honour: I hear you and that is on the record. 31 On the second day of the hearing the issue of overtime was again the subject of an exchange between her Honour and counsel for the appellants: Her Honour: The Zions book has been given to the applicants with access under the summons, has it not? Rogers: It has been given to the Commission and I presume the other side have got it because they have got photocopies from it. Her Honour: It was one of the documents produced. Rogers: Produced four or five months ago. If there is any problem, your Honour, I have got photocopies. Her Honour: Can you give me an explanation for the missing pages as it is July 1997 and through to October 1997, this is an important time in the employment, is it not? Rogers: I do not know whether Mr Smart knows or not. I do not know why that period is not there. Her Honour: It is leading up to the time after which there were difficulties. Rogers: Yes, but ultimately there is no fight between the parties at least in relation to that period about the hours that Mr Easton has worked. There is no allegation that Mr Easton worked in our case very few hours or very many. That is not the fight between the parties. Her Honour: If you have only got wages claimed for those missing periods of time I would not be able to tell what overtime he works because you averaged it out over the week. Rogers: That is a moot point your Honour. That is a suggestion that has been made, but can I say this, your Honour, there are two things. Firstly, there is no allegation put against my client that he has made any breach of any award. That is not alleged. Her Honour: That is not the case. The question is only the unfairness under the contract or the performance of the contract but if you…. Rogers: There is no claim for overtime but if you fall into subsection 5, then the court has to look at what is just and fair in the circumstances. Her Honour: I am trying to find out what occurred. Would you answer my question? In relation to July to October you have told me that the Zions wages book will be there but will that allow me to identify what hours are worked? There may be overtime, if it causes you stress, what hours he worked between July and October, that might be able to tell you. Rogers: The answer is your Honour, I think so, I have not checked myself but I will check it over lunch to confirm.

32 In her judgment, her Honour stated, in relation to the overtime question:

54 In an examination of the records the applicant worked some 400 hours of overtime. The figures reveal the applicant was paid for those hours at a lower rate than his ordinary rate of pay. He was paid $12 per hour for ordinary hours worked over a 37.5 hour week and $12 per hour (the same rate as for ordinary hours) for overtime but only after 76 hours worked per fortnight not as would be the norm for work performed after a 37.5 hours week on a 75 hour fortnight.

55 As to the respondent's submission that the overtime claim was not pleaded and therefore not part of the claim before the Court, the applicant submits the overtime claim was incorporated in the comprehensive claim for an order that the respondent pay fair rates of pay and fair conditions to the applicant.

56 As to the overtime rate paid to the applicant, the court finds it significant that the evidence reveals the penalty rate paid for overtime on a fortnightly calculation was, in effect, a lower rate of pay than the ordinary time rate of pay. It is certainly standard industrial practice for overtime to be at a higher rate than the pay rate for ordinary hours. The purpose of this industrial practice is to ensure that a worker is properly compensated for working outside agreed ordinary hours. The respondent submits the applicant received additional pay for overtime and there is no community standard for an overtime rate. 33 At pars 61 and 62 of her judgment her Honour made the following findings:

61 From all of the above evidence, taking into account Mr Easton's qualifications and taking the Pilots (General Aviation) Award 1984 as a guide, the court finds there was an unfairness in the contract from the day it was struck as to the level of pay to Mr Easton both as to his weekly rate of pay and his overtime rate.

62 The court is satisfied from the evidence that the contract of employment provides a total remuneration less than an employee performing work under the Pilots (General Aviation) Award 1984 would have received. The court is further satisfied that the amount struck does not fairly take into account the two skills offered to this employer, namely, the applicant's piloting skills and carpentry skills. What work, from the evidence, was required of the applicant and the benefits enjoyed by the respondent through employment of the applicant indicate the payments resulting from the contract were too low.

34 Her Honour found that: 93 The applicant worked overtime. However, the Pilots (General Aviation) Award 1984 for pilots does not allow for an overtime rate but time off after in air flying time. This circumstance does not match up with the applicant's work circumstances. The applicant worked some 400 hours overtime. I find the applicant should have been paid an overtime rate in accordance with the Pilots (General Aviation) Award 1984 of time and half at the adjusted fair rate of pay accepting the applicant worked a 76 hour fortnight before the payment of overtime with credit for payments made.

35 In the judgment of 1 November 2000 Kavanagh J said: There was then further argument in relation to costs' orders. These arguments directed the Court's attention to a number of documents and particularly to the issue as to when it became clear that overtime payments were part of the claim. This Court has found that on the pleadings it may well have been unclear. It takes into account the conduct of the respondent in the hearing and determined that this issue became clear on the second day of hearing as to an issue in litigation. 36 Kavanagh J proceeded to make orders that included an order that the appellants pay the respondent $5,118.00 in respect of overtime. It is to be noted that in his final submissions on behalf of the respondent Mr Latham claimed an amount of $2847.74 being twice the sum of $1423.87 calculated for additional hours worked on the basis of 400 hours at ordinary rates of pay. This matter is considered further at pars [45] to [47]. Her Honour determined that overtime should be calculated at time and one half. The basis on which her Honour determined this overtime rate is not clear.

37 In her judgment of 1 November 2000, Kavanagh J appeared to acknowledge that it might not have been clear that overtime payments were part of the claim but, nevertheless, came to the view that it was clear to the appellants by the second day of proceedings. However, even by the second day of proceedings it was still unclear as to the nature of the alleged claim. What was the claim that the appellants were required to answer other than, in her Honour's words, "there may be overtime"?

38 The claim in respect of Mr Easton was that he should receive payment of salary as a full time pilot under the Pilots' (General Aviation) Award. Kavanagh J accepted this claim and having regard to a salary of $591.75 per week payable under the Award to a pilot performing the duties performed by Mr Easton, her Honour determined a fair rate to be $600 per week taking into account the respondent's pilot and carpentry skills. Given that the respondent's claim was for payment of salary at the rate of pay prevailing in the industry - namely, the rate prescribed by the Pilots (General Aviation) Award, and given that is what her Honour essentially ordered, we do not consider that, in the absence of a specific claim for overtime and in the absence of an award provision relating to overtime, it was open to her Honour to order additional payments at overtime rates.

39 The respondent submitted that overtime was an issue from the outset and that the overtime claim was incorporated in the comprehensive claim for an order that the respondent pay fair rates of pay and fair conditions to the applicant. The claim in the summons for "fair rates of pay and fair conditions" was based on the Pilots' (General Aviation) Award. Mr Latham also referred to Mr Easton's affidavit and the affidavit of Mr Easton's solicitor where overtime and the rate at which he had been paid for overtime worked, were mentioned. In his affidavit Mr Easton also referred to time spent in recording temperature and air pressure at night and over weekends and said "…. I would have expected some form of monetary remuneration or time off in lieu of pay. No additional pay was received." The respondent also referred to a letter dated 11 June 1999 from the respondent to the appellants that sets out an offer of settlement and the breakdown of the offer. The letter refers to a claim for "Award wages (including superannuation)/overtime underpayment/penalty rate and overtime non payments" of an amount of $28,000.

40 The effect of what Mr Latham put by way of submission on the overtime issue was that although the claim for overtime was not particularised it would have been apparent from the references to overtime in the affidavits filed by the respondent, from the references to overtime in the transcript and from the letter of 11 June 1999, that overtime was part of the respondent's claim and that the claim for overtime was a component of the general claim for salary. Mr Latham contended that the term "salary" as used in the Pilots' (General Aviation) Award comprehended overtime.

41 The difficulties we have in accepting Mr Latham's submissions on the overtime issue are these:

1. The Award does not provide for the payment of overtime. Clause 42 (b)(viii) provides for an allowance to be paid for each day a pilot is required to work on a duty-free day but it is not expressed to be a payment for overtime; it is expressed as a flat money allowance separate from salary. Consequently, on the face of it, a claim for salary based on the Award could not reasonably be said to comprehend overtime payments. 2. There was no separate claim for payment at overtime rates, or for an allowance under cl 42(b)(viii), pleaded or particularised in the summons; there was no evidence about the number of duty-free days worked by the respondent. The respondent was on notice from very early in the proceedings that the appellants considered there was no claim for overtime, yet the respondent did not seek to amend his claim to make it clear that overtime was an issue. The fact there was reference to overtime in affidavits filed by the respondent and in the transcript does not make it a claim. 3. The reference to an overtime claim in the letter of 11 June 1999 from the respondent to the appellants, cannot in our opinion, be regarded as a formulation of an overtime claim for the purpose of the proceedings. The offer of compromise was made without prejudice prior to the conclusion of conciliation proceedings. Moreover, in identifying the various components of the claim it was an explanation of an offer to settle, not an explanation of a claim to be pressed in the proceedings. In any event, if the calculation in the offer of compromise by the respondent was, indeed, the basis of his claim for overtime, he had the opportunity, once he had clearly been put on notice that the appellants challenged overtime as being an issue in the proceedings, to amend his claim accordingly. He did not do so. 42 In our opinion, it could not be said that, from the outset of proceedings, a claim for overtime was apparent on the pleadings or on any other basis. If it was the intention of the respondent to make such a claim then it was not sufficient to rely on the terms of a federal award that made no provision for overtime, especially in the absence of any particularisation of the claim.

43 We think that over the consistent objection of counsel for the appellants, the claim for overtime did, in fact, spring from the trial Judge and the course of extensive questioning of witnesses during the proceedings. We consider that, but for her Honour's intervention, there would have been no available basis upon which any alleged claim for overtime could have been granted.

44 It is necessary, therefore, to make orders quashing the decision and order of Kavanagh J in relation to overtime.

45 For the reasons given, it was not appropriate for her Honour to grant the "claim" as to overtime or to make the order at overtime rates in that respect. However, as has been noted earlier, there was a claim made in the summons filed for "payment of salary at the rate of pay prevailing in the industry for the period August 1996 to January 1998". The sum particularised in the summons was $16,051.02 and was claimed in addition to the $31,000 particularised for the primary claim said to be as "payment of 12 months salary at the rate of pay prevailing in the industry". 46 This claim was particularised by the respondent in final submissions with detailed arithmetic calculations. This material may be summarised for the present purposes in this way: (a) during the period August 1996 to January 1998 the respondent worked 437.75 hours in addition to or outside his ordinary hours; (b) if these hours had been paid at the ordinary time rate under the award the respondent should have been paid $6,811.87 (rates varying from $15.32 to $16.15 per hour, depending on the particular sub-period, were used for this calculation); (c) from this amount, $5,388 was deducted as the amount actually paid to the respondent, resulting in a difference of $1,423.87; (d) it was submitted that "were the more usual overtime rates of double time used, the difference would have been $2,847.74".

47 The last step is plainly incorrect. If its premises were correct the relevant amount would have been in the order of $8,236. The premise as to the more usual rate of overtime was also incorrect. However, since, as we have held, it was open to the Court at first instance to grant relief on the basis of payment to the respondent at the rate of $600 per week it follows that it was also open to the Court to grant payment for the additional hours claimed at the hourly equivalent (approximately $16 per hour) of that amount. After allowance for the sum of $5,388 paid in that respect the available amount on this basis would have been $1,616. However, as the amount particularised by the respondent for ordinary time was approximately $1,424, it would in the circumstances be inappropriate to award more than this amount on appeal. Nevertheless, as we have held that the overtime rate element of the orders made at first instance should be overturned it follows that in lieu thereof an amount of $1,424, on the basis particularised for the period August 1996 to January 1998, should be substituted.

48 The quashing of the decision and orders of Kavanagh J relating to overtime was submitted by the appellants to have implications for the costs orders made at first instance. In the absence of an order awarding $5,118 in overtime payments and based on the calculations made earlier in this judgment, the judgment amount would have been $26,614.48 (including interest), which is slightly more than the amount offered to the respondent in the offer of compromise, namely $26,140.48, which includes interest. In those circumstances, and because the consideration which led her Honour to make differential costs orders as to the trial is no longer relevant, it would seem to follow that the appellants should pay the respondent's costs of the proceedings before Kavanagh J. However, liberty should be granted to the appellants should they wish to apply for a different approach to be considered. The orders made will deal with this in an appropriately conditional way which, absent an application from the appellants within the time specified, will result in an effective costs order in terms of our preliminary consideration.

49 It is necessary finally to consider the question of the costs of the appeal proceedings. The appeal and cross-appeal were heard together and the issues raised by the cross-appeal did not materially increase the hearing time required in the original appeal which, because of the level of detail involved, was of some complexity. In the circumstances, and having regard to the respondent's success on the major issues on the appeal, the appellants/cross respondents should pay 80 per cent of the respondent/cross appellant's costs of the appeal proceedings.

1. The appeal in Matter No IRC 4787 of 2000 is dismissed, except as to the decision and order of Kavanagh J relating to overtime payments. 2. Orders 2(a)(ii) and (vi) in the Orders made by Kavanagh J on 1 November 2000 are set aside.

3. The cross-appeal in Matter No. 5838 of 2000 is dismissed except as to the decision and order of Kavanagh J relating to costs. 4. Unless the appellants, within 10 days of delivery of judgment, apply in writing for orders otherwise, such application being accompanied by written submissions, orders 2(b) and (c) in the orders made by Kavanagh J on 1 November 2000 are set aside and the appellant in Matter No 4787 of 2000 shall pay the respondent's costs of the proceedings before Kavanagh J as agreed or, failing agreement, as assessed. 5. The respondent shall, within 10 days, file and serve short minutes of order to give effect to this judgment and orders and for the lifting of the stay granted on 16 November 2000. The matter is listed before Boland J on Thursday 13 December 2001 at 9.30am for the making of final orders, unless the parties file consent orders in the meantime. 6. Leave to appeal is granted to the extent referred in the judgment and otherwise refused. 7. The appellants in Matter No 4787 of 2000 and cross- respondents in Matter No 5838 of 2000 shall pay 80 per cent of Mr Easton's costs of the appeal and cross-appeal in an amount as agreed or assessed.

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