FEDERAL COURT OF AUSTRALIA

Cargill v Harbour City Real Estate Pty Ltd t/as Re/Max Harbour City Real Estate [2010] FCAFC 7

THE COURT ORDERS THAT:

1.         The appeal is allowed.

2.         The orders of the primary judge are set aside.

3.         Pursuant to section 719(5) of the Workplace Relations Act 1996 (Cth), the first and second respondents jointly or severally pay to the appellant Jane Christine Cargill the sum of $27,132.70 by way of damages for breach of the applicable provisions of the appellant’s AWA in respect to wages.

4.         Pursuant to section 719(5) of the Workplace Relations Act 1996 (Cth), the first and second respondents jointly or severally pay to the appellant Jane Christine Cargill the sum of $2,408.28 by way of damages for breach of the applicable provisions of the appellant’s AWA in respect to annual leave.

5.         Pursuant to section 722(1) of the Workplace Relations Act 1996 (Cth), the first and second respondents jointly or severally pay to the appellant Jane Christine Cargill the sum of $1,772.45 by way of interest on the amount referred to in orders 1 and 2.

6.         Pursuant to section 719(5) of the Workplace Relations Act 1996 (Cth), the first and second respondents jointly or severally pay to the credit of the appellant Jane Christine Cargill’s Westscheme superannuation fund the sum of $2,441.94 by way of damages for breach of the applicable provisions of the appellant’s AWA in respect of superannuation.

7.         Pursuant to section 719(5) of the Workplace Relations Act 1996 (Cth), the first and second respondents jointly or severally pay to the credit of the appellant Jane Christine Cargill’s Westscheme superannuation fund the sum of $463.97 by way of damages (arising from the resultant loss of earnings in the superannuation fund) for breach of the applicable provisions of the appellant’s AWA in respect of superannuation.

8.         Pursuant to section 719(1) of the Workplace Relations Act 1996 (Cth), the first respondent pay a total penalty of $4,000.00.

9.         Pursuant to sections 728 and 719 of the Workplace Relations Act 1996 (Cth), the second respondent pay a total penalty of $1,000.00.

10.       The penalties be paid to the appellant.

11.       The first and second respondents make all payments within 14 days.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.  The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

NORTH J:

1                          The circumstances which give rise to the issue to be determined on this appeal are described in the reasons for judgment of Buchanan J.  That description is gratefully adopted and will not be repeated except so far as is necessary for convenience in understanding these reasons.  It is therefore possible immediately to address the meaning of the Australian Workplace Agreement (AWA) which incorporated the undertaking given by the first respondent to the Employment Advocate.

2                          The first respondent operated a real estate franchise in Western Australia.  Franchises also operated in Queensland.  Franchise operators wished to engage real estate sales people on AWAs.  For this purpose Mr Don Tepper, who was the Industrial Relations Manager of the Real Estate Employers Federation of South Australia, applied to the Employment Advocate on behalf of the franchisees for approval of a form of AWA.  That approval was subject to the provisions of the Workplace Relations Act 1996 (Cth) (the Act).

THE STATUTORY CONTEXT

3                          Section 170VPB(2) of the Act provided:

(2)        If the Employment Advocate has concerns about whether the AWA passes the no-disadvantage test, but those concerns are resolved by:

(a)        a written undertaking given by the employer and accepted by the Employment Advocate;

…

the Employment Advocate must approve the AWA.

4                          Section 170XA relevantly provided:

(1)        An agreement passes the no-disadvantage test if it does not disadvantage employees in relation to their terms and conditions of employment.

(2)        …an agreement disadvantages employees in relation to their terms and conditions of employment only if its approval or certification would result, on balance, in a reduction in the overall terms and conditions of employment of those employees under:

(a)        …designated awards;

5                          Section 170X defined designated award as follows:

designated award, in relation to a person to whom an agreement will apply, means an award that the Employment Advocate under section 170XE…has determined to be appropriate for the purpose of deciding whether the agreement passes the no-disadvantage test.

6                          Section 170XE provided:

(1)        If:

(a)        an employer proposes to make an AWA with a person; and

(b)        there is no relevant award in relation to the person;

the employer must apply in writing to the Employment Advocate for the making of a determination under section (2)

(2)        Upon application, the Employment Advocate must determine, and inform the employer in writing, that an award or awards are appropriate for the purpose of deciding whether the agreement passes the no-disadvantage test.

(3)        For the purposes of subsection (2), the Employment Advocate must determine:

(a)        an award or awards under this Act regulating terms or conditions of employment of employees engaged in the same kind of work as that of the person under the AWA; or

(b)        if the Employment Advocate is satisfied that there is no such award under this Act – a State award or State awards regulating terms or conditions of employment of employees engaged in the same kind of work as that of the person under the AWA.

7                          Section 170VPJ  provided:

An undertaking accepted by the Employment Advocate or Commission under this Division is taken to be included in the AWA.

8                          An Approval Notice dated 12 July 2006 from the office of the Employment Advocate to Mr Tepper stated:

In assessing the AWA against an award for the purpose of the no-disadvantage test, the award applied was the:

PROPERTY SALES AWARD QUEENSLAND - STATE (the State Award)

9                          Some of the terms of the State Award are relevant to this appeal.

THE STATE AWARD

10                        The State Award is designed to meet the unique nature of employment in the real estate industry (Part 1.5.2).  It provides for two types of employment, namely, Stage 1 and Stage 2 employment.

11                        Stage 1 employment is where the minimum entitlement to wages, leave and public holidays apply (Part 12).  The timing of payments of such wages and allowances is specified (Part 14).

12                        Stage 2 employment is where the parties agree to opt out of the provisions of Parts 12 and/or 14.  In order to qualify for Stage 2 employment the parties must apply to an independent body called the Queensland Property Industry Registry (QPIR) which is a body jointly administered by the employee body, the Property Sales Association of Queensland, Union of Employees and the employer body, the Queensland Real Estate Industrial Organisation of Employers (trading as the Real Estate Employers Association). 

13                        The QPIR assesses the employee against criteria specified in Part 15.2.1 of the State Award. The assessment is expressly designed to ensure that the employee suffers no disadvantage in opting out of Stage 1 employment.  To achieve this, the Award provides that employment agreements relating to Stage 2 employment must provide at least equal benefits to the average good employee as prescribed by Parts 12 and 14 (Part 16.3.2(a)(ii)(B)).  The written agreements for both Stage 1 and Stage 2 employment must be registered with the QPIR. Part 16 therefore acts as a safety net for employees who elect to opt out of Stage 1 employment conditions.

14                        Part 15 provides for the process of opting out of the provisions of Parts 12 and/or 14.  It is introduced as follows:

15.1.1   Application of this Part

This Part, otherwise known as Stage 2 Employment, applies only to those employees who have been assessed by independent, industry-based peers, as demonstrating sufficient competence to make employment arrangements which differ from the provisions of Part 12 and/or 14.

This Part constitutes a Personal, Stand-alone No Disadvantage Test, which must be applied separately from any other Part of this Award.

15                        Part 15.1.4 provides for a minimum income threshold as follows:

15.1.4   Minimum income threshold

Stage 2 Employment incorporates a minimum income of 125% of the employee’s prescribed Award rate of pay, which is deemed to compensate the employee for annual leave and/or leave loading, bereavement leave, family leave, sick leave, wages for working public holidays, and allowances and/or any time worked beyond 38 hours per week averaged over a 4 week cycle.

16                        Finally, the opting out procedure is set out in Part 15.2.1 as follows:

15.2.1   Qualifying to Opt Out – Assessment Criteria

Where it can be demonstrated, to the satisfaction of the QPIR, that an employee:

(a)        has held a Real Estate Agent’s Licence for a least 2 continuous years; or

(b)        has at least 6 months’ full-time equivalent recent experience in the industry and a historical earning capacity of a least 125% of the rate of pay prescribed for the employee’s Award classification; or

(c)        can demonstrate a personal work history which would provide a reasonable expectation of an earning capacity of at least 125% of the rate of pay prescribed for the employee’s Award classification; or

(d)        is guaranteed by the employer to earn at least 125% of the rate of pay prescribed for the employee’s Award classification during each year of employment (or part thereof),

the employee and the employer may freely elect to alter any of the provisions of Parts 12 and/or 14, subject to the conditions set out in Parts 15, 16 and 17.

The alteration of the provisions of Parts 12 and/or 14 shall be known as opting out.

CONSIDERATION

17                        Pursuant to the statutory provisions outlined above, the Employment Advocate was required to undertake the statutory duty of determining whether the agreement submitted by Mr Tepper disadvantaged real estate employees of franchisees in Queensland and Western Australia.  To do this, the Employment Advocate designated the State Award as the benchmark for the application for the no disadvantage test.  The Employment Advocate was thus concerned to ascertain whether the agreement resulted in an overall reduction in the terms and conditions of employees under the State Award. 

18                        The outcome of the application of the no disadvantage test was that the Employment Advocate was only prepared to approve the agreement if the employers gave an undertaking.  The form of the undertaking reflected the wording of much of Part 15.2.1 but without those words which appear in bold below:

Where it can be demonstrated, to the satisfaction of the QPIR, that an employee:

(a)        has held a Real Estate Agent’s Licence for a least 2 continuous years;     or

(b)        has at least 6 months’ full-time equivalent recent experience in the           industry and a historical earning capacity of a least 125% of the rate      of pay prescribed for the employee’s Award classification; or

(c)        can demonstrate a personal work history which would provide a   reasonable expectation of an earning capacity of at least 125% of the rate of pay prescribed for the employee’s Award classification; or

(d)        is guaranteed by the employer to earn at least 125% of the rate of pay     prescribed for the employee’s Award classification during each year           of employment (or part thereof),

the employee and the employer may freely elect to alter any of the provisions of Parts 12 and/or 14, subject to the conditions set out in Parts 15, 16 and 17.

The alteration of the provisions of Parts 12 and/or 14 shall be known as Opting Out.

19                        It seems probable that the Employment Advocate meant the undertaking to include all of Part 15.2.1 including the words in bold.  This follows from the fact that the Employment Advocate was seeking to ensure that employees under the agreement would suffer no disadvantage by reason of the agreement.  Only if the undertaking is read to include the entirety of Part 15.2.1 would the no disadvantage test be satisfied. 

20                        The alternative reading of the undertaking also requires the addition of some words to give meaning to the words which actually appear in it.  The existing words would need to be supplemented by adding after “I hereby give the following undertaking with respect to the above employee” that “this agreement will only operate if the employer is satisfied that the employee:”.  Without such words, the undertaking does not disclose any purpose for the undertaking. 

21                        Furthermore, the alternative construction would reduce the terms and conditions provided by the State Award in two major respects.  First, it would remove the assessment of competence for opting out from an independent body made up of representatives of both employers and employees and approved by the Industrial Commission of Queensland, to the employer.  Such a construction would not satisfy the no-disadvantage test. It amounts to a loss of the employee’s entitlement to an independent assessment.

22                        Second, the alternative construction makes no provisions for the safety net provided in Part 16 of the Award, namely, that a commission employee would earn at least the minimum Award entitlements.  Indeed, the present case illustrates such a circumstance.  The appellant earned commissions of $4,597.59 in a period when the Award entitlements amounted to $27,132.70.  The impact on employees in Queensland is particularly direct.  They would have been subject to the State Award by operation of the Award itself.  On the alternative construction their actual rights would have been severely diminished under the agreement.  Any construction of the undertaking which does not include this safety net would clearly place employees at a disadvantage compared with the Award.

23                        Another consideration militates against the alternative construction.  Expressed as an undertaking standing alone without the introductory words proposed, (d) undertakes to the Employment Advocate that the employee will earn at least 125% of the Award rate of pay.  However, no such contractual obligation to the employee is separately expressed.  This awkward formula points to the unlikelihood of the construction. 

24                        The preferred construction is supported by an email sent by Mr Tepper by franchisees on 26 June 2006 in which he said: 

2.         The Employment Advocate is poised to approve the agreements subject to an undertaking by the employer.  The undertaking is in relation to salespersons who are being paid “commission only” under the AWA.

3.         The undertaking is no different to what is in the award …

4.         Normally you can bargain out of award criteria but for some reason the Employment Advocate is not prepared to allow that on this occasion.

In paragraph 3 of the email Mr Tepper said that the undertaking is to correspond with the Award.  And in paragraph 4 he said that the Employment Advocate was not prepared to allow the parties to bargain out of the Award. 

25                        This email is inconsistent with the alternative construction. The alternative reading involves rejecting two key elements of the Award, namely, the independent assessment of the right to opt out, and the earnings safety net applicable when an employee opts out.  It follows that the Employment Advocate meant the undertaking was to reflect the full provisions of Part 15.2.1. 

26                        It follows that if the parties have not opted out in accordance with the process provided, the employment is governed by conditions in the terms of Parts 12 and 14 of the Award. 

27                        The Award itself does not apply.  Rather, its terms are incorporated into the agreement (s 170VPJ).  It is accepted by the parties that the amount due to the appellant if conditions in terms of the Award conditions apply amounts to $31, 313.43 and the amount payable to the appellant’s superannuation fund is $2,905.91.  As the procedure provided for in the Award for opting out was not followed, the appellant is entitled to payment of these amounts. 

CONCLUSION

28                        For the foregoing reasons the appeal should be allowed.  The orders of the primary judge should be set aside. 

The first four orders made by the Industrial Magistrate dealt with the amounts payable to the appellant. They should be reinstated but in the following form, recognising the quantum agreed by the parties:

1.         Pursuant to section 719(5) of the Workplace Relations Act 1996 (Cth), the first and second respondents jointly or severally pay to the claimant Jane Christine Cargill the sum of $27,132.70 by way of damages for breach of the applicable provisions of the claimant’s AWA in respect to wages.

2.         Pursuant to section 719(5) of the Workplace Relations Act 1996 (Cth), the first and second respondents jointly or severally pay to the claimant Jane Christine Cargill the sum of $2,408.28 by way of damages for breach of the applicable provisions of the claimant’s AWA in respect to annual leave.

3.         Pursuant to section 722(1) of the Workplace Relations Act 1996 (Cth), the first and second respondents jointly or severally pay to the claimant Jane Christine Cargill the sum of $1,772.45 by way of interest on the amount referred to in orders 1 and 2.

4.         Pursuant to section 719(5) of the Workplace Relations Act 1996 (Cth), the first and second respondents jointly or severally pay to the credit of the claimant Jane Christine Cargill’s Westscheme superannuation fund the sum of $2,441.94 by way of damages for breach of the applicable provisions of the claimant’s AWA in respect of superannuation.

5.         Pursuant to section 719(5) of the Workplace Relations Act 1996 (Cth), the first and second respondents jointly or severally pay to the credit of the claimant Jane Christine Cargill’s Westscheme superannuation fund the sum of $463.97 by way of damages (arising from the resultant loss of earnings in the superannuation fund) for breach of the applicable provisions of the claimant’s AWA in respect of superannuation.

29                        The notice of appeal sought reinstatement of all of the orders made by the Industrial Magistrate, including the following:

Pursuant to section 719(1) of the WR Act the first respondent pay a total penalty of $4,000.00.

Pursuant to sections 728 and 719 of the WR Act the second respondent pay a total penalty of $1,000.00.

The penalties be paid to the claimant.

The first and second respondents make all payments within 14 days.

30                        These orders should be reinstated.

Associate:

Dated:         15 February 2010

REASONS FOR JUDGMENT

SIOPIS J:

31                        I have had the benefit of reading the draft Reasons of North J and Buchanan J.  I gratefully adopt the description of the underlying facts set out in their respective reasons.  For the reasons set out below, I would allow the appeal and make the orders proposed by North J.

32                        The issue which is at the core of this appeal is the meaning to be given to the undertaking which the Employment Advocate required the respondents to give as a condition of approving the AWA between the first respondent, Harbour City, and the appellant, Ms Cargill, which provided that Ms Cargill work as a real estate salesperson on a “commission only” basis.

THE PROCEEDING BEFORE THE INDUSTRIAL MAGISTRATE

33                        Before the Industrial Magistrates Court, the parties exchanged pleading-like documents setting out their respective positions.  Ms Cargill pleaded that Harbour City gave an undertaking to the Employment Advocate that Harbour City would guarantee to Ms Cargill earnings of at least 125% of the pay rate prescribed for a property salesperson in the Property Sales Award Queensland - State 2005, an Award of the Queensland Industrial Relations Commission.  In their responsive pleading, the respondents denied the allegation and said that the second respondent, Ms Robertson, signed an undertaking on behalf of Harbour City in the following terms.

Property Sales Person:

1          has held a Real Estate Agent’s Licence for at least two continuous years; or

2          has had at least six months’ full time equivalent recent experience in the industry and a historical earning capacity of at least 125% of the rate of pay prescribed for the employee’s Award classification; or

3          can demonstrate a personal work history which would provide a reasonable expectation with an earning capacity of at least 125% of the rate of pay prescribed for the employee’s Award classification; or

4          is guaranteed by the employer to earn at least 125% of the rate of pay prescribed for the employee’s Award classification during each year of employment (or part thereof).

34                        The respondents went on to plead that they provided the undertaking on the basis of the third paragraph in the undertaking.  The respondents explained that they made the undertaking on the basis that there was a reasonable expectation that Ms Cargill would meet the relevant earning capacity because:

(a)        she was the top negotiating time share Sales Associate in Fremantle WA;

(b)       she successfully managed her own businesses “Timber Tabs WA” and “Jane Cargill Tee Shirt Designs”;

(c)        her business involved trade mark registration, design patent applications and sales;

(d)       she was a qualified nurse and qualified primary school teacher; and

(e)        she was employed during the “boom period” for housing in Perth.

35                        It followed, said the respondents, that there was no breach of the AWA in not paying Ms Cargill the prescribed minimum payment.

36                        Before the Industrial Magistrates Court, the respondents contended that Harbour City had elected to rely on the third alternative in the undertaking.  It was contended that at the time of signing the undertaking on behalf of Harbour City it was Ms Robertson’s subjective intention to rely on that alternative, and she had engaged in the subjective assessment process of Ms Cargill’s work history called for by that alternative.

37                        Ms Robertson, Harbour City’s only witness, gave evidence before the Industrial Magistrate that at the time of giving the undertaking she was aware of the third alternative of the undertaking and, subjectively took into account a number of considerations relating to Ms Cargill’s past work history, in coming to the view that Ms Cargill had the requisite work history.

38                        The Industrial Magistrate found that the third alternative of the undertaking, relied on by the respondents, had no application to Ms Cargill’s circumstances.  This was because it was apparent from the undertaking’s obvious origin in Pt 15 of the Queensland Award, that the third alternative of the undertaking was premised on an application for “opting out” on that ground being made by the affected employee and an assessment being made of the application by a third party industry body.  Such a body existed in Queensland, but did not exist in Western Australia.  The Industrial Magistrate also had regard to textual indications in cl 4.1.1 in the AWA to find that the third alternative had no application to Western Australian conditions.

39                        Further, the Industrial Magistrate was unimpressed with the evidence given by Ms Robertson that at the time of the signing of the undertaking she took into account Ms Cargill’s work experience and came to the view that Ms Cargill’s work experience was such as satisfied the third alternative.  At para 29 of her reasons, the Industrial Magistrate said as follows:

Here it is difficult to make a positive finding as to the employer’s actual intention at the time of signing the undertaking.  The claimant was not a party to the undertaking and the only witness called by the respondents gave vague and unreliable evidence as to its making.

40                        Earlier, in her reasons, the Industrial Magistrate (para 20) had said that Ms Robertson’s intention at the time of signing the undertaking was irrelevant.  Further, the Industrial Magistrate said that she would have difficulty in relying on Ms Robertson’s evidence, in any event, “given her vague recollection as to how it was that she came to sign the undertaking and her incomprehensible explanation as to why it was that Ms Cargill, and others, were asked to enter into AWAs”.

THE APPEAL BEFORE THE PRIMARY JUDGE

41                        The respondents appealed against the decision of the Industrial Magistrate.  One ground of appeal was that the Industrial Magistrate erred in finding that the third alternative in the undertaking had no application in the circumstances of Ms Cargill’s employment.

42                        The respondents also appealed against the Industrial Magistrate’s decision not to make a positive finding as to Ms Robertson’s subjective intention at the time of signing the undertaking, and rejecting Ms Robertson’s evidence.  This was ground three of the appeal.  It read as follows:

The learned Magistrate erred in failing to make a positive finding that it was the employer’s intention at the time of signing the undertaking that clause (3) of that undertaking was the applicable clause to the claimant, in that:

(a)        The failure to make the finding was against the weight of the available evidence; and or

(b)        The credibility finding made by her Honour in relation to the Second Appellant is not supported by the evidence.

43                        The primary judge allowed the respondents’ appeal on the first ground referred to above.  The primary judge held that the third alternative referred to in the undertaking had application in the circumstances of Ms Cargill’s employment.

44                        The primary judge found that the undertaking does not in its terms require review by an industrial panel.  The primary judge went on to say:

To eliminate the third option because there was no industry panel (a factor which may have been overlooked by somebody), in my view, would be to rewrite either the undertaking or the statutory instrument.  Neither course is open.

45                        The primary judge proceeded on the basis that there appeared to be “no challenge to the fact that Ms Cargill had the qualities referred to in the third option”.

46                        The primary judge concluded that:

[P]rovided there was a proper factual basis to justify a conclusion as to a level of experience to satisfy the third option in the undertaking, the existence of a panel or otherwise was not a relevant basis to exclude the application of option 3 in the undertaking.

Accordingly the basis under which Ms Cargill was paid was justified by the third option in the undertaking and, in my respectful view Ms Cargill should not have succeeded on her challenge.  Accordingly I propose making orders as reflected below.

47                        However, the primary judge dismissed the third ground of appeal.  The primary judge noted that Harbour City and Ms Robertson placed particular reliance on what Ms Robertson considered and took into account when signing the undertaking.  The respondents contended that, contrary to the Industrial Magistrate’s finding, Ms Robertson’s evidence on the matter was clear.  However, the primary judge said that it was not appropriate to revisit the Industrial Magistrate’s factual finding on appeal.

48                        There has been no cross-appeal by Harbour City and Ms Robertson from the primary judge’s decision dismissing this ground of appeal and refusing to interfere with the credibility finding made by the Industrial Magistrate.

THE APPEAL BEFORE THIS COURT

49                        There were two grounds of appeal before this Court.

50                        The first ground of appeal impugned the primary judge’s finding that the third alternative in the undertaking could apply in the circumstances to exempt Harbour City from having to pay Ms Cargill the prescribed minimum payment in the Award.

51                        The second ground of appeal was an alternative to the first ground of appeal.  This ground of appeal impugned the primary judge’s finding that the evidence demonstrated Ms Cargill had a prior work history which would provide a reasonable expectation of an earning capacity of at least 125% of the rate prescribed under the Award.  This ground of appeal also impugned the primary judge’s finding on the basis that such a construction would permit the respondents to remunerate Ms Cargill on a “commission only” basis without ever notifying her of the terms of the undertaking.

The first ground of appeal

52                        In my view, the first ground of appeal should be upheld because the primary judge erred in failing to construe the AWA, as supplemented by the incorporation of the undertaking, by reference to all of the surrounding circumstances.

53                        In the case of Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 (West Bromwich), the House of Lords held that it was, in appropriate circumstances, permissible to construe a written contract by reference to the surrounding circumstances even in the absence of ambiguity in the language of the written contract.

54                        In the case of Maggbury Pty Limited v Hafele Australia Pty Limited (2002) 210 CLR 181, the High Court of Australia cited West Bromwich with approval.  At 188, at [11], Gleeson CJ, Gummow and Hayne JJ observed:

Interpretation of a written contract involves, as Lord Hoffmann has put it:  “the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.”  That knowledge may include matters of law, as in this case where the obtaining of intellectual property protection was of central importance to the commercial development of Mr Allen’s ironing board.  (Footnotes omitted.)

55                       The High Court has in a number of subsequent cases confirmed that it was not necessary for a court to find ambiguity in the language of the contract for it to have regard to surrounding circumstances in construing a written contract.  Those cases are referred to and analysed in the case of Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407.

56                        In the case of Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101, Lord Hoffmann made a number of observations as to the use of surrounding circumstances in construing a written contract.

57                        Lord Hoffman observed at 1112, at [14], that a court would adopt this approach to the construction of a written contract in cases where a court concluded that “something must have gone wrong with the language” used in the written contract.  Lord Hoffmann went on to say:

In such a case, the law did not require a court to attribute to the parties an intention which a reasonable person would not have understood them to have had.

58                        Further, Lord Hoffman observed at 1112, at [15], that it would require a “strong case” to persuade the court that something must have gone wrong with the language.  But he said that the subtleties of language are such that “no judicial guidelines or statements of principle can prevent it from sometimes happening”.

59                        At 1113-1114, at [21], Lord Hoffmann went on to make the following observations as to the task a court is to undertake in implementing this approach to the construction of a written contract:

When the language used in an instrument gives rise to difficulties of construction, the process of interpretation does not require one to formulate some alternative form of words which approximates as closely as possible to that of the parties.  It is to decide what a reasonable person would have understood the parties to have meant by using the language which they did.  The fact that the court might have to express that meaning in language quite different from that used by the parties (“12 January” instead of “13 January” in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749; “any claim sounding in rescission (whether for undue influence or otherwise)” instead of “any claim (whether sounding in rescission for undue influence or otherwise)” in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896) is no reason for not giving effect to what they appear to have meant.

60                        Before the courts below, and also before this Court, the respondents contended that the term of the AWA comprised by the third alternative in the undertaking, was to be construed as a promise or undertaking that Ms Robertson had, prior to signing the undertaking, engaged in a process whereby she had had regard to the work history of Ms Cargill and concluded that there was a reasonable expectation that Ms Cargill would achieve the minimum prescribed earnings.  As I have said already, the Industrial Magistrate rejected the evidence of Ms Robertson that she had in fact engaged in such a process.  This finding was upheld by the primary judge and there was no cross-appeal.

61                        The primary judge appeared to take a different view as to the proper construction of the third alternative in the undertaking, to that advanced by the respondents in the Courts below and in this Court.

62                        The primary judge did not construe the third alternative as a promise by Harbour City that it would engage, or had engaged, in a process of assessment of Ms Cargill’s work history as a precondition to her employment on “commission only” remuneration.  Rather, the primary judge found that the third alternative comprised a standard which could be applied ex post facto, in justification for not having paid Ms Cargill the minimum prescribed payment during the term of her employment.

63                        It is clear that the undertaking as incorporated into the AWA, particularly as regards the third alternative, does not afford a clear meaning and that “something must have gone wrong with the language”.  In these circumstances, it is, on the application of the authorities referred to above, appropriate to take into account the surrounding circumstances to seek to determine the proper construction of the AWA, as supplemented by the undertaking.

64                        In my view, the following facts and circumstances are relevant, as surrounding circumstances, in discerning the true construction of the third alternative, as incorporated as a term of the AWA.

65                        First, by statute, the undertaking becomes part of the AWA.  The AWA is an agreement comprising mutual promises regulating the employment relationship of the parties thereto for the future term of the employment.  Thus, there would be an expectation that an undertaking that becomes part of an AWA, as opposed to one standing outside of the AWA, would be promissory in character.

66                        Secondly, the undertaking was imposed by the Employment Advocate in a statutory context where the Employment Advocate was required to apply a “no disadvantage test” in favour of Ms Cargill in order to give effect to the statutory intention at the time.

67                        Thirdly, each of the first respondent and the Employment Advocate knew and appreciated that the purpose of the undertaking was to ensure that the employees who were the intended parties to the AWAs in question, were in no worse a position in relation to entering into an agreement which provided for remuneration on a “commission only” basis, than those who were covered by the benchmark Award.  This is evident from the email communication of 26 June 2006 which was sent by Mr Don Tepper to franchisees (referred to in the reasons of North J), which reflected Harbour City’s agent’s understanding why the Employment Advocate required the undertaking and the commercial, industrial and statutory objective which the Employment Advocate sought thereby to achieve.

68                        Fourthly, the “no disadvantage test” was applied by reference to the Property Sales Award Queensland - State 2005.  Part 15.2.1 of the Award provided for a preliminary process for an employee wanting to work on a “commission only” basis, to “opt out” of the provisions of Pt 12 and/or Pt 14 of the Award.  There are a number of aspects of that process that are significant in the context of this case.  In the context of the third alternative, it is necessary for an employee who wishes to “opt out” of the relevant provisions of the Award, to have an expectation of being able to earn in excess of the prescribed amount, and to be able to “demonstrate” to the satisfaction of the Queensland Property Industry Registry (QPIR) a work history that would justify that expectation as a “reasonable expectation”.  It is apparent, therefore, that the provision contemplates the participation of the employee in a third party assessment process.  It is only in those circumstances, in the context of the third alternative, that “the employee and employer may freely elect to alter any of the provisions of Parts 12 and/or 14”.

69                        As noted, the assessment process under the Award is a process that occurs prior to the employee and the employer being eligible to elect to “opt out” of the relevant protective Award provisions.  The making of the assessment, therefore, operates on a precondition to “commission only” employment taking effect.  Thus, the parties have the benefit of knowing, at an early stage, whether the employment will be on a “commission only” basis.

70                        Fifthly, the undertaking, organised through Mr Don Tepper, was to apply to employees who were parties to AWAs with the Re/Max franchisees in both Queensland and in Western Australia.

71                        Sixthly, there is, and was at the material time, no industry body in Western Australia equivalent to the QPIR.

72                        Seventhly, the undertaking was imposed, and became part of the AWA, some four months after Ms Cargill had commenced work under the AWA.

73                        In my respectful view, when the AWA as supplemented by the undertaking, is construed by reference to the surrounding circumstances, the third alternative does not have the meaning found by the primary judge, nor that contended for by the respondents.

74                        In my view, the Industrial Magistrate was correct to find, as a matter of construction, that the third alternative had no application to Ms Cargill’s circumstances.

75                        The language of the third alternative, by referring to a “reasonable expectation”, indicates that an objective criterion is to be applied to the employee’s expectation that he or she will earn more than the prescribed Award sum as a “commission only” employee.  The provision further anticipates the employee being able to “demonstrate a personal work history” sufficient to justify that expectation, as a “reasonable expectation”.  Those two factors in combination, do not sit comfortably with a construction which permits “commission only” employment to occur, without any prior input from the employee as to the basis on which the employee holds the earnings expectation and how the other elements of the assessment are to be applied.

76                        I might add, in this regard, that it was common cause that Ms Robertson did not ask Ms Cargill to put forward her views on the essential elements comprising the assessment called for in the third alternative, before signing the undertaking.

77                        Further, a construction of the term of the AWA based on the third alternative in the undertaking, which removes the necessity for the participation of the employee in an independent preliminary assessment as to the employee’s earnings expectation, is also incongruous with the fact that the undertaking was imposed by the Employment Advocate to ensure that the employees who were potential parties to the AWAs were not at a disadvantage compared to the position of the employees under the Queensland Award.  As is evident from the terms of the email of 26 June 2006 referred to at [37] above, Mr Tepper was aware of the context in which the undertaking was sought and was given, and the statutory, commercial and industrial objective sought to be achieved by the seeking, and the giving, of the undertaking.

78                        As mentioned, the Queensland Award used by the Employment Advocate as the benchmark, placed restrictions on the circumstances in which an employee may elect to forego the minimum payments prescribed in the Award.  Under the Award, the equivalent provision to the third alternative in the undertaking could only apply to employees under the Award desirous of “opting out” once they had the benefit of an independent assessment as to the reasonableness of their earning expectation.  It could not, therefore, be said that an employee suffers “no disadvantage” by being deprived of the benefit of the objective preliminary assessment process, as a precondition to being permitted to work on a “commission only” basis.

79                        The incongruity is particularly vivid because of the fact that the undertaking was arranged and given by Mr Tepper in relation to employees proposing to work on a “commission only” basis for franchisees in Queensland and in Western Australia.  The disadvantage that would befall Queensland employees, deprived of the objective preliminary assessment process by QPIR which was available to employees employed under the Award, is patent.

80                        In my respectful view, when consideration is given to the surrounding circumstances, the relevant term of Ms Cargill’s AWA cannot bear the construction contended for by the respondents, nor that found by the primary judge.   This is because both constructions contemplate that Ms Cargill will be deprived of the right to participate in a preliminary independent assessment process of her work history and earnings expectation, as a precondition to her employment as a “commission only” employee.  A reasonable person having all the knowledge possessed by the Employment Advocate, Mr Tepper and Harbour City referred to above, would not have concluded that the parties meant the third alternative of the undertaking to have that effect.

81                        It follows that, as regards an employee, such as Ms Cargill, who has already commenced employment on a “commission only” basis, at the time the undertaking was given, the third alternative would be construed as requiring confirmation by the employer that the employee in question has demonstrated “to the satisfaction of the relevant industry panel” that he or she has the relevant work history to justify the employee’s earnings expectation as being a “reasonable expectation”.

82                        It was common cause that this never occurred in the case of Ms Cargill.  It follows that the third alternative was not available to the respondents to justify entry into the AWA on “commission only” terms.  The first ground of appeal should, therefore, be upheld.

            The second ground of appeal

83                        In any event, I would have upheld the second ground of appeal, even if I had come to the view that the third alternative was to be construed in the manner determined by the primary judge.  This is because the evidence of Ms Cargill’s work history did not, in my respectful view, satisfy the requirement in the third alternative.

84                        In my view, the nature of the work history which would be required to satisfy the standard set out in the third alternative is informed by the standard set out in the second alternative of the undertaking.

85                        The second alternative deals with a person who has experience in the industry, but, apparently, not as a licensed real estate agent of two years’ standing – which is covered by the first alternative of the undertaking.  It is to be observed, that in respect of such a person, the requirement is that the employee must have “at least 6 months’ full-time equivalent recent experience in the industry” (emphasis added).  Also, the employee is required to demonstrate an “historical earning capacity”, presumably in relation to the recent industry work experience, equal to 125% of the prescribed Award payments.

86                        In my view, if that is the standard that is to be applied to the nature and extent of the required work experience of an employee with industry experience, it follows a fortiori, that a standard at least as rigorous, would apply in assessing, under the third alternative, the work history of an employee with no industry experience.

87                        In this case, there was no evidence that Ms Cargill had at least six months’ equivalent full-time recent work experience in any capacity, let alone in a capacity utilising skills relevant to a real estate salesperson.  The evidence was that Ms Cargill had not worked since 2001.

88                        In coming to his view, that the standard set out in the third alternative was satisfied by the evidence of Ms Cargill’s work experience, the primary judge observed that “there seems to be no challenge to the fact that Ms Cargill had the qualities referred to in the third option”.  The fact of the second ground of appeal and the primary judge’s tentative language in describing Ms Cargill’s position, indicates that Ms Cargill may well not have been as clear as she could have been, in articulating her position on this issue before the primary judge.  Also, it may well be that the manner in which the parties contested the case before the primary judge led to an obscuring of Ms Cargill’s position on this issue.

89                        For these reasons, I allow the appeal.

Associate:

Dated:         15 February 2010

REASONS FOR JUDGMENT

BUCHANAN J:

90                        The appellant, Ms Cargill, was employed by the first respondent (“Harbour City”) as a commission only real estate sales employee, commencing her employment on 18 March 2006.  Her employment was governed by the terms of an Australian Workplace Agreement (“the AWA”).  The AWA was signed by her on 22 February 2006 and lodged for approval with the Office of the Employment Advocate (“the OEA”) on 27 February 2006.  It was to take effect at the time her employment commenced.  The AWA, when finally approved some months later, contained an “undertaking” by Harbour City which was included in order that the AWA meet the “no disadvantage test” imposed by the Workplace Relations Act 1996 (Cth) (“the Act”)(as in force prior to extensive amendments which came into effect on 27 March 2006).  The “no disadvantage” test was applied using, as a benchmark, the Property Sales Award Queensland – State 2005 (“the Qld award”). 

91                        Clause 2 of the AWA provided that Ms Cargill would be remunerated in accordance with Sch 3 to the AWA.  Schedule 3 to the AWA provided for remuneration on a commission only basis (nominally 50 percent).  Other possible methods of remuneration, which were included in the AWA (it being adaptable to various circumstances of employment) but which did not apply to Ms Cargill, included 92 percent commission only (Sch 1), 70 percent commission only (Sch 2) and 40 percent plus “debitable” wage (Sch 4).

92                        Clause 11 of Sch 3 provided:

11.       Commission Only:  If you are being paid under this Schedule you will not receive the wage or car allowance.

93                        The AWA was filed with the Office of the Employment Advocate as required by the Act.  A filing receipt was issued on 27 February 2006.  During the course of discussions with the Employment Advocate, Harbour City gave a written undertaking to meet the requirements of the “no disadvantage” test.  The terms of that undertaking were as follows:

In relation to the AWA(s) between all Remax franchises in the states of Queensland and Western Australia and the employees classified as Property Sales Person and Property Sales Trainee:

         I am authorised to give the following undertaking on behalf of all Remax franchises in the states of Queensland and Western Australia and I hereby give the following undertaking with respect to the above employees(s):

Property Sales Person:

1.     has held a Real Estate Agent’s Licence for at least 2 continuous years; or

2.     has at least 6 months’ full-time equivalent recent experience in the industry and a historical earning capacity of at least 125% of the rate of pay prescribed for the employee’s Award classification; or

3.     can demonstrate a personal work history which would provide a reasonable expectation of an earning capacity of at least 125% of the rate of pay prescribed for the employee’s Award classification; or

4.     is guaranteed by the employer to earn at least 125% of the rate of pay prescribed for the employee’s Award classification during each year of employment (or part thereof).

(The term “Award” was defined in the AWA itself as a reference to the Qld award.)

94                        The undertaking was signed by the second respondent (Ms Robertson) on 7 July 2006.  On 12 July 2006 the Office of the Employment Advocate issued an approval notice approving the AWA concerning Ms Cargill.  That approval notice pointed out that the undertaking was deemed to be a legally binding part of the AWA.  That advice reflected s 170VPJ of the Act.

95                        Ms Cargill’s employment came to an end on 4 April 2007.  On 31 July 2007 she commenced proceedings in the Industrial Magistrates Court of Western Australia claiming the benefit of the fourth alternative referred to in the undertaking, as well as other entitlements.  She also sought the imposition of pecuniary penalties on Harbour City and on Ms Robertson who, she alleged, was involved in the alleged failure to comply with the AWA.  She asked that any pecuniary penalties imposed be paid to her, in addition to her entitlements under the AWA.

96                        On 26 February 2008 an Industrial Magistrate concluded that only the fourth alternative in the undertaking could have any applicability to Ms Cargill.  That finding was based on conclusions flowing from the fact that the four alternatives in the undertaking reflect provisions in the Qld award which provide for an “independent assessment process” to examine whether employees should be permitted, on the basis of any of the four alternatives, to “opt out” of certain parts of the Qld award.  I shall return to this issue in due course.  The Industrial Magistrate concluded that the lack of any such process in Western Australia (the process being committed under the Qld award to the Queensland Property Industry Registry (“QPIR”)) meant that the third alternative in the undertaking had no applicability to Ms Cargill.  It was common ground that neither of the first two alternatives applied to her.  Accordingly, by an apparent process of elimination, the Industrial Magistrate concluded that a breach of the AWA had occurred.

97                        In a supplementary decision dated 22 May 2008 the Industrial Magistrate ordered that Harbour City and Ms Robertson, “jointly or severally”, pay to Ms Cargill $29,784.43 as damages for underpayment of wages, with interest of $1,787.06.  They were required to pay further sums of $2,893.32 and $549.73 to Ms Cargill’s Westscheme superannuation fund.  The Industrial Magistrate also imposed a pecuniary penalty of $4,000 on Harbour City and $1,000 on Ms Robertson and ordered that the penalties be paid to Ms Cargill.

98                        Harbour City and Ms Robertson appealed to this Court.  On 19 June 2009 a judge of the Court upheld the appeal and set aside the orders of the Industrial Magistrate (Harbour City Real Estate Pty Ltd t/as Re/Max Harbour City Real Estate (ACN 111 210 023) v Cargill (No 3) [2009] FCA 669).  The primary judge took the view that the third alternative under the undertaking applied to Ms Cargill.  He said (at [48]):

… in my respectful view, the third option was open under the undertaking notwithstanding the fact that there is no independent panel to assess the qualities which are described in the third option.

99                        His Honour went on (at [50]):

50        … As it happens in this instance, there does not appear to be any serious challenge to the fact that Ms Cargill was qualified in the manner set out in option 3. …there seems to be no challenge to the fact that Ms Cargill had the qualities referred to in the third option.

100                      Ms Cargill has now appealed.  The appeal has not been confined to an argument that the fourth alternative should have been applied to Ms Cargill, rather than the third alternative.  Instead, it was first argued that the provisions of the AWA, read with the undertaking, had the effect of directly importing an entitlement to wages under the Qld award.  In the alternative it was argued that the fourth alternative in the undertaking operated in Ms Cargill’s case but not the third.

101                      In my view the proposition that any provision of the Qld award relevant to the present case was incorporated directly into the AWA should not be accepted. 

102                      Clause 1.6.1 of the AWA provided:

1.6.1     This agreement will form the complete agreement covering all terms and conditions of employment.  It will operate to the exclusion of any and all other agreements or awards unless otherwise noted.  In particular this AWA will displace the Property Sales Award Queensland – State 2005 unless the AWA states that the said award applies in some respect.

(Emphasis in original.)

103                      It was accepted by counsel for Ms Cargill at the appeal that no provision in the body of the AWA “states” that the Qld award applied in any respect relevant to the present appeal.  The undertaking refers to the Qld award but there is only one respect in which it “states that the said award applies in some respect”.  That is in the fourth alternative which states a guarantee of a minimum level of earnings.  The circumstances in which that minimum level of earnings might be guaranteed require further consideration.  There is a further argument, yet to be considered, that the undertaking must be construed in a way that reflects a more general operation of the Qld award but that is an argument which appeals to different legal principles.  It is not an argument about incorporation but about interpretation.  In my view, no provision of the Qld award, relevant to the present appeal, was incorporated, by the terms of the AWA or the undertaking, into the AWA itself except for the operation of the fourth alternative in the undertaking, if it was engaged.  Clause 1.6.1 had the contrary effect.

104                      Clause 1.6.1 had a further effect, which is significant for any suggestion that the undertaking should be interpreted in a way that conformed to the operation of the Qld award.  It emphasised that the AWA (which came to include the undertaking) displaced the Qld award, rather than conformed to it.  I have, in any event, come to the same view by reference to the provisions in question.

105                      There is no doubt that the four alternatives which were contained in the undertaking were taken from cl 15.2.1 of the Qld award.  However, they were not taken in company with the context, immediate or more general, in which they there appeared.  It is important to appreciate, at the outset, that cl 15.2.1 appeared in Part 15 of the Qld award which dealt with “Stage 2 Employment” under the award.  Part 15 will be set out in full to establish the context in which cl 15.2.1 appeared (I have emphasised some of the text and removed the emphasis otherwise appearing).

PART 15 – PERSONAL, STAND-ALONE NO DISADVANTAGE TEST

15.1      Application, flexibility, intent, minimum income threshold, authorisation

15.1.1   Application of this Part

This Part, otherwise known as Stage 2 Employment, applies only to those employees who have been assessed by independent, industry-based peers, as demonstrating sufficient competence to make employment arrangements which differ from the provisions of Parts 12 and/or 14.

This Part constitutes a Personal, Stand-alone No Disadvantage Test, which must be applied separately from any other Part of this Award.

This Part does not apply to Casual Employees or Trainees (i.e. Casual Employees and Trainees may not Opt Out).

15.1.2   Flexible Employment Arrangements

Part 15:

            (a)        facilitates the often-competing objectives of:

(i)         a regulated employment environment that ensures sufficient protection for competent employees; and

(ii)        significant flexibility in employment arrangements for employers.

(b)        allows employers and employees covered by this Award to:

(iii)       arrive at arrangements which differ from the provisions of Parts 12 and/or 14; and

(iv)     subject to such arrangements being registered as prescribed in Parts 16 and 17, apply those arrangements in lieu of Parts 12 and/or 14.

15.1.3   Statement of Intent

Stage 2 Employment is designed to recognise the unique nature of Queensland’s Real Estate Industry, and its practices and procedures which have been accepted and proven over time, including the remuneration of employees, either totally or in part, by commission.

It incorporates a minimum income threshold of 125% of the employee’s prescribed Award rate of pay, which is deemed to compensate the employee for annual leave and/or leave loading, bereavement leave, family leave, sick leave, wages for working public holidays, any allowances and/or any time worked beyond 38 hours per week averaged over a 4 week cycle.

15.1.4   Minimum income threshold

Stage 2 Employment incorporates a minimum income threshold of 125% of the employee’s prescribed Award rate of pay, which is deemed to compensate the employee for annual leave and/or leave loading, bereavement leave, family leave, sick leave, wages for working public holidays, any allowances and/or any time worked beyond 38 hours per week averaged over a 4 week cycle.

15.1.5   Authorisation

The Industrial Commission recognises the Queensland Property Industry Registry (QPIR), which is administered by the PSAQ and REEA, as the entity performing the assessments prescribed by Part 15.

15.2      Opting Out of Parts 12 and/or 14

15.2.1   Qualifying to Opt Out – Assessment Criteria

Where it can be demonstrated, to the satisfaction of the QPIR, that an employee:

(a)        has held a Real Estate Agent’s Licence for at least 2 continuous years; or

(b)        has at least 6 months’ full-time equivalent recent experience in the industry and a historical earning capacity of at least 125% of the rate of pay prescribed for the employee’s Award classification; or

(c)        can demonstrate a personal work history which would provide a reasonable expectation of an earning capacity of at least 125% of the rate of pay prescribed for the employee’s Award classification; or

(d)        is guaranteed by the employer to earn at least 125% of the rate of pay prescribed for the employee’s Award classification during each year of employment (or part thereof),

the employee and the employer may freely elect to alter any of the provisions of Parts 12 and/or 14, subject to the conditions set out in Parts 15, 16 and 17.

The alteration of the provisions of Parts 12 and/or 14 shall be known as Opting Out.

15.2.2   No Disadvantage Test – Initial Assessment of Competence

An employee may Opt Out of Parts 12 and/or 14 only after being assessed as competent to do so, under the criteria outlined in clause 15.2.1, by the QPIR, which is the sole entity approved by the Industrial Commission to assess whether the employee meets the requirements of clause 15.2.1.

15.2.3   No Disadvantage Test – Recurring Assessment of Competence

In order to ensure that the employee achieves a minimum safety-net income during the course of employment, the No Disadvantage Test assessment of the employee’s competence to Opt Out shall be a recurring event, as prescribed in clause 16.3.2(b)(ii)(B).

106                      As will be apparent, an understanding of Stage 2 Employment involves consideration of a series of interlocking and interdependent provisions.  Parts 12 and 14, which may each be modified, deal with minimum entitlements to wages, annual leave, sick leave, bereavement leave, family leave, public holidays and the mechanics of payment of wages, allowances and commission.  As was made clear by cll 15.1.3 and 15.1.4, minimum entitlements under the Qld award were, upon achievement of Stage 2 Employment status, deemed to be satisfied by a minimum income threshold of 125% of the award rate.  An employee was only entitled to opt out with the approval of QPIR, which is administered by the Property Sales Association of Queensland (an employees’ union) and the (Queensland) Real Estate Employers’ Association.  Approval to opt out was not permanent.  It was, under cl 15.2.3, subject to cl 16.3.2(b)(ii)(B) which provided:

16.3.2   Stage 2 Employment

(a)        …

(b)        Once an employee is approved by the QPIR to Opt Out:

            (i)         …

(ii)        The employee’s Approval to Opt Out shall:

(A)       apply for:

(1)        3 years; or

(2)        if requested by the employee and the employer, such shorter period as may be determined by the QPIR.

(B)       no longer apply once the expiry date of the employee’s approval to Opt Out is reached, at which time the employee shall apply for their approval to Opt Out to be renewed, for such further period as prescribed by clause 16.3.2(b)(ii)(A).

107                      Furthermore, under cl 16.3.2(b)(iii) if an employee earned less than 125% of the award rate in the first 12 months the employee had the right, upon giving written notice, to revert to coverage by Parts 12 and 14 of the Qld award.

108                      Clause 15.2.1 of the Qld award played its part as an element in this elaborate arrangement under the Qld award, none of which found any reflection or counterpart in the AWA or the undertaking.  On the contrary, although the four alternatives were expressed identically to those in the Qld award, in the undertaking they were placed in a very different context.  They were not, in that context, matters for consideration by QPIR and they could not sensibly be, so far as employment in Western Australia was concerned.  They were not, in the context of the AWA, matters which concerned whether any employee should “opt out” of some other entitlement, much less those stated in Parts 12 and 14 of the Qld award as applying to employees covered by that award.  The AWA already provided, in most cases, for payment by commission, rather than wages.  The four alternatives in the undertaking had to be given operative effect in that context, not the context of the Qld award.  They had to be given operative effect as part of an undertaking, rather than as a statement of matters for consideration by QPIR.

109                      The four alternatives required application in the new context in which they appeared.  In my view, they were capable of sensible application in that context and by reference to their own terms.  In the context of the AWA and the undertaking they represented a series of alternatives, one of which necessarily applied.  The first two alternatives were simple in their operation.  They were either satisfied or they were not.  No question of judgment was involved.  I will return to the third alternative.  The fourth alternative was required to be observed if no other applied.  Again, no question of judgment was involved.  It cannot be doubted, in my view, that if either of the first two alternatives applied to Ms Cargill there would be no basis to suggest an interpretation of the undertaking to give effect to any part of the scheme of the Qld award.  Neither would there be a basis for such a suggestion if none of the first three alternatives applied.  In that event, the undertaking would operate directly, with the AWA, to provide an entitlement to an ascertainable sum.  Similarly, there is no reason to deny content to the third alternative, or to seek to define it by reference to matters it does not refer to, if it was capable of application in its own terms.

110                      The question for decision, in my view, as the primary judge correctly appreciated, was whether the third alternative was satisfied, or should be taken to be satisfied.  Consideration of that question directs attention to Ms Cargill’s capacities, as they were known to the parties, in the context that she had accepted engagement on a commission only basis.

111                      In her oral evidence before the Industrial Magistrate Ms Cargill accepted that she understood at the time she was employed that she was to be remunerated in accordance with Sch 3 of the AWA, that she was explicitly told at her initial interview that she would be paid on a 50 percent commission basis and that she understood she would not be receiving a wage.  At that time the undertaking was not in force and there was no evidence that her employment was approached on either side by reference to the possibilities which the undertaking presented.  However, it would seem that her previous work history would have been sufficient to provide the reasonable expectation referred to in the third alternative in the undertaking.  At [16] the primary judge recorded:

16.       There seemed to be little dispute as to Ms Cargill’s background.  Ms Cargill did not dispute the basic facts.  Those facts were that:

•           Ms Cargill was the top negotiating timeshare sales associate in Fremantle, Western Australia;

•           she had successfully managed two other businesses which she owned;

•           in her past businesses and work in timeshare she had involved herself in trademark registration, design patent applications and sales;

•           she had qualified as a nurse and a primary school teacher; and

•           she was being employed during a ‘boom period’ for housing in Western Australia.

112                      As earlier indicated, in the view of the primary judge there was no challenge to the conclusion that Ms Cargill had the capacities and qualities referred to in the third alternative.  No different position was suggested on the appeal.

113                      In those circumstances, had the undertaking been in force at the time Ms Cargill was employed, and present to the minds of the parties, it would not have been open to suggest, in my view, that the third alternative referred to in the undertaking did not apply to her.  In my view it can make no difference that the matter falls for assessment in a retrospective way.

114                      Had it been necessary for some process to be followed whereby, after the undertaking came into operation, some specific judgment was made about which of the alternatives applied to Ms Cargill’s circumstances, on the evidence before the Industrial Magistrate that was done.  Ms Robertson’s oral evidence was:

MS NEEDHAM:  That is a copy of the undertaking that you signed, isn’t it, Ms Robertson?---That’s correct.

When you saw that, and when you signed this – I think the evidence is accepted that this was in relation to Ms Cargill?---Correct.

When you looked at those clauses that are there under the heading Property Salesperson, what, if anything, did you think about?---I read through them and Jane did not meet the first criteria because she – we were sponsoring her through the course, or had sponsored her through the course and she had subsequently got her real estate licence.  She didn’t have six months’ full-time equivalent, which was a little bit ambiguous because equivalent recent experience in the industry – she had had six months full-time in an equivalent industry, but I didn’t ask her for any pay schedules, so I couldn’t prove that she’d earnt 125 per cent of the rate of pay.  So that one was a little bit ambiguous and I thought, no, she doesn’t fit that criteria.  Number 3, can demonstrate a person work history in which would provide a reasonable expectation of her earning capacity of at least 125 per cent of the rate of pay prescribed by the employee’s award classification.  Yes, she had – at the interview – stated quite categorically – well, first of all, she had the phone call in regard to the advertisement to Janet Roney and Janet came in to me quite excited to say, “We found some new talent in Bunbury” in the fact that she had a lady from East Bunbury by the name of Jane Cargill who reads all the papers as if – and is familiar with all of the advertisements, knew what was for sale in her area.  She then went on to say that she had been a top negotiating lady in time share.

Just to clarify, this is what Janet was telling you?---This is Janet telling me before I’d even met Jane.  And that she had been in advertising and marketing, and that was something that – in advertising and marketing we were looking at picking up our advertising and marketing and thought she might be able to help us here on that, as well.  So that was the phone call from Janet and then - - -

That was information you took into account, is that right?---Yes, very much so.

What else, if anything, did you take into account?---The fact that she was very confident.  She had a great knowledge of the industry.  She understood what was on the market.  She understood what prices were being paid for properties, and that she’d read – at her interview she stated she read the real estate lift-out from cover to cover.  She had a passion for it and she had chosen Re/Max from the advertising, as it stood out from all the other agencies in Bunbury and that she really wanted to be part of the Re/Max franchise.

Was there anything about her background that you took into account?---The top negotiating salesperson and in that we mentioned, “So you would have been doing contracts and so forth.”  Even though they’re not the same as an offer and acceptance for a contract in regarding to property sales, it would be a similar contract for time share with no titles involved.”  And the fact that she had had experience in that, the fact that she had experience in advertising, marketing and she had run her own business and that was an important ingredient because most of our Re/Max associates do advance through to achieving their own business.  It is a career path.

Do you recall if she told you anything about that business or businesses?---She told us that she worked in Fremantle in that business and that she – that’s where she had been involved in the time share.  She also - - -

What about her own businesses?---Her own businesses?

Yes?---She had one called Timbertabs and went on to outline what Timbertabs was and Jane Cargill T-Shirt Design in which she had some patents and also she took – what is it when you put a stamp on it and nobody else can duplicate that?  Can’t think of the word.

MR McCORRY:  You can lead.

MS NEEDHAM:  Copyright?---Copyright, thank you.  And involving copyright procedures.  So she was very knowledgable in business procedures and also very knowledgable in running these businesses and that.  Obviously, they had been a success.

When did you learn all of this?  How did you get to know about all of this?---At the interview.

What circumstances are we talking about – which meeting – on your evidence?---She told Janet most of that on the phone, so Janet relayed that information to me.  Janet had made an appointment to see Jane in the office and without consulting my diary was not sure whether I could be in attendance of not, so Janet did the first interview with her and, at that same time, I came in for part of the interview.  We then invited her back to meet the two directors and that was done in our interview room.  Now, we had an interview room that was between Janet’s office and my office and our sales meetings were conducted upstairs in another office.  So, at that time, when the boys came in, John recognised Jane and had a little chat.

Who are “the boys”?  You know who they are, but we don’t?---John and Ron – John Tink and Ron Ranson, who were the directors of Re/Max Harbour City, along with myself at that time.  It is usual practice for the office that we would always interview everybody – the three of us – with Janet.

For the purposes of the undertaking, what of all of that did you take into account when reading this undertaking and considering it?---The confidence which she displayed at the interview, the fact that she had been in listing and negotiating and selling time share, that she had been a top negotiating representative or agent in that industry, which is similar to the real estate industry; the fact that she’d run her own business; she was involved in marketing, advertising, copywriting and had an experience also in the fact that she had very good education qualifications and could understand quite comprehensively any documentation, in the fact that she had a teaching diploma and also had a nursing degree or diploma.

And you took all of that into account in relation to the third clause?---Yes.

What, if any, consideration did you give to the fourth clause?---None, because I wouldn’t have employed Jane on that fourth clause.

115                      As the undertaking operated by reference to qualifications, work experience or general experience and capacity, underpinned by a guaranteed minimum level of remuneration if none of the first three alternatives applied, I doubt that it was necessary for there to have been any intermediate assessment of the kind to which Ms Robertson deposed.  Ms Cargill’s rights could be evaluated, when necessary, by reference to her qualifications, work experience and capacities.  Whether or not that is so, however the matter is viewed it does not seem to me to accord with reality to postulate that Ms Cargill would have been assessed, at any stage, having regard to the evidence in the case and the circumstances of her employment, as not meeting the test in the third alternative.

116                      In my view, therefore, the approach taken by the Industrial Magistrate was in error.  The primary judge was right to correct it and set aside the orders which had been made.  No other reason has been shown to uphold the present appeal.  I would order that the appeal be dismissed.

Associate:

Dated:         15 February 2010