Linfox Transport v Nisbet [1999] VSC 436

Supreme Court of Victoria|1999-11-04|Before: HEDIGAN, J.

EMPLOYMENT - Long distance driver of heavy vehicles - Enterprise Agreement between employer and Union setting out "trip rate", the sum to be paid for completion of specified journey - Long Distance Drivers Award - Whether injured driver entitled to weekly payments at the trip rate level on the Award rate - Award rate not applicable. Accident Compensation Act 1985 - Section 5A(1) and 5A(6) - Whether worker entitled to payments at pre-accident level of earnings.

The dispute had been whether or not the Respondent, a long-distance heavy vehicle transport driver who had sustained injuries falling from the tray of his vehicle on 21 December 1996 was entitled to have his weekly payments based on his pre-injury net average weekly earnings or on the appropriate weekly rate of pay provided for in the possibly applicable Award (about $472 per week) instead of the $1,075 he was actually paid. The Respondent worked for the First Appellant (hereinafter called Linfox) as a long-distance driver and, after receiving his injuries, had received weekly payments based on his actual pre-accident weekly earnings (the said sum of $1,075 weekly, the level of which was not in dispute).

Subsequently the Appellants, apparently taking a different view as to what the Act's entitlements should be in respect of Nisbet, reduced the payments to the Respondent, on the basis that the Transport (Long Distance Drivers) Award 1993 (hereinafter called "the Award") applied to the worker so as to determine his entitlements under the Act. Thus, it was said, he was to be compensated on the basis of the ordinary time rate of pay for a normal number of hours a week, allegedly described in the Award, as the proper basis on which to fix the weekly payments of compensation. The Respondent's customary work involved him in loading his vehicle, then driving from Melbourne to Nhill, in Victoria, where he exchanged his laden vehicle with a similar one driven from Adelaide, then returning with it from Nhill to Melbourne.

Part of the evidence before the Magistrate included the following:

(i) The Transport Workers Award 1983 (hereinafter called "the general Award");

(ii) The Transport (Long Distance Drivers) Award, already nominated by me to be called "the Award", 1993; and

(iii) The Linfox Interstate Enterprise Agreement 1995 ("the Enterprise Agreement").

It appears that, after a change of government, enterprise bargaining between unions and workers and employers had been encouraged partly through the then Industrial Relations Act which led on to the making of and regulation of such agreements.

The Enterprise Agreement made in 1995 was made between Linfox and various branches of the Transport Workers Union, including the Victorian branch. It appears not to have been executed, but both sides in this hearing treated it as setting out the terms which applied to the contract of employment here.

The dispute though is whether or not on its proper construction it displaced the applicable Award provisions.

I recite some of its clauses; clause 3.0, parts 1.0, 2.0 and 4.0 to this effect:

"1.0 The Transport Workers (Long Distance Drivers) Award of 1993 shall apply to the long distance operations of Linfox Interstate save and except for those matters dealt within this Agreement.

2.0 Where the terms of this Agreement and the terms of the Award are in conflict, the terms of this Agreement shall prevail.

3.0 The Transport Workers (Long Distance Drivers) Award 1993 shall be referred to hereinafter as "the Award".

4.0 Linfox Interstate shall be referred to hereinafter as 'the Company'."

Clause 5.0 of the Enterprise Agreement is headed "Rates of Pay", and is as follows:

1.0 The following rates of pay shall apply on the long distance operations listed below, inclusive of all driving time, change-over time, 17.5% loading on holiday pay, and rostered days off based on the Grade 8 category of the Award.

Payment in lieu of rostered days off is included in trip rate at $4.43 per trip."

1.0 Annual leave shall be four weeks per year to be paid at the following rate.

2.0 Loading of 17.5% is included in the trip rate at $1.29 per trip."

There was attached to the Enterprise Agreement a Summary or break up of the $175.20 rate of pay for each trip, that is, setting out the value attributed to its various component parts. For example, the $175.20 was made up of payments for travel based on estimated time at an hourly rate, change over, payments for loss of rostered days off and holiday pay loading.

However, there is no reference to the Summary in the Enterprise Agreement itself. It does not appear that any party at the Magistrates' Court ever put the case that the Summary had any contractual effect or significance. In this Court, Counsel for the Appellants did not either in his oral or written submission argue that it set out terms, although he apparently did so by inference in his reply.

It appears that although some corporately related companies in the Linfox Group were parties to the Award, Linfox (Transport), that is the first Appellant, was not a party to it. The Magistrate decided that this meant that the Award did not apply to this case, but he went on to decide it on other grounds as well. The Magistrate stated that the corporate distinctions were clear and deliberate and declined to view the matter as a mistake or slip, that is, there was not a misdescription of a single entity, but there was another group of different entities, correctly described, so that cases such as Australian Commonwealth Shipping Board v. The Federated Seamen's Union [1925] HCA 3; (1925) 35 CLR 462, and Nicoll v. Parr 1985 FLR 141 did not apply. The same argument was advanced and rejected in respect of the general Award, the TWU Award. The Transport Workers (Long Distance Drivers) Award purports to bind the TWU of Australia and its members. Mr Nisbet was a member of that union.

Clause 10A of the Award makes provision for weekly Award rates of pay for ordinary hours of work (the numbers of hours not specified), allegedly comprising the base rate and supplementary classifications in lieu of over-award payments. The Respondent's weekly Award rate under the Award was $459.70 plus some minor supplements.

Clause 10C(a), with respect to long distance drivers, provided for payments based on minimum cents per kilometre, plus unloading rates and other allowances, for example, living away from home, industry, disability, lack of toilets, rain, handling dirty material and the like. In this context, there also has to be considered, as the vital statutory application, section 5A of the Act, which deals with pre-average weekly earnings. The two relevant parts of this section are (i) section 5A(1), which defines the worker's pre-injury average weekly earnings, and, (ii) 5A(6) which makes specific provisions, critical in this case, for the purposes of subsection (1) as to what might be deemed to be the ordinary time rate of pay or ordinary number of hours worked under the subsection:

(1) In this Act, 'the worker's pre-injury average weekly earnings' means -

(a) the average weekly earnings during the 12 months preceding the relevant injury if the worker has been continuously employed by the same employer for that period; or

(b) the average weekly earnings for the period less than 12 months preceding the relevant injury for which the worker has been continuously employed by the same employer -

calculated at the worker's ordinary time rate of pay for the worker's normal number of hours per week.

(a) if an ordinary time rate of pay is fixed for the worker's work under the terms of the worker's employment and in addition a piece rate is payable, the ordinary time rate of pay shall be deemed to be the sum of the ordinary time rate of pay and the average weekly piece rate payment received by the worker during the relevant period under sub-section (1);

(b) if an ordinary time rate of pay is not fixed for the worker's work under the terms of the worker's employment, the ordinary time rate of pay shall be deemed to be the average weekly rate earned by the worker during the relevant period under sub-section (1); and

(c) if the normal number of work hours per week is fixed in any industrial award applicable to a worker, the worker's normal number of hours per week in that work shall be deemed to be the number so fixed; and

(d) if a normal number of work hours per week is not fixed for the worker's work under the terms of the worker's employment, the normal weekly number of hours shall be deemed to be the average weekly number of hours worked by the worker during the relevant period under sub-section (1)."

The argument before the Magistrate and before me included whether or not this Award governed the Respondent's payments or whether his rights were to be found to arise from the "trip rate" in the Enterprise Agreement.

The Magistrate found that there were not fixed by the Award or the Enterprise Agreement a "normal number of hours per week" within the meaning of section 5A(6), nor was "an ordinary time rate of pay" within the meaning of section 5A(6) fixed in this case. Thus he applied section 5A(6)(b) of the Act and declared the pre-accident weekly rate to apply. An appeal against this decision was made pursuant to s.109 of the Magistrates' Court Act 1989 and the Master fashioned the questions of law as follows:

"(a) Did the learned Magistrate err in law in holding that the Transport Workers (Long Distance Drivers) Award 1993 was not an industrial award applicable to the worker within the meaning of Section 5A(6) of the Accident Compensation Act 1995 (the Act)?

(b) Did the learned Magistrate err in law in finding that the Transport Workers (Long Distance Drivers) Award did not fix a 'normal number of hours per week' within the meaning of Section 5A(6)(c) of the Act or otherwise?

(c) Did the learned Magistrate err in law in that he determined that an ordinary time rate of pay was not fixed for the worker's work within the meaning of Section 5A of the Act?"

There was some dispute, of a not very significant kind, in the affidavits sworn and filed for this appeal. A memorandum from Counsel for the Appellants in the Magistrates' Court exhibited to the Appellants' affidavit purported to include parts of the evidence, but it is difficult to know what is comment, opinion and fact from that document, which was never written to be included in that form in the affidavit. The Respondent's solicitor's affidavit was in more acceptable form, and indeed, Mr Bingeman QC for the Appellants preferred to rely on it also. That affidavit sets out the Respondent's evidence, apparently accepted by the Magistrate, as to what his job involved. That included a statement that he was a member of the TWU, but that he considered himself bound by the Enterprise Agreement because it was on this basis that he had agreed to work for Linfox. The Respondent explained his losses. One Olthof from Linfox said he believed the Enterprise Agreement was made with the union, not Nisbet, but it appears that the Magistrate accepted the Respondent. Nothing will turn on that, because quite clearly the parties rightly approached the terms of the Enterprise Agreement as being terms on which he was employed. Mr Bingeman did not argue to the contrary and both the Appellants and Respondent conducted the appeal on the basis that the terms of the Enterprise Agreement applied. The Enterprise Agreement had not been executed. The issue really was as to the scope and effect of those terms. The Appellants argued that the Award governed the issue, and that the compensation provided by s.82 of the Act was to be determined by s.5A which defined pre-injury average weekly earnings. It was accepted that s.5A(1) and (6) had to be considered. Thus Mr Bingeman submitted the words "ordinary time rate of pay" and "normal number of hours a week" were the critical words. He relied on a number of authorities that supported a construction that the phrase "worker's ordinary time rate of pay" meant the base rate for normal standard working hours and did not include other payments that might be achieved, for example, over time, shift allowances and the like, cf_. Catlow v. Accident Compensation Commission_ [1989] HCA 43; (1989) 167 CLR 543 at 562-3, Robertson v. ACC (1991) 2VR 333 at 339, Scott v. Sun Alliance [1993] HCA 46; (1993) 178 CLR 1 at 5-7, HIH Winterthur Workers' Compensation (Vic) Ltd v. Russell, (unreported McDonald J, Victorian Supreme Court, 10/12/1998).

In those cases, the Award clearly applied and specifically provided what the ordinary hours of work each week were and what the rate for that was. In each of them the Court found the relevant industrial Award was applicable for worker in his employment.

Russell was a "trip rate" case. But the evidence in that case showed the trip rate calculation only related to the method of calculating the period which was worked. In addition, all of the other benefits which Russell got were specified in the Award. There was no Enterprise Agreement fixing the trip rate in Russell. In Russell, annual leave and long service leave were fixed by reference to the Award. In this case the Enterprise Agreement fixed annual leave (clause 8) and the Award does not provide for long service leave at all, so far as I could detect. It was also argued by Counsel for the Appellants that as the Respondent was a member of the TWU the Award applied to him and bound him, even though this Linfox company was not listed as a party to the Award. At the least it is to be doubted that the Award is unilaterally binding, that is, that the worker is bound by its limiting provisions, but the employer was not because it was not a party to it.

It was also submitted that the Award must apply if the Enterprise Agreement did not specify wage rates, thus "the base rate of pay" and the "ordinary time rate of pay" were imported from the Award into the Enterprise Agreement. It was claimed that the phrase "trip rate" was only shorthand for the calculations of the base rate plus relevant allowances.

Mr O'Loghlen QC, who appeared with Mr Fehring for the Respondent, submitted that the Magistrate was clearly correct, although he had not elaborated all of the steps in the analysis. He contended that the use of the phrase "average weekly earnings" in s.5A was intended to prevent injustices to worker and employer. For example, a worker adventitiously receiving abnormally large earnings from overtime and penalties at or about the time of injury would obtain an unfair windfall, as would the employer if the worker was at the time on abnormally low earnings because of, say, substantial absences abnormally occurring (such as a prolonged illness of a spouse). Thus s.5A(1), he argued, is concerned to do a calculation to prevent abnormally high or low average weekly earnings dominating the result. This is probably correct, but I doubt it is of much significance in this case. Here, the question is whether the Award or the Enterprise Agreement applied in the relevant respect, that is whether the parties intended Nisbet to be paid in accordance with the Award or the Enterprise Agreement. It is not to be questioned that even if one has resort to terms made between employer and worker, that the Catlow exclusions might apply. See Catlow itself at 561 and Robertson at 339 where the language leaves no doubt that the operation of the Catlow principle (namely, that the entitlement of the injured worker is to be calculated by reference to the basic pay and not actual earnings) applies to cases where the rate of pay is fixed by the terms of the contract of employment or by the Award. But it must be borne in mind that those authorities are concerned with cases in which there is predicated a normal or standard number of hours worked each week, or a base rate of pay, or fixed remuneration geared to time spent or hours work.

Mr O'Loghlen submitted the Magistrate was correct in concluding that the Award did not apply to employees of Linfox which was not an employer for the Award's purposes, because clause 40(e) of the Award defined "employer" to mean "any employer party to this Award". As I have said, Linfox Transport was not, as its name did not appear in Schedule A of the employers who were parties to the Award. The name that did appear was that of Linfox Interstate. I note that no evidence was ever led of any mistake or oversight to account for this anomaly, if it is an anomaly.

But his main argument was that clauses 1.2 and 2.0 of the Enterprise Agreement governed the plaintiff's payments, not the Award. The parties, encouraged by government, went out of their way to avoid the "over-arching governance" of the Award. Thus, he said, the "rates of pay" set out in clause 5 of that agreement were in conflict with those in clause 10 of the Award and prevailed. Cases such as Catlow, Robertson and Russell were to be distinguished as being cases concerned with defined basic weekly hours of work.

Here the terms of employment did not provide for an ordinary time rate of pay for a standard ordinary number of working hours in each day and week. This appears to me to be correct, and I do not overlook that in Scott (supra) the High Court specifically stated:

"It is not always the case that a worker will have an ordinary time rate of pay. There may be no industrial award agreement regulating his or her employment and his or her contract of employment may not distinguish between ordinary and other time rates of pay or may provide for remuneration which has no temporal element - for example, piece work or commission." (My emphasis.)

Indeed, he argued, that being paid per trip was the equivalent to being paid for "piece work". It does not appear to me to be piece work, but it does appear to be payment for performing a task regardless of how long it takes. In my view, the parties to the Enterprise Agreement chose to apply rates of pay for long distance operations different from those in the Award, although they intended it to be all inclusive, that is, to include the supplements, rather than adding them on. Once that occurred, the parties chose a single trip figure, clearly much greater than ordinary rates of pay for standard hours worked. This is because it was the achievement of the result that was being rewarded, not simply the expenditure of time. As such it was at least comparable to piece work. Thus the parties intended a rate of pay, the amount of which per trip was specified, to prevail over the rates otherwise ascertainable from the Award. Thus the Enterprise Agreement's terms did not establish an "ordinary time rate of pay", but a specific sum for each completed trip.

Moreover, it is my view that there was no ordinary time rate of pay fixed in the Award. Mr Bingeman argued that there was, although he conceded that it was one that had to be derived by analysing the Award rather than it simply appearing, clearly stated, what the hours were for each week, and the rate. As such, it seems to be straining language to claim that an ordinary time rate of pay was 'fixed'. He also appeared to accept (although avoiding "conceding" it) that the contrast of the language employed in this Award with the language used in the general Award was not helpful on the construction issue, nor on the persuasive application of the decision in Russell. Clause 3.1 of the Enterprise Agreement stated that the Award applied to long distance operations of Linfox Interstate unless in conflict with the terms of the Enterprise Agreement. Thus, leaving aside the question of whether or not this Linfox company could rely on the Award (as it was not an employer under it) many of its terms were likely to apply, for example, dispute resolution.

But the point is whether the parties in effect contracted out of the Award with respect to the way in which the employee was to be rewarded for his services. Counsel for the applicant (transcript 16) accepted that they were entitled to do that, but he argued that there was an ordinary time rate in the Award, and therefore in the Agreement. This contention appears to dismiss the Agreement between the parties that the worker would be paid per trip, not by reference to a standard or normal number of hours per week, or any particular hourly rate.

Doubtless, as the Summary suggests, time elements influenced the figure determined upon, but there is nothing to suggest that if a driver took longer or shorter time to make the trip to Nhill and back, that he was paid any more or any less. The fact that the Summary was attached, but its analysis not included in the body of the Enterprise Agreement, nor in the critical terms as to payment, seems to be inconsistent with Mr Bingeman's suggestion that it had the effect of a term. Thus, it appears to me that s.5A(6)(b) applies (an ordinary time rate of pay not being fixed) with the result that the Magistrate was obliged to deem the average weekly rate earned by the worker to be the ordinary time rate of pay for the purposes of s.5A(1).

There was some reference to the TWU General Award. Linfox was not an employer for that Award either, but apart from that, that Award does not purport to deal with long distance drivers. It was not referred to in the Enterprise Agreement, thus suggesting that neither party (although Linfox was not a party) intended to have any long distance driver bound by the general award. The appellants argued for the applicability of that Award in the Magistrates' Court, but Mr Bingeman did not much address that issue in this Court, other than to refer to clause 18(a), which is not in the Award. In any event, the general Award specified the ordinary hours of work of an ordinary transport worker as 40 hours (cf. Russell). Russell was bound by the general Award; Nisbet was not. Nisbet's terms of employment conflicted with the Award and they prevailed. Thus it was open, in my view, for the Magistrate to decide that the normal number of hours of the Award was not fixed in any applicable Award. The general Award did not apply, and the applicable award (in the contractual not industrial sense) was excluded by the parties as to rates of pay, payment being made for trip completion. Arguably s.5A(6)(d) might be thought to apply in the alternative, or cumulatively, to s.5A(6)(b) previously referred to, that is to deem that the worker worked an average weekly number of hours for which he was paid $1,075 weekly. However, it is not necessary for me to decide that.

Subsequent to my preparation of these reasons, Counsel referred to me, and I am indebted to Counsel for so doing, the reasons for decision of Judge R Williams of the County Court in Stelling v. Bunker Freightlines (Aust.) Pty Ltd & Villacare Pty Ltd (28/10/1999). This was decided the day after argument before me. His Honour had to consider a similar issue to this question, also about long distance drivers and also involving the issue of the relationship for legal purposes between the Award and the Enterprise Agreement, although not then in the same terms. The injured plaintiff in that case also customarily did a fixed by place return trip. Similarly, the Enterprise Agreement contained a Schedule in which times and rates that underpinned the trip rate were set out. But there as here, there were no "normal hours of work", no "standard hours" and no overtime paid if more time was taken. His Honour concluded, as I have, that the Catlow considerations did not arise because the worker simply did not customarily work standard hours at a normal rate of pay, with overtime and other supplements added. He also distinguished, as I have, Russell because in that case the Award applied. Here, it does not, either because with respect to Linfox it is not enforceable against the worker as it is not an Award employer or because there is no normal hours of work at an ordinary time rate of pay fixed or provided for. Thus, he decided, as I do, that s.5A(6)(d) applied and was to be followed in determining and to look to pre-accident weekly earnings.

As I have indicated in other cases, although questions of law have to be determined in s.109 appeals, they do not necessarily have to be the precise questions formulated by the Master, nor even necessarily answered directly, so long as the Court's reasons deal with the appropriate questions of law. It should not be overlooked that the Respondent does not appear on the application before the Master who fashions the questions at the instigation of the Appellant. In this case, in my judgment, the questions are not apt to deal with the issues which are raised, as a key matter for consideration is the meaning, scope and effect of the Enterprise Agreement which the parties do not dispute applied to the Respondent and the Appellants and which set out the terms of the employment of long distance drivers by Linfox. Thus, to direct Question 1 simply to the broad issue of whether the Award applied to the worker is to miss the point. It may well apply in other respects (e.g. dispute resolution), but that matter was irrelevant and not developed in argument. The Enterprise Agreement prevails over the Award if there is conflict. Thus, I decline to answer the questions as formulated but have instead addressed the issues, as raised and argued before the Magistrate and before me.

If some response, for the sake of formality, were required I would answer as follows:

(a): Not necessary to answer, but in any event, not so as to displace his rights under the Enterprise Agreement;

The Appellants are ordered to pay the Respondent's costs of the appeal.

Compensation Act 1985

Accident Compensation Act 1995

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