Appeal against a decision of the Commission given on 11 April 2011 in matter no. B 181/2010

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

FULL BENCH

CITATION : 2011 WAIRC 00886

DELIVERED : Wednesday, 14 September 2011

FILE NO. : FBA 5 OF 2011

Appellant

AND

Kellogg Brown and Root Pty Ltd

Respondent

ON APPEAL FROM:

Jurisdiction : Western Australian Industrial Relations Commission

Coram : Commissioner S J Kenner

Citation : [2011] WAIRC 00278; (2011) 91 WAIG 672

File No : B 181 of 2010

CatchWords : Industrial Law (WA) - Appeal against part of decision made by Commissioner - Alleged claim for contractual benefits - Construction of a contractual term - Claim for damages for time in lieu for travelling time - Accrual of time severable from the condition that provided for when the time in lieu was to be taken.

Legislation : Industrial Relations Act 1979 (WA) s 23, s 29(1)(b)(ii), s 49

Result : Appeal allowed and order at first instance varied

Appearances:

Appellant : In person

Respondent : No appearance

Case(s) referred to in reasons:

Matthews v Cool Or Cosy Pty Ltd [2004] WASCA 114; (2004) 136 IR 156

Pavey & Matthews Pty Ltd v Paul (1986) 162 CLR 221

Reasons for Decision

SMITH AP:

The appeal

1         This is an appeal instituted by an employee under s 49 of the Industrial Relations Act 1979 (WA) (the Act).  The appeal is against part of a decision made by the Commission at first instance on 11 April 2011, dismissing a claim made by the appellant that he had not been allowed by his employer (the respondent) a benefit to which he was entitled under his contract of employment.  The appellant claimed that he was owed 15 hours’ pay as time in lieu for travelling time incurred in three return trips from Perth to Brisbane at five hours per trip whilst on assignment to the Gorgon Gas Project in Perth.

2         The respondent did not participate in the hearing of this appeal.  On 7 July 2011 its representative, Ms Sarah Cook, informed the Full Bench in a letter that the appeal could proceed and be determined in its absence.

Background

3         In the application before the Commission the appellant made a claim that not only had he been denied payment in lieu of paid travelling time, but that he had also been denied payment for one day’s pay in lieu of a public holiday and a return economy airfare from Perth to Brisbane.  All of the claims arose whilst the appellant was assigned to work in Perth at the Gorgon Gas Project from Brisbane.  The claim for travelling time is a claim for payment of time in lieu for time engaged in travelling from the appellant’s home base in Queensland whilst working on the Gorgon Gas Project in Perth.

4         After hearing from the parties on 31 March 2011, the Commission at first instance upheld the application in part and on 11 April 2011 made an order that the respondent pay to the appellant the sum of $495.36 for a day in lieu of a public holiday and provide to the appellant a return economy airfare from Perth to Brisbane, as denied contractual benefits.  The claim for payment of time in lieu of travelling time was dismissed.

5         The appellant entered into a contract of employment for his engagement by the respondent in Brisbane by executing a document dated 5 February 2007.  In 2010 he reached an agreement with the respondent to work in Perth for a short period of time.  The terms of the appellant’s assignment at the Gorgon Gas Project were contained in a letter from the respondent dated 12 July 2010 which set out specific variations to the appellant’s contract of employment whilst he was engaged at the Gorgon Gas Project.

6         After some negotiation between the parties, the appellant agreed to undertake an assignment on the Gorgon Gas Project for a period of two months commencing on or about 15 July 2010 or 19 July 2010.  The arrangement came to an end on 17 September 2010 when the appellant’s resignation from his employment became effective, which was at the same time his two month assignment to the Gorgon Gas Project had been completed.

7         The material terms of the appellant’s assignment terms and conditions of employment at the Gorgon Gas Project were as follows:

(a) The term of the temporary assignment was for an initial period of approximately two months from the commencement date and could be extended or shortened by mutual agreement.

(b) At the end of each four week period of living away from home the appellant was entitled to a return economy airfare to his home location provided that the assignment was scheduled to continue for another 14 days.

(c) The respondent was to provide the appellant with time off in lieu of five hours per fortnight (travel time associated with home visits) to assist in offsetting his travel time.  This time was to be taken on demobilisation from the project, on the basis that his demobilisation was at the initiative of the project.  This was defined to mean that his services were no longer required by the project.

8         The appellant had given four weeks’ notice to terminate his employment as required by the terms and conditions of his contract.  He also informed the respondent that he would honour his two month assignment agreement in Perth and extended the notice period to complete the assignment.  He stated, however, that his employment with the respondent did not cease in Perth because the respondent moved him back to Brisbane, so at the time which his contract came to an end he was in Brisbane, but he did not carry out any work in Brisbane after he returned from Perth.  When the matter came before the Commission at first instance the appellant argued that he could have taken the time off in lieu owed to him in the Brisbane office but he was told ‘No, you’ve finished.  That’s it.  You don’t return to Brisbane office’ (ts 12).

9         After considering the travel time clause in the assignment agreement the Commission at first instance concluded that the appellant was not demobilised at the initiative of the project and that his resignation was a termination of employment at his own initiative.  A finding was then made that there was no entitlement on the terms of the agreements, on their ordinary natural meaning, for the appellant to be entitled to travel time [7].

10      The appellant argued that finding that he was demobilised at the initiative of the project was incorrect as the assignment contract was for a fixed term of two months from the respondent to Chevron on the Gorgon Gas Project.  He also said that the two month term was honoured as agreed and that he had earnt 15 hours travel time upon the completion of the project.

Construction of the contractual term

11      In making the finding that the appellant was not demobilised at the initiative of the project, the Commission may have formed the view that demobilisation at the initiative of the project was a condition precedent to the obligation of the respondent to perform its part of the contract.  Consequently, it was found that resigning his employment and terminating the contract at his initiative the appellant had failed to be entitled to the contractual benefit of time off in lieu for the travel time.

12      If it can be said that the obligation on the respondent to perform was dependent upon the condition precedent then the appellant’s claim at law fails.  However, when the contractual term is analysed it appears that when the time in lieu was to be taken, that is on demobilisation at the initiative of the project, is a condition which is a contingent condition.  A contingent condition is an event which neither party undertakes to bring about and which the existence of a contract, or the binding force of its principal obligations, depends:  Peel E, Treitel: The Law of Contract (12th ed, 2007) [17-015].  However, in my view, the contingent condition is not a condition precedent to the accrual of the travelling time, but was simply a condition which went to when that time was to be taken.  The time at which the time in lieu was to be taken was contingent on the demobilisation at the initiative of the project.  It is a separate condition to the accrual of the time in lieu of the five hours per fortnight travel time.  These rights and obligations were, in my view, severable.

13      Consequently, under the terms of the contract 15 hours’ time in lieu had accrued to the appellant.  In any event, irrespective of the appellant’s resignation of his employment contract, the demobilisation had occurred at the initiative of the project as the assignment terms agreement had come to an end as the assignment period was fixed by mutual agreement for a period of two months and had not been extended by the parties.  The appellant, however, was unable to take the time in lieu after the demobilisation had ceased as his employment contract came to an end.

14      Under s 23 of the Act the Commission is empowered to make a monetary award of damages to resolve a claim of a breach of a right or entitlement to a ‘benefit’ made under s 29(1)(b)(ii) in relation to an industrial matter:  Matthews v Cool Or Cosy Pty Ltd [2004] WASCA 114; (2004) 136 IR 156.  As Pullin J in Cool Or Cosy explained [48] – [49]:

A contractual promise by an employer to give an employee 12 months' notice before employment is terminated, confers a right on the employee to be given such notice. Such a contractual right is a benefit with real and measurable value. If a contract containing a term requiring notice to be given, is terminated by an employer without cause and without notice, and therefore in breach of such a term, then the employee is entitled to an award of damages: see Automatic Fire Sprinklers Pty Ltd v Watson [1946] 72 CLR 435 at 465.

In the language of s 29(1)(b)(ii), an employee dismissed without notice in breach of contract, may refer to the Commission a claim ‘that he [had] not been allowed by his employer a benefit ... to which he [was] entitled under his contract of service’. Once the claim has been referred, the authority or jurisdiction of the Commission to grant remedies, is to be found in s 23. The section is extraordinary in its brevity. As I have already said, it simply confers jurisdiction on the Commission to enquire into and ‘deal with’ the claim. In my opinion, this provision confers jurisdiction on the Commission to order damages for the non-allowance of a benefit if the non-allowance amounts to a breach of contract. The principal objects of the Act are set out in s 6, and they include a statement that the objects of the Act are to provide a means for conciliation with a view to amicable agreement, thereby preventing and settling industrial disputes, and to provide means for ‘settling industrial disputes not resolved by amicable agreement’. If there were no power to award damages, then the Commission would not be able to settle this type of dispute.

15      In this matter, the industrial matter is a dispute about whether the appellant should be paid for 15 accrued hours.  The appellant was entitled to 15 hours’ time off in lieu.  Or put another way, he was entitled to be paid 15 hours’ pay for time that he was not required to work.  As his employment contract terminated at the expiration of his assignment to the Gorgon Gas Project he was unable to take that time off work as paid time in lieu.  The contractual right to 15 hours’ time in lieu, to use the words of Pullin J is of ‘real and measurable value’.  As the time in lieu was untaken and remained owing at the time the contract of employment between the parties came to an end, damages can be awarded for the value of the accrued untaken time, as it was a ‘benefit’ to which the appellant was entitled.

16      Even if it could be said that the right to take the time in lieu could not arise until the appellant had been demobilised back to Brisbane and recommenced work in Brisbane, that is until the contingent condition had been fulfilled, the appellant may have had an entitlement to damages for the untaken time in lieu on grounds of quantum meruit for the value of the accrued hours.  A claim for quantum meruit may be made for reasonable remuneration where a contractual provision is unenforceable.  The basis of a claim for quantum meruit arises out of the principles of unjust enrichment and a claim for restitution:  Pavey & Matthews Pty Ltd v Paul (1986) 162 CLR 221.  However, in my opinion, it is not necessary to decide the appeal on this basis, as the appellant has been denied a contractual benefit, that is 15 hours’ time in lieu that had accrued to him at the time his employment had come to an end for which damages can and should have been awarded for compensation of the denial of that benefit.

17      For these reasons I would make an order to uphold the appeal and vary paragraph (2) of the order made by the Commission at first instance on 11 April 2011 in B 181 of 2010 by deleting the words from paragraph (2):

THAT otherwise the application be and is hereby dismissed.

and inserting the words:

THAT the respondent pay to the applicant 15 hours’ pay.

18      I would also add an additional paragraph (3) to the order made by the Commission at first instance that the respondent pay to the applicant the amount specified in paragraph (2) of the order within 21 days of the date of the variation of the order by the Full Bench.

SCOTT ASC:

19      I have had the benefit of reading the Reasons for Decision of the Honourable Acting President.  I agree that the appeal should be upheld and that payment for 15 hours’ time off in lieu for travelling time is due to the appellant.

20      The letter of 12 July 2010 signed by both parties set out the terms and conditions of the appellant’s assignment to the Gorgon Project.  The paragraph dealing with travel time associated with home visits provides amongst other things:

Please note that it has been agreed that KBR Brisbane will provide you with time off in lieu of 5 hours per fortnight (travel time associated with home visits) to assist in offsetting the travel times.  This will be taken on demobilisation from the project on the basis that your demobilisation is at the initiative of the project.  This means that your services are no longer required by the project.   (Attachment 3)

21      The Commission at first instance found that the appellant was not demobilised at the initiative of the project but due to his resignation, at his own initiative.

22      However, the parties had agreed that his assignment to the project, which gave rise to the agreement to travelling time, was to be for a period of approximately 2 months.  Although his employment with the respondent terminated at his own initiative, the appellant extended the notice period to ensure that he completed the assignment.  Therefore, the appellant’s assignment ended in accordance with the agreement and there was no agreement to extend it.  His assignment did not finish at his own initiative.  He was demobilised from the project at the time of his employment terminating, when his assignment had been completed.

23      I find that a proper construction of the terms of the assignment for the time in lieu of travel time is that firstly there was an entitlement to the benefit of 5 hours per fortnight.  Secondly, the benefit itself was not contingent upon his being demobilised from the project at the initiative of the project.  Rather the timing of his taking of the time off in lieu was to be “on demobilisation from the project”.  The term “on the basis that your demobilisation is at the initiative of the project” again refers to the timing of taking of time in lieu not to a condition for entitlement.  The appellant was unable to take the time off in lieu due to his resignation taking effect.  This did not deny him an entitlement to the benefit.

24      Therefore, I conclude that the appellant has an entitlement to the payment of an award of damages for the non-allowance of the benefit. 

MAYMAN C

25      I have read a draft of the reasons for decision of Smith AP.  I agree with those reasons and the order proposed.