Zoran Lozevski v Goodman Fielder Consumer Foods Pty Ltd. - [2004] NSWIRComm 314 - NSWIRComm 1994 case summary — Zoe

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Zoran Lozevski v Goodman Fielder Consumer Foods Pty Ltd.

[2004] NSWIRComm 314

Industrial Relations Commission (NSW)|1994-12-20|Before: Haylen J, Sams DP, Mr P

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Source facts

Court

Industrial Relations Commission (NSW)

Decision date

1994-12-20

Before

Haylen J, Sams DP, Mr P

Source

Original judgment source is linked above.

Judgment (79 paragraphs)

[1]

Industrial Relations Commission of New South Wales in Court Session

[2]

CITATION : Zoran Lozevski v Goodman Fielder Consumer Foods Pty Ltd. [2004] NSWIRComm 314 PARTIES : Zoran Lozevski v Goodman Fielder Consumer Foods Pty Ltd. FILE NUMBER: IRC 4137 of 2004 CORAM: Haylen J CATCHWORDS : Industrial Relations Act 1996 - s 108A - unfair contract alleged - motion challenging jurisdiction - consideration of remuneration package - whether unilateral payment of four cents as result of rounding up calculation took remuneration above remuneration cap - application of maxim de minimus non curat lex - whether private mobile telephone calls and credit card reward points constituted an "employment benefit" - employer concessions and gratuities not an "arrangement" or a "related condition" or "collateral arrangement" to the contract of employment - motion dismissed AOS Group Australia Pty Ltd v Arrogante and ors [2004] NSWIRComm 80 at [15] Aveling v UBS Capital Markets Australia Holdings Ltd [2004] NSWIRComm 261 Canizales v Microscoft Corp and ors (2000) 99 IR 425 Carlton Brewery Ltd v Federal Commissioner of Taxation (1947) 73 CLR 446 especially at 455) Clayton's Case (1585) 5 Co Rep 1a 1b Commander Australia Limited v Kerr [2004] NSWIRComm 74 at [30] Crowe v UCS Developments Pty Ltd (2003) 130 IR 266 at 275 [34] Farnell Electronic Components Pty Ltd v Collector of Customs (1996) 142 ALR 322 at 324-327 Harris v Hammon (No 2) (1995) 59 IR 232 at 237 Legal and General Assurance Society Ltd v Stock (1993) 49 IR 464 CASES CITED : Mayne Nickless Ltd v Industrial Relations Commission of New South Wales [2004] NSWCA 359 Newton v Federal Commissioner of Taxation (1956-57) 97 CLR 1 at 7-8 Payne v Commissioner of Taxation (1996) 66 FCR 299 Pinho v Andre 20 December 1994, unreported Re Hall and Alison Clint Floral Deliverty Pty Ltd and ors (1971) AR 56 Reich v Client Server Professionals of Australia Pty Ltd (2000) 49 NSWLR 551 Robert Jackson v National Aboriginal Islander Skills Development Association (NAISDA) Inc [2003] NSWIRComm 118 Schmidt v Piano Holdings Pty Ltd (unreported Sams DP 5 February 1999 Shead v Summit Western Pty Ltd (1998) 81 IR 347 Wood v Carwardine [1923] 2 KB 185 Young v Canadian Northern Railway Co [1931] AC 83 at 88-89 HEARING DATES: 09/23/2004 DATE OF JUDGMENT: 10/27/2004

[18]

13 When the applicant was provided with a mobile telephone, he was told that he was to be "contactable 24 hours a day". The applicant gave a brief description of his duties and how they required him to work outside normal hours, including evenings and at weekends from home, sometimes elsewhere outside the respondent's premises and while on annual leave. He was available to make and receive telephone calls outside normal hours and gave two particular examples of working outside normal hours to secure contracts for the respondent. The applicant was not aware of any policy or other guideline promulgated by the respondent dealing with his use or the use by employees generally of mobile telephones supplied by the respondent. Specifically, he had never been told that he was required to reimburse the respondent for any private telephone calls. The applicant stated that a number of telephone calls were made to make family arrangements to accommodate out of normal hours' work he was performing. The applicant was also able to identify a number of weekend calls and calls made on either on public holidays or annual leave which were directly related to his work. The offer of appointment had made it clear that part of the fixed remuneration was fringe benefits tax. While his salary included an amount for a motor vehicle and associated fringe benefit tax, the applicant stated that he had never received any fringe benefit or paid any fringe benefit tax in relation to the personal use of the company mobile telephone or the use of a corporate credit card. 14 The corporate credit card had been supplied to the applicant when he commenced employment in 1994 and he was authorised to incur business related expenses, which the respondent paid directly to American Express. In July 2002, a new management system was introduced together with a new American Express card and under this new system liability for the card was transferred to the applicant. The applicant linked the corporate credit card to his personal Gold American Express Card and paid for the Membership Rewards Programme to link the corporate credit card to his personal card. It was the applicant's understanding that, by making that payment himself, he acquired the rewards points associated with the use of the corporate credit card and he would not have acquired the points if he had not made that payment. This, he understood, reflected the respondent's credit card policy. Nevertheless, the applicant had not redeemed any of the points accrued from the corporate credit card nor had he received any monetary amount referrable to accrued points.

[53]

DELIBERATION (i) The Statutory Scheme 50 Although the decision of the Full Bench of the Court in Commander made reference to the Second Reading Speech concerning the Industrial Relations Amendment (Unfair Contracts) Bill which introduced, inter alia, s 108A, for present purposes it is instructive to return to the parliamentary debate. On 11 April 2002 the Bill had its Second Reading. Attention was drawn to the fact that the unfair contracts jurisdiction had been "utilised overwhelmingly as a means of obtaining compensation in connection with the termination of employment of highly paid executives". It was then noted that following the decision in Canizales v Microscoft Corp. and ors (2000) 99 IR 425 there was a significant increase in the number of applications lodged, leading to the conclusion that the unfair contracts provisions were being regularly invoked by persons who were neither being exploited nor treated ungenerously. The Second Reading Speech then continued: By narrowing the application of the Unfair Contracts provisions of the Industrial Relations Act 1996, greater certainty will be introduced into their operation, and the more extravagant and speculative claims will be prevented. The Industrial Relations Amendment (Unfair Contracts) Bill 2002 will introduce the following limitations on the operation of the existing Unfair Contracts provisions. An employee earning an annual remuneration package in excess of $200,000 will not be able to make an application under the Unfair Contracts provisions. "Remuneration package" will be defined to mean the total value of the monetary remuneration and employment benefits that are payable or receivable under a contract of employment. Bonuses and other performance-related or incentive payments will be included in the meaning of monetary remuneration. ' employment benefits' will mean all those benefits of a private nature that are provided to an employee at the cost of his or her employer. The Bill spells out that this includes superannuation contributions and motor vehicles, but makes it clear that this is not an exhaustive list. The Bill also empowers the making of regulations to prescribe any new types of employment benefits that might emerge. ... The Bill deals in a simple and direct way with the phenomena of highly paid employees who would not be able to make an unfair dismissal claim using the Unfair Contract provisions as an avenue to excessive enrichment when their relationship with their employer comes to an end. These highly paid employees will be excluded from this jurisdiction. Any contractual claims they have will still be able to be pursued in the common law courts.

[54]

51 In the Committee stage, a number of amendments were proposed including an amendment to omit the reference to "remuneration package" and to refer instead to "remuneration". The Minister, in the Legislative Council, rejected that amendment stating that the main thrust of the Bill was to target the remuneration package of an employee which was measured by the amount of the employee's salary plus the monetary value of any employment benefits payable. The employment benefits could include commission, bonuses, the personal non-business use of a car or any other fringe benefit the employee receives. The Bill as drafted narrowed the application of the unfair contracts provision under the Industrial Relations Act 1996 "giving greater certainty to employers, and highly paid executives who will no longer be able to bring extravagant and speculative claims" to the Commission. The word "remuneration" was inadequate given that the Commission in Shead had held that the word "remuneration", in relation to unfair contract provisions, should be given its ordinary meaning, that is, an employee's total package as a reward for work performed. The proposed definition provided in the Bill gave effect to the definition in Shead by making it clear exactly what is meant by "remuneration package", and indicated without doubt that it also included the value of any non-salary components of an employee's package. The Minister continued: This means that salary packaging arrangements will not be able to purposely include or exclude employees from the jurisdiction. In effect, they will be irrelevant in determining eligibility. What will be relevant is personal benefit received by the employee for the work that he or she performed for his or her employer. The remuneration package is therefore the amount of the employee's salary plus the monetary value of any employment benefits payable. This may include commission, bonuses, the personal non-business use of a car or any other fringe benefit the employee receives.

[61]

55 After referring to the judgment in Crowe and extracts from the Second Reading Speech (which are contained within the extracts set out earlier in this judgment), the Full Bench proceeded to deal with the concepts of "paid", "received", "payable" and "receivable". In this regard, the Full Bench said: [47] The ordinary meaning of "paid" and "received" refers to the amount or sum in question having actually been paid and accepted, rather than an entitlement to receive at some future time. Similarly, the ordinary meaning of "payable" and "receivable" refers that the amount in question being owed or already able to be given and received or accepted. In Carlton Brewery Limited v Federal Commissioner of Taxation (1947) 73 CLR 446 the majority of the High Court held that the words "paid" or "payable" in taxation legislation must refer to a payment that has in fact been made or one that must be made to discharge a liability (see especially per Dixon J at 455) [48] The words of s 108A(1)(a) are used disjunctively. The approach of the "draftsperson" was to use the word 'or' to separate the words 'paid' and 'payable' and then to enclose in brackets the words 'payable' and 'receivable', with the word 'or' inserted again between those words. In our view, each of the words 'paid', 'received', 'payable' and 'receivable' is to be treated for the purposes of the construction of s 108A as giving rise to separate and distinct tests to be applied in determining whether a remuneration package exceeds the remuneration cap. [49] The respondent referred to the decision of the Full Bench of the Commission in Austeck Pty Ltd v Atsalos. The judgment in Austeck dealt with the construction of s 83 of the Act and in particular the meaning of the term "annual remuneration" as found in s 83(1)(b). Although we regard the judgment in that matter as correctly decided, it is of limited assistance in the present case since it was concerned with the different statutory scheme involved in the consideration of the expression of "annual remuneration" in s 83(1)(b). The difference in the terms and structure of the statutory criteria in s 108A and s 83(1)(b) is sufficiently illustrated by para [45] of the Full Bench decision in Austek which was as follows: [45] We consider that a reference to "annual remuneration", in the literal sense of that expression, is at odds with an interpretation that favours looking at what the applicant earned in the 12 months preceding termination of employment. We consider that the expression "annual remuneration" should be construed as the rate of remuneration fixed by the contract of employment at the point of termination. The word 'annual', in the context in which it appears, conditions the word remuneration so that the expression 'annual remuneration' is given the meaning - the rate actually fixed as the contractual yearly remuneration. ...

[63]

56 The result in the present case will therefore be governed by these general principles laid down by Full Benches of this Court in recent times. With the exception of the extra four cents actually paid to the applicant over and above the contracted rate, the value of private calls made on the mobile telephone and the value of the credit card reward points raise the issue of whether they are employment benefits of a private nature. Such benefits are to be analysed to establish whether or not they form part of the remuneration package which is defined to mean the total value of monetary remuneration and employment benefits payable or receivable under a contract of employment. (ii) The four cent question 57 I deal firstly with the amount of four cents paid to the applicant by the respondent over the $200,000 sum contracted between the parties but relied upon by the respondent in these proceedings as bringing s 108A into operation. There is no issue that the four cents is the result of a "rounding up" exercise administratively and unilaterally adopted by the respondent. It was not contested by the respondent that the applicant had no right to the four cents or that the respondent was not bound to pay the four cents to the applicant. Unlike the issues of the mobile telephone and the credit card reward points there is no suggestion that the four cents here is paid as part of any arrangement, related condition or collateral arrangement. Allowing for a legislative intention that a statutory cap is to apply in circumstances where the Court is left with no discretion, I am, nevertheless, satisfied that the principle covered by the maxim de minimis non curat lex (that is, the law does not concern itself with trifling matters) applies. In Bennion's "Statutory Interpretation", 4th Ed the learned author states: It is essential to the working of a legal system that it should adopt the principle of the maxim de minimis non curat lex (the law does not concern itself with trifling matters). There are a number of reasons for this. Litigious persons and unnecessary litigation must be discouraged: boni judicis est lites dirimere (the good judge prevents litigation). Time must not be wasted. Costs must be kept down. The dignity of the law must be preserved. Parliament is presumed to have regard to all these matters, and by implication to intend that its enactments shall not apply in a de minimis case. It is excepted from their operation, as if excluded by an express proviso. ( at 958). In dealing with fractions of a day, it is stated that the di minimus principle looks to the substance: a lease dated 26 May was expressed to run for three years "from henceforth" and was delivered at 4.00 pm on 20 June. It was held the time of day of delivery was immaterial, "for the law in this computation doth reject all fractions and divisions of a day for the uncertainty, which is always the mother of confusion and contention". ( Clayton's Case (1585) 5 Co Rep 1a, 1b) (at 960).

[64]

58 In Farnell's case, Hill J, dealing with certain provisions of the Customs Tariff Act 1987 (Cth), held that in an appropriate case the maxim de minimis non curat lex will be applied as a rule of interpretation with the applicability or otherwise of the maxim depending on the context in which it falls to be considered. In that case, his Honour noted that an earlier edition of Bennion's "Statutory Interpretation" spoke of the general rule that an enactment by implication imports the principle of the maxim and that similarly, Halsbury's Laws of England 4th Ed, Volume 44(1) stated that unless the contrary intention appears, an enactment by implication imports the principle of legal policy expressed in the maxim de minimis non curat lex: so, if an enactment is expressed or applied to matters of a certain description, it will not apply where the description is satisfied only to a very small extent. His Honour noted that the principle had been applied, either expressly or by implication, in a wide variety of situations where a trivial failure to comply with a specific condition was ignored. His Honour noted that in Wood v Carwardine [1923] 2 KB 185 the statutory issue was whether a landlord, who supplied water to a tenant through a pipe and caused a caretaker to deliver letters, messages and parcels, received rent which included "attendance". It was held that the de minimus rule applied with the result that the delivery of letters, parcels, etc, although constituting "attendance", was such a trivial part of the duties of a caretaker that it could be ignored and thus it was held the rent did not include "attendance". His Honour noted (at 326) that the most recent example of the application of the de minimis principle in Australia by a superior court was to be found in the decision of Smith J of the Supreme Court of Victoria in Pinho v Andre (20 December 1994, unreported) where it was held that a debt had been paid for the purposes of s 52(3) of the Supreme Court Act 1986 (Vic) although $7.63 was still owing to the bank. Hill J expressed the view that the various examples he had cited illustrated two principles: the first was that in an appropriate case the maxim will be applied as a rule of interpretation; the second being that the applicability or otherwise of the maxim depends upon the context in which it falls to be considered. Only recently the New South Wales Court of Appeal in Mayne Nickless Ltd v Industrial Relations Commission of New South Wales [2004] NSWCA 359 applied the de minimus principle in declining to exercise its discretion to issue prohibition where the only claim based on unfairness in s 106 proceedings arising from a breach of contract concerned a sum of $135.

[70]

... In Newton v Federal Commissioner of Taxation (1956-57) 97 CLR 1 at 7-8, the Privy Council said: Their Lordships are of opinion that the word 'arrangement' is apt to describe something less than a binding contract or agreement, something in the nature of an understanding between two or more persons - a plan arranged between them which may not be enforceable at law. Having referred to these cases, Sheppard J continued: In drawing on these cases I am not unmindful of the danger of using cases which are authorities on the construction of one statute for the purpose of construing another. An essential distinction between the two sections is that that the income tax section takes an arrangement of a particular kind, that is an arrangement which has the purpose or effect of altering the incidents of taxation, and by its own force avoids that arrangement against the Commissioner. The section under consideration here speaks of an arrangement of a particular kind, that is an arrangement whereby a person performs work in an industry, and then confers upon the Commission power to avoid if it is, for example, unfair. In the one case one has to determine whether there is an arrangement which has the purpose or effect of altering the incidents of income tax. In the other, one simply has to determine whether there is an arrangement under which or whereby work is to be done in an industry. Nothing is said about purpose or effect, but it seems to me to be appropriate to construe the section as applying to any dealing, the purpose of which or the effect of which was to achieve a situation under which a person worked in an industry. The assistance that I think can be obtained from the income tax cases is first of all the width given to the meaning of the word 'arrangement' when it is used together with the words 'contract' and 'agreement'. Secondly, there is the fact that an arrangement will be found to exist where there is a plan or concerted action by a number of people to bring about a particular result (at 64).

[73]

66 There are a variety of benefits provided in workplaces to employees at a cost to the employer which may be said to be of a personal or private benefit to the employee but which would never be regarded as part of an "arrangement", including a "related condition" or a "collateral arrangement" to the contract of employment. It is not unusual in many spheres of business for regular entertainment to be held for social purposes such as lunches, end of week drinks, special occasion dinners and Christmas parties, all of which provide a personal benefit to the employee at a cost to the employer: nor is it unusual for employers to provide access to cultural events for its employees and clients or to permit various workplace facilities to be used for reasonable personal purposes by staff. Having regard to the parliamentary debates and the terms of s 108A, I have great difficulty in concluding that it was the legislative intention that the parties and the Court should become involved in a protracted exercise whereby the minutiae of the employment would be subjected to close scrutiny and evaluation in order to establish all the benefits an employee received from the employer. It is quite clear that the legislature has cast a wide net: consideration is not limited to cash payments or base salary, with bonus payments, superannuation payments and motor vehicles all to be considered in determining the remuneration package. This approach does no more than look to the features which regularly arise when the Court is required to consider what is the remuneration package when formulating an appropriate money order having determined that a contract is unfair. In this context, cases under s 106 have not generally factored in the benefit of a mobile telephone or credit card reward points. The Court is not usually called upon to value all the benefits such as staff lunches, parties and attendances at sporting and cultural events at the expense of the employer. The approach urged by the respondent would not accord with the construction of s 108A determined by the Full Court in Commander: it is difficult to see how such an approach would enable parties "to determine with objective certainty whether an application may be brought", nor would such an approach give "litigants and potential litigants greater certainty" regarding the application of the section.

[75]

68 In Shead, the Full Bench concluded that the word "remuneration" was not used consistently throughout the 1996 Act and that fact may have led the Full Bench in Commander to state that cases dealt with under s 83 of the Act provide limited assistance since that provision was concerned with the different statutory scheme involved in the consideration of the expression "annual remuneration" in s 83(1)(b). In addition, in Shead, the Full Bench noted that employees with packages over the limit value of $68,000 could gain access to a review of their dismissal so long as the cash component of the package was less than $68,000: such employees could, by choosing a package with a lower salary and higher benefits, gain access to the unfair dismissal provisions which the legislature intended to make available only to a particular class of employee while other employees, remunerated on the same total basis but with a package with a higher salary component, would have no such rights. It was said that such a result would seem both odd and unintended having regard to the scheme established by Part 6, Chapter 2 of the 1996 Act. The Court then went on to state that employees with total packages of less than $68,000 would have compensation available to them under s 89 limited to the cash component of their package - a significant disadvantage but one resulting from the narrow meaning given to remuneration by the drafter of the statute, presumably in order to allow more highly remunerated employees access to the relief provided. This was again said to be a peculiar and unintended result. In the context of s 108A the respondent's approach may lead to the unintended consequence that, while a miscellany of benefits provided at the employer's cost may be taken into account in determining whether or not the salary cap has been exceeded, it would also have the result that, where the salary cap was not exceeded with the inclusion of such benefits, the making of a money order may nevertheless, and apparently for the first time in the long operation of this provision, entitle the Court to calculate the remuneration package on the basis of such private benefits being included. The Court and the parties would therefore become involved in an excruciatingly detailed analysis of every benefit provided to an employee at the cost of the employer which might be said to be a private benefit: it is difficult to accept that this was the intention of the legislature in enacting the 2002 amendments.

Zoran Lozevski v Goodman Fielder Consumer Foods Pty Ltd.

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