Jurisdiction : WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

Citation : UNITED VOICE WA v DIRECTOR GENERAL, DEPARTMENT OF EDUCATION [2013] WAIRC 53

Industrial Agreement - Interpretation - Alleged contravention of s 83 of the Industrial Relations Act 1979 (WA) - Proper construction of the Industrial Agreement - Special meaning given by the parties to an express term - Implied Terms - Surrounding circumstances known to both parties when the agreement was made - Whether there was a breach of the Industrial Agreement - Whether relevant to consider whether appellant was obliged to follow government policy announced by members of the Executive or comply with statutory direction to comply with the Industrial Agreement

Industrial Relations Act 1979 (WA), s 83, s 90

Public Sector Management Act 1994 (WA), s 8(2), s 29(1), s 30(d), s 32(1)

School Education Act 1999 (WA), s 231

Albert House Ltd (in vol liq) v Brisbane City Council [1968] HCA 46; (1968) 118 CLR 144

Amcor Ltd v Construction, Forestry, Mining and Energy Union [2005] HCA 10; (2005) 222 CLR 241

Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99

BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266

Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410

City of Wanneroo v Holmes [1989] FCA 369; (1989) 30 IR 362

Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337

George A Bond & Co Ltd (in liq) v McKenzie [1929] AR (NSW) 498

Hodgson v Morella Pastoral Co Pty Ltd (1975) 13 SASR 51

Homestake Australia Ltd v Metana Minerals NL (1991) 11 WAR 435

Kucks v CSR Ltd (1996) 66 IR 182

McCourt v Cranston [2012] WASCA 60

Moneywood Pty Ltd v Salamon Nominees Pty Ltd [2001] HCA 2; (2001) 202 CLR 351

Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451

Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516

RW Cameron & Co v L Slutzkin Pty Ltd [1923] HCA 20; (1923) 32 CLR 81

Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165

United Voice WA v Director General, Department of Education [2012] WAIRC 446; (2012) 92 WAIG 1592

United Voice WA v Director General, Department of Education [2013] WAIRC 53

Vince Coles Pty Ltd v Skischufabrik Dynafit (Unreported, NSWCA, 28 October 1985)

Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; (2011) 86 ALJR 1

White v Australian and New Zealand Theatres Ltd [1943] HCA 6; (1943) 67 CLR 266

1 PULLIN J: This is an appeal by the appellant (Director General) from a decision of the Full Bench of the Western Australian Industrial Relations Commission, which upheld an appeal by the respondent (Union) against a decision of an industrial magistrate.

2 The Director General is the CEO of the Department of Education (Department). On 4 August 2010, the Western Australian Industrial Relations Commission registered an industrial agreement known as the Education Assistants' (Government) General Agreement 2010 (Agreement), which was entered into by the Director General and the Union. It contained provisions relating to conditions of employment of employees who were education assistants as defined in the Agreement. Clause 10 of the Agreement read:

10.1 The employer consistent with its policy, Staff Induction, will ensure all new employees and redeployees attend induction sessions within three months of commencement of employment.

10.2 The Department of Education and Training will develop a specific induction package for Education Assistants.

10.3 Each district office is responsible for conducting inductions which are to be held twice each term during term time for new employees. The Employer will notify the Union if there are no new employees requiring induction and the required second induction in the term will not be necessary.

10.4 The Union will be given at least 14 days notice of the time and place of the inductions and the names of those attending. The Union is entitled to at least thirty minutes to address new employees without Employer representatives being present. The Union will meet the costs associated with its attendance at such sessions.

10.5 Every effort will be made to induct new employees in remote locations. Inductions may be part of professional development days or other days dedicated to staff training or development. Where car travel is greater than two hours, consideration may be given to an on-line induction to be available for new employees.

3 The Agreement was enforceable under s 83 of the Industrial Relations Act 1979 (WA) (IR Act), and on 18 August 2011, the Union filed an originating claim in the Industrial Magistrates Court alleging that the Director General had contravened the Agreement. The Union claimed a penalty pursuant to s 83(4)(a)(ii) of the IR Act.

4 Particulars of the claim allege various contraventions, but relevantly allege a breach of cl 10.3 of the Agreement by 'failing to provide induction sessions to new employees and redeployees within three months of commencement ... [and] by removing the responsibility for conducting inductions from the district offices and reallocating the responsibility to the line manager or principal of individual schools'.

5 The Director General denied any breach of cl 10.3 of the Agreement, but admitted other contraventions. The allegations came on for hearing before an industrial magistrate.

The hearing before the industrial magistrate

6 As to the alleged contravention of cl 10.3 of the Agreement, the industrial magistrate said in his reasons in United Voice WA v Director General, Department of Education [2012] WAIRC 446; (2012) 92 WAIG 1592 that, 'as a result of a government initiative which restructured the Education Department, district offices were abolished on 7 September 2010' [25], and that 'eight regional offices and seven local education offices ... replaced the 14 district offices' [22]. The industrial magistrate referred to evidence of Ms Collins, who was a Regional Executive Director for a region, that 'the role of Regional Executive Directors and that performed [by] regional offices is significantly different to that of the now defunct district offices'. The industrial magistrate accepted that 'regional offices are not structured to provide hands-on support. It is not their role to conduct inductions. That responsibility is devolved to schools in line with the policy underlying the restructure' [26].

7 The industrial magistrate held that the obligation to induct education assistants 'is and has always been, the responsibility of the Director General of the Department of Education'; that 'upon district offices being abolished, the immediate responsibility for conducting inductions reverted to the Director General [and] [s]he resumed that immediate responsibility when it became impossible for inductions to be done by district offices'; and that 'in line with the policy underlying the restructure, she delegated that responsibility to schools' [28].

8 The industrial magistrate found that the Director General could not be in breach of cl 10.3 of the Agreement because district offices had been abolished and 'there was no agreement that district offices would exist for the life of the 2010 agreement'; that cl 10.3 was incapable of enforcement; that the clause was no more than a 'mechanical provision relating to delegation of responsibility to district offices'; and that 'upon the abolishment of district offices that mechanism became redundant' [33].

9 The industrial magistrate said that, in any event, even if it could be said that there had been a breach of cl 10.3 of the Agreement, the common law defence of impossibility enabled exculpation of the Director General because the impossibility of complying with cl 10.3 arose from the implementation of government policy which the Director General was 'statutorily obliged' to follow [34]. The allegation that there was a contravention of cl 10.3 of the Agreement was therefore dismissed.

10 Contraventions not relevant to this appeal were admitted. The Union appealed against the part of the decision dismissing the complaint of contravention of s 83 of the IR Act based on the alleged breach of cl 10.3 of the Agreement.

11 The Full Bench upheld the appeal by a majority (Smith AP and Beech CC) with Kenner C dissenting: see United Voice WA v Director General, Department of Education [2013] WAIRC 53. The majority referred to the 'abolition' [54] of district offices by the 'executive of the Western Australian Government' [5], and counsel for the Director General on this appeal referred to the abolition as a result of action by the 'government'.

12 To show how this occurred, counsel for the Director General referred this court to a document which had been tendered as an exhibit in the Industrial Magistrates Court. It consisted of an announcement signed by the Premier of Western Australia, the Hon Colin Barnett MLA and the Minister for Education (at that time), Dr Elizabeth Constable MLA, dated September 2010. The announcement read:

School support services currently operating from district education offices will move to schools, giving principals and staff a greater say in how these services are delivered and used. The professionalism of school staff will ensure the services available to schools are used to maximise support, opportunities and benefits to students and staff.

13 Elsewhere in the announcement, it was said that the 'Government' was going to create 75 'school networks' in 'eight education regions across the State', and that 'up to 75 school networks, eight regional education offices and seven local education offices will replace the 14 existing district education offices'. The statement also revealed that the regional and local education offices would be located where there were currently district offices and that 'a significant proportion of current district staff will relocate to schools or networks'. It was submitted that the implementation of this new government policy meant that it was no longer possible for the Director General to comply with cl 10.3 of the Agreement and that, in consequence, there could be no breach of cl 10.3.

14 The majority of the Full Bench held that, on the basis that the district offices were abolished, it was no longer possible to conduct inductions at district offices, but that the words 'district office' in cl 10 could be read to include not only the district offices that were in existence at the time the Agreement was made, but also 'education offices located in districts' [69]. They further held that '[r]egional structural bodies that came into existence after the district education offices were abolished, that could be resourced in a way that were capable of being responsible for inductions and at the same time complied with the requirements of the education networks and regions policy, are education offices located in districts' [69].

15 Kenner C, in dissent, held that the district office referred to in cl 10.3 was 'that specific part of the [D]epartment's organisational structure in existence at the time of making of the Agreement, and which was abolished following the announcement of the change in government policy in September 2010' [98].

16 As a result of the majority decision, the part of the decision the subject of the appeal was quashed and the matter was remitted to the Industrial Magistrates Court for further hearing and determination according to law. This meant that the industrial magistrate would have to consider the issue of whether there had been a contravention or contraventions of the Agreement based on the Full Bench's interpretation of cl 10.3.

17 The Director General appealed on the ground that:

The Full Bench erred in the interpretation of clause 10.3 ... by interpreting the term 'district office' to mean 'education offices located in districts' and not to mean the entity within the Department of Education abolished in September 2010.

18 The Agreement has to be construed to determine what the intention of the parties was at the time the Agreement was entered into. This has to be determined by ascertaining what a reasonable person would have understood the words of the Agreement to mean taking into account the text, the surrounding circumstances known to the parties and the purpose and object of the transaction: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 [40]; Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 [22].

19 Surrounding circumstances may only be taken into account if the ordinary meaning of the words used by the parties is ambiguous or susceptible of more than one meaning: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337, 352; McCourt v Cranston [2012] WASCA 60 [23].

20 The phrase 'district office' is ambiguous if considered alone, but it would be wrong to concentrate only on that phrase. The phrase has to be construed in the context of the Agreement read as a whole: Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109. Even then, however, the phrase is ambiguous.

21 There is no doubt that when the Agreement was entered into there existed buildings known as district offices or district education offices which were staffed by employees of the Department who had the qualifications to conduct induction sessions as contemplated by the Agreement. Both parties knew of the existence of these offices and the fact that staff with qualifications to conduct inductions were located at these offices.

22 Allowing for the fact that industrial agreements are not always framed with that careful attention to form and draftsmanship which one expects to find in an Act of Parliament (see George A Bond & Co Ltd (in liq) v McKenzie [1929] AR (NSW) 498, 503), it is clear by reading the whole of cl 10 that the parties intended that the Director General would be obliged to ensure that all new employees and redeployees would attend induction sessions (cl 10.1) and that the Department, of which the Director General was CEO, would develop an induction 'package' for education assistants (cl 10.2). Clause 10.3 of the Agreement should be interpreted as providing that the induction package developed by departmental officers would be presented to new employees and redeployees at places then described as district offices by employees of the Department who were qualified to carry out the induction. A building cannot be 'responsible' for inductions. Neither party contended otherwise on this appeal. Thus 'district offices' meant the places which at the time the Agreement was entered into, were called district offices or district education offices and which were staffed by persons with the qualifications to carry out inductions. The Director General was obliged to ensure that such persons would carry out the inductions at those places.

23 The fact that the Premier and the Minister for Education made an announcement about future policy and the fact that the Director General was inclined to implement that policy bedevilled the proceedings both before the industrial magistrate and the Full Bench. The announcement by the Premier and the Minister occurred after the Agreement was entered into. It could have no bearing on the proper construction of the Agreement which has to be determined by reference to what was intended by the parties when they entered into the Agreement.

24 Further, the announcement by the Premier and the Minister had nothing to do with the issue of contravention. As the Agreement involved a promise by the Director General to carry out inductions at district offices using employees of the Department qualified to carry out the inductions then, as will be seen below, the adoption of a different policy by the Executive might explain why there was a breach of the Agreement, but the reasons why the Director General did not comply with the Agreement were irrelevant.

25 As to the first issue, which related to the interpretation of cl 10.3, the majority erred when it said that the construction of the words 'district office' in cl 10:

can be read to include not only the district education offices by that name that were in existence at the time the 2010 agreement was made, but to include education offices located in districts. Regional structural bodies that came into existence after the district education offices were abolished, that could be resourced in a way that [they] were capable of being responsible for inductions and at the same time complied with the requirements of the education networks and regions policy, are education offices located in districts [69].

26 That reveals error because the majority takes into account events subsequent to the Agreement, ie, the abolition of district offices and the creation of regional offices, and then construes the Agreement by reference to those events. The ground of appeal should be upheld.

27 It does not follow that the order of the Full Bench should be set aside. Section 90(3a) of the IR Act provides that if any ground of appeal is made out but the court is satisfied that no injustice has been suffered by the appellant, the court shall confirm the decision the subject of appeal unless it considers there is good reason not to do so.

28 No injustice will be suffered if the Full Bench decision is not reversed and there is no good reason why that should not be the result of this appeal for the following reasons.

29 Section 30(d) of the Public Sector Management Act 1994 (WA) (PSM Act) states that in performing functions of a chief executive officer of a department, the chief executive officer shall 'comply with any binding ... industrial agreement under the Industrial Relations Act 1979'. There was no dispute that the Director General was the chief executive officer of the Department.

30 The chief executive officer of a department is appointed under s 45 of the PSM Act. Section 29(1) of the PSM Act states that the function of a CEO relating to his or her department or organisation is, inter alia, to manage that department or organisation. Further under that Act, the Director General is not only the CEO of the department but the 'employing authority' (see section 5(1) of the PSM Act). The 'employing authority' under s 36(1) of the PSM Act has the power to determine organisational structures and arrangements and to create, transfer or abolish offices.

31 It is true that under s 32 of the PSM Act the CEO must comply with any 'lawful directions or instructions' given to him or her from time to time by a 'responsible authority' (defined in s 3 of the PSM Act to be the Minister in the absence of a board, committee or other body administering the department or organisation) and that under s 231 of the School Education Act 1999 (WA) (SE Act), the Minister may give directions to the CEO in writing in relation to functions under the SE Act. However, counsel for the Director General conceded that there was no evidence of ministerial directions under either s 32 of the PSM Act or s 231 of the SE Act. In any event, the Minister could not have given a direction to ignore the statutory requirement to comply with industrial agreements.

32 The provisions set out above make it clear that it is the Director General who is the person with the authority to organise the Department, devise organisational structures and to create, transfer or abolish offices. It was therefore the Director General who could do any of those things and while it may well be, as counsel for the Director General said, that the Director General would normally follow government policy,

government policy cannot override the instruction in s 30(d) of the PSM Act to comply with industrial agreements.

33 It was therefore no answer to a complaint about contravention to say that the 'government' had adopted a policy which made it impossible to comply with cl 10.3 of the Agreement. Clause 10.3 of the Agreement was a promise by the Director General to ensure that inductions were conducted twice yearly at district offices by properly qualified staff. There was a statutory obligation to comply with that promise and the Director General's functions authorised her to organise staff so that suitably qualified staff could continue to conduct inductions at district offices. The change of name of the buildings from district office to regional office or local office was of no consequence. The Director General contravened the Agreement if she failed to comply with the promise in cl 10.3.

34 For those reasons, there will be no miscarriage of justice if the orders of the Full Bench remain in force and the matter returns to the industrial magistrate. It may be that in the light of these reasons that the parties agree that there has been a contravention because of a failure to comply with cl 10.3 of the Agreement. However, if that is not agreed then the Full Bench order that the case now been determined 'according to law' will leave it to the industrial magistrate to determine the issue of contravention and if contravention is found, to determine the appropriate penalty for contravention.

35 The original application for contravention sought an order that there be future compliance with the Agreement. That is now no longer a matter which would come under consideration because the Agreement has come to an end and been replaced with a different agreement.

37 BUSS J: This is an appeal by the Director General, Department of Education (Director General), pursuant to s 90 of the Industrial Relations Act 1979 (WA) (IR Act), from a decision of the Full Bench of the Western Australian Industrial Relations Commission.

38 The respondent to this appeal, United Voice WA (United Voice), appealed to the Full Bench from a decision of the Western Australian Industrial Magistrates Court constituted by Magistrate Cicchini.

39 The decision in question was the magistrate's finding that the Director General had not contravened or failed to comply with a provision

of an 'industrial agreement' (as defined in s 7(1) of the IR Act), namely cl 10.3 of the Education Assistants' (Government) General Agreement 2010 (the 2010 Agreement).

40 The Full Bench, by a majority (Smith AP & Beech CC; Kenner C dissenting), allowed United Voice's appeal.

41 The majority of the Full Bench held, relevantly, that the magistrate had made material errors of law in construing cl 10.3 of the 2010 Agreement. They quashed the magistrate's decision and remitted the matter to the Industrial Magistrates Court for further hearing and determination according to law.

The background facts and circumstances including the reasons of the magistrate and the Full Bench

42 The background facts and circumstances, including the reasons of the magistrate and the Full Bench, are summarised in the reasons of Pullin J, with whom Le Miere J has expressed his agreement.

43 I will not repeat the background facts and circumstances, except to the extent necessary to explain my reasons.

44 The parties to the 2010 Agreement are the Director General and United Voice.

45 The Director General is the chief executive officer of the Department of Education (Department).

46 United Voice is an organisation of employees registered under div 4 of pt II of the IR Act.

The functions and ancillary powers and duties of the Director General

47 By s 29(1) of the Public Sector Management Act 1994 (WA) (PSM Act), subject to the Act and to any other written law relating to his or her department, the functions of a chief executive officer are to manage that department, and in particular, relevantly:

(d) to ensure the appropriate deployment and redeployment of resources within that department ... ;

(e) to ensure the proper organisation of that department ... , including the devising of organisational structures and arrangements;

(f) to ensure the appropriate division of responsibilities between, and the assignment of functions to, the employees employed in that department ... ;

(g) to manage and direct employees employed in that department ... and, without limiting the generality of this paragraph, to be responsible for the recruitment, selection, appointment and deployment of those employees.

48 Section 30(d) of the PSM Act provides that, in performing the functions of a chief executive officer of a department, that chief executive officer shall comply with, relevantly, any industrial agreement under the IR Act.

49 By s 32(1) of the PSM Act, in performing his or her functions, a chief executive officer shall, subject to:

(b) any public sector standard or code of ethics; and

(c) any other written law relating to his or her department,

comply with any lawful directions or instructions given to him or her from time to time by the 'responsible authority' of his or her department.

50 The term 'responsible authority', in relation to a department, is defined in s 3(1) of the PSM Act to mean, relevantly, the Minister of the Crown responsible for the department.

In matters relating to -

(a) the selection, appointment, transfer, secondment, classification, remuneration, redeployment, redundancy or termination of employment of an individual employee; or

(b) the classification of a particular office, post or position,

in its department or organisation, an employing authority [which is defined in s 5 to include a chief executive officer] is not subject to any direction given, whether under any written law or otherwise, by the Minister of the Crown responsible for the department or organisation, but shall, subject to this Act, act independently.

52 By s 231 of the School Education Act 1999 (WA), the Minister may give directions in writing of a general nature to the chief executive officer of the Department with respect to the performance of the chief executive officer's functions under the Act, but the Minister cannot give a direction in relation to a particular person.

53 In the present case, there was no evidence that the Minister had given the Director General a relevant direction or instruction under s 32(1) of the PSM Act or s 231 of the School Education Act.

The registration of the 2010 Agreement and s 83 of the IR Act

54 On 11 January 2010, the 2010 Agreement was filed in the Western Australian Industrial Relations Commission.

55 On 4 August 2010, the Commission registered the 2010 Agreement under the IR Act as an industrial agreement.

56 The 2010 Agreement includes provisions relating to persons employed within the Department as 'Education Assistants', as defined in cl 3.1 of the agreement.

57 Section 83(1) read with s 83(2) of the IR Act provides, relevantly, that where a person contravenes or fails to comply with a provision of an industrial agreement, any organisation or association named as a party to the industrial agreement may apply to an industrial magistrates court for the enforcement of the provision.

58 By s 83(4), on the hearing of an application under s 83(1), the industrial magistrates court may, by order, if the contravention or failure to comply is proved, issue a caution or impose such penalty as the court thinks just, but not exceeding $2,000 in the case of, relevantly, an employer.

10.1 The employer [that is, the Director General] consistent with its policy, Staff Induction, will ensure all new employees and redeployees attend induction sessions within three months of commencement of employment.

10.2 The Department of Education and Training will develop a specific induction package for Education Assistants.

10.3 Each district office is responsible for conducting inductions which are to be held twice each term during term time for new employees. The Employer will notify the Union if there are no new employees requiring induction and the required second induction in the term will not be necessary.

10.4 The Union will be given at least 14 days notice of the time and place of the inductions and the names of those attending. The Union is entitled to at least thirty minutes to address new employees without Employer representatives being present. The Union will meet the costs associated with its attendance at such sessions.

10.5 Every effort will be made to induct new employees in remote locations. Inductions may be part of professional development days or other days dedicated to staff training or development. Where car travel is greater than two hours, consideration may be given to an on-line induction to be available for new employees.

The relevant issue in the Magistrates Court

60 United Voice alleged before the magistrate that the Director General had contravened or failed to comply with, amongst other provisions, cl 10.3 of the 2010 Agreement.

61 United Voice's particulars asserted that the Director General had contravened cl 10.3 by 'failing to provide induction sessions to new employees and redeployees within three months of commencement' and by 'removing the responsibility for conducting inductions from the district offices and reallocating the responsibility to the line manager or principal of individual schools'.

62 United Voice claimed a penalty for the contravention pursuant to s 83(4) of the IR Act.

Facts not in dispute between the parties or established by evidence in the Magistrates Court

63 A number of facts were not in dispute between the parties or were established by evidence in the Magistrates Court.

64 At all material times before September 2010, there was an entity within the Department's internal organisational structure formally called a 'district education office', but more commonly referred to as a 'district office'.

65 At all material times before September 2010, the Department's internal organisational structure included, relevantly, a central head office, 14 district offices and individual schools.

66 Each district office was located within a specific geographic area of the State and had particular functions in relation to the schools located within its area. Each district office had buildings and facilities, and employees of the Department were located and carried out their work in those buildings and used those facilities.

67 At all material times before September 2010, the inductions referred to in cl 10 of the 2010 Agreement were held at district offices twice each term. In each district office new education assistants, who had been appointed to schools within the geographic area serviced by that district office, were inducted. The inductions at each district office were conducted by employees of the Department whose ordinary place of work was at the buildings of that office.

68 Clause 10.3 conferred an important benefit on United Voice in that it enabled representatives of United Voice to address the new education assistants at a central location, rather than at the individual schools where the new education assistants worked, on the desirability and advantages of their becoming members of United Voice. See cl 10.3 read with cl 10.4.

69 In September 2010 the Executive Government of Western Australia announced the abolition of district offices. The Government created eight 'education regions'. Each region related to a specified geographic area within the State and had a 'regional education office'. In addition to the regional education offices, the Government announced the creation of seven 'local education offices'. The Government decided that, as from September 2010, there would be a regional education office or a local education office located in the buildings in which each district office had previously been located.

70 Although, as from September 2010, regional education offices or local education offices have occupied the buildings previously occupied by the district offices, the new offices have roles and resources different from the district offices.

71 Before this court, other facts were not in dispute, as follows:

(a) At all material times before September 2010, three Department employees at each district office were responsible for conducting inductions at that district office.

(b) At all material times before September 2010, there were usually about 20 to 25 new education assistants at each induction.

(c) Clause 10 of the 2010 Agreement replicated in substance a clause in the Education Assistants' (Government) General Agreement 2007 between the Director General and United Voice. The arrangements in 2010 in relation to inducting new education assistants at district offices, and the nature and function of district offices, also existed in 2007, 2008 and 2009.

(d) The duration of an induction was to be measured in hours, not days.

(e) Since September 2010, the employees of the Department, who had previously been responsible for inducting new education assistants at district offices, were redeployed to the central head office or individual schools or elsewhere within the Department's internal organisational structure, pursuant to the reorganisation announced by the Government in September 2010.

(f) Since September 2010, new education assistants have been inducted at individual schools.

(g) At all material times, the Director General had the power to instruct Department employees to conduct inductions for new education assistants at the buildings previously occupied by the district offices.

The reasoning and conclusion of the magistrate

72 The reasoning and conclusion of the magistrate were, relevantly, as follows:

Clause 10.3 does not require the continued existence of district offices. Once those offices were abolished, it rendered the first part of the first sentence in Clause 10.3 otiose. It was impossible for district offices to have responsibility for inductions when they did not exist. The [Director General] cannot be, and is not, in breach of Clause 10.3 because district offices have been abolished. There was no agreement that district offices would exist for the life of the 2010 Agreement. Clause 10.3 is incapable of enforcement. It is no more than a mechanical provision relating to delegation of responsibility to district offices. Upon the abolishment [sic] of district offices that mechanism became redundant.

In any event, even if it could be said that there has been a breach of Clause 10.3, the common law defence of impossibility enables exculpation of the [Director General]. It suffices to say that the impossibility of complying with Clause 10.3 arose from the implementation of government policy which the [Director General] was statutorily obliged [to] follow.

The alleged breach of Clause 10.3 of the 2010 Agreement, as asserted in paragraph 3.6(b) of the Statement of Claim is not made out [33] - [35].

The reasoning and conclusion of the majority of the Full Bench

73 The reasoning and conclusion of the majority of the Full Bench were, relevantly, as follows:

When the express right to organise is considered, together with the requirement that subject to new employees and redeployees being recruited inductions are to be held twice a term, it can be presumed that the intention of the parties when the 2010 agreement was made was that inductions would be arranged on a district by district basis. There is no dispute about this conclusion, as it was commonly understood by the parties that the district education offices would be responsible for and did in fact make arrangements for inductions to be conducted on a regional basis. We use the word 'regional' in the sense of geographical areas in which public schools are located. Within each designated geographical area each school was provided with services from a district education office.

The duties, rights and obligations created in cl 10 must be considered together in a way that each is intended to give effect to goals in a harmonious way, together with the following matters, which lead to a conclusion that the words 'district office' in cl 10.3 can be read to include regional and local offices. These matters are:

(a) the statutory obligation on both parties to comply with the express terms of the 2010 agreement;

(b) the obligation on the [Director General] to comply with policies made by the executive of the state which is expressly recognised by the parties in cl 50.1; and

(c) the fact that change in the organisation of the delivery of education services is expressly recognised in cl 42 and cl 49.

When all these matters are considered the construction of the words of 'district office' in cl 10 can be read to include not only the district education offices by that name that were in existence at the time the 2010 agreement was made, but to include education offices located in districts. Regional structural bodies that came into existence after the district education offices were abolished, that could be resourced in a way that were capable of being responsible for inductions and at the same time complied with the requirements of the education networks and regions policy, are education offices located in districts.

...

In our opinion, the learned Industrial Magistrate erred in finding that it is the responsibility of the [Director General] to induct education assistants. The [Director General] is obliged by the 2010 agreement to ensure that each district office is responsible for conducting inductions for education assistants. We also do not agree that upon the abolition of district education offices the immediate responsibility for conducting inductions reverted to the [Director General]. In our opinion, upon the abolition of district education offices, the [Director General] was required (if possible) to put in place arrangements so that education offices in regions could be responsible for inductions in accordance with cl 10.3. The evidence shows this was possible [67] - [69], [75].

The reasoning and conclusion of the minority of the Full Bench

74 The reasoning and conclusion of Kenner C, who dissented, were, relevantly, as follows:

In my view, based on the language used in cl 10.3, construed consistently with the tenor of cl 10 and the rest of the Agreement as a whole, it is reasonably plain that the district office referred to in cl 10.3 was that specific part of the Department's organisational structure in existence at the time of the making of the Agreement, and which was abolished following the announcement of the change in government policy in September 2010. The fact of the existence of some 14 district offices, for some years, as a part of the Department's organisational structure seemed well accepted and known to the parties ... It also seemed beyond contention that for many years, the district offices had been responsible for the conduct of inductions of Education Assistants.

...

It is not the case in my view, even allowing for the most generous approach to the construction of cl 10.3, that the subclause can be read reasonably as substituting for 'district office' the words or words to the effect 'regional subdivisions of the Education Department, located in the organisational structure between the central department office and schools'. To so hold leads to an impermissible redrafting of the subclause, not supported by the plain text or context of cl 10.3 within the Agreement as a whole.

...

The defence of impossibility applies in this case. It is difficult to see how the Director General can be held culpable for action she was required to take to implement Government policy. It was the implementation of this policy that led to the abolition of the district offices ... It was impossible for the district offices to be responsible for inductions at the material time, because such known and recognised entities no longer existed after the policy was put into effect [98], [100], [119].

75 Section 90(1)(b) of the IR Act provides, relevantly, that an appeal lies to this court from any decision of the Full Bench on the ground that the decision is erroneous in law in that there has been an error in the construction or interpretation of any industrial agreement in the course of making the decision appealed against.

76 By s 90(3a) of the IR Act, if any ground of an appeal is made out but this court is satisfied that no injustice has been suffered by the appellant or a person who is a member of or represented by the appellant, this court must confirm the decision the subject of appeal unless it considers that there is good reason not to do so.

77 The sole ground of appeal relied on by the Director General before this court reads:

The Full Bench erred in the interpretation of cl 10.3 ... by interpreting the term 'district office' to mean 'education offices located in districts' and not to mean the entity within the Department ... abolished in September 2010.

78 The ground of appeal, as developed at the hearing, raises for determination the proper construction of cl 10 (in particular, cl 10.3) of the 2010 Agreement.

79 The Director General asserted that the entity referred to in cl 10.3 as a 'district office' was abolished by the Executive Government in September 2010.

80 The Director General maintained that after September 2010, through no fault of her own, she could no longer ensure that 'each district office was responsible for conducting inductions' within cl 10.3 and, in consequence, she did not contravene that provision by her failure to ensure that district offices were responsible for conducting inductions of new education assistants.

The proper approach to the construction of an industrial agreement

81 The construction of an industrial agreement involves ascertaining what a reasonable person would have understood the parties to the agreement to mean. The language of the agreement should be understood in the light of its industrial context and purpose. See Amcor Ltd v Construction, Forestry, Mining and Energy Union [2005] HCA 10; (2005) 222 CLR 241 [2] (Gleeson CJ & McHugh J).

82 In Kucks v CSR Ltd (1996) 66 IR 182, Madgwick J observed:

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 (184). (emphasis added)

See also City of Wanneroo v Holmes [1989] FCA 369; (1989) 30 IR 362, 378 - 379 (French J); Amcor [96] (Kirby J), [129] - [130] (Callinan J).

83 The words of a clause in a written agreement are to be given the most appropriate meaning which they can legitimately bear. A court must have regard to all of the provisions of the agreement with a view to achieving harmony among them. See Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109 - 110 (Gibbs J). These propositions are applicable to instruments generally, subject to any particular rules of construction which have been developed in relation to a particular kind of provision or instrument.

84 In the present case, it was not suggested by either of the parties that, in construing the express terms of the 2010 Agreement, consideration should be given to the surrounding circumstances, known to the parties, when the agreement was made. It is therefore unnecessary to analyse the emphatic observations of Gummow, Heydon and Bell JJ in Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; (2011) 86 ALJR 1 [2] - [5].

The admissibility of evidence to show that a particular word or phrase bears a special trade or locality meaning

85 It is well-established that where a word in a written agreement has a special trade or locality meaning among a particular class of people, evidence is admissible to establish that the parties intended the word to have that meaning.

86 In Hodgson v Morella Pastoral Co Pty Ltd (1975) 13 SASR 51, Bray CJ said:

Normally, of course, all the words in a written contract are to be construed according to their natural and ordinary sense, but evidence is admissible to show that any particular word or phrase bears a peculiar meaning in a particular locality or according to the practice of a particular trade or business, and when that is done then prima facie the word or phrase bears that peculiar meaning (53).

87 In Vince Coles Pty Ltd v Skischufabrik Dynafit (Unreported, NSWCA, 28 October 1985), McHugh JA (Hope JA agreeing) expounded on this principle as follows:

When evidence is admitted to prove that words in an agreement have a special trade or locality meaning, it is because their use in an agreement made in that locality, or with reference to a matter in that trade, raises a presumption that the parties have contracted in accordance with that special meaning: Smith v Wilson [1832] EngR 643; (1832) 3 B & Ad 728 at 732; Lewis v Marshall (1844) 7 M & G 729 at 744; Kirchner v Venus [1859] EngR 306; (1859) 12 Moo PC 361 at 399; Myers v Sarl (1860) 3 El & E1 306 at 319; Appleby v Pursell [1973] 2 NSWLR 879 at 889. The presumption arises from the parties' knowledge, or the notoriety, of that meaning in the locality or trade; Smith v Wilson at 733; Myers v Sarl at 315-16. The presumption is one of fact, not of law, and may be rebutted: Clayton v Gregson (1836) 5 A & E 302. The terms of the agreement may show that the parties did not intend to contract in accordance with the special meaning: Humfrey v Dale [1857] EngR 166; (1858) 7 E & B 266 at 274; Myers v Sarl at 320-21. Proof that one or both parties were ignorant of the special meaning of the words in the trade or locality will rebut the presumption: Kirchner v Venus; Sutton v Tatham [1839] EngR 608; (1839) 10 Ad & E 27. Moreover, unless the meaning is both certain and notorious, no presumption arises (5).

See also Homestake Australia Ltd v Metana Minerals NL (1991) 11 WAR 435, 447 (Ipp J).

The admissibility of evidence to identify the subject matter of a written agreement

88 The subject matter of a written agreement may be identified by extrinsic evidence if the description of the subject matter in the agreement is uncertain or ambiguous. See RW Cameron & Co v L Slutzkin Pty Ltd [1923] HCA 20; (1923) 32 CLR 81, 90 - 93 (Isaacs J); White v Australian and New Zealand Theatres Ltd [1943] HCA 6; (1943) 67 CLR 266, 270 - 271 (Latham CJ).

The admissibility of evidence of the surrounding circumstances, known to the parties, when a written agreement was made, where a term is sought to be implied in fact to give business efficacy to the agreement

89 In BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266, a majority of the Privy Council specified the conditions necessary to ground the implication in fact of a contractual term:

Their Lordships do not think it necessary to review exhaustively the authorities on the implication of a term in a contract which the parties have not thought fit to express. In their view, for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it 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 (282- 283).

See also Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, 605 - 606 (Mason J, Barwick CJ, Gibbs, Stephen & Aickin JJ agreeing); Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337, 347, 351 - 352 (Mason J, Stephen & Wilson JJ agreeing), 404 (Brennan J).

90 Where a term is sought to be implied in fact to give business efficacy to a written agreement, the term will not be implied unless the conditions stipulated in BP Refinery, and approved in Secured Income and Codelfa, are satisfied. These conditions will often overlap.

91 A court, in deciding whether the conditions for the implication in fact of a term are satisfied, may take into account the form of the agreement, its express terms and the surrounding circumstances, known to the parties, when the agreement was made. Surrounding circumstances are to be distinguished from any antecedent negotiations and the actual intentions, aspirations or expectations of the parties.

92 In Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410, McHugh and Gummow JJ said:

[A]s indicated above, terms implied by the application of what one might call the business efficacy test are terms unique to the particular contract in question, depending upon the form of the contract, the express terms and the surrounding circumstances (448). (emphasis added)

See also Albert House Ltd (in vol liq) v Brisbane City Council [1968] HCA 46; (1968) 118 CLR 144, 148 - 149 (Kitto J); Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516 [55] (Gummow J); Moneywood Pty Ltd v Salamon Nominees Pty Ltd [2001] HCA 2; (2001) 202 CLR 351 [80] (Gummow J).

93 In Secured Income, Mason J distinguished between evidence of surrounding circumstances, on the one hand, and the antecedent oral negotiations and expectations of the parties, on the other, as follows:

In truth the evidence is not evidence of surrounding circumstances; it is evidence of the antecedent oral negotiations and expectations of the parties and as such it cannot be used for the purpose of construing the words of a written contract intended by the parties to comprehensively record the terms of the agreement which they have made. As Lord Wilberforce said in Prenn v Simmonds ( [1971] 1 WLR 1381, at p 1385; [1971] 3 All ER 237, at p 240):

... evidence of negotiations, or of the parties' intentions ... ought not to be received, and evidence should be restricted to evidence of the factual background known to the parties at or before the date of the contact, including evidence of the 'genesis' and objectively the 'aim' of the transaction.

As to the circumstances, and the object of the parties, there is no controversy in the present case. The agreement itself, on its face, almost supplies enough, without the necessity to supplement it by outside evidence.

The comment by his Lordship in the last paragraph which I have quoted has equal application to the present case where the provisions of the contract itself so amply demonstrate that the purpose of the parties was to provide against the possibility that the respondent's investment return on the purchase price was less than the figure stipulated (606).

94 In Codelfa, Mason J did not, on my understanding of his Honour's reasons, state that the surrounding circumstances, known to the parties, when the agreement was made, may not be taken into account in deciding whether the conditions for the implication in fact of a term are satisfied. See, in particular, his Honour's reasons at 352 - 354.

95 It is significant that a term will not be implied in fact if it is inconsistent with any express term of the agreement. The relevance of surrounding circumstances, where a term is sought to be implied in fact, does not undermine the 'true rule' enunciated by Mason J in Codelfa as to the admission of evidence of surrounding circumstances as an aid in the interpretation of 'the language' of a contract (352).

96 The strictures of Gummow, Heydon and Bell JJ in Western Export Services about resort to surrounding circumstances were made in the context of the construction of an express term of a written agreement. Their Honours' remarks were not directed to the implication in fact of a term.

The merits of the Director General's ground of appeal

97 The Director General and United Voice were agreed, before the magistrate, the Full Bench and this court, that the term 'district office', in cl 10 of the 2010 Agreement, did not bear its natural and ordinary meaning. Evidence adduced at the hearing in the Industrial Magistrates Court established that, as at the date of making the 2010 Agreement, 'district office' had a special meaning, within the Department's internal organisational structure, that was certain and notorious among a particular class of people, including the Director General and organisations (registered under div 4 of pt 2 of the IR Act) of employees working at the Department. The only reasonable construction of the term 'district office', in cl 10 of the 2010 Agreement, is that the parties were referring to the entities within the Department's internal organisational structure, as at the date of making the agreement, that were formally called 'district education offices', but more commonly referred to as 'district offices'.

98 As I have mentioned, at all material times before September 2010:

(a) each district office was located within a specific geographic area of the State and had particular functions in relation to the schools located within its area; and

(b) each district office had buildings and facilities, and employees of the Department were located and carried out their work in those buildings and used those facilities.

99 Clause 10.3 must be construed in the context of cl 10 and the other provisions of the 2010 Agreement as a whole (in particular, cl 10.1 and cl 10.2) and the special meaning given by the parties to the term 'district office'.

100 On this approach, it is readily apparent that cl 10.3, properly construed, embodies a promise by the Director General that:

(a) the Department, through its employees at each district office, will arrange for inductions of new education assistants to be held twice each term at the district office, unless there are no new education assistants requiring induction; and

(b) the inductions will be conducted by suitably qualified employees of the Department.

101 The critical question, for the purposes of this appeal, is: what was the presumed intention (if any) of the parties, as at the date of making the 2010 Agreement, in relation to arranging and conducting inductions, if district offices were to be abolished during the subsistence of the agreement?

102 More specifically, was it an implied term of the 2010 Agreement that, if district offices were abolished during the subsistence of the agreement, the subject matter of the Director General's promise would be as follows:

(a) the Department, through its employees, will arrange for inductions of new education assistants to be held twice each term at the buildings previously occupied by each district office, unless there are no new education assistants requiring induction; and

(b) the inductions will be conducted by suitably qualified employees of the Department?

103 In my opinion, the conditions for the implication of this term are satisfied.

104 First, the term is fair and reasonable as regards the Director General and United Voice. The surrounding circumstances, known to the parties when the agreement was made, establish that limited resources were required to conduct inductions at the buildings occupied by district offices; in particular, only three Department employees at each district office were responsible for conducting inductions at that district office and there were usually only about 20 to 25 new education assistants at each induction. Further, those surrounding circumstances establish that, at all material times, the Director General had power to instruct suitably qualified employees of the Department to conduct inductions at the buildings occupied by the district offices. Clause 10.3 stipulated that inductions were to be held only twice each term. The parties were agreed that the duration of an induction was to be measured in hours, not days. The suggested implied term does not operate to the material prejudice or disadvantage of the Director General. It preserves the Director General's promise without exposing her to unreasonable financial expense or administrative inconvenience. It also preserves for United Voice the substance of the benefit of the Director General's promise.

105 Secondly, the term is necessary to make cl 10 operate effectively. Otherwise, the Director General's promise could easily be avoided, to the detriment of United Voice, by an internal reorganisation of the Department which altered the name and function of the entities that occupied the buildings in question when the agreement was made. The implication of the term is essential to give effect to the reasonable expectations of the parties, objectively determined, as at the date of making the agreement.

106 Thirdly, it is obvious, after taking into account the express terms of the agreement as a whole and the surrounding circumstances known to the parties when the agreement was made, that a term should be implied to deal with the relevant contingency and it is also obvious, after taking into account those matters, that the provision to be implied should be in the terms I have formulated.

107 Fourthly, there is no doubt that the term can be articulated with clarity and precision.

108 Fifthly, the term is not inconsistent with any of the express terms of the agreement or with its general tenor. Also, it is not apparent that the parties were cognisant of the point and either deliberately rejected the term or deliberately failed to deal with the relevant contingency.

109 The Government's announcement, in September 2010, of the abolition of district offices, did not absolve the Director General from compliance with the implied term or immunise her from the consequences of her contravention or failure to comply with it. It was not, at any time, 'impossible' for the Director General to comply with the implied term. The Director General's promise was not discharged under the contractual doctrine of frustration. The Director General was obliged under the law of contract and s 30(d) of the PSM Act to comply with the provisions of the 2010 Agreement including the implied term.

110 The construction of cl 10.3 adopted by the majority of the Full Bench was erroneous. It was not open to the majority to conclude that, on the express terms of cl 10, the term 'district office' included the '[r]egional structural bodies that came into existence after the district education offices were abolished' [69].

112 As I have mentioned, by s 90(3a) of the IR Act, if any ground of an appeal is made out but this court is satisfied that no injustice has been suffered by the appellant or a person who is a member of or represented by the appellant, this court must confirm the decision the subject of appeal unless it considers that there is good reason not to do so.

113 In the present case, despite the error of construction made by the majority of the Full Bench, the decision of the majority to allow the appeal was correct. The magistrate made material errors of law in construing cl 10.3. It was appropriate for the majority of the Full Bench to quash the magistrate's decision and remit the matter to the Industrial Magistrates Court for further hearing and determination according to law.

114 However, the determination according to law in the Industrial Magistrates Court must now be in accordance with the reasons of this court and not in accordance with the reasons of the majority of the Full Bench.

115 I am satisfied that, even though the ground of appeal has been made out, no injustice has been suffered by the Director General. No relevant injustice was suggested at the hearing before this court. No good reason exists for not confirming the orders made by the majority of the Full Bench.

117 LE MIERE J: I agree that the appeal should be dismissed for the reasons given by Pullin J.