2014 WAIRC 00034
APPEAL AGAINST A DECISION OF THE COMMISSION IN MATTER NO. B 166 OF 2012 GIVEN ON 1 AUGUST 2013

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

FULL BENCH

CITATION : 2014 WAIRC 00034

CORAM
: THE HONOURABLE J H SMITH, ACTING PRESIDENT
ACTING SENIOR COMMISSIONER P E SCOTT
COMMISSIONER S M MAYMAN

HEARD
:
THURSDAY, 7 NOVEMBER 2013

DELIVERED : FRIDAY, 24 JANUARY 2014

FILE NO. : FBA 10 OF 2013

BETWEEN
:
MS JOHANNA LANDSHEER
Appellant

AND

MORRIS CORPORATION (WA) PTY LTD
Respondent

ON APPEAL FROM:

JURISDICTION : WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION
CORAM : COMMISSIONER J L HARRISON
CITATION : [2013] WAIRC 00573; (2013) 93 WAIG 1301
FILE NO. : B 166 OF 2012

CatchWords : Industrial law (WA) - claim for contractual benefits - increase in daily hours without an increase in salary - terms of contract considered - whether terms wholly in writing or partly oral considered - terms found to be wholly in writing - terms implied in fact and in law principles considered - wages-work bargain - whether contract entitled employee to be paid for each hour worked - contract provided for an all up rate of pay - no entitlement to payment for additional hours of work
Legislation : Industrial Relations Act 1979 (WA) s 7, s 26(1)(a), s 29(1)(b)(ii), s 49.
Result : Appeal dismissed
REPRESENTATION:
APPELLANT : MR T J HAMMOND (OF COUNSEL)
RESPONDENT : MR A CAMERON, AS AGENT
Solicitors:
APPELLANT : FIOCCO'S LAWYERS

Case(s) referred to in reasons:
Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570
Ahern v The Australian Federation of Totally and Permanently Incapacitated Ex-Service Men and Women (Western Australian Branch) Inc (1999) 79 WAIG 1867
Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435
Belo Fisheries v Froggett (1983) 63 WAIG 2394
BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of Shire of Hastings (1977) 180 CLR 266
Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410
Castlemaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337
Comptoir Commercial Anversois v Power, Son & Co [1920] 1 KB 868
Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd [1986] HCA 14; (1986) 160 CLR 226
County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193
Deane v The City Bank of Sydney (1904) 2 CLR 198
Devefi Pty Ltd v Mateffy Pearl Nagy Pty Ltd (1993) 113 ALR 225
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471
Gruzman Pty Ltd v Percy Marks Pty Ltd (1989) 16 IPR 87
Hampton v BHP Billiton Minerals Pty Ltd (No 2) [2012] WASC 285
Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21; (2001) 181 ALR 263
Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41
Hotcopper Australia Ltd v Saab [2001] WAIRC 03827; (2001) 81 WAIG 2704
Hoyt's Pty Ltd v Spencer [1919] HCA 64; (1919) 27 CLR 133
Hughes v Greenwich London Borough Council [1994] 1 AC 170
Hughes v St Barbara Ltd [2011] WASCA 234
Knight v Alinta Gas Ltd [2002] WAIRC 06243; (2002) 82 WAIG 2392
Major v Bretherton [1928] HCA 11; (1928) 41 CLR 62
Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451
Perth Finishing College Pty Ltd v Watts (1989) 69 WAIG 2307
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355
Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234
Riverwood International Australia Pty Ltd v McCormick [2000] FCA 889; (2000) 177 ALR 193
Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 240 CLR 45
Sterling Engineering Co Ltd v Patchett [1955] AC 534
The Administration of the Territory of Papua and New Guinea v Daera Guba (1973) 130 CLR 353
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
University of Western Australia v Gray [2009] FCAFC 116; (2009) 179 FCR 346
Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251
Vodafone Pacific Ltd v Mobile Innovations Ltd [2004] NSWCA 15
Ware v Amaral Pastoral Pty Ltd (No 5) [2012] NSWSC 1550
Waroona Contracting v Usher (1984) 64 WAIG 1500
Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; (2011) 282 ALR 604
Case(s) also cited:
Bacchus Marsh Concentrated Milk Co Ltd (in Liquidation) v Joseph Nathan & Co Ltd [1919] HCA 18, (1919) 26 CLR 410
Breen v Williams (1996) 186 CLR 71
Bryant v Flight (1839) 5 M & W 114
Flett v Deniliquin Publishing Co Ltd [1964-5] NSWR 383
Hughes v Western Australian Cricket Assn (Inc) (1986) 19 FCR 10; (1986) 69 ALR 660
Landsheer v Morris Corporation (WA) Pty Ltd [2012] WAIRC 00314; (2012) 92 WAIG 605
Powell v Braun [1954] 1 All ER 484
Reigate v Union Manufacturing Co (Ramsbottom) Ltd [1918] 1 KB 592
Woodhouse v ADA Manufacturing Co Ltd [1954] SASR 263
Young & Marten Ltd v McManus Childs Ltd [1969] 1 AC 454
Reasons for Decision
SMITH AP:
The Appeal
1 This appeal is instituted under s 49 of the Industrial Relations Act 1979 (WA) (the Act) against a decision made by the Commission on 1 August 2013 in B 166 of 2012. Application B 166 of 2012 was an industrial matter referred to the Commission by Johanna Landsheer under s 29(1)(b)(ii) of the Act. Ms Landsheer claims that she has been denied unpaid wages for additional hours worked by her from 13 March 2009 by Morris Corporation (WA) Pty Ltd under her contract of employment. After hearing the matter, the Commissioner dismissed Ms Landsheer's application. This appeal is against the decision to dismiss.
The factual background
2 It is common ground that Ms Landsheer entered into a written common law contract of employment. However, Ms Landsheer claims that the written agreement did not contain all the terms and conditions of her employment.
3 Ms Landsheer was employed by Morris Corporation as a kitchen hand. She was a flyin/flyout employee and her place of work was the Cloudbreak site in the northwest of Western Australia. Travel to and from the Cloudbreak site was approximately one and a half hours each way by plane and was unpaid. At all material times, she worked a three week cycle of 14 days' work and seven days off.
4 Prior to Ms Landsheer commencing work and signing the written contract of employment, Ms Landsheer was interviewed by a representative of Morris Corporation, Les Seaton, who told Ms Landsheer that 'we would be doing 10-hour days': ts 16. For the first year of her employment, Ms Landsheer worked shifts of 10 and a half hours as she had a half hour unpaid lunchbreak. In March 2009, the project manager employed by Morris Corporation informed Ms Landsheer and other employees on site that they would now be working 12hour shifts. Ms Landsheer was also told that if she did not accept the increased hours she would no longer have a job. From that time onwards Ms Landsheer worked 12hour shifts but her pay remained unchanged.
5 After the introduction of the 12hour shifts, employees asked for pay increases at group meetings but received no response. Ms Landsheer continued to work 12hour shifts on the same weekly rate of pay she was paid when she commenced employment with Morris Corporation in 2008. At the time she gave evidence before the Commission at first instance, Ms Landsheer was still employed by Morris Corporation. However, at the time the appeal was heard, the Full Bench was informed that Ms Landsheer had resigned from her employment on 13 May 2013.
6 When Ms Landsheer commenced working the 12hour shifts, she had a half hour paid break and two other breaks of 10 minutes a shift. Consequently, Ms Landsheer's claim is that she is due and owing payment for one and a half hours of additional work that she carried out on each shift from on or about 13 March 2009 until 13 May 2013.
7 At the hearing at first instance, another employee of Morris Corporation, Ms Lynn Mori, gave evidence on behalf of Ms Landsheer. Ms Mori worked for Morris Corporation as a peggy/cleaner at Cloudbreak between 10 June 2008 and May 2012. Before commencing employment at Morris Corporation, Ms Mori also, like Ms Landsheer, attended an interview. She gave evidence that she:
(a) was very surprised to be told at the interview that she would be paid a salary of $75,000 per annum for working 10hour shifts. She questioned the hours of work because she had previously worked for another employer carrying out similar work in 12hour shifts for about $55,000 per annum. Consequently, she asked the person who interviewed her on behalf of Morris Corporation several times about the hours of work, and was told several times that 'It's only a 10hour roster': ts 26; and
(b) worked 10hour shifts from 10 June 2008 until 12 March 2009. On 11 March 2009, she attended a meeting in which she was told that, 'As from tomorrow FMG want the whole site to be working 12hour days; we're the only contractors on site doing 10 hours, so as from tomorrow, you will be expected to do a 12hour shift': ts 27. There was a huge uproar at that announcement and the question was asked whether they were going to be paid extra money for the extra hours, and they were told, 'No, you need to be grateful. You're on the best paid site in WA and if you don't like it, there's a window seat with your name and you can f… o..': ts 27.
8 Both Ms Landsheer and Ms Mori gave evidence that working the additional hours of work interfered with the time that they could spend at the gym and in other leisure activities. Ms Mori also said that she became very fatigued working 12hour shifts.
9 The parties filed an agreed statement of facts before the hearing at first instance. The statement of agreed facts records that on or about 13 March 2009, Morris Corporation unilaterally increased the number of hours Ms Landsheer was required to work, from 10 to 12 hours per day, and that Ms Landsheer's weekly wage remained the same, and she did not consent to work more hours for the same rate of pay. It was also common ground and agreed that Ms Landsheer entered into a written contract of employment which was agreed and signed by the parties on or about 28 March 2008.
Material Terms of the Written Contract of Employment
10 The written contract of employment contained comprehensive terms. Clause 1, cl 2 and cl 3 provided:
1. PARTIES TO AGREEMENT
The Australian Workplace Agreement ('AWA') is between MORRIS CORPORATION (WA) PTY LTD (ABN 87 093 760 902) ('the Company') and Johanna Landsheer, an employee employed by the Company ('the Employee') and sets out the provisions agreed by them (collectively referred to as 'the Parties').
2. COMMENCEMENT AND DURATION
The AWA shall come into effect on the 27/03/2008 or on the day after a filing receipt is issued by the Workplace Authority ('the WA') for this AWA, whichever is the earlier date.
The AWA and employment shall continue until the completion or termination of the services contract between the Company and The Pilbara Mining Alliance Pty Ltd ('PMA') or on 27/03/2013 whichever is the earliest date.
It is agreed between the parties that following the expiry of the AWA, its terms and conditions will continue to apply by way of an extension or extensions for a period or periods of up to a maximum of five (5) years from the date of registration with the WA when confirmed in writing by the Company.
If the AWA and employment is extended the AWA and employment shall continue until the completion or termination of the services contract between the Company and TPI or extension date, whichever is the earliest date.
3. COMPLETE AGREEMENT AND EXPRESS EXCLUSION OF PROTECTED AWARD AND OTHER TERMS
For the purposes of this clause, the terms award or awards include a pre-reform federal award, a rationalised and/or simplified federal award, a preserved state agreement and a notional agreement preserving a state award.
The AWA is intended to cover all matters pertaining to the employment relationship. In this regard, the AWA represents a complete statement of the mutual rights and obligations between the Company and the Employee to the exclusion (to the extent permitted by law) of other laws, awards, agreements (whether registered or unregistered), custom and practice and like instruments or arrangements.
Subject to the Fairness Test (Part 8, Division 5A of the Workplace Relations Act 1996 ('Act')), the AWA regulates all terms and conditions of employment and, subject to this AWA, expressly excludes and displaces the operation of any and all other matters and conditions of employment (including those howsoever described or identified as either a preserved entitlement, preserved notional term, preserved notional entitlement, protected notional condition, preserved award term or protected award condition) in any award or agreement.
Without in any way limiting the operation and intention of this clause, any clause or term or provision of an award dealing with any of the following matters (including incidental matters) are excluded and displaced in whole by the AWA:
a) rest breaks;
b) incentive-based payments and bonuses;
c) annual leave loadings;
d) observance of days declared by or under a law of a State or Territory to be observed generally within that State or Territory, or a region of that State or Territory, as public holidays by employees who work in that State, Territory or region, and entitlements of employees to payment in respect of those days or substitute days;
e) monetary allowances for:
i. expenses incurred in the course of employment; or
ii. responsibilities or skills that are not taken into account in rates of pay for employees; or
f) disabilities associated with the performance of particular tasks or work in particular conditions or locations;
g) loadings for working overtime or for shift work;
h) penalty rates;
i) any other matter specified in the Workplace Relations Regulations 2006.
11 The material terms of the contract are cl 7 and cl 9 which were as follows:
7. REMUNERATION
Details of your annualised salary package are set out in the table below.
Base Salary Rate:
$ 1432.69 per week
Superannuation
$ 128.94 per week
Total Salary Rate
$ 1561.63 per week
Subject to clauses Error! Reference source not found., Error! Reference source not found. and Error! Reference source not found. your salary is paid by the Company to compensate you fully in respect of all entitlements, including payment for work in accordance with Clause 9 – Hours of Work / Rosters, additional hours of work, location, travel and other factors associated with this position. The salary includes payment for approved leave and gazetted public holidays whether worked or not.
The Company will make superannuation contributions on your behalf in accordance with the Superannuation Guarantee (Administration) Act 1992.
Your remuneration is directly linked to the position and in the event of you transferring to another position and/or operation, it will be reviewed in line with the new position.
The salary will be paid 1 weekly in arrears. The salary will be paid by direct transfer into your nominated account with a bank, or other recognised financial institution.
In the event of a significant change in working conditions the Company may conduct a review of your remuneration.
9. HOURS OF WORK / ROSTERS AND DUTIES
Subject to clause 13, your ordinary hours or [sic] work are 38 hours per week averaged over a 12month period, plus all reasonable additional hours necessary to complete your assigned work. You and the Company agree that any hours worked in excess of 38 hours per week averaged over a 12 month period are reasonable based on your personal circumstances and the operational requirements of the business.
Subject to clause 13, your ordinary hours of work will be worked within a daily spread of 12 hours.
Your hours of work will be in accordance with the requirements of your work area, as advised to you by your supervisor, or other authorised Company officer ('Project Working Hours'). The applicable roster will be provided to you.
An indictative [sic] roster cycle will be two weeks (14 days on) one week off (7 days off)
(see table below)

Mon
Tue
Wed
Thu
Fri
Sat
Sun
Week one
10
10
10
10
10
10
10
Week two
10
10
10
10
10
10
10
Week three
R&R
R&R
R&R
R&R
R&R
R&R
R&R
Week Four
10
10
10
10
10
10
10
Week Five
10
10
10
10
10
10
10
Week Six
R&R
R&R
R&R
R&R
R&R
R&R
R&R
The Company may vary shift rosters and hours of work. The Company may transfer you to or from day work to shift work, and from one shift panel to another, to meet its operational requirements.
In the event of changes to your regularly rostered hours of work, the Company may conduct a review of your remuneration.
Your position is Kitchen Hand with the Company. Your duties are defined in your role description. You may be required to work in any areas or sites and undertake other duties as required commensurate with your skills, competence and training.
You will comply with all reasonable instructions from officials of PMA and Team 45.
You will assist in the training of other employees as required by the Company. You will undertake training courses in relation to enhancing or broadening your work skills as required by the Company.
Position descriptions will be periodically updated to reflect changes to your position, as the nature of your position and the level of responsibility may vary significantly during the term of your employment. Where significant changes to the organisation or performance of your work are proposed, you will be consulted.
12 Although cl 9 makes various references to being subject to cl 13, cl 13 has no application to the claim made by Ms Landsheer. Clause 13 provided for the terms and conditions that applied to the working of shift work. Ms Landsheer's counsel informed the Full Bench that Ms Landsheer was not a shift worker. In my opinion, that concession was properly made. Clause 13 provided that shift work was deemed to be where the majority of the ordinary hours of work are worked outside the spread of ordinary hours defined in cl 9 of the contract of employment. Clause 9 provided the daily spread of hours is 12 hours. It is apparent that the claim made by Ms Landsheer is not for work carried out beyond the spread of 12 hours.
13 Though the written common law contract was described in its terms as an Australian Workplace Agreement, the agreement between the parties was not formally registered as an Australian Workplace Agreement. Thus, the agreement could only have effect as a common law contract of employment.
Commissioner's Reasons for Decision
14 At the hearing at first instance, a submission was made on behalf of Ms Landsheer that in ascertaining the contractual terms and conditions between the parties, the Commission could have regard to the surrounding circumstances to determine the meaning of the contract and it could be implied in Ms Landsheer's common law contract of employment that she had a right to reasonable remuneration for all hours of work.
15 After outlining the evidence and the submissions put forward by both parties, the Commissioner made the following findings:
(a) For an applicant to be successful in a denial of a contractual benefit claim, a number of elements must be established:
(i) the claim must relate to an industrial matter pursuant to s 7 of the Act;
(ii) the claimant must be an employee;
(iii) the claimed benefit must be a contractual benefit; that being a benefit to which there is an entitlement under the applicant's contract of service;
(iv) the relevant contract must be a contract of service;
(v) the benefit claimed must not arise under an award or order of this Commission; and
(vi) the benefit must have been denied by the employer: Hotcopper Australia Ltd v Saab [2001] WAIRC 03827; (2001) 81 WAIG 2704; Ahern v The Australian Federation of Totally and Permanently Incapacitated Ex-Service Men and Women (Western Australian Branch) Inc (1999) 79 WAIG 1867.
(b) The onus is on Ms Landsheer to establish that the claim is a benefit to which she is entitled under her contract of employment. The Commission must determine the terms of the contract of employment and decide whether the claim constitutes a benefit which has been denied under this contract having regard to the obligations on the Commission to act according to equity, good conscience and the substantial merits of the case: Belo Fisheries v Froggett (1983) 63 WAIG 2394; Waroona Contracting v Usher (1984) 64 WAIG 1500; Perth Finishing College Pty Ltd v Watts (1989) 69 WAIG 2307.
(c) A contractual agreement between the parties is to be interpreted using the ordinary words of the contract unless there is ambiguity: Knight v Alinta Gas Ltd [2002] WAIRC 06243; (2002) 82 WAIG 2392.
(d) In Ware v Amaral Pastoral Pty Ltd (No 5) [2012] NSWSC 1550 the preconditions necessary to imply a term of a contract were outlined in BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of Shire of Hastings (1977) 180 CLR 266, 283.
(e) At all material times, Ms Landsheer was an employee of Morris Corporation and she was employed under a contract of service. This claim is an industrial matter for the purposes of s 7 of the Act as it relates to wages Ms Landsheer claims are due to her arising out of her employment with Morris Corporation. The benefit that Ms Landsheer is claiming does not arise under an award or order of this Commission. The issue to be determined, therefore, is what were the terms of Ms Landsheer's contract of employment with Morris Corporation and whether it was a term of the contract of employment that Ms Landsheer is entitled to the payment for the additional hours worked by her since March 2009 and superannuation entitlements on the amount claimed.
(f) The written contract constituted Ms Landsheer's terms and conditions of employment with respect to her employment at the Cloudbreak site. The written contract commenced on 27 March 2008. The written contract provided that after 27 March 2013 its terms and conditions could continue to apply for up to another five years without any changes to the contract, including the annual salary: cl 2. The contract also stated that it covers all matters pertaining to the employment relationship to the exclusion of any award or agreement: cl 3.
(g) The terms of the contract relevant to Ms Landsheer's claim are as set out in cl 7, cl 9 and cl 13 of the written contract.
(h) The terms of the written contract allowed Morris Corporation to require Ms Landsheer to work 12hour shifts without an increase to the salary that she is to be paid as specified in the contract. Therefore, Ms Landsheer's claim that she be paid for the additional hours she worked after 13 March 2009 had not been made out.
(i) It was not in dispute that Ms Landsheer was told at her interview that she would be working 10hour shifts. The contract had an 'indicative' roster of 10hour shifts in cl 9 and Ms Landsheer worked 10hour shifts up to 13 March 2009. However, cl 7 states that Ms Landsheer is to be paid an annualised salary in full compensation for all hours worked in accordance with cl 9. Clause 9 provides that, subject to cl 13, Ms Landsheer is to work 38 hours per week averaged over a 12month period, plus all reasonable additional hours necessary to complete her assigned work. It also states that her ordinary hours of work were to be worked within a daily spread of 12 hours, which was at that time the current number of hours Morris Corporation required Ms Landsheer to work, and it refers to Ms Landsheer working two weeks on and one week off. Clause 9 also provides that Morris Corporation may vary Ms Landsheer's shift roster and hours of work. Clause 9 states that Ms Landsheer's hours of work will be in accordance with the requirements of her work area, as advised by her supervisor, and a roster will be provided accordingly. Clause 7 refers to the salary paid to Ms Landsheer being in full compensation for the hours worked by Ms Landsheer plus any additional hours of work. Given these terms of the contract, Morris Corporation could require Ms Landsheer to work up to 12 hours on any shift without any adjustment in her annual salary.
(j) Ms Landsheer's argument that Morris Corporation could not increase her hours without reviewing her remuneration and increasing her annual salary in return for working additional hours is rejected. It was not in dispute that when Ms Landsheer's hours changed to a 12hour shift, Ms Landsheer was not consulted about the impact of this change on her income, nor was there a review of her remuneration. Clause 7 and cl 9 state, however, that Morris Corporation 'may' conduct a review of Ms Landsheer's remuneration in the event of a significant change to her working conditions and if her regularly rostered hours of work changed. The reference to 'may' in cl 7 and cl 9 refers to any review being discretionary and it was, therefore, not mandatory for Morris Corporation to conduct a review of Ms Landsheer's remuneration when her hours were increased: Concise Oxford Dictionary (8th ed, 1990) 'may' is defined as 'expressing possibility'.
(k) Ms Landsheer's argument that it is necessary to imply additional terms into the contract as there is no express term allowing Morris Corporation to unilaterally vary a fundamental term of the contract, that is, increasing the hours to be worked by Ms Landsheer without her being paid additional remuneration, is rejected. The written contract contains terms which allow and contemplate her working up to 12 hours in each shift for the same rate of pay as when she worked a 10hour shift, without a review of her remuneration being required.
(l) Whilst it may be unfair to require an employee to work additional hours with no increase to an employee's remuneration, that is not the basis for determining whether Ms Landsheer is due the wages she is seeking in this matter. The claim requires an interpretation of the terms of the contract, not whether the terms of the contract were unfair to Ms Landsheer.
(m) As a finding is made that Ms Landsheer is not due the benefit she is claiming she is owed under the contract and when also taking into account s 26(1)(a) of the Act considerations and the duty on the Commission to consider the relief being sought on the basis of equity, good conscience and the substantial merits, the application will be dismissed.
Ms Landsheer's submissions
16 On behalf of Ms Landsheer, counsel put to the Full Bench that at the heart of the appeal is the question whether the term implied by law into almost every contract of service as a matter of course, which is the right to be paid for service performed, was a term that was breached by Morris Corporation. In addressing this issue, the following submissions were made:
(a) The terms and conditions of employment of Ms Landsheer were partly oral and part in writing. To make this finding, regard must be first had to the fact that the written contract of employment was riddled with errors and the wording of the agreement was so ambiguous that to truly ascertain the terms of the contract of employment regard must be had to the surrounding circumstances of the conditions of work of Ms Landsheer. If regard is had to two pieces of evidence a finding should have been made that the contract of employment was quite different to what was set out in the written agreement. The first material evidential matter is that Ms Landsheer was told at her interview unequivocally that she would be required to work 10hour shifts. The other key piece of evidence is the conduct of the parties for 12 months after her employment commenced. In the first 12 months of her employment she was only required to work 10hour shifts for which she was paid a weekly salary. When regard is had to these matters, the written contract of employment must be read to the extent that it included the representations made to Ms Landsheer at the time of her interview and be read in light of the conduct of what was expected of her throughout the first 12 months of employment. It is also argued that when regard is had to the ambiguity in the written terms of the contract and these evidential matters, a finding should have been made that it was a fundamental term of the work-wages bargain that Ms Landsheer would work for 10 hours a day to receive the salary set out in cl 7 of the written contract, and to the extent that if she was required to work additional hours of work, she would be remunerated accordingly.
(b) Clause 7 of the written contract ambiguously contains errors and sets out a base salary rate per week but it does not specify the amount of hours that were expected to be worked per week. Apart from the reference of 'subject to clauses Error! Reference source not found.', the clause contains an ambiguous rider that provides, 'In the event of a significant change in working conditions the Company may conduct a review of your remuneration.' The use of the word 'may' imports something more onerous than perhaps an equivocation. It is also argued that cl 9 is ambiguous as it does not state 'your ordinary hours of work will be worked up to 12 hours per shift', but says 'your ordinary hours of work will be worked within a daily spread of 12 hours'.
(c) When regard is had to the context in which the work arrangements were made, it is clear the bargain made between the parties was that Ms Landsheer would be 'paid $1,423.69 per week in exchange for working a 10hour shift'. To work a 12hour shift is 'overtime' in the sense that it is one and a half hours' work per day over and above what Ms Landsheer could have reasonably expected to be paid for on the basis of what she was told at her interview and the conduct of the parties in the first 12 months of employment.
(d) There is no doubt that Morris Corporation unilaterally varied the bargain of performance of work and the payment of remuneration by requiring Ms Landsheer to work more hours each shift for the same pay. There was no express term in the contract making such a variation lawful. Neither were there any terms one could properly imply into the contract to suggest Morris Corporation could alter such terms without consultation or agreement with Ms Landsheer.
(e) In the absence of an express or implied term making such a variation permissible, the only finding open to the Commission was that there was a denial of a benefit under the contract, which ought to have resulted in an order being made for damages for what Ms Landsheer ought to otherwise have received if she had been paid in a manner commensurate with the hours worked.
(f) The Commissioner erred in finding Morris Corporation could lawfully decide to unilaterally increase Ms Landsheer's hours per shift without paying her for the additional time worked.
(g) A court can look at the surrounding circumstances to determine the meaning of a contract of employment. In Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21; (2001) 181 ALR 263 [24], the High Court held that the relationship between the parties is to be found not merely from contractual terms. In this matter, the work practices imposed by the employer go to establishing the totality of the relationship between the parties.
(h) The terms of the written contract of employment clearly foreshadowed the ability of the parties to alter the fundamental terms of the contract, but only after a review had been taken: cl 7 and cl 9. Insofar as the written contract provides for a review of remuneration that may be undertaken, the word 'may' in cl 7 and cl 9 should be interpreted as imperative and not discretionary. This interpretation is consistent with the principle in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355, where the High Court found that in interpreting legislative instruments, purpose, general policy and context must also be taken into account. In particular, an industrial instrument cannot be interpreted in a vacuum divorced from industrial realities.
(i) There is no express term in the contract which provides the parties have agreed Morris Corporation may unilaterally alter the number of hours worked without providing Ms Landsheer with commensurate remuneration, especially after employing her for an entire year on the same terms and conditions. Nor is there any scope for implying into the contract a term that enables a unilateral change in working conditions without commensurate pay.
(j) A purported agreement which leaves the content of the agreement entirely at the discretion of one party is not contractual in nature: Riverwood International Australia Pty Ltd v McCormick [2000] FCA 889; (2000) 177 ALR 193 [111] (North J). The point which is attempted to be made on behalf of Ms Landsheer in this submission is that a contract of employment which allows one party to alter a fundamental term by adding one and a half hours' work a day to the rostered hours of work without payment is not enforceable because such a provision is unilateral in nature and offends the fundamental principle implied at law of the work-wages bargain.
(k) Whether a term should be implied into a contract is an issue of law to be decided on by the court on the basis of the other terms of the contract and the evidence admissible on the issue: Comptoir Commercial Anversois v Power, Son & Co [1920] 1 KB 868. For a term to be implied at law, it must be necessary to make the implication, that it, without the term, the contract would be rendered nugatory, worthless, or be seriously undermined: Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Ltd [1986] HCA 14; (1986) 160 CLR 226.
(l) It was necessary to imply the right to be paid for service performed by Ms Landsheer into the contract of employment. When examining what is 'necessary' a number of intermediate appellate courts have held the meaning of the word 'indicates something required in accordance with current standards of what ought to be the case, rather than anything more absolute': Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234, 261E approved in Devefi Pty Ltd v Mateffy Pearl Nagy Pty Ltd (1993) 113 ALR 225, 240 - 241.
(m) The wages-work bargain can also be implied as a term implied by fact. The onus of proof is on the party asserting the existence of an implied term to prove that the term should be implied into the contract: Hughes v Greenwich London Borough Council [1994] 1 AC 170, 177. The court can look at the contract as well as the surrounding circumstances in which the contract was made: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337. However, evidence of the parties' actual intention for their negotiations is not admissible for the purpose of implying a term: Codelfa Construction.
(n) Had the Commissioner taken into account all of the relevant evidence in relation to the proper construction of the contract of employment and applied the established principles relevant to implied terms which are set out in BP Refinery (Westernport) Pty Ltd, she would have arrived at a different result.
17 If the Full Bench is persuaded by the arguments put on behalf of Ms Landsheer, it is submitted on her behalf that it is not necessary to remit the matter to the Commission for further hearing as the loss suffered by Ms Landsheer as a result of working the increased hours with no increase in salary entitled her to an order in her favour that she is due $61,907.76 in wages and $5,571.70 in superannuation entitlements.
Principles – Ascertainment of the terms of the contract of employment
18 The first issue to be determined in this appeal is whether the terms of employment were partly oral or wholly in writing. The second issue is whether a term or terms can be implied into the contract as a matter of fact to the effect that Ms Landsheer is entitled to be paid reasonable remuneration for each hour of work in a shift that is in addition to 10 hours of work.
19 The principles discussed in Hollis v Vabu Pty Ltd do not assist in resolving what were the terms of the contract. The principle enunciated by Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ in Hollis v Vabu Pty Ltd when their Honours said that for the purposes of this litigation the relationship between the parties is to be found not merely from the contractual terms [24], their Honours were considering whether the contractual relationship between the parties was one of principal and independent contractor or employer and employee, and whether Vabu Pty Ltd was vicariously liable for the consequences of the courier's negligent performance of his work. The cause of action and the facts of that matter did not require the High Court to consider the principles to be applied when ascertaining whether the terms of the contract of employment were partly oral and partly in writing and the implication of terms into a contract of employment.
20 The starting point in a consideration of the first issue is that the party who alleges that a written agreement does not represent the entire contract must counter a presumption that it does: Major v Bretherton [1928] HCA 11; (1928) 41 CLR 62, 67 (Isaacs J).
21 A pre-contractual representation can be binding if the promise is promissory and thus a warranty and not representational. In Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 Gibbs CJ explained:
A representation made in the course of negotiations which result in a binding agreement may be a warranty – i.e., it may have binding contractual force – in one of two ways: it may become a term of the agreement itself, or it may be a separate collateral contract, the consideration for which is the promise to enter into the main agreement. In either case the question whether the representation creates a binding contractual obligation depends on the intention of the parties. In J. J. Savage & Sons Pty. Ltd. v. Blakney ((1970) 119 C.L.R. 435, at p. 442) and Ross v. Allis-Chalmers Australia Pty. Ltd. ((1980) 55 A.L.J.R. 8, at pp. 10, 11; 32 A.L.R. 561, at pp. 565, 567), it was said that a statement will constitute a collateral warranty only if it was 'promissory and not merely representational', and it is equally true that a statement which is 'merely representational' – i.e., which is not intended to be a binding promise – will not form part of the main contract. If the parties did not intend that there should be contractual liability in respect of the accuracy of the representation, it will not create contractual obligations (61).
22 If a contract is partly in writing and partly oral, the oral terms cannot contradict the terms of the written agreement: Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 [36]. Nor can the terms of a collateral contract impinge upon the terms of the main contract: Hoyt's Pty Ltd v Spencer [1919] HCA 64; (1919) 27 CLR 133, 147. If earlier agreed oral terms contradict written agreement the terms of the oral agreement can be said to be discharged by the written agreement: Equuscorp [36].
23 Courts are reluctant to find that the parties' contract is partly in writing and partly oral when the written document appears to be a complete contract. In Equuscorp the High Court in a joint judgment of five judges made the following points why generally a party having executed a written agreement will be bound by it. These are:
(a) The legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual beliefs or intentions [34].
(b) Oral agreements will sometimes be disputable and resolving such disputes is commonly difficult, time-consuming, expensive and problematic [35].
24 In Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 240 CLR 45 Kirby J said [98] - [99]:
Written documents and legal rights: The fundamental reason for observing restraint in receiving extrinsic evidence to elaborate, explain and, as some parties would hope, vary a written contract, where parties have put their agreement in writing, was stated by Isaacs J in Gordon v Macgregor ((1909) 8 CLR 316 at 323-324. See also Bacchus Marsh Concentrated Milk Co Ltd (In liq) v Joseph Nathan & Co Ltd (1919) 26 CLR 410 at 427):
'The very purpose of a formal contract is to put an end to the disputes which would inevitably arise if the matter were left upon verbal negotiations or upon mixed communings partly consisting of letters and partly of conversations. The written contract is that which is to be appealed to by both parties, however different it may be from their previous demands or stipulations, whether contained in letters or in verbal conversation.'
The practical utility of this rule has been recognised many times, including by this Court (Petelin v Cullen (1975) 132 CLR 355 at 359; see also Prenn v Simmonds [1971] 1 WLR 1381 at 1384; [1971] 3 All ER 237 at 240). The reason for its persistence as a matter of legal doctrine is based on a desire to uphold the more formal bargains that parties commit to writing; to discourage expensive and time-consuming litigation about peripheral and disputable questions; and to recognise the ample capacity of our law to rectify a written contract where a party can prove that it does not reflect the true agreement of the parties, objectively ascertained (cf Greig and Davis, The Law of Contract (1987), p 414).
25 Regard can only be had to surrounding circumstances to interpret a contract where ambiguity arises. In Codelfa Construction Mason J (with whom Stephen and Wilson JJ agreed) stated:
The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed (352).
Whilst debate has ensued in a number of decisions of superior courts in Australia whether this rule of construction still applies, in Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; (2011) 282 ALR 604 Gummow, Heydon and Bell JJ held that until the High Court embarks upon a reconsideration of the 'true rule' enunciated by Mason J in Codelfa Construction, intermediate courts are bound to follow that precedent [3].
26 Whether the parties intended the contract to be wholly in writing is a question of fact. In Deane v The City Bank of Sydney (1904) 2 CLR 198 Griffith CJ said:
In the present case the first question is, what is the agreement? Is it the writing, or the verbal conversation, or is it to be gathered from the conversation and the letter with all the other circumstances? Possibly it was open to the jury to find that the agreement was contained in the writing, but whether it was or not was a preliminary question of fact for the jury to determine on the evidence (209).
27 Whilst the principle may have been controversial, it is now accepted that a court or tribunal cannot look at subsequent conduct to interpret a written agreement: Hughes v St Barbara Ltd [2011] WASCA 234 [106] (Pullin JA); The Administration of the Territory of Papua and New Guinea v Daera Guba (1973) 130 CLR 353, 446 (Gibbs J); Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 [35] (Gummow, Hayne and Kiefel JJ).
28 However, regard may be had to subsequent conduct of the parties for the purposes of determining what were the entire terms of the contract. In County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 Spigelman CJ said [21] - [27]:
In my opinion, subsequent conduct, especially how a contract for purchase and sale was settled, is relevant, on an objective basis, to the identification of the subject matter of the contract or the determination of necessary terms, as distinct from deciding the meaning of words.
In Carmichael v National Power Plc, supra, the House of Lords had to determine whether a person performed work under a contract of employment, within the meaning of a statute. The House of Lords overruled a Court of Appeal decision that, on the proper interpretation of documents pursuant to which the casual work arrangement had been made, there was such a contract. When rejecting a submission that reliance on post contractual conduct was inconsistent with the objective approach to identifying and interpreting a contract and that the subjective belief of the parties was irrelevant, Lord Hoffmann said at 2050:
'This austere rule would be orthodox doctrine in a case in which the terms of the contract had been reduced to writing. But I do not think that it applies to a case like the present. In a case in which the terms of the contract are based upon conduct and conversations as well as letters, most people would find it very hard to understand why the tribunal should have to disregard the fact that Mr Lovatt and Mrs. Carmichael both agreed that the CEGB were under no obligation to provide work and the applicants under no obligation to perform it. It is, I think, pedantic to describe such evidence as mere subjective belief. In the case of a contract which is based partly upon oral exchanges and conduct, a party may have a clear understanding of what was agreed without necessarily being able to remember the precise conversation or action which gave rise to that belief ... But the terms of the engagement must have been discussed and these conversations must have played a part in forming the views of the parties about what their respective obligations were.
The evidence of a party as to what terms he understood to have been agreed is some evidence tending to show that those terms, in an objective sense, were agreed. Of course the tribunal may reject such evidence and conclude that the party misunderstood the effect of what was being said and done. But when both parties are agreed about what they understood their mutual obligations (or lack of them) to be, it is a strong thing to exclude their evidence from consideration. Evidence of subsequent conduct, which would be inadmissible to construe a purely written contract (see Whitworth Street Estates (Manchester) Ltd v James Miller and Partners Ltd [1970] AC 583) may be relevant on similar grounds, namely that it shows what the parties thought they had agreed.'
A second matter often referred to is the uncertainty that would be introduced into commercial relationships by reliance on post contractual conduct. (See Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 316; FAI v Savoy Plaza supra at 350.) This consideration, in my opinion, is not material when the issue to be determined arises from uncertainty about the subject matter of the contract or the failure to expressly address necessary terms.
All of the cases on which the respondents relied involved contracts in writing. Where, as here, the issue is the identification, as a matter of fact, of the subject matter of the contract, as distinct from the interpretation of the contract, subsequent conduct, especially conduct at the time of settlement is, in my opinion, entitled to significant weight.
As in the case of reference to pre-contractual conversations, the fact that the relevant part of the contract here under consideration was not in writing determines the admissibility of such conduct. (See Wilson v Maynard Shipbuilding Consultants [1978] QB 665 at 675; Mears v Safecar Security Ltd [1983] QB 54 at 77-8; Lewison op cit at [3.15] p 111, 114; J L R Davis (ed), Contract: General Principles (2006) Thomas Law Book Co esp at [7.4.460] at [10] p 384; [7.4.560] p 392; [7.4.610] p 393-394.)
The reasoning of Lord Wilberforce in Liverpool City Council v Irwin, set out at [12] above, was expressly applied to reject the applicability of the rule that post contractual conduct cannot be used in Ferguson v John Dawson & Partners (Contractors) Ltd [1976] EWCA Civ 7; [1976] 1 WLR 1213 per Megaw LJ at 1221, because:
'We are here concerned not with construing a contract but with evidence as to what the terms of a contract were.'
Similarly Browne LJ said at 1229:
'In the present case, the question is not one of construction of the contract, but of what were the terms of an oral and only partially expressed contract. In my opinion, the court can in such a case take into account what was done later as a basis for inferring what was agreed when the contract was made, or as establishing later additions or variations.'
29 To determine the terms of agreement, consideration must be given not only to what the parties by their words and conduct said and surrounding circumstances, but not their substantive beliefs or understanding: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 [22].
30 As to the second issue raised on behalf of Ms Landsheer which is whether a term or terms can be implied into the contract, the circumstances which a court or tribunal will imply a term on grounds of fact are well settled. There are five conditions that must be satisfied for a term to be implied on this basis. In BP Refinery (Westernport) Pty Ltd (283) and Codelfa Construction (347) the principle was stated that the term must:
(a) be reasonable and equitable;
(b) be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;
(c) be so obvious that 'it goes without saying';
(d) be capable of clear expression; and
(e) not be contradictory of any express term of the contract.
31 Terms can also be implied as part of the legal relationship of employment. The principles relating to the implication of terms as a matter of law were recently restated by the Full Court of the Federal Court in University of Western Australia v Gray [2009] FCAFC 116; (2009) 179 FCR 346 where Lindgren, Finn and Bennett JJ said [136]:
We begin with what is well accepted. (i) Terms implied in law are 'legal incidents of the particular class of contract' to which they respectively relate: Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 345. They are to be found in many commonly occurring types of contract — sales, employment, landlord and tenant, doctor-patient, etc. (ii) They are not based upon the intention of the parties, actual or presumed, in a given instance, although the provenance of a particular term may well have been the commonplace use of such a term in earlier times in contracts of that type, so establishing what later would become the default rule: see Byrne 185 CLR at 449. (iii) Neither are they founded on the need to give efficacy to a contract: Codelfa Construction 149 CLR at 345; although, as has often been recognised, there can be a deal of overlap between terms implied in law and terms implied in fact in particular contractual settings: see eg Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151 (Hughes Aircraft Systems International) at 193. While implication in law is also said to be based on 'necessity', that necessity, as will be seen, is informed by 'more general considerations than mere business efficacy': Lister v Romford Ice and Cold Storage Company Pty Ltd [1957] AC 555 (Lister) at 576. (iv) Implication of a term in law yields to the contrary intention of the parties as expressed in their contract or because of inconsistency with the terms that have been agreed: Castlemaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468 (Castlemaine Tooheys) at 492B-C; Shell UK Ltd v Lostock Garage Ltd [1976] 1 WLR 1187 (Shell UK) at 1196.
32 In Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 McHugh and Gummow JJ pointed out the question whether the law would imply into the contract of employment a term turns on whether the term is a necessary incident of a definable category of contractual relationship (452). Their Honours said:
Many of the terms now said to be implied by law in various categories of case reflect the concern of the courts that, unless such a term be implied, the enjoyment of the rights conferred by the contract would or could be rendered nugatory, worthless, or, perhaps, be seriously undermined (Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635 at 647-648, 659). Hence, the reference in the decisions to 'necessity'.
For example, it is established that the mere relationship of landlord and tenant implies a covenant for quiet enjoyment. The reason for this appears to be that, originally, the common law courts would not recognise the tenant as having any estate in the demised land and would not reinstate the tenant if ejected by the landlord; the remedy in covenant remedied the position of the tenant who otherwise, if ejected, would have been without recourse (Norton, Treatise on Deeds, 2nd ed (1928), p 547, where the authorities are collected).
This notion of 'necessity' has been crucial in the modern cases in which the courts have implied for the first time a new term as a matter of law (450).
33 In Renard Constructions (ME) Pty Ltd, Priestley JA explained what is meant by 'necessity':
It seems to me that the word necessity, when used in the cases analysed by Hope JA, was not being used in the absolute sense. In regard to classes of contract to which particular implications have been recognised as attaching, it is not possible to say that the implication was always necessary, in the sense that the contracts could not have worked without the implied term. Contracts of sale, contracts of employment, and leases are three classes of contract to which such terms have been attached. In all cases it would have been possible for the main purposes of the contracts to have been attained without the implications the judges have held they include. The rules in regard to each of them have come into existence not because in the particular cases giving rise to recognition of the implication it has been thought that it would be impossible for such contracts to be made and carried out without the implications, but because the Court decided it would be better or more appropriate or more reasonable in accordance with the contemporary thinking of the judges and parties concerned with such contracts that the term should be implied than that it should not. The idea is conveyed I think by Holmes's phrase 'The felt necessities of the time' where necessity has the sense of something required in accordance with current standards of what ought to be the case, rather than anything more absolute (261).
34 Terms implied by law into all contracts of a class, may originate as terms implied in fact which become a part of common practice that courts begin to import them into transactions of that type of contract as a matter of course; and the result is a rule of law: Halsbury's Laws of England (4th ed, vol 9); applied in Castlemaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468, 487 (Hope JA). It is notable, however, that terms implied by the law are terms which are imported uniformly.
35 Terms implied by law can be varied or excluded by agreement: Sterling Engineering Co Ltd v Patchett [1955] AC 534, 547 (Lord Reid). Such a term will also be excluded if the term is inconsistent with the terms of the contract: Gruzman Pty Ltd v Percy Marks Pty Ltd (1989) 16 IPR 87, 89 (McLelland J), applied in Devefi Pty Ltd (240 - 241) (Northrop, Gummow and Hill JJ); University of Western Australia v Gray [136].
Conclusion – What were the material terms of the employment contract?
36 When the principles set out above are applied to the facts of this matter, the first question that must be asked is from the words 'we will be working 10hour days' did the parties intend to be bound by a warranty that the salary rate of $1,561.63 including superannuation for each week was to be paid for work to be performed in 10hour shifts worked each day for two weeks in a three week cycle? If that proposition is accepted, then can it be inferred that an hourly rate for work performed should be calculated on the basis that for 14 days of work in a three week cycle, 140 hours of work would be performed, which equated to an hourly rate of $30.70 per hour.
37 In my opinion, I cannot make those implications from the evidence. The evidence was that 'we will be working 10hour days'. There was no discussion about how remuneration for work would be calculated. Nor was it stated that the length of shifts for the total amount of remuneration would be fixed at 10 hours. The fact that for the first 12 months of employment Ms Landsheer worked 10 and a half hour shifts for 14 days in each three-week cycle does not assist the arguments put on behalf of Ms Landsheer. This work pattern is consistent with cl 9 of the written contract which provided for an 'indicative roster' of 10hour shifts, as the length of each shift was not set at 10 hours in cl 9. Nor could such a term be inferred from the vague statement made to Ms Landsheer at the interview.
38 Even if it could be inferred it was an oral term of the contract that the length of each shift was fixed at 10 hours for a weekly rate of pay of $1,432.69, such a warranty is inconsistent with the express terms of the written agreement. Thus, once the written agreement was entered into by the parties the oral warranty was discharged by the terms of the written agreement: Equuscorp [36].
39 I do not agree there is ambiguity in cl 7 or cl 9 of the written agreement. Whilst the words that cl 7 begins with 'Subject to clauses Error! Reference source not found' are meaningless, these words are capable of severance as a mistake in expression: Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251, 264 (Kirby P), 278 (Priestley JA).
40 When the whole of the provisions of the written agreement are considered, it appears that there are no provisions in the written agreement that provide for an exception to the condition created in cl 7 that 'your salary is paid by the Company to compensate you fully in respect of all entitlements, including payment for work in accordance with Clause 9 – Hours of Work / Rosters, additional hours of work, location, travel and other factors associated with this position'.
41 The terms of the written agreement are comprehensive. This is reflected in cl 3. Clause 3 expresses an intention to comprehensively cover all conditions of employment. When cl 7 and cl 9 are read together it is clear that:
(a) Morris Corporation was to pay Ms Landsheer an annual salary, including superannuation calculated at $1,561.63 per week: cl 7;
(b) The annual salary was paid as full compensation in respect of all entitlements, including additional hours worked in accordance with cl 9.
(c) Ordinary hours of work were 38 hours per week averaged over a 12month period plus all reasonable additional hours: cl 9.
(d) Ordinary hours were to be worked within a daily spread of 12 hours: cl 9.
(e) Hours worked in excess of 38 hours per week averaged over a 12month period were reasonable: cl 9.
(f) An 'indicative roster' cycle was 14 days on and seven days off of 10hour shifts: cl 9.
(g) Shift rosters and hours of work could be varied by Morris Corporation.
(h) In the event of a significant change in working conditions or regularly rostered hours of work, it was provided that Morris Corporation 'may' review Ms Landsheer's remuneration: cl 7 and cl 9.
42 Whilst cl 9 used the term 'reasonable additional hours', that term was not undefined. The second sentence of the first paragraph of cl 9 provided that 'You and the Company agree that any hours worked in excess of 38 hours per week averaged over a 12 month period are reasonable based on your personal circumstances and the operational requirements of the business'. By these words, all additional hours were deemed to be reasonable. The number of additional hours is not, however, unrestricted. As ordinary hours were to be worked within a 12hour spread, hours worked beyond 12 hours could not be considered additional hours of work, worked in accordance with cl 9. Thus, it could not be said the number of hours required to be worked within a 24hour period was unlimited.
43 It was expressly agreed that Morris Corporation could vary shift rosters and hours of work. In the event that shift rosters and hours of work were varied, Morris Corporation was not required to increase the remuneration paid to Ms Landsheer. The use of the word 'may' in the context of cl 7 and cl 9 was permissive only and not ambiguous. There is no scope to interpret the word 'may' other than a discretion. If circumstances specified when the discretion was to be exercised, thus creating a duty to review Ms Landsheer's remuneration, there would be scope to read the word 'may' as 'shall'. Notwithstanding this interpretation, it may be open to imply by law that in the event that the hours of work were increased and rostered hours were varied, that Morris Corporation was required to act reasonably in reviewing or considering whether a review of remuneration should be conducted. An obligation of good faith and reasonableness in the performance of a contractual obligation or the exercise of a contractual power may be implied as a matter of law in a commercial contract: Vodafone Pacific Ltd v Mobile Innovations Ltd [2004] NSWCA 15, [125] and [217] (Giles JA) (Sheller and Ipp JJA agreeing); Hampton v BHP Billiton Minerals Pty Ltd (No 2) [2012] WASC 285, [261] - [264] (Edelman J). However, it is not part of the case put on behalf of Ms Landsheer that Morris Corporation breached an implied term by failing to act reasonably by not considering whether it should review Ms Landsheer's remuneration or not reviewing her remuneration after a decision had been made to increase her hours of work by one and a half hours each shift. This implication if applied, however, would not go so far as to ensure that Ms Landsheer was to receive an increase in remuneration for the additional hours worked.
44 In this matter the 'class' of contract is an employment contract. The terms sought to be implied by law into the contract by Ms Landsheer is a term commonly referred to as the 'wages-work' bargain and a 'right to reasonable remuneration'.
45 I do not agree that the Commissioner's construction of the terms of the written agreement is contrary to the 'wages-work' bargain which is generally accepted as a term implied in employment contracts. The 'wages-work' bargain arises out of service not work: Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435, 465 - 466 (Dixon J). As the learned authors Sappideen, O'Grady, Riley and Warburton in Macken's Law of Employment (7th ed) point out [5.40] Dixon J in Watson:
[S]ays that it is service which earns wages, not work. Obviously the service usually required will be work, but service is wider than work. It might include refraining from work, say to be ready for an expected rush order, for 'they also serve who only stand and wait' (Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at 466). Thus 'a fireman is working for the fire authority even when ... sitting in the recreation room' (Suffolk County Council v Secretary of State for the Environment [1984] ICR 882 at 892, citing Mercer v Associated Electrical Industries Ltd (1968) 3 ITR 188) and employees waiting for equipment to come online are at work (Australian Workers Union v BlueScope Steel Ltd [2007] NSWIRComm 1022 at [58]). Service might also include taking leave, as for example, where an employer exercises a statutory or award based right to direct an employee to proceed on long service leave or to implement the 'annual close down' so obliging the workforce to take annual leave. It might include being available to work during certain hours, say while the worker is on standby at home (Note, Tweed District Hospital v Miller (1948) 90 AR (NSW) 25 at 26 referring, with apparent approval, to the view of Curlewis J in McPherson v Metropolitan Board of Water Supply and Sewerage [1922] AR 53 to the effect that the ordinary meaning of the word 'work' includes standing by to be prepared to do duty which the employer may require). Similarly an employee on annual holidays or sick leave is still entitled to wages, even though not actually working; such leave is part of the employee's service (Australian Workers Union v BlueScope Steel Ltd [2007] NSWIRComm 1022 at [47]).
46 The principle of 'wages-work' bargain extends only to service, that is, to be ready and willing to work. It does not extend to a right to be paid for every hour of work. If such a right is created it will be created by the express terms of the contract or a term implied on grounds of fact. There was no evidence before the Commissioner at first instance of a 'current standard' upon which a contrary finding could be made. To the contrary, 'all up' rates of pay in employment contracts are not uncommon.
47 Whether a right to be paid for each hour of work in this matter depends upon the construction of the agreed terms of the contract of employment. Ms Landsheer's entitlement to wages arose expressly under the terms of the written agreement. The terms of cl 3, cl 7 and cl 9 when read together provided that the 'wages-work' bargain in the contract was that Ms Landsheer was to be paid an annualised salary calculated as pay for each week (or put another way, an 'all up' rate of pay), for working rostered shifts of hours up to 12 hours each day and that she was to be paid the same rate of pay each week including for the time she was rostered off work.
48 When regard is had to these terms of employment, there is no scope to imply a term on grounds of fact of a right to 'reasonable remuneration for each hour of work'. There is no scope to do so in this matter because the 'wages-work' bargain in the employment agreement of Ms Landsheer expressly provided for an all up rate of pay that included payment for hours worked up to 12 hours a shift. Thus, it cannot be said that no payment had been made to Ms Landsheer for the additional hours of work. Also, such a term cannot be implied at law. To imply such a term in the circumstances of this matter would be inconsistent with the express terms of the contract that provide for an 'all up rate of pay'.
49 Thus, from the time the written agreement became binding on Ms Landsheer and Morris Corporation, Morris Corporation had the right to roster Ms Landsheer to work up to 12 hours a day and Ms Landsheer was required to make herself available for that work in exchange for the right to be paid the salary specified in cl 7 of the written agreement. To imply a term of reasonable remuneration for the additional hours of work would not be open on the grounds of implication of terms on grounds of fact as to do so would be to imply a term of additional remuneration for the additional hours of work. Such a term would be contrary to the express terms of the written agreement. Also such an implication does not arise out of any principle that can be implied at law.
50 For these reasons, I am of the opinion the grounds of appeal have not been made out and the appeal should be dismissed.
SCOTT ASC
51 I have read a draft of the reasons of the Acting President. I agree with those reasons and have nothing to add.
MAYMAN C
52 I have had the benefit of reading a draft of the reasons for decision of Her Honour the Acting President. I respectfully agree with the conclusions that she reached and have nothing further to add.