100212601

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES NOEL LEONARD KNIGHT

APPELLANT

 -v-

 ALINTA GAS LTD

RESPONDENT

CORAM FULL BENCH

  HIS HONOUR THE PRESIDENT P J SHARKEY

  COMMISSIONER S WOOD

  COMMISSIONER J L HARRISON

DELIVERED MONDAY, 19 AUGUST 2002

FILE NO/S FBA 12 OF 2002

CITATION NO. 2002 WAIRC 06243

_______________________________________________________________________________

Decision Appeal dismissed

Representation

Appellant Mr G McCorry, as agent

Respondent Mr Rene L Le Miere QC and Mr D S Sash (of Counsel), by leave

_______________________________________________________________________________

Reasons for Decision

THE PRESIDENT:

INTRODUCTION

1         This is an appeal by the above named appellant, Noel Leonard Knight, against the decision of the Commission, constituted by a single Commissioner, made on 15 February 2002 in matter No 1248 of 2001.  The appeal is brought under s.49 of the Industrial Relations Act 1979 (as amended) (hereinafter referred to as “the Act”).

2         The decision appealed against is contained in an order of the Commission made on 15 February 2002 in application No 1248 of 2001.  By that decision the Commissioner at first instance dismissed an application made by Mr Knight pursuant to s.29(1)(b)(ii) of the Act.

GROUNDS OF APPEAL

3         The grounds of the appeal are as follows:-

“1. The learned Commissioner erred in fact and in law in finding that the terms of clause 4.3 and 4.4 of the employment agreement were ambiguous and that therefore evidence of pre-contractual discussions was admissible, in that –

1. The Appellant and the Respondent both agreed that the clauses were not ambiguous;

2. A proper construction of clause 30.3(c)(iii) of the employment agreement (incorporated into clause 4.3) does not give rise to any ambiguity; the clause merely specifies the rate of pay for the purpose of calculating redundancy entitlements while clause 4.4 specifies the period of service to be taken into consideration for the purpose calculating redundancy entitlements;

 2. In the alternative, the learned Commissioner erred in fact and in law in finding that the evidence of the pre-contractual discussions amounted to an exception (of the kind referred to by Mason J in Codelfa Construction Pty Ltd -v- State Rail Authority of NSW (1982) 149 CLR 337 at 352-353) to the principle that it is the presumed intention of the parties rather than their actual intention that is to prevail, in that the evidence was that the Respondent refused to modify any of the text of the employment agreement, rather than refused to agree to changes in substantive rights conferred by the agreement- the employee proposed modifications being designed to clarify the terms of the agreement rather than alter the rights conferred.

 3. The learned Commissioner erred in fact and in law in finding that even if there was no ambiguity the Appellant had not made out a case that he was entitled to payment in respect of pro-rata annual leave, in that –

a) Clause 9.5 of the agreement expressly provides that annual leave must be taken as soon as reasonably practicable after the expiration of the year for which it accrues unless other agreed arrangements had been made;

b) In the absence of “other agreed arrangements” the Appellant had no entitlement to take any of the annual leave that - if he had continued working to the end of the 2 year guaranteed employment period - would have accrued in the 12 months prior to the last day of the guaranteed employment period and no entitlement to take any annual leave that accrued in the first year until after the first anniversary date of the commencement of the guaranteed employment period;

c) There was no evidence that any “other agreed arrangements” had been made between the Appellant and the Respondent;

d) It is irrelevant that the Appellant may have been entitled to take annual leave during the 2 year guaranteed employment period if the entirety of any annual leave that was so taken was accrued during a period of service prior to the guaranteed employment period commencing; and

e) The Appellant’s legal position in respect of annual leave entitlements for service during the guaranteed employment period are identical to his position in respect of long service leave, a claim which the Commissioner would have allowed.

4. The learned Commissioner erred in fact and in law in finding that clause 4.3 of the employment agreement did not require the Respondent to pay to or on behalf of the Appellant, the employer contributions that would otherwise have been made to the Appellant’s superannuation fund for the balance of the 2 year guaranteed employment period, in that –

a)             the learned Commissioner considered only whether or not the superannuation contributions formed part of the Appellant’s salary and not whether they were due by way of compensation in accordance with Clause 4.3 of the employment agreement;

b)             Clause 4.3 of the employment agreement required the Respondent to compensate the Appellant – in the event of early termination – on a pro-rata basis for the remainder of the guaranteed employment period;

c)             The compensation was expressed to “include” salary, which in the context of the clause, is not a word of limitation and implies that compensation is not limited to salary; and

d)             The use of the expression “compensation on a pro-rata basis” in Clause 4.3 implies that the overall intent of the clause was to put the Appellant in the same position he would have been if the entire two year guaranteed employment period had been worked, which would require the superannuation contributions to have been made in addition to the payment of salary.

ORDERS SOUGHT

1. The appeal be upheld.

2. The orders of the Commission be set aside and in lieu thereof it be ordered that the Respondent pay to the Appellant contractual benefits in the amount of –

a)        $3,500 in respect of the long service leave component of the contractual benefit;

b)        $8,167 in respect of the annual leave component of the contractual benefit; and

c)        $12,791 in respect of the superannuation component of the contractual benefit.”

BACKGROUND

4         Noel Leonard Knight (the above named appellant, and hereinafter called “Mr Knight”) was the applicant in the proceedings at first instance and claimed, pursuant to s.29(1)(b)(ii)of the Act, that he had not been paid owed benefits to which he was entitled under a contract of employment with the respondent, not being benefits under an award or an order of the Commission.

5         He claimed that he was owed benefits which accrued as compensation for time not worked from 2 June 2001 until 16 October 2002.  The benefits claimed were:-

(a) $3,500 an amount claimed and calculated pro-rata for long service leave

(b) $8,167 an amount claimed and calculated pro-rata as annual leave

(c) $12,791 an amount claimed and calculated pro-rata for superannuation contributions.

6         These amounts were amounts said to be prescribed as compensation payable pursuant to a contract of employment in writing, between the parties hereinafter referred to as “the 2000 agreement”.

7         He had been employed by Alinta Gas Ltd, the above named respondent, but that employment ceased on 1 June 2001.  He had previous to that been employed by Alinta Gas Ltd from 1966 to 1 June 2001 when he was made redundant and retrenched.

8         His case was that he was owed the abovementioned sums pursuant to the express terms of his contract of employment which guaranteed him employment until 16 October 2002 or compensation to be assessed as if he worked until 16 October 2002.

9         It was common ground that when his employment ceased on 1 June 2001 he was paid 71.60 weeks salary calculated at the rate of his base salary that he would have received if he had worked from 2 June 2001 until 16 October 2002.  He was also paid 205.97 hours pay as pro-rata long service leave and 846.25 hours pay as accrued annual leave.  It was alleged that he was made redundant about 16 months before the expiry of the guaranteed two year period.  That he was made redundant was not in issue on this appeal.

10      Payments for pro-rata long service leave and accrued annual leave were calculated and paid until the date his employment ended, namely 1 June 2001.

11      The appellant had been employed by the company and its predecessors which were the public utilities the Gas Corporation and the State Energy Commission of Western Australia from 5 December 1966 until 1 June 2001.

12      At the time that his employment ceased he was employed as a gas supply administrator.  During the time of his employment he was a party to more than one common law employment agreement.

13      On 31 January 1999, he and other employees entered into a written common law agreement with his employer, that agreement being entitled “Alinta Gas Employment Agreement 1999”, hereinafter called “the 1999 agreement”.

14      Both the agreements referred to hereinafter were common law agreements entered into by employees to cover their terms and conditions during the two year transitional period.  They were also submitted on appeal to have the same effect as a Federal award, although what that effect was and what followed from it were it the case, was not at all made clear.

15      Pursuant to clause 29.3(c) of the 1999 agreement a number of payments were required to be made to him in the event that he was made redundant.  Clause 29.3(c) provides:-

“If the Employee’s employment is terminated due to redundancy, the redundancy payment will be calculated as follows:

(i) twelve weeks pay, in lieu of notice plus three weeks pay for each completed year of continuous service (also taking into account previous continuous service with SECWA if the Employee transferred to AlintaGas from SECWA);

(ii) calculations will be based on the Employee’s substantive classified ordinary rate of pay at the date of termination; and

(iii)       all accrued annual leave and long service leave will be paid out, including pro rata entitlements based on the Employee’s substantive classified ordinary rate of pay at the date of termination.  If the Employee has less than three years of service the Employee will not be eligible for pro rata long service leave entitlements.”

16      Some time after that, an agreement was entered into for the “transfer” of employees from the Gas Corporation to the respondent when Alinta Gas became a public company following its purchase of the Gas Corporation operation.

17      Agreed transitional arrangements which were said to have been reached in principle, were as follows (see “News Brief”, No 8, 20 January 2000 – Sale of AlintaGas Employee Issues Update – Newsletter to all employees from the Public Affairs Branch):-

“A two-year employment guarantee from the point of sale with a redundancy package of twelve weeks in lieu of notice plus three weeks for each year of service uncapped.  The two-year employment guarantee will be couched in the same terms as the DBNGP employment guarantee,”

18      There was an agreement called the DBNGP Employment Guarantee which is, in fact, the “Dampier to Bunbury Natural Gas Pipeline Agreement 1997” which was an agreement certified pursuant to the Workplace Relations Act 1996 by Senior Deputy President Polites on 19 February 1998.  That agreement was not germane to the resolution of the issues in this appeal, however, it was common ground that it provided, inter alia, by clause 7.3 as follows:-

“If an employee is terminated by the Employer for any reason, other than a valid reason relating to the employee’s capacity or conduct, before the period of two years guaranteed employment has been completed, the Employer will compensate the employee on a pro rata basis for the remainder of the period not employed.  The compensation will include any salary and work related allowances the employee would otherwise have earned and the provisions of Clause 13 of this Agreement shall apply.”

19      Clause 13 of that agreement provided:-

“When an employee is terminated due to redundancy, the employee shall be entitled to 12 weeks pay inclusive of the prescribed period of notice and an additional three weeks severance pay for each completed year of service.

The payment provided herein shall be in addition to any payment for accrued annual leave, long service leave, or superannuation that may be due.”

20      Sometime prior to June 2000 the appellant and other permanent employees of the Gas Corporation were provided with a draft of a new proposed contract of employment, by the respondent.  Clause 4 of that proposed 2000 agreement was significant and I will refer to its terms hereinafter.

21      Clause 30.3(c) of the proposed agreement prescribed a formula for payment of redundancy pay and it contained the same terms as clause 29.3(c) of the 1999 agreement to which I have referred above.

22      Mr Knight, together with a number of other employees in the trading division of Alinta Gas, wrote on 2 June 2000 to Mr Kevin Bishop, then acting general manager of trading, raising a number of issues in respect to the proposed contract.

23      Mr J Cahill, Acting Chief Executive Officer of Alinta Gas, responded on 6 June 2000 and advised the appellant and the other employees that it was neither practical nor appropriate to attempt to negotiate individual employment contracts with employees at the time whilst the transition from government to public ownership was ongoing.  He said that that was a matter which could be reviewed after the sale process was completed.

24      In a letter dated 14 June 2000, the appellant and the other employees in the trading division of Alinta Gas Ltd wrote to Mr J Cahill, Acting Chief Executive Officer, raising a number of issues in respect of the proposed agreement and attaching a paper setting out a number of matters, including a suggested redraft of clause 4.3 of the proposed agreement.  In a paper provided to Mr J Cahill dated 14 June 2000 entitled “Issues associated with offer of employment” the employees suggested that the last sentence of clause 4.3 of the contract should be replaced with the following:-

“The compensation will include any salary the employee would otherwise have earned and all entitlements, including annual leave and long service leave, that would have accrued had the employee been employed continuously up to the date this employment guarantee lapses.  The provision of clause 30-redundancy shall also apply.”

25      There was evidence of what occurred at a meeting on 30 June 2000 between various managers of Alinta Gas Ltd, and various employees of Alinta Gas Ltd including Mr Knight, from the trading division.  The evidence is recited in paragraph 9 of the reasons for decision of the Commissioner as follows:-

“Mr James Hennessy, General Manager, Regulatory Affairs, Supply and Strategy met with the Applicant and other members of the Trading Division on 30 June 2000.  At that meeting Mr Nigel Philip, the General Manager of the Trading Division, advised the Applicant that he had a directive from the Respondent that it would not agree to amend the contract to include any of the amendments proposed by the employees.  The Applicant testified that Mr Philip said that (Clause 4) “was only a salary guarantee”.  The Applicant also testified that Mr Hennessy made a similar comment at that meeting but that he (Mr Hennessy) also said that “the employees, the way it’s written, have a very good case that it’s not written as if it’s an employee guarantee, this is actually more than that, and if the employees wanted to take it further then they would have very good grounds to do so.  And that was Mr Hennessy’s comment, so I was more than happy to sign it on that basis.”  Mr Hennessy testified that he recalled telling the Applicant that there would be no changes to the contract and he (the Applicant) would have to sign the contract or not at all.  After the meeting the Applicant executed a contract in the form proposed by the Respondent.”

26      The Alinta Gas Ltd employment agreement 2000 was executed by the appellant and other employees on 6 and 14 July 2000.  It was entered into in anticipation of what was then called “The Gas Corporation” sale, ((ie) the sale to Alinta Gas Ltd of the Gas Corporation operation).

27      Indeed, the agreement expressly provided in clause 2.1 that the 2000 agreement arose from the sale of the Gas Corporation.  Further, the agreement recited that, in anticipation of the sale, agreement had been reached between the parties on employee transitional arrangements.

28      Significantly, except for some minor changes to the operation of the agreement in clause 2, and the insertion of clause 4, the 2000 agreement contained the same terms as the 1999 agreement.

29      The respondent sought to adduce evidence from Mr Gregory Larkin, a human resource consultant, as to what the respondent intended by the words used in clause 4.3 and 4.4 of the 2000 agreement meant.  The appellant objected to the admissibility of the evidence and the evidence was led on the basis that the Commissioner would rule on its admissibility at the conclusion of the case.

30      There was a similar objection to the evidence given by Mr Hennessey in relation to pre-contract negotiations, and, in particular, the appellant objected to the admissibility of the contents of the document entitled “Issues associated with the offer of employment” and the matters raised at the meeting on 30 June 2000.

FINDINGS

31      Both parties contended that clause 4.3 and 4.4 were not ambiguous.

32      For the reasons given, the Commissioner at first instance found in paragraphs 20 and 21 of the reasons for decision that clause 4.3 and 4.4 were ambiguous and that the evidence set out in paragraphs 8 and 9 of the reasons for decision was admissible.  That evidence was the evidence of the letter written by the employees, the evidence of what Mr J Cahill had said to them, and what Mr Hennessey and Mr Philip had said to them.

33      For convenience I reproduce paragraphs 20 and 21 of the reasons for decision (see page 21 of the appeal book (hereinafter referred to as “AB”)):-

“20 In YZ Finance Co Pty Ltd v Cummings (1964) 109 CLR 395 at 401-2 Kitto J observed in a case concerning interpretation of a statutory provision:

" … Unlike the verb "means", "includes" has no exclusive force of its own.  It indicates that the whole of its object is within its subject, but not that its object is the whole of its subject.  Whether its object is the whole of its subject is a question of the true construction of the entire provision in which the word appears. …”

In this matter, the word "includes" in Clause 4.3 is imprecise as it gives no clear indication of what is included, other than salary and the provisions of Clause 30.  Clause 4.4 does not further clarify what is included.  I also note that the application of Clause 30 is cast in mandatory terms in that Clause 4.3 provides, "and the provisions of Clause 30 - Redundancy shall apply".  Further, in my view there is a conflict between Clause 4.4 and Clause 30.3(iii), in that prima facie the words "calculations will, for all purposes be based on the assumption the employee had worked the two year period" were to have the effect that (leaving aside any superannuation payments), all payments made on cessation of employment, that is all payments of salary, annual leave, long service leave are to be calculated as if the Applicant terminated his employment on 16 October 2002.  However this construction is at odds with the express terms of Clause 30.3(iii) (which is incorporated into Clause 4.3).  Clause 30.3(iii) clearly provides that as part of redundancy pay, all accrued annual leave and long service leave including pro rata entitlements will be paid out, including pro rata entitlements based on the employee's ordinary rate of pay at the date of termination.

 21 Accordingly I have reached the view that Clauses 4.3 and 4.4 are ambiguous and the evidence set out in paragraphs 8 and 9 of these reasons is admissible.  This evidence shows that the Respondent rejected the suggestion made by the Applicant and fellow employees that in the event of redundancy, employees who are parties to the 2000 Agreement would be paid pro rata annual leave and pro rata long service leave until 16 October 2002.  I accept the submission made on behalf of the Applicant that the evidence of Mr Cahill set out in paragraph 12 of these reasons is inadmissible.”

34      The Commissioner then went on to hold that the evidence showed that the respondent rejected the suggestion made by the appellant and fellow employees that in the event of redundancy, employees who are parties to the 2000 agreement would be paid pro-rata annual leave and pro-rata long service leave until 16 October 2002.  The Commissioner therefore accepted the submission made on behalf of the appellant that the evidence of Mr Cahill set out in paragraph 12 of the reasons was inadmissible.

35      She then went on to hold that if she were wrong in holding that clause 4.3 and 4.4 are ambiguous and that the appellant’s argument as to the meaning of clause 4.3 and 4.4 is the proper construction then the appellant was unable to make out a case that he is owed pro-rata annual leave.  This was because an entitlement to annual leave is an entitlement to take paid leave within a period of service.

36      The Commissioner also found that the appellant had not made out a case that he would have taken no leave from the beginning of June 2001 until 16 October 2002.  Further, the Commissioner found that the evidence established that but for the redundancy in June 2001 the appellant would have taken 10 days annual leave.  The appellant gave evidence that he had accrued a substantial amount of annual leave, but gave no evidence as to whether but for being made redundant he had intended or not intended to take further annual leave in 2001 or in 2002.

37      The Commissioner observed that she would have allowed his claim for pro-rata long service as the facts established that even if the appellant had worked until 16 October 2002 he had no entitlements to take long service as such paid leave had not accrued.

38      The Commissioner then went on to hold that superannuation contributions of 12% are not “salary” within the meaning of clause 4.3 of the 2000 agreement.

39      This interpretation was arrived at relying on the Totalisation Agency Board v Fisher (1997) 77 WAIG 1889.

RELEVANT CLAUSES OF THE 2000 AGREEMENT

40      For convenience I reproduce hereunder the relevant clauses of the 2000 agreement namely clauses 4, 9.3, 9.5, 12.1, 12.2, 12.3, 17.1, 25.1(a), 30.3(c)(iii), 30.3(d) and special conditions clause 10(13) (see page 84 (AB)):-

41      Clause 4 provided as follows:-

“4.1 This clause shall apply to employees previously employed by the Gas Corporation, and who have subsequently accepted the offer of employment to transfer to AlintaGas Limited prior to the sale of the Gas Corporation. Employees employed after the sale completion date are not affected by this Clause.

 4.2 Subject to a termination of employment based on a valid reason relating to the Employee’s capacity or conduct, each Employee is guaranteed two years employment from the date of sale in their current position and their current terms and conditions of employment.

 4.3 If an Employee is terminated by AlintaGas for any reason, other than a valid reason relating to the Employee’s capacity or conduct, before the period of two years guaranteed employment has been completed, AlintaGas will compensate the Employee on a pro rata basis for the remainder of the period not employed. The compensation will include any salary the Employee would otherwise have earned and the provisions of Clause 30- Redundancy shall apply.

 4.4 For redundancy, calculations will, for all purposes be based on the assumption the Employee had worked the full two year period from the sale completion date, in addition to the previous continuous service provided with the State Electricity Commission (SEC), the State Energy Commission of Western Australia (SEC WA) and the Gas Corporation.”

42      Clause 9.3 and 9.5 provided as follows:-

“9.3 (a) Annual leave shall be exclusive of the public holidays specified in this Agreement.

 (b) Should any public holiday occur during any period of annual leave taken by the Employee, it shall treated as a public holiday and the annual leave shall be taken around it.

 (c) Approved periods of absence from work through work related accidents shall not interrupt continuity of service, but the first six months only of any such absence shall count as service when calculating the Employee’s annual leave entitlement.

 9.5 Annual leave must be taken as soon as reasonably practicable after the expiration of the year for which it accrues, unless other agreed arrangements have been made between AlintaGas and the Employee.  In accordance with this clause, AlintaGas may direct the Employee to take any accrued and untaken annual leave in excess of 150 hours.”

43      Clause 12.1, 12.2 and 12.3 provided as follows:

“12.1 (a) The Employee shall accrue an entitlement to 487.5 hours long service leave following the completion of ten years’ continuous service and the completion of each subsequent seven years’ continuous service.

 (b) If the Employee was in the employ of the Gas Corporation on 24 March 1997, the first period of long service leave shall accrue or shall have accrued after the first seven years of continuos service.

 12.2 If the Employee’s employment is terminated:-

 (a) by AlintaGas for any reason other than the Employee’s serious and wilful misconduct; or

 (b) by the Employee on account of illness, incapacity or domestic or other pressing necessity; or

 (c) by reason of the death of the Employee

 and at the time of termination the Employee has completed at leat three years’ continuous service, the Employee shall be entitled to a pro-rata amount of long service leave on the basis of 487.5 hours for seven years’ or ten years’ continuous service, as the case may be in accordance with clause 12.1.

 12.3 Long service leave must be taken as soon as reasonably practicable after the date on which it accrues, unless other arrangements have been agreed between AlintaGas and the Employee.”

44      Clause 17.1 provided as follows:-

“17.1 Salary will be paid fortnightly into a bank account, credit union or other account agreed between AlintaGas and the Employee on the Employees’ usual pay day.”

45      Clause 25.1(a) provided as follows:-

“25.1 (a) The rate of pay applicable to the Employee shall be the rate of pay specified below for the level the Employee is classified as:

LEVEL 1 Column 1 Column 2 Column 3 Column 4

 $ p.a. $ p.a. $ p.a. $ p.a.

16 years or under 14688 14908 15206 15510

17 years 16807 17059 17400 17748

18 years 19374 19665 20058 20459

19 years 21942 22271 22716 23170

20 years 24511 24879 25377 25885”

46      Clause 30.3(c)(iii) and 30.3(d) provided as follows:-

“30.3 (c) If the Employee’s employment is terminated due to redundancy, the redundancy payment will be calculated as follows:

…

(iii) all accrued annual leave and long service leave will be paid out including pro-rata entitlements based on the Employee’s substantive classified ordinary rate of pay a the date of termination.  If the Employee has less than three years of service the Employee will not be eligible for pro-rata long service leave entitlements.

 30.3 (d) If the Employee receives a redundancy payment the Employee shall not be eligible to be re-employed by AlintaGas within one year of his/her employment termination date.”

47      Clause 10(13) provided as follows:-

“(13) Where the Employee contributes 5% of his salary to a superannuation fund, AlintaGas will be required to contribute an additional 12% of the Employee’s salary to the superannuation fund.”

ISSUES AND CONCLUSIONS

PRINCIPLES

Admission of extrinsic evidence

48      The following principles apply to the admission of extrinsic evidence in relation to the question of interpretation of a written agreement.

49      Extrinsic evidence cannot be admitted to subtract from, add to, vary or contradict the language of the written instrument (see Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] 149 CLR 337 at 347 per Mason J).

50      A prescription that the parties intended a written document to be the sole and exclusive repository of their agreement is raised where the document is apparently complete on its face in the sense that it provides “for all matters relevant to the particular transaction involved” (see L F Thorne and Co Pty Ltd v Thomas Borthwick and Sons (Australasia) Ltd (1956) 56 SR (NSW) 81 (FC) per Street CJ at page 88 and see also Gordon v McGregor [1909] 8 CLR 316).

51      (a) Extrinsic evidence is admissible as an aid to interpretation where there is ambiguity.

(b) That can only be done where the language of the document is ambiguous and the evidence must be of more than collateral intention.

(c) Relevant extrinsic evidence will be admissible to help the resolution of an ambiguity if a patent or latent ambiguity is established (see DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] 138 CLR 423 and see also Rankin v Scott Fell and Co [1904] 2 CLR 164 per Griffith CJ at pages 173-174).

Patent ambiguity

52      An ambiguity is patent where the text of the document is manifestly incomplete, defective or self-contradictory, or cannot be understood without explanation (see Giliberto v Kenny (1983) 57 ALJR 283 (HC) and see also R W Cameron and Co v L Slutzkin Pty Ltd [1923] 32 CLR 82).

Latent ambiguity

53      A latent ambiguity is shown by reference to extrinsic facts which cast doubt on what is, on the face of it, clear.  Evidence of such facts will be admitted (see Life Insurance Co of Australia Ltd v Phillips [1925] 36 CLR 60 per Isaacs J at page 79).

Interpretation

54      Somewhat axiomatically, there is no scope for interpreting a contract unless there is ambiguity or the words in issue are otherwise susceptible to more than one meaning (see Codelfa Construction Pty Ltd v State Rail Authority (NSW) (op cit) at page 352 per Mason J and see also Rankin v Scott Fell and Co (op cit)).

55      There are no strict rules of law governing the interpretation of contracts apart from the relevant rules of evidence.  The plain, ordinary or natural meaning of the words used by the parties to express a term will prevail unless the context warrants otherwise.  However, the process of construction of a contractual provision means more than merely assigning to the words of a written instrument their plain and ordinary meaning (see Codelfa Construction Pty Ltd v State Rail Authority (NSW) (op cit) at page 348 per Mason J).  The parties’ apparent or objective intentions, as evidenced by the context in which they contracted, control the process of interpretation, an issue which the court necessarily approaches objectively (see The Life Insurance Co. of Australia Ltd v Phillips [1925] 36 CLR 60).

CONCLUSIONS

56      This was a claim for contractual benefits said to be entitlements of the appellant pursuant to the 2000 agreement which was in writing and which in its terms was almost identical to the 1999 agreement.

57      The extent of the appellant’s entitlements were dependent on the interpretation of the 2000 agreement.  The agreement was required to be interpreted according to the principles which I have referred to above.  The agreement clearly prescribed two years guaranteed employment for Mr Knight in the event that the Gas Corporation enterprise was sold to another person or entity.

58      What occurred, as clause 4.1 makes clear, was that clause 4.1 applied to Mr Knight and to all employees previously employed by the Gas Corporation who transferred to Alinta Gas Pty Ltd, the above named respondent, before the sale of the Gas Corporation.  Each employee was guaranteed two years employment from the date of sale in their “current position and their current terms and conditions of employment”.

59      Upon a fair reading, and giving each word in clause 4.3 its plain and ordinary meaning, clause 4.3 prescribed that if a person were “terminated” by Alinta Gas for any reason except “a valid reason relating to the employee’s capacity or conduct” before the two year guaranteed employment had been completed, then Alinta Gas would compensate the employee on a “pro-rata basis” for the remainder of the period not employed.

60      In Mr Knight’s case, the period was 16 months.  Thus, that clause, read on its own, clearly prescribes that an amount of compensation would be paid to be calculated pro-rata, that is to be calculated for the period of the guaranteed employment during which he would no longer be employed.  Next, that clause prescribes that the amount of compensation would not include any salary which he would otherwise have earned, that is during the period of the two years after his employment was terminated.

61      The clause also provides that the provisions of clause 30 – Redundancy, apply.

62      Clause 4.4 quite clearly prescribes that the calculation of a redundancy payment there would be taken into account and assumed as being worked a period of two years from the sale completion date, as well as periods of service previously served with the SEC, SECWA and the Gas Corporation.  Thus, there would be paid for a redundancy payment an amount calculated on two years service after the sale completion date and previous continuous service with the entities to which I have referred above.

63      Two elements of compensation were, of course, prescribed:-

(a)                 One element was salary which would otherwise have been earned but for the termination of employment ((ie) earned during the two year period).

(b)                 The other component was a redundancy payment as calculated as prescribed by clause 30 and calculated, too, in accordance with clause 4.4.

64      Clause 30 defines what redundancy is, and, in particular, that the employee will be redundant if Alinta Gas does not require his or her position to be filled (see clause 30.1(a)).

65      It was not in dispute that Mr Knight’s position was made redundant and that he was retrenched.

66      Thus, clause 30.3(c), which prescribes the method of calculating a redundancy payment, applies.

67      It is necessary to interpret that clause, too.  The clause prescribes the calculation of a redundancy payment as follows:-

(a)                 The employee is to be paid 12 weeks pay in lieu of notice “plus” three weeks pay for each completed year of continuous service, including the two years “guaranteed employment”, and also taking into account at the point of sale the previous service with the entities which I have referred to and which are referred to in clause 4 of the agreement.

(b)                 The clause also provides that calculations will be based on the employee’s substantive classified ordinary rate of pay at the date of termination.

68      Those provisions are quite clear.

69      Clause 30.3(c)(iii) is a somewhat different clause.  That purports to provide as part of the process of calculation of redundancy payment that all accrued annual leave and long service leave is to be paid out to include all pro-rata annual entitlements based on the employee’s substantive classified ordinary rate of pay.

70      Although that clause purports to prescribe what shall be part of the redundancy payment it clearly does not so prescribe.  In ordinary clear terms clause 30.3(c)(iii) does prescribe, that all accrued annual leave and long service leave will be paid out.  It requires that the entitlements to long service leave, including pro-rata entitlements to the same, will only exist as an entitlement if more than three years of service have been completed.

71      However, it specifically and separately prescribes that there will be separate payment out.

72      Clause 9.3 and 9.5 respectively confer long service leave and annual leave entitlements.  These are entitlements separately conferred on an employee under the 2000 agreement and, inter alia, prescribe what “accrued but untaken” annual leave will be paid on termination of employment.

73      Clause 12 prescribes long service leave entitlements and what they are and when the same accrue.  It is clear by virtue of clause 12.3 that long service leave is to be taken as soon as is reasonably practicable (see also clause 12.6).

74      Further, accrued long service leave in excess of 500 hours by the same clause, clause 12, may by agreement between Alinta Gas and the employee be paid out to the employee.  Accordingly, both those benefits are not, and are plainly not, part of the redundancy payment or prescribed to be part of the mode of calculating it.  I should add, as Mr McCorry properly conceded, that the entitlements which Mr Knight is claiming for long service leave and annual leave are not entitlements which arise from clause 4.3.

75      Further, whilst the two year guaranteed period of service is to be used for the purpose of calculating a redundancy payment, it is not so prescribed for the purpose of calculating what are long service leave and annual leave entitlements.

76      Those calculations are the provinces of clauses 9 and 12.  If it was intended that the two years “guaranteed employment period” was to be taken into account in calculating those entitlements, then clauses 9, 12 and 30.3(c)(iii) would surely have said so and those provisions specifically do not so say.

77      By the word “accrued” it is clearly meant that only leave which is accrued according to the prescriptions in clauses 9 and 12 at the time of the termination of employment, is the leave referred to.

78      Those words are not at all any expression of an entitlement to leave that Mr Knight may have applied for before his employment was terminated and which he was to take after the date on which, in fact, his services were terminated.

79      Put shortly, there was no provision in the contract which prescribed that any period of the two year period which he did not work because his employment was terminated before the two year “guaranteed period” expired, could be taken into account for the purpose of calculating his annual leave or long service leave entitlements.  There is nothing express or implied in the agreement which would lead to that conclusion.

80      The express terms of clause 30.3(c)(iii), which is applied by clause 4.3, also most expressly provides that accrued annual leave and long service leave, including pro-rata entitlements, are to be paid out at the date of termination and no more.

81      They are not to be read, on any fair reading of the agreement, as a whole and the relevant clauses as being part of the redundancy payment calculations.

82      In my view, clause 4.4 is clearly directed only to what calculations are to be made to arrive at a redundancy “payment” and take no account of separately prescribed entitlements under clauses 9 and 12.

83      Clause 4.4 plainly prescribes that the calculations will be “for redundancy”.  In my opinion, and I emphasise it on a fair reading, clause 30.3(c)(iii) does not prescribe how to calculate a redundancy payment, but requires the payment out separately calculated of separately prescribed entitlements to long service leave and annual leave.

84      The use of the word “include” in clause 4.3 is clear.  The word enables the clause to prescribe, when read with the whole of clause 4, including clause 4.4, that there will be compensation, what the compensation is to be composed of, namely salary which would otherwise have been earned for example, and it prescribes the operation of clause 30 as applying.

85      There is a clear exclusion by omission of any entitlement pursuant to clause 4.4 and clause 30 of any amount of long service leave benefit or annual service leave benefit calculated on any part of the year not worked.

86      Further, these payments are clearly not part of any redundancy payment or otherwise any part of the “compensation” prescribed.  The phrase “for all purposes” cannot take the matter beyond the limits which clause 30.3(c)(iii) prescribes when read with clauses 9, 12 and clause 4 as a whole.

87      Redundancy payments in their plain terms, and as supported by the context are restricted to payments by way of notice of termination and severance pay calculated on the payment of an amount which is the total payable for each year of service completed, by way of severance pay.  (As to what constitutes severance pay and notice see Hot Copper v Saab 81 WAIG 2704 (FB)).

88      Given that meaning, which is its accepted meaning, it is plain that calculations for the purposes of arriving at compensation are limited to the calculation of what is service for the calculation of redundancy payments.  It will be clear from what I have just said that there is not a patent or latent ambiguity which requires or permits the admission of extrinsic evidence.

SUPERANNUATION

89      I now turn to the question of whether superannuation contributions of 12% are “salary” within the meaning of clause 4.3 of the 2000 agreement.  Mr Knight’s evidence was that up until the time of the termination of his employment he contributed 10% of his salary to the Alinta Gas Ltd superannuation fund.

90      The Commissioner found, and it was not challenged, that by operation of law the nature of the fund was that no employer or employee contributions could be made to the fund once his/her employment was terminated.

91      At first instance, it was contended that the Commissioner should make an order that the respondent pay to the applicant a sum of monies equivalent to the 12% contributions which would have been made had he worked the full two year period, ((ie) until 10 October 2002).

92      The word “salary” does not on its plain and ordinary meaning at all include contributions which an employer undertakes to make to a superannuation fund.  These monies are not paid to the employee.  They are paid to a fund to ensure that the employee receives a certain benefit from the fund according to the terms of the superannuation trust deed.

93      The Commissioner referred to the reasons for decision of the Industrial Appeal Court in Totalisation Agency Board v Fisher (op cit) in which the Industrial Appeal Court held that a “commission only employee” was not paid a “salary” so as to be regarded as a “salaried employee” within the meaning of the Government Officers Salaries, Allowances and Conditions Award 1989.  In that case, Justice Anderson, with whom Scott J agreed, observed at page 1891:-

“If resort is had to case law to ascertain the ordinary meaning of the word salary, I can find nothing in the cases to which we have been referred including the case mentioned above, which would support the conclusion that the commission and other entitlements provided for in this Agency Agreement are salary. Both parties relied on the case of In Re Shine, Ex parte Shine (supra) in support of their opposite contentions.  In my opinion the judgments provide no support for the respondent’s case.”

94      In Re Shine; ex parte Shine [1892] 1 QB 522 at page 529, Bowen LJ said:-

“Salary, I think, must mean a definite payment for personal services arising under some contract, and (to borrow an expression of my brother Fry) computed by time.”

95      In that same case, Fry LJ said at page 531:-

“Whenever a sum of money has these four characteristics - first, that it is paid for services rendered; secondly, that it is paid under some contract or appointment; thirdly, that it is computed by time; and fourthly, that it is payable at a fixed time - I am inclined to think that it is a salary, and not the less so because it is liable to determination at the will of the payer, or that it is liable to deductions.”

96      However as Scott J points out in Totalisation Agency Board v Fisher (op cit) at page 1891:-

“As the reasons of Anderson J reveal, the word “salary” is used in many different statutes and in different contexts.  It is not possible to discern a singular meaning of the word which would apply to all of the statutory contexts in which the word appears. The judgement of Fry LJ In Re Shine; Ex parte Shine [1982] 1 QB 522 gives an indication of the criteria that may be looked at in determining whether or not a particular payment is a salary. The four characteristics to which Fry LJ refers at 531 are a valuable guide in determining whether or not any payment is a “salary” for the purpose of a particular statute.”

97      I adopt what Bowen LJ said in Re Shine; ex parte Shine (op cit).  What Bowen LJ said, is, in my opinion, applicable whether the word “salary” appears in a statute, an award or a contract such as this.

98      I therefore apply what Fry LJ said and say that it is quite clear that superannuation contributions are not payments for services rendered, are not computed by time, are not paid to the appellant and are not part of “salary” as that term appears.

99      Further, clause 25 of the 2000 agreement prescribes what the salary is.  It is does not refer to superannuation contributions.

100   The Commissioner at first instance said this in paragraph 27 of her reasons for decision (see page 23 (AB)):-

“In this matter the Commission is not concerned with interpreting a statute or an award. It is necessary to have regard to whether the meaning of salary can be ascertained from the express terms of the contract. In my view when regard is had to Special Conditions 1 and 13 of the 2000 Agreement it is clear that the Applicant’s “salary” is an amount equal to the rates of pay in Clause 25 of the 2000 Agreement for Level 8, Step 3 plus 12%. The amount to be paid by the Respondent as superannuation was an additional amount of 12% and did not form part of the Applicant’s salary within the meaning of Special Condition I or Clause 4.3.”

101   For the reasons which I have referred to above, I agree with that finding.

FINALLY

102   It is not necessary to consider the grounds of appeal or the submissions made further.  I have considered all of the submissions carefully.

103   It follows that it has not been established that the Commissioner at first instance erred in deciding as she did in relation to the benefits claimed.

COMMISSIONER S WOOD:

104   I have read the reasons for decision of His Honour the President.  I agree with those reasons and have nothing to add.

COMMISSIONER J L HARRISON:

105   I have read the reasons for decision of His Honour the President.  I agree with those reasons and have nothing to add.

THE PRESIDENT:

106   For those reasons, the grounds of appeal are, in my opinion, not made out and I would dismiss the appeal.

Order accordingly