decision
1By a Memorandum of Understanding dated 17 August 2011 ("the MOU"), the Commissioner of Corrective Services New South Wales entered into an agreement with the Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales ("the PSA") to delete 350 positions across the whole of the operations of Corrective Services NSW (a division of the Department of Justice, hereafter referred to as 'CSNSW') so as to "achieve employee-related cost savings" of not less than $33 million.
2Overall, the MOU had the purpose of making CSNSW more competitive as an alternative to the privatisation of Correctional Centres by the New South Wales Government.
3The MOU was given effect to at, inter alia, the Kempsey, Dillwynia and Wellington Centres by the deletion of eight custodial positions. Those Centres were governed by an "island" award known as the Crown Employees (Correctional Officers, Department of Corrective Services) Award 2007 for Kempsey, Dillwynia and Wellington Correctional Centres ("the Award").
4Some three years later, by an amended application brought by leave of the Commission, the PSA sought to vary the Award in various respects concerning, inter alia, Chief Correctional Officers and Principal Correctional Officers.
5The confluence of the potential increase in employee-related costs under the application and the aforementioned savings in employee-related costs effected by the MOU resulted in an issue being ventilated in these proceedings as to whether the application was precluded by the terms of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2011("the 2011 Regulation") which declared matters for the purposes of s 146C of the Industrial Relations Act 1996 ("the Act") to be aspects of Government policy that are to be given effect to by the Industrial Relations Commission when making or varying awards. (It may be noted that, since the Commission reserved its decision in this matter, the 2011 Regulation was replaced by the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 ("the Regulation") but no change to the 2011 Regulation is material to the present proceedings as cll 6, 8 and 9 of the Regulation are in the same terms as in the 2011 Regulation).
6The issue was first ventilated in a hearing of the PSA's primary application before Staff J on 14 June 2013. At that hearing, his Honour accepted CSNSW's submission to program a hearing as to what CSNSW described as a "threshold question". At the commencement of that hearing, on 1 July 2013, Staff J, upon the request of CSNSW, resolved that a question should be referred to the President pursuant to s 193(1) of the IR Act for a determination in respect of s 193(2) of that Act. That question, as stated by Staff J, was as follows:
Whether whole of government savings, that is, measures that bring a government department or agency within budget can be relied upon by the applicant as representing employee related cost savings in discharge of its obligations under s 146C of the Industrial Relations Act 1996 and the Industrial Relations (public Sector Conditions of Employment) Regulation 2011".
7On 2 July 2013, the then President, Boland J, determined that "these proceedings, including any Special Case aspect of them, are to be dealt with by a Full Bench of the Commission. The evidence in the matter is to be taken by Staff J on behalf of the Full Bench."
8Upon the matter being returned to Staff J, the question or questions to be determined by the Full Bench were crystallised in the form of questions formulated by the parties. A question filed by CSNSW (on 26 July 2013) was expressed in the following terms:
To the extent that the deletion of eight (8) custodial positions from the three (3) correctional centres affected by this application and as referred to in paragraphs 13-15 of the witness statement of Stewart Little filed on 25 January 2013, has resulted in a reduction of Corrective Services NSW's expenditure, doe [sic] such reduction in expenditure fall within the definition of "employee-related cost savings" in Regulation 9 of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2011?
9The PSA also filed a question for adjudication by the Full Bench (on 9 August 2013). However, the Full Bench determined that the question posed by the PSA would be deferred until later in the proceedings.
10Ultimately, the question addressed by the Full Bench was refined in the course of argument to be whether savings effected at the three Correctional Centres governed by the Award as a result of the MOU fell outside the meaning of employee-related cost savings in cl 9(1) of the Regulation in consequence of the operation of paragraph (d) of the clause. It was contended by CSNSW that the savings obtained from the application of the MOU could not constitute savings in addition to whole of Government savings measures for the purposes of cl 9(1)(d) because, in substance, those savings exclusively concerned whole of Government savings measures and, in the result, in the absence of alternate discrete employee-related cost savings, the application would be precluded by the Regulation. (The PSA may consider further savings measures in the light of our ruling on the present question.)
11This decision is directed to the resolution of the question posed by CSNSW as refined by the parties during the course of argument (per the preceding paragraph). We shall refer to the composite of these questions as "the question" or "the issue".
12Hence, it became unnecessary to decide at this stage of the proceedings the precise amount of savings under the MOU as the preliminary issue raised by CSNSW proceeded upon the basis that, even if the savings deriving from the MOU were such as would fully offset the increased employee-related costs arising from the amended application, they did not satisfy the conditions of cl 6(1)(b) of the Regulation, permissive of increases in employee-related costs above 2.5 per cent because those savings derived entirely from whole of Government savings measures for the purposes of cl 9(1)(d). In any event, it was common ground that the variation, if granted, would have the effect of increasing employee-related costs, although there was a dispute as to the quantum of those costs.
13We shall comment further on the nature of the issue ventilated but, so expressed, it involves a question of statutory construction.
14The principles applicable to making such a determination have been recently discussed in judgments of the High Court in Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Thelander [2012] HCA 56; (2012) 248 CLR 378; (2012) 293 ALR 412 ('Certain Lloyd's'); Australian Education Union v Department of Education and Children's Services [2012] HCA 3; (2012) 248 CLR 1; (2012) 285 ALR 27 and Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32; (2012) 248 CLR 500.
15An extrapolation of principles from those judgments was provided by the Full Bench of this Court in Public Service Association and Professional Officers' Amalgamated Unions of New South Wales v Department of Education and Communities [2013] NSWIRComm 32 at [24] as follows:
[24] There are three recent High Court authorities which provide guidance as to the correct approach to statutory interpretation, namely, Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Thelander [2012] HCA 56; (2012) 293 ALR 412, Australian Education Union v Department of Education and Children's Services [2012] HCA 3; (2012) 285 ALR 27 and Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32. Key principles, relevant to the present proceedings, can be distilled from these authorities:
(1) The legal meaning of a provision of a statute is to be ascertained by processes of statutory construction: Certain Lloyd's Underwriters at [25] per French CJ and Hayne J. Thus, the fundamental object of statutory construction is to ascertain legislative intention: Certain Lloyd's Underwriters at [88] per Kiefel J. However, the use of the metaphor 'legislative intention' must not mislead. This expression must be understood as the intention that the courts will impute to the legislature by a process of construction: Certain Lloyd's Underwriters at [88] per Kiefel J. The duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have: Certain Lloyd's Underwriters at [25] per French CJ and Hayne J (applying Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355; (1998) 72 ALJR 841; (1998) 153 ALR 490 at [78] per McHugh, Gummow, Kirby and Hayne JJ);
(2) Ordinarily, the legal meaning of a provision of a statute will correspond with the grammatical meaning, but not always: Certain Lloyd's Underwriters at [25] per French CJ and Hayne J and at [68] per Crennan and Bell JJ (applying Project Blue Sky at [78] per McHugh, Gummow, Kirby and Hayne JJ). Nonetheless, the process of statutory construction must begin with a textual analysis of the words of a provision - that is, a consideration of the ordinary and grammatical meaning of the words: Australian Education Union at [26] per French CJ, Hayne, Kiefel and Bell JJ; Barclay at [41] per French CJ, Crennan, Gummow and Hayne JJ; Certain Lloyd's Underwriters at [23] per French CJ and Hayne J. Although that initial step may involve the construction of the words of a provision in question when read in the context of the statute as a whole: Certain Lloyd's Underwriters at [88] per Kiefel J. Thus, the legal meaning is ascertained by reference to the language of the statute viewed as a whole: Certain Lloyd's Underwriters at [26] per French CJ and Hayne J and [88] per Kiefel J. The purpose of the statute resides in its text and structure: Certain Lloyd's Underwriters at [25] per French CJ and Hayne J;
(3) Context may also be considered "in a broader sense as including the general purpose and policy of the legislation, in particular the mischief to which the statute is directed and which the legislature intended to remedy.": Certain Lloyd's Underwriters at [88] per Kiefel J;
(4) The context and purpose of a provision are important to its proper construction. Legal meaning may be ascertained by reference to general purpose, consistency and fairness: Certain Lloyd's Underwriters at [24] per French CJ and Hayne J;
(5) The determination of the purpose of a statute or a particular statutory provision may be based upon an express statement of purpose in the statute itself, inference from its text and structure and, if appropriate, reference to extrinsic materials: Certain Lloyd's Underwriters at [25] per French CJ and Hayne J. Whilst consideration of extrinsic materials should not displace the clear meaning of the text of a provision, the purpose of a provision may be elucidated by appropriate reference to them: Certain Lloyd's Underwriters at [70] per Crennan and Bell JJ;
(6) It is conceivable that the context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with their literal or grammatical meaning: Certain Lloyd's Underwriters at [68] per Crennan and Bell JJ quoting Project Blue Sky at [78] per McHugh, Gummow, Kirby and Hayne JJ;
(7) Determination of a statutory purpose neither permits nor requires some search for what those who promoted or passed the legislation may have had in mind when it was enacted: Certain Lloyd's Underwriters at [25] - [26] per French CJ and Hayne J and [70] per Crennan and Bell JJ. In construing a statute it is not for a court to construct its own idea of a desirable policy, impute it to the legislature, and then characterise it as a statutory purpose: Australian Education Union at [27] - [28] per French CJ, Hayne, Kiefel and Bell JJ.
16The parties concurred that those principles of statutory construction were applicable to the construction of the legislation and delegated legislation in these proceedings.
17Those principles were applied more recently by the New South Wales Court of Appeal in Public Service Association and Professional Officers' Associated Amalgamated Union of New South Wales [2014] NSWCA 116 ("PSA 2014") at [44] to [47].
44 The principles governing the construction of delegated legislation, such as the regulation in the present case, are those applicable to Acts of Parliament generally: Collector of Customs v Agfa-Gevaert Ltd [1996] HCA 36 ; (1996) 186 CLR 389 at 398; King Gee Clothing Co Pty Ltd v The Commonwealth [1945] HCA 23 ; (1945) 71 CLR 184 at 195.
45 The relevant principles have been stated on a number of recent occasions by the High court. In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) [2009] HCA 41 ; (2009) 239 CLR 27, the plurality emphasised (at [47]) that construction must begin with a consideration of the text itself and while the language employed is the surest guide to legislative intention, the meaning of the text may require consideration of the context which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy: See also Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32 ; (2012) 86 ALJR 1044 at [41]; Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55 ; (2012) 87 ALJR 98 at [39]; Certain Lloyd's Underwriters v Cross [2012] HCA 56 ; (2012) 248 CLR 378 at [23].
46 Determination of the purpose of the statute or a particular provision may be based not only on an express statement of purpose in the statute itself but also by inference from its text and structure and where appropriate by reference to extrinsic material. However, the process does not involve a search for what those who presented and passed the legislation had in mind: Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 ; (1998) 194 CLR 355; Certain Lloyd's Underwriters v Cross supra at [23]-[26].
47 Extrinsic material cannot be used to construe a legislative provision unless a construction of the provision suggested by the material is reasonably open: CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2 ; (1997) 187 CLR 384 at 408; Newcastle City Council v GIO General Ltd [1997] HCA 53 ; (1997) 191 CLR 85 at 113. In particular it is not for a court to construct its own idea of a desirable policy, impute it to the legislature and then characterise it as a statutory purpose: Australian Education Union v Dept of Education and Children's Services [2012] HCA 3 ; (2012) 248 CLR 1 at [28].
18The Court of Appeal further observed the following (at [48]):
There is one other matter which should be noted. It is well established that where a regulation is open to two constructions, one within the power conferred by the enabling Act and the other outside of such power, the former construction should be adopted: ut res magis valeat quam pereat: Widgee Shire Council v Bonney [1907] HCA 11; (1907) 4 CLR 977 at 983; Birch v Australian Mutual Provident Society [1906] HCA 51; (1906) 4 CLR
324 at 343; Airservices Australia v Canadian Airlines International Limited [1999] HCA 62; (2000) 202 CLR 133 at [229]-[230] and [408]. This principle finds statutory embodiment in s 32 of the Interpretation Act 1987 (NSW). However, that section is subject to any contrary intention appearing in the legislation (Interpretation Act, s 5).
19We note, for completeness, the more recent discussion of the principles of statutory interpretation by the High Court in Taylor v The Owners - Strata Plan No 11564 [2014] HCA 9; (2014) 306 ALR 547; (2014) 88 ALJR 473 at 482-483.