Rand v Uni-Roof Safe-T-Rail Pty Ltd

CATCHWORDS : APPEAL - Local Court Magistrate - implied term - contract of employment - overtime - appeal dismissed - costs

CASES CITED : Australian Broadcasting Tribunal v Bond & Ors (1990) CLR 321 Byrne v Australian Airlines Ltd (1995) 185 CLR 410

PARTIES : Noel Rand - Plaintiff Uni-Roof Safe-T-Rail Pty Ltd - Defendant

COUNSEL : Mr T Boyd, counsel - Plaintiff Mr D Shoebridge, counsel - Defendant

SOLICITORS : Herbert Weller, Solicitors - Plaintiff Rockliffs Solicitors - Defendant

• 10 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

13053/08 Noel Rand v Uni-Roof Safe-T-Rail Hire Pty Ltd

JUDGMENT 1 HER HONOUR: By summons of 18 June 2008 the plaintiff appeals the whole of a judgment of Magistrate Curran, given on 23 May 2008. Mr Rand had been employed by the defendant, principally as a driver, from May 2002 to October 2003. Mr Rand claimed that under his contract of employment, he was entitled to be paid for overtime worked in excess of an agreed forty hour working week, at the rate of time and a half for the first two hours and double time thereafter. His Honour took the view that the evidence did not establish such an agreement and dismissed the claim. 2 The plaintiff claimed that his Honour erred in law, in misdirecting himself that he did not have the power or jurisdiction to make an inference that there was an implied term in the contract that the plaintiff was entitled to be paid a fair and reasonable rate of overtime and that such a rate would be based on the Transport Industry (State) Award. There was no issue between the parties that the question of whether a particular inference can be drawn from the facts found is a question of law (Australian Broadcasting Tribunal v Bond & Ors (1990) CLR 321.) 3 The evidence before his Honour was that of Mr Rand, given by affidavit, upon which he was not cross examined. It was not challenged that what he had agreed at the outset with a Mr Wicker, for the defendant, was: Mr Rand: "How much will the hourly rate of pay be?" Mr Wicker: "The normal rate of pay is $20:00 per hour for a forty hour week, that is Monday to Friday?" Mr Rand: "What is the overtime rate of pay?" Mr Wicker: "You will be paid for the overtime you work."

4 Mr Rand was paid for all overtime worked. The parties' contest concerned whether Mr Rand was paid at the appropriate rate. Initially he was paid at his agreed hourly rate of $20. On some later occasions he was paid higher rates for overtime worked on Saturdays. 5 There was evidence that early in the employment, Mr Rand became concerned about the rate he was being paid for overtime work. He spoke to Mr Wicker, saying 'You have not paid for my overtime at overtime rates'. Mr Wicker responded, 'We will have a meeting about it and discuss it. I'm too busy at the moment'. Mr Rand continued to work overtime for which he was paid $20 per hour. On about five later occasions he raised the question of his overtime payment with Mr Wicker, who repeatedly told him 'We are working on an agreement and it will have a provision for the payment of overtime. You will be paid for the overtime you have worked.' 6 On Saturday, 22 March 2003, Mr Rand worked nine and a half hours overtime and was paid at the rate of $30 for the first two hours and thereafter $40. 7 On 12 May, Mr Rand drove a bigger truck at work. Shortly afterwards, it was agreed that Mr Rand's hourly rate would be increased to $22 per hour, because he was driving the bigger truck. Mr Rand's evidence of the further discussion was: Mr Rand: "When will you compensate me for my overtime which I have worked? Mr Wicker: "We are still working out an agreement in which there will be an allowance for the overtime worked. You will be paid for the overtime you have worked." 8 Thereafter Mr Wicker was paid at the rate of $22 per hour for ordinary and overtime hours worked Monday to Friday. Overtime hours worked on Saturdays on 30 August, 13 and 27 September and 11 and 25 October were also paid at the rate of time of half for the first two hours and double time thereafter. The employment ended on 30 October 2003.

The decision below 9 His Honour noted that it was common ground that there was no evidence of any express agreement that Mr Rand would be paid a higher rate for overtime work, than that which applied to ordinary hours of work. Rather, the parties' contest was over whether or not the evidence permitted the inference to be drawn, that this was what had been agreed. On the case advanced for Mr Rand, that inference was said to have been available from the fact that on a number of occasions, Mr Rand was paid on such a basis. 10 His Honour noted that Mr Rand's claim had not been advanced by reference to any award which applied to the employment. He concluded that the evidence did not leave open the inference sought to be drawn. 11 On his Honour's approach, a contract required mutuality. While there was no question that Mr Rand thought he ought to have been paid higher rates for overtime which he worked and that, historically, his claim reflected the way in which workers in this State had been paid, which might explain Mr Rand's expectation, it was not the subject of any agreement between the parties. Rather, Mr Wicker repeatedly told Mr Rand that the defendant 'was working on an agreement', but none was ever reached. 12 His Honour also noted that an industrial agreement with the Transport Workers' Union had been referred to before him, but it was not dealt with in the evidence and he did not know whether it applied to Mr Rand. His view was that if an industrial award was to be incorporated into a common law contract of employment, it required an explicit agreement between the parties to the contract. There was no evidence of such an agreement, only an apprehension or desire on Mr Rand's part, that he should be paid higher rates for overtime. 13 The claim was accordingly dismissed and an indemnity costs order made against the plaintiff, having regard to an offer of compromise which he had refused.

The parties' cases 14 Despite the reliance on the Transport Workers (State) Award in the summons and the plaintiff's written submission, at the hearing, that aspect of the appeal was not pressed. The plaintiff's case was that his Honour had fallen into error in failing to deal with the claim that there was an implied or inferred term of the contract, which entitled Mr Rand to the payment of overtime worked on the basis claimed. That term could be inferred from the evidence as to the parties' course of dealing, or implied therefrom. (Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 422 and 442-3.) 15 The evidence showed that on at least six occasions the plaintiff was paid on the basis claimed. From that evidence it was open to infer that the claimed contractual term had been agreed. Courts did not operate in a vacuum and it was well-known that overtime was paid for, on the basis claimed. The parties' course of dealing showed an understanding, on the defendant's part, that this was what the agreement contemplated. 16 It followed that it should have been concluded that the term was so obvious, that the parties, if asked, would have said of course that was what had been agreed. The evidence showed that they were aware that not all of their agreement had been spelled out and that the term was necessary, for the reasonable and effective operation of this contract. 17 The respondent's case was that the plaintiff had not demonstrated error of the kind claimed. His Honour's decision made it clear that he had considered and rejected the case advanced, that there was either an express or implied contractual term of the kind which the plaintiff claimed. His Honour's conclusions were open on the evidence as to the parties' course of dealing with each other. The evidence did not allow the inference asserted, which was not necessary, for the effective operation of this contract. Many employment contracts operated effectively without such a term. The evidence showed attempts by the plaintiff to obtain an agreement for higher overtime pay being reached. At the highest, there was payment on that basis for Saturday work after March 2003, but no payment for overtime on the claimed basis otherwise.

Consideration 18 The case below was concerned with the proper terms of Mr Rand's contract of employment. The terms of the contract were never reduced to writing. The only evidence as to its express terms came from Mr Rand, whose evidence was unchallenged. 19 In submissions put for the plaintiff below, reference was sought to be made to the provisions of the Transport Industry (State) Award. To that point, however, no claim had been advanced in the proceedings under that award. It was not in evidence. Nor had the evidence sought to establish that its terms applied to Mr Rand's employment. The defendant did not concede that the award applied to the employment. The plaintiff was given an opportunity by his Honour to amend his case to advance an award claim, which was refused. On appeal reliance on that award was also abandoned. 20 It was conceded below, that the evidence did not show any express agreement between the parties that Mr Rand would be paid at the overtime rates which he claimed. While he asked at the outset what the overtime rate would be, the only response which he received from Mr Wicker was that 'you will be paid for the overtime you work'. Consistently with that advice, he was thereafter paid for overtime at the only rate discussed, of $20 per hour. 21 His Honour was unable to conclude from the evidence that Mr Wicker had told Mr Rand that the rate of $20 per hour was the 'normal rate', that when overtime was worked, it would be paid at the rate of time and a half for the first two hours and double time thereafter. On the evidence, that view of the evidence was plainly open. 22 It was not until March 2003, after repeatedly asking about a higher overtime rate, that Mr Rand was informed by Mr Wicker that an agreement was being negotiated, which would deal with overtime. Who that agreement was being negotiated with, was not dealt with in the evidence. Mr Rand was again told that, 'You will be paid for the overtime you have worked'. Thereafter, when Mr Rand worked overtime on Saturdays, he was paid the claimed rates for overtime, but there was no such payment made for overtime worked Monday to Friday, for which he continued to be paid at the rate of $20 per hour (and later $22). When Mr Rand enquired again about the payment made to him for overtime work, he was given the same advice. 23 Whether or not the discussions to which Mr Wicker referred, resulted in an agreement which applied to Mr Rand, for increased payments when overtime was worked on Saturdays, was not revealed on the evidence. That was certainly a possibility. There was no evidence, however, from which it could be inferred that the higher payment resulted from any discussion or agreement reached between Mr Rand and the defendant. 24 The plaintiff relied on the High Court's approach in Byrne to argue that the evidence of this higher payment for overtime worked on Saturdays after March 2003, permitted the claimed term to be implied and that his Honour had erred in failing so to conclude. I am unable to accept the argument. 25 It was observed in the joint judgment of Brennan CJ, Dawson and Toohey JJ at p 442 that: The implication which the appellants seek to make is based upon the presumed or imputed intention of the parties. In that context, the remarks of the majority in the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings [(1977) 180 CLR 266 at 283] are frequently called in aid: "(1) [the implication] 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." In laying down those criteria, it was recognised that there was a degree of overlap. Further, as Deane J has observed [See Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 121.] , the cases in which the criteria in BP Refinery (Westernport) Pty Ltd v Shire of Hastings have been applied in this Court are cases in which there was a formal contract, complete on its face. He pointed out that a rigid approach should be avoided in cases, such as the present, where there is no formal contract. In those cases the actual terms of the contract must first be inferred before any question of implication arises. That is to say, it is necessary to arrive at some conclusion as to the actual intention of the parties before considering any presumed or imputed intention. And the test to be then applied was in a later case formulated by Deane J in these terms [See Hawkins v Clayton (1988) 164 CLR 539 at 573.] :

"The most that can be said consistently with the need for some degree of flexibility is that, in a case where it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. That general statement of principle is subject to the qualification that a term may be implied in a contract by established mercantile usage or professional practice or by a past course of dealing between the parties."

26 McHugh and Gummow JJ dealt with this at 442-3: We have referred to the exiguous nature of the evidence as to the form taken by, and the express terms of, the contract of employment between the respondent and the appellants. There are two consequences.

First, this species of implication is concerned with the circumstances of the particular case. The primary judge and Black CJ and Gray J in the Full Court referred to the need to prove facts leading to the implication of a term of this nature. Gray J said ([1994] FCA 888; (1994) 47 FCR 300 at 361.): "(T)his Full Court does not know what all of the express terms of the contracts were. It does not know whether they were adequate to make the contracts of employment efficacious or whether any of them would contradict the proposed implied term. An examination of the facts surrounding the creation of each contract of employment might lead to a different result for one appellant from the other."

Secondly, where the contract is not in writing and is oral or partly oral or it appears that the parties themselves did not reduce their agreement to a complete written form, caution is required against an automatic or rigid application of the cumulative criteria identified in BP. We should proceed on the footing that the present case is to be approached in this way.

In such situations, the first task is to consider the evidence and find the relevant express terms. Some terms may be inferred from the evidence of a course of dealing between the parties. It may be apparent that the parties have not spelled out all the terms of their contract, but have left some or most of them to be inferred or implied. Some terms may be implied by established custom or usage, as described above. Other terms may satisfy the criterion of being so obvious that they go without saying, in the sense that if the subject had been raised the parties to the contract would have replied "of course"( Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 at 121.). If the contract has not been reduced to complete written form, the question is whether the implication of the particular term is necessary for the reasonable or effective operation of the contract in the circumstances of the case; only where this can be seen to be true will the term be implied ( Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 at 573.).

The contractual term propounded by the appellants would operate in a partisan fashion. It would favour the interests of the employee at the expense of those of the employer. Further, in the operation sought to be given the term by the appellants, so as to require procedural regularity or fairness, the term also would qualify what otherwise has been understood to be the general law of the employment contract.

27 The evidence did not meet the tests specified. There is no basis on which it may be concluded that in this employment contract, the claimed term was necessary to give the contract business efficacy, or that it would not have been effective without that term, or that the term was necessary, for its reasonable or effective operation. As the defendant submitted, there are many employment contracts which operate effectively without such a term. Mr Rand was paid for all his overtime work. While not content with the rate at which he was being paid, that Mr Rand's employment contract was not operating effectively or reasonably was not established. 28 It may have been entirely understandable that Mr Rand had a desire, or even an expectation, that he would be paid higher rates for overtime work. That is certainly what awards in this State generally provide for, in respect of work to which such awards attach. Nevertheless, so far as this employment contract was concerned, such an expectation could not amount to a contractual right, unless an agreement to that effect was reached with the defendant. The evidence as to the parties' course of conduct with each other was that despite Mr Rand's repeated enquiries, the defendant did not act in accordance with an understanding that he was entitled to be paid overtime on the basis which he claimed. That from March 2003, when overtime was worked on Saturdays, payment was made on the basis claimed, can not, as was argued for the plaintiff, leave open the inference sought to be established. That would require the basis on which Mr Rand was otherwise paid to be ignored. 29 It follows that it must be concluded that his Honour's views of the evidence were open; no error has been established and that the appeal must be dismissed. 30 I also note that at the hearing, the defendant also sought and was granted leave to make an application under the Legal Profession Act 2004 within 14 days of the date of this judgment.

Order 31 For the reasons given, I order that the appeal be dismissed with an order for costs in favour of the defendant and that the defendant have leave to make an application under the Legal Profession Act 2004, within 14 days.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.