FEDERAL COURT OF AUSTRALIA

Atkins Freight Services Pty Ltd v Fair Work Ombudsman [2017] FCA 1134

ORDERS

THE COURT ORDERS THAT:

1.    The appeal is dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

WHITE J:

1    This decision concerns an appeal against the judgment of an Industrial Magistrate in the Industrial Relations Court of South Australia (IRCSA) on three underpayment of wages actions: Fair Work Ombudsman and Ors v Atkins Freight Services Pty Ltd [2015] SAIRC 22. It is brought to this Court pursuant to s 565 of the Fair Work Act 2009 (Cth) (the FW Act). The appellant, Atkins Freight Services Pty Ltd (Atkins Freight) was the Respondent in each of the three actions in the IRCSA.

2    The first action was brought by Mr Kearns and the second by Mr Schmidt. Both were employees (or former employees) of Atkins Freight.

3    The third action was brought by the Fair Work Ombudsman (the FWO) in respect of eight employees (or former employees) of Atkins Freight. These persons included Michael Freckleton, Lloyd Gedling, Wayne Latham and Trevor Kalms. All of the employees were, or had been, employed by Atkins Freight as drivers of trucks delivering fuel. Each action sought the payment of award and statutory entitlements which had accrued in the period from 1 July 2008 until 31 December 2009.

4    At the trial, the FWO appeared on behalf of Mr Kearns and Mr Schmidt in their respective actions, as well as pursuing her own action in respect of the eight employees.

5    The claims were successful. The Industrial Magistrate found that the employment of the employees was governed by the Transport Workers (Oil Distribution) Award 2001 (the Oil Industry Award) made under the Workplace Relations Act 1996 (Cth) (the WR Act). However, Atkins Freight had paid the employees (other than Mr Latham and Mr Kalms) on the basis that the Road Transport (Long Distance Drivers) Award (the Long Distance Award) applied to their employment. It had paid Mr Latham and Mr Kalms on the basis that a collective agreement entitled “Atkins Freight Services Pty Ltd Local Shift Workers Collective Agreement 2008” (the Shift Workers Agreement) made under the WR Act applied to their employment. The entitlements of the employees under the Oil Industry Award were superior to those pertaining under the Long Distance Award and the Shift Workers Agreement, with the consequence that the employees had not been paid, or had been underpaid, their entitlements.

6    The underpayments found by the Industrial Magistrate were of diverse kinds, being underpayments of meal allowances, overnight expenses, shift allowances, overtime, public holiday and holiday rates, personal/carer’s leave, and superannuation.

7    The period during which the contraventions occurred straddled the period in which the WR Act ceased operating and the commencement on 1 July 2009 of the FW Act. The Industrial Magistrate made declarations (albeit described as orders) that, in the period to 30 June 2009, Atkins Freight had contravened the Oil Industry Award in multiple respects and, in the period from 1 July 2009 to 31 December 2009, had contravened sub-item 2(1) of Sch 16 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (the Transitional Act). The Industrial Magistrate also ordered Atkins Freight, pursuant to s 719(6) of the WR Act and s 545(3) of the FW Act, to pay the amounts outstanding to the employees resulting from the contraventions. In particular, Atkins Freight was ordered to pay $23,769.53 to Mr Freckleton, $30,684.96 to Mr Gedling, and $15,561.07 to Mr Latham.

8    In a separate judgment delivered on 1 July 2016, the Industrial Magistrate imposed penalties on Atkins Freight: Fair Work Ombudsman and Ors v Atkins Freight Services Pty Ltd [2016] SAIRC 19. It is not necessary to outline those penalties because ultimately Atkins Freight did not pursue its appeal concerning them.

9    Although the Amended Notice of Appeal had originally contained five grounds, Atkins Freight pursued only Grounds 2 and 3. Ground 2 consisted of two parts. The grounds pursued were:

(a)    the Industrial Magistrate should have found that Deeds of Settlement entered into by Mr Freckleton on 26 March 2012 and Mr Gedling on 19 April 2012 had the effect that Atkins Freight was “no longer liable” to pay any amount for “underpayment of wages” and that no order with respect to underpayment could be made under either s 719(6) of the WR Act or under s 545(3) of the FW Act (Ground 2(a));

(b)    alternatively, the Industrial Magistrate should, by reason of the Deeds of Settlement, have declined in the exercise of the discretion available to him to order that Mr Freckleton and Mr Gedling be paid any amount (Ground 2(b));

(c)    the Industrial Magistrate had erred in not finding that Mr Latham’s employment was covered by the Shift Workers Agreement (Ground 3).

10    As can be seen, Ground 2(a) raised a question of law, whereas Ground 2(b) concerned the exercise of a discretion.

11    The FWO filed a Notice of Contention in which she asserted that the Deeds of Settlement between Atkins Freight and Mr Freckleton and Mr Gedling respectively did not create an estoppel binding her in the proceedings in the IRCSA. This Contention appears to have been unnecessary as its subject matter is encompassed by Ground 2 of Atkins Freight’s Notice of Appeal.

The Deeds of Settlement

12    The terms of the respective Deeds of Settlement made by Mr Freckleton on 26 March 2012 and by Mr Gedling on 19 April 2012 were relevantly identical. Each was made using a pro-forma document shown as having been prepared for Atkins Freight by a firm of legal practitioners. This being so, it is sufficient to set out the terms of Mr Freckleton’s Deed only.

13    The Deed commenced with a face page entitled “Deed of Settlement of Claims” on which Mr Freckleton’s name had been entered in handwriting. It was followed by a page containing a table of contents. The substantive part of the Deed commenced with the heading “Deed of Settlement of Claims with Atkins Freight Services Pty Ltd”. Mr Freckleton’s name was inserted in handwriting into the space left for “Name of Employee”. The name “Atkins Freight Services Pty Ltd” formed part of the printed document opposite the entry “Name of Employer”. The Deed then continued:

1.    The purpose of this deed

This is a legally binding document, under which:

•    we agree to pay you the amount set out in clause 2; and

•    in return, you agree not to make or persist with any wages claims arising out of your employment, as explained in clause 3.

The document also sets out certain other obligations which both we and you agree to accept.

2.    The payment

2.1    We agree to pay you a total of $10,000.00, less tax deducted at the appropriate rate, in consideration for your obligations under this Deed.

Within 14 days of us receiving this deed duly executed by you payment of the lump sum will be made to your nominated bank account.

3.    The release from claims

The payments you are receiving are to settle any claims for wages arising out of your employment with us, even though we deny that we are legally liable to make such a payment.

Accordingly you agree to release us, any related corporation and our directors, employees and agents from any such claims that you might have as at the date of execution of this Deed.

The release applies to such claims regardless of whether they arise from an agreement, from a statute or from some other law or industrial instrument. Nor does it matter whether you are presently aware of any right to make such a claim.

4.    Indemnity

In the event that you breach any of your obligations under this deed, you agree to indemnify us against any loss, cost, damage or expense (including but not limited to legal fees) that we incur because of the breach.

You agree that we may produce this deed to a Court, Commission, Tribunal, body or other person as evidence of your irrevocable undertaking not to institute any wages claims against us.

…

6.    About this deed

6.1    No Other Statements or Promise

This document records the entire agreement between us. This means that you must disregard any other statements or promises concerning the matters covered by this document.

6.2    Severance

If any provision in this deed is found to be invalid or unenforceable for any reason, this will not (as far as possible) affect the validity of the remainder of the deed.

…

8.    Acknowledgment as to seeking advice

You acknowledge that you have had an opportunity to seek independent advice before signing this document, and that you have, in fact, sought that advice.

14    The figure of $10,000.00 had been entered in cl 2.1 in handwriting. In Mr Gedling’s case, that figure was $4,750.00.

15    It was common ground that the Deeds had been executed by Mr Freckleton and Mr Gedling on the dates shown on the respective Deeds. The evidence did not disclose whether Mr Freckleton and Mr Gedling were still employees of Atkins Freight at those dates. There was evidence that Atkins Freight had paid the sum of $10,000 to Mr Freckleton but no evidence that it had paid the sum of $4,750 to Mr Gedling.

16    Both Deeds were executed after the period of employment of Mr Freckleton and Mr Gedling to which the FWO’s claim related, and before the date (20 June 2013) on which the FWO had commenced her proceedings in the IRCSA.

17    The issues in the trial concerning the Deeds arose from the Third Amended Answer to the FWO’s claim which was filed by Atkins Freight on 22 April 2015 (the third day of the trial). The relevant paragraphs in the Amended Answer were as follows:

[7]    Employees Gedling and Freckleton entered into Deeds of Settlement of claims on 19 April 2012 and 26 March 2012 respectively and the Applicant is thereby not entitled to claim further entitlements on their behalf.

[8]    In purporting to act on behalf of the employees of the Respondent, the Applicant is bound by any Collective Agreement and any Deeds of Settlement entered into by any employee.

[9]    In the alternative, if the Applicant is entitled to pursue claims on behalf of Gedling and Freckleton then the Respondent should be entitled to a set off of the sum of $4,750 for any entitlement due to Gedling and $10,000 for any entitlement due to Freckleton.

18    The Industrial Magistrate accepted the FWO’s submission that, as the Deeds were relied upon by way of defence to the FWO’s claim, Atkins Freight had “the onus of proof in relation to [their] validity, scope and operation”, at [40]. He held that the evidence adduced by Atkins Freight “falls far short of what is required to discharge the onus”, at [40]. Later, at [42], the Industrial Magistrate said:

Mr Gedling and Mr Freckleton were not called. There is simply no evidence as to what the position was at the time the deeds were entered into. It is entirely unclear whether the claims for wages referred to in the deed[s] had any correlation with the contraventions claimed by FWO on behalf of Gedling and Freckleton.

19    The Industrial Magistrate also held that the FWO was not in any event bound by the Deeds because she was not a party to them, at [41]. He referred in this respect to the judgment of Emmett JA in Ramsey Food Processing Pty Ltd v Tomlinson [2014] NSWCA 237 at [101]-[102].

Ground 2(a) – the effect on the power of the IRCSA

20    In contending that the Deeds had the effect that Atkins Freight was no longer liable to pay any amount for underpayment of wages and that orders could not be made pursuant to s 719(6) of the WR Act and s 545(3) of the FW Act, counsel for Atkins Freight advanced the following propositions:

(a)    the express terms of cl 3 of the Deeds in particular made it apparent that there had been a compromise of such claims as Mr Freckleton and Mr Gedling had, irrespective of whether they arose under contract, statute or award;

(b)    the general principle that parties cannot contract out of the minimum entitlements imposed by an award does not apply to compromises of bona fide disputes concerning the underpayment of wages: Kowalski v Trustee, Mitsubishi Motors Australia Limited Staff Superannuation Pty Ltd [2003] FCAFC 18 (Kowalski) at [19];

(c)    furthermore, it was the policy of the WR Act to encourage the resolution at the workplace level of disputes between employers and employees;

(d)    it was not necessary for Atkins Freight to establish any correlation between the subject matter of the underlying claim for wages in the Deeds and the claims made by the FWO in the proceedings;

(e)    the FWO’s claim in respect of unpaid wages or allowances was subject to the same limitations which would have been applicable had the employees brought their own claims;

(f)    contrary to the Industrial Magistrate’s view concerning the location of the onus, it was for the FWO, if she wished to submit that effect should not be given to the Deeds, to put forward a case that they should be set aside on established grounds, such as misrepresentation, unconscionability or the like.

21    Atkins Freight also relied on several of these matters in relation to Ground 2(b) concerning the discretion and some will be considered in relation to that Ground.

22    In considering the merit of these submissions, it is necessary to have regard to the jurisdiction being exercised by the IRCSA, the FWO’s standing to bring the proceedings, her role in doing so, and to consider whether there were any relevant statutory limitations on the IRCSA’s power.

23    Under the WR Act which applied to the claims in respect of the period concluding on 30 June 2009, the IRCSA’s jurisdiction was derived from ss 719 and 720. Section 719 provided (relevantly):

(1)    An eligible court may impose a penalty in accordance with this Division on a person if:

(a)    the person is bound by an applicable provision; and

(b)    the person breaches the provision.

…

(6)    Where, in a proceeding against an employer under this section, it appears to the eligible court that an employee of the employer has not been paid an amount that the employer was required to pay under an applicable provision …, the court may order the employer to pay to the employee the amount of the underpayment.

24    Section 720 provided:

If an employer is required by an applicable provision … to pay an amount to an employee or to pay an amount to a superannuation fund on behalf of an employee, the employee, or an inspector on behalf of the employee, may, not later than 6 years after the employer was required to make the payment to the employee or fund, sue for the amount of the payment in an eligible court.

25    In this case, s 719(6) was invoked because the FWO did seek the imposition of penalties on Atkins Freight under subs (1) in respect of the contraventions she alleged.

26    By s 717 of the WR Act, the term “eligible court” was defined to include the IRCSA. Section 717 also defined the term “applicable provision” to include a term of an award, s 607 (in relation to meal breaks) and s 612 (in relation to public holidays).

27    As can be seen, both ss 719(6) and 720 empowered the IRCSA to order an employer to pay to the employee an amount which the employer “was required to pay under an applicable provision”. Neither provision subjected the jurisdiction or power of the IRCSA to any other limitation.

28    Following the repeal of the WR Act on 30 June 2009, Sch 3 cll 2(1) and 3(1) and (2) of the Transitional Act had the effect that the Oil Industry Award continued to apply in the same way as it had before that repeal.

29    Furthermore, Sch 3, cll 2(2)(a), 2(5) and 3(a) of the Transitional Act (which, cumulatively, provided a definition of the term “award-based transitional instruments”) had the effect that it was a contravention of Sch 16, cl 2, sub-item 2(1) for an employer to contravene a term of the Oil Industry Award. By reason of Sch 16, cl 16(1)(a) of the Transitional Act and Pt 4-1 of the FW Act (in particular s 545(3)), the IRCSA had jurisdiction to hear and determine claims for award underpayments (including the underpayment of amounts required by the Oil Industry Award) in respect of the balance of the period which was the subject of the FWO’s claim (1 July 2009 to 31 December 2009).

30    It is plain that the FWO had standing to pursue the claims of award underpayment in the present case. Section 681 of the FW Act establishes the FWO and s 682(1) provides for the FWO’s functions. Relevantly, these include the function of commencing proceedings in a court to enforce the FW Act, fair work instruments and safety net contractual entitlements (subpara (1)(d)); and the representation of employees who are parties to proceedings in a court under the FW Act or a fair work instrument (subpara (1)(f)). By reason of cl 13(2) in Sch 18 to the Transitional Act, those functions include the commencement of proceedings “to enforce” the WR Act and awards made under that Act.

31    In commencing the proceedings in the present case to enforce to the WR Act and the Oil Industry Award, the FWO was acting pursuant to s 681(1)(d) of the FW Act, and not s 681(1)(f). That is to say, the FWO was not representing the employees.

32    In the exercise of her statutory function under s 681(1)(d), the FWO was not representing the legal interests of either Mr Freckleton or Mr Gedling and was not bound by agreements made by them: Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 256 CLR 507 at [44]-[46]. The Deeds could not by themselves give rise to any limitation on the IRCSA’s jurisdiction or power, nor on the powers of the FWO. In particular, as the FWO was not a party to the Deeds, she could not be bound by them and they could not give rise to an estoppel binding her: Tomlinson at [45]-[46]. Accordingly, it was not necessary for the FWO to establish grounds, whether in law or in equity, on which the Deeds should be set aside.

33    None of the provisions in the Oil Industry Award on which the FWO relied made the obligation they imposed subject to a condition subsequent, such as that the employee’s claim to the award entitlement had not been comprised. Further, neither the power of the FWO to apply to the IRCSA, nor the exercise of jurisdiction by the IRCSA, was made subject to some further limitation such as the ability of the employee to sue to recover the unpaid amount.

34    The effect of all these provisions is that the question for the IRCSA was whether Atkins Freight had been required either by the WR Act itself or the Oil Industry Award to make the claimed payments, and had not made them.

35    It is true that there could be the prospect of double recovery by an employee whose compromised claims are later pursued by the FWO in the exercise of her independent function. There may also be circumstances, of which Kowalski is an example, in which it would be appropriate for the IRCSA to have regard to compromises of bona fide disputes concerning the underpayment of wages. However, when circumstances of these kinds arise, account can be taken of them by a court in the exercise of the discretion which is the subject of Ground 2(b) in the Notice of Appeal.

36    For these reasons, I consider that Ground 2(a) fails.

Ground 2(b) – the discretion

37    The alternative submission of Atkins Freight was that the IRCSA should, by reason of the Deeds, have declined in the exercise of a discretion to make any order in favour of Mr Freckleton or Mr Gedling.

38    The FWO accepted that, by reason of s 719(6) of the WR Act and s 545(3) of the FW Act, the IRCSA had a discretion as to whether to make an order with respect to the underpayments to Mr Freckleton and Mr Gedling. The discretion exists because both s 719(b) and s 545(3) provide that an eligible State or Territory court “may” order the payment of an award underpayment. The FWO also accepted that, if there had been “a dispute on foot” about the same matters which were the subject of the FWO’s claims in respect of Mr Freckleton and Mr Gedling and those employees had voluntarily compromised their claims, there may have been a proper basis for the exercise of the discretion by the IRCSA not to make an order for underpayment, at least to the extent of the underpayment.

39    Atkins Freight did not contend in the IRCSA that the discretion should be exercised in its favour. Paragraph [7] and [8] of its Third Amended Answer, set out earlier in these reasons, indicate that Atkins Freight’s contentions were only that the Deeds of Settlement meant that the FWO was “not entitled” to make further claims on their behalf and that the FWO was herself bound by the terms of those Deeds. Paragraph [9] of the Third Amended Answer raised a claim, in the alternative, of set off. Counsel for Atkins Freight on the appeal conceded that the issue of discretion had not been agitated in the IRCSA.

40    The general principle is that a party cannot raise a new point on appeal if the point could possibly have been met by the other party by additional evidence: Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438; Water Board v Moustakas (1987) 180 CLR 491 at 497.

41    However, counsel for the FWO conceded, quite fairly, that she was able to argue on the appeal the issues concerning the exercise of the discretion and did not oppose Atkins Freight being permitted to do so.

42    It will be recalled that in [42] of his reasons, the Industrial Magistrate recorded that Mr Freckleton and Mr Gedling had not been called to give evidence; that there was no evidence as to the circumstances pertaining at the time of entry into the Deeds; and that it was unclear whether the claims for wages to which the Deeds referred were correlated at all with the contraventions alleged by the FWO in these proceedings in relation to Mr Freckleton and Mr Gedling.

43    Counsel for Atkins Freight did not challenge those findings directly and it is apparent that each has a proper basis in the evidence before the IRCSA.

44    As noted earlier, the execution by Mr Freckleton and Mr Gedling of the Deeds became an issue on the third day of the trial on the filing by Atkins Freight of its Third Amended Answer to the FWO’s claim. The evidence which trial counsel for Atkins Freight led from Mr Atkins in relation to the Deed made with Mr Freckleton was slight:

Q:    In 2012, Mr Atkins, did you have discussions with Mr Michael Freckleton … as to whether he had an entitlement for underpayments [of] wages … up until that date?

A:    Yes.

Q:    Did you enter into settlement discussions with Mr Freckleton in relation to such a claim?

A:    Yes.

Q:    Did those discussions result in a settlement of any claims that Mr Freckleton may have had arising from his employment with Atkins Freight Services Pty Ltd including any underpayment of wages claimed to date being 23-26 March 2012 when the document was executed?

A:    Yes.

Q:    … Looking at the document now produced to you, is that a true copy of a deed of settlement of claims entered into between him and your company, Atkins Freight Services Pty Ltd?

A:    Yes.

Q:    Did the company subsequently pay the settlement sum to him in accordance with the agreement reached?

A:    Yes.

Q:    Has there been any attempt, to your knowledge, to repay that sum since the agreement was entered into?

A:    No.

45    Counsel then tendered the Deed of Settlement and it was received into evidence over the objection of counsel for the FWO.

46    Trial counsel for Atkins Freight then resumed the examination in chief which, after a successful objection to one question, was as follows:

Q:    … Did you have any discussions, around the same time that you had discussions with Mr Freckleton, with Mr Gedling in relation to his employment with Atkins Freight Services Pty Ltd?

A:    Yes.

Q:    What were those discussions about?

47    Objection was taken to that question and it was never answered as both trial counsel acceded to the Industrial Magistrate’s suggestion that he receive the Deed into evidence and hear submissions later as to the use which could be made of it. No doubt the Industrial Magistrate made that suggestion having regard to the way in which Atkins Freight had, in the Third Amended Answer, indicated that the Deeds may be relevant. As already seen, the Amended Answer did not indicate that Atkins Freight would be making any submission concerning the exercise of the discretion.

48    That was the sum total of the evidence presented by Atkins Freight in relation to the Deeds.

49    The FWO’s first contention on the appeal concerning the Deeds was that no effect should be given to them because it is not possible for employers and employees to contract out of the minimum entitlements established by awards. That principle is well established: Josephson v Walker (1914) 18 CLR 691 at 700; Textile, Clothing and Footwear Union of Australia v Givoni Pty Ltd [2002] FCA 1406 at [23]-[35]; Metropolitan Health Service Board v Australian Nursing Federation [2000] FCA 784, (2000) 99 FCR 95 at [17]-[25]. The FWO accepted that this general principle does not preclude parties from compromising bona fide current and contemplated litigation. So much was confirmed by the Full Court in Kowalski at [17]:

In these circumstances to view the Heads of Agreement as simply involving some diminution of the appellant’s statutory rights is to misunderstand the agreement reached. Plainly the appellant and the second respondent had litigation outstanding. Plainly enough each party was putting a particular position in that litigation. There were risks to each. True it is that statutory public rights cannot be waived or compromised. However, this does not prevent the parties from compromising litigation on foot and in contemplation, having regard to the various risks to the parties in that litigation.

(Citations omitted)

50    However, the FWO submitted that the principle recognising the validity of compromises of claims to award entitlements had no application in the present case. That was because there was no evidence (let alone a suggestion) that there had in March and April 2012 been any contemplated litigation or even a dispute between either Mr Freckleton or Mr Gedling, on the one hand, and Atkins Freight on the other which could have been the subject of the compromise. The settlement deeds did not contain any recital of litigation or disputes which they were intended to settle. On the contrary, cl 3 of the Deeds referred only to claims which the employees “might have” and went on to say that it did not matter “whether you are presently aware of any right to make such a claim”. I also observe that the Deeds of Settlement refer to “any” wages claims (cl 1) and to “any” claims (cl 3) and not to identified claims. Terminology of these kinds is inconsistent with the Deeds being in settlement of current or contemplated litigation or of an extant dispute.

51    The answers of Mr Atkins in his evidence in chief set out above suffer from the fact they were responsive to questions in leading form. However, even those answers did not suggest that there was any current or contemplated litigation. Mr Atkins was asked only whether he had had discussions with Mr Freckleton “as to whether he had an entitlement for underpayment [of] wages”. Counsel for the FWO submitted that this evidence was just as consistent with Mr Atkins having initiated a discussion with Mr Freckleton at a time when he (Mr Freckleton) was unaware that he had not been paid his true entitlements and in which Mr Atkins had referred to the possibility that Atkins Freight had underpaid him his true entitlements and had offered him a lump sum payment instead. I accept that submission. There is simply no evidence that either Mr Freckleton or Mr Gedling had taken any action at all with respect to the underpayments or even that they were the ones raising the issue with Mr Atkins. The circumstances of this case appear to be very different from those considered by the Full Court in Kowalski, as there is no evidence of an existing bona fide dispute.

52    The principle acknowledged in Kowalski should be carefully confined in its application. Were it otherwise, the general principle that parties cannot contract out of award obligations may be easily subverted. Counsel for Atkins Freight appeared to acknowledge that this was so by submitting that the Kowalski principle applied to “bona fide” disputes.

53    The submission made by Atkins Freight that the policy of the WR Act and the FW Act to encourage the resolution at the workplace level of disputes between employers and employees does not warrant any different view. The existence of such a policy may be accepted, having regard to the terms of s 186(6) of the FW Act and Pt 13 of the WR Act. Atkins Freight submitted that this statutory policy supported an understanding that it was the legislative intention that agreements of the kind reflected in the Deeds of Settlement should be enforceable. It is not altogether clear that the dispute resolution procedures contemplated by the WR Act and the FW Act do apply in the case of non-compliance by employers with their payment obligations under awards and enterprise agreements. However, it is not necessary to express a concluded view on that issue. First, it was also the policy of the WR Act and is the policy of the FW Act that employers and employees should comply with their obligations under awards and industrial agreement and that there should not be any contracting out of those obligations other than in confined circumstances. Secondly, there is no evidence that Atkins Freight was invoking any dispute resolution procedure in the Oil Industry Award. In fact, Atkins Freight’s evidence did not even establish that Mr Freckleton and Mr Gedling were still employees of Atkins Freight at the time that they entered into the Deeds of Settlement. That is to say, it is not clear whether these were agreements made at the “workplace level”.

54    In my opinion, the present case has not been shown to be within the Kowalski principle. Instead, the Deeds contravene the principle that it is not open to parties to contract out of award obligations. Clause 8 of the Deeds which contains an acknowledgement that the employees had sought legal advice before executing the Deeds does not require any different conclusion. When the issue concerns the exercise of the discretion, it is to be expected that there would be evidence that that had in fact occurred if reliance is to be placed on such a clause. Atkins Freight led no such evidence.

55    Next, the FWO submitted that the Deeds of Settlement may be construed as applying equally to entitlements which may accrue in the future as well as to entitlements which had accrued in the past. This was a further reason, it was submitted, that the Deeds could not be regarded as relating to current or contemplated litigation.

56    I consider that the terms of cl 3 of the Deeds preclude acceptance of this particular submission. The second sentence of that clause provides for a release from any such claims that you might have “as at the date of execution of this Deed”.

57    However, a related submission of the FWO has more force. This was her submission to the effect that such claims for wages to which the Deeds referred were not shown to correlate with the contraventions by Atkins Freight alleged by the FWO with respect to Mr Freckleton and Mr Gedling. As already noted, the Industrial Magistrate upheld that submission. Given the limited evidence led from Mr Atkins about the Deeds, that finding cannot be assailed.

58    The Deeds refer to a lump sum payment. When that kind of payment is made, it is important to identify the particular award entitlement to which it relates. This is indicated by the line of authorities concerning claims by employers for a set off in respect of non-award or over-award payments in the defence of award underpayment claims: Ray v Radano [1967] AR (NSW) 471; Pacific Publications Pty Ltd v Cantlon (1983) 4 IR 415; Poulos v Waltons Stores (Interstate) Ltd (1986) 10 FCR 429; Poletti v Ecob (No 2) (1989) 91 ALR 381, (1989) 31 IR 321; Logan v Otis Elevator Co Pty Ltd [1999] IRCA 4, (1999) 94 IR 218; Australian and New Zealand Banking Group Ltd v Finance Sector Union of Australia [2001] FCA 1785, (2001) 111 IR 227; Linkhill Pty Ltd v Director, Office of the Fair Work Building Industry Inspectorate [2015] FCAFC 99, (2015) 240 FCR 578. These authorities indicate that close attention should be given to any agreement between the parties that a sum of money is paid for specific purposes and to any designation by the employer which indicates that the payment was made for a purpose other than satisfaction of an award entitlement.

59    In the present case, the decision of the Full Bench of the Industrial Commission of New South Wales in Court Session in Pacific Publications Pty Ltd v Cantlon is particularly pertinent. In that case, the employer had made a payment of $4,000 described as “special gratuity” to a retrenched employee at the time of the termination of the employee’s employment. Later, the employer sought to have the payment of $4,000 brought into account in relation to the employee’s claim that the notice of his termination had been insufficient. The Full Bench held that the employer was not entitled to do so on the basis that the term “special gratuity” in its ordinary meaning was apt to describe some “extra-award” or concessional amount independent of, and in excess of, award entitlements on termination, at 421. That being so, the payment could not be set off against the award entitlement.

60    In the present case, the payments to Mr Freckleton and Mr Gedling were not said to have been paid in respect of any particular period or in respect of any particular entitlement. Given the dates of the Deeds of Settlement, the payments may well have been made in respect of periods after the contraventions alleged by the FWO. Alternatively, they may have related to earlier contraventions. Further still, the Deeds of Settlement make it apparent that the payments were made to settle claims for “wages” whereas, as noted earlier, several of the contraventions of Atkins Freight related not to wages but to unpaid allowances and expenses. In the industrial context, it is common for a distinction to be drawn between wages, on the one hand, and allowances, on the other: Mutual Acceptance Co Ltd v Federal Commissioner of Taxation (1944) 69 CLR 389 at 396-7.

61    The Industrial Magistrate rejected the claim of Atkins Freight to a set off, and Atkins Freight has not brought any appeal against that rejection. There would be an incongruity, in my opinion, for the Court to hold that, despite the claim to a set off having failed, the Court should nevertheless, and for the same reasons, decline in the exercise of its discretion to make any order in respect of the established underpayments.

62    Having regard to these matters, including those stated above at [20], it is difficult to identify a persuasive basis on which the discretion available under s 545(3) could be exercised favourably to Atkins Freight. In addition, the conclusion of the Industrial Magistrate at [42] has not shown to be wrong.

63    Accordingly, Ground 2(b) fails.

Ground 3

64    By Ground 3, Atkins Freight contended that the Industrial Magistrate should have found that Mr Latham’s employment was covered by the Shift Workers Agreement, and not the Oil Industry Award.

65    The Industrial Magistrate rejected this claim, holding at [33] that Atkins Freight had not discharged the onus of showing that Mr Latham’s employment was covered by the Shift Workers Agreement.

66    The issue concerning the Shift Workers Agreement was introduced into the proceedings at first instance by the Third Amended Answer filed on the third day of the hearing before the Industrial Magistrate.

67    The Shift Workers Agreement indicated on its third page that it was a collective agreement of the kind for which Pt 8 of the WR Act provided. It was, apparently, an “employee collective agreement” contemplated by s 327 of the WR Act. That section provided:

An employer may make an agreement (an employee collective agreement) in writing with persons employed at the time in a single business (or part of a single business) of the employer whose employment will, or would but for the operation of an ITEA that has passed its nominal expiry date, be subject to the agreement.

68    Section 340(2) of the WR Act provided that an employee collective agreement would be regarded as approved if: (a) the employer had given all the persons employed at the time whose employment will or would be subject to the agreement a reasonable opportunity to decide whether they wished to approve the agreement; and (b) the majority of those persons had decided that they did want to approve the agreement. Section 333B provided that an employee collective agreement was made when the agreement was approved in accordance with s 340.

69    In addition to tendering the Shift Workers Agreement, Atkins Freight tendered a notification from the Australian Government Workplace Authority under s 346M of the WR Act that the Agreement passed the no-disadvantage test and would commence operating seven days later (on 10 April 2009).

70    Section 349 of the WR Act provided that an award had no effect in relation to an employee while a workplace agreement operated in relation to the employee.

71    There are some unsatisfactory features of the Shift Workers Agreement. The face page of the Agreement shows that it was made between Atkins Freight, on the one hand, and “The LOCAL SHIFT WORKER EMPLOYEES’ of Atkins Freight Services Pty Ltd”, on the other. However, the employee parties are identified in the body of the Agreement as “The Heavy Vehicle Employees’ of the Company”, on the other. Despite this, the execution page shows that two employees (a Mr Cochrane and Mr Kalms) executed the document “on behalf of the LOCAL SHIFT WORKERS EMPLOYEES’ of Atkins Freight Service”. The Agreement contained no definition of the terms “local shift worker employees” or “the heavy vehicle employees”. Nor did it contain any specification or criteria by which such persons could be identified.

72    Despite the difficulties created by these circumstances in identifying the persons to whom the Shift Workers Agreement referred, counsel for Atkins Freight submitted that the Industrial Magistrate should have found that the employment of Mr Latham was governed by that Agreement. Counsel relied on the evidence given by Mr Atkins before the Industrial Magistrate as follows:

Q:    In 2008 did you enter into discussions with some of your employees with a view to entering into a collective agreement with respect to shift workers?

A:    Yes.

Q:    And did that result in a collective agreement being certified?

A:    Yes.

…

Q:    Looking at the document now produced to you, is that a true copy of the collective agreement between Atkins Freight Service Pty Ltd and the local shift worker employees of Atkins Freight Service Pty Ltd?

A:    Yes.

Q:    And just looking at page 20, is that your signature at the top, Ian Atkins with the date of 5 August 2008?

A:    Yes.

Q:    There are two employees’ names that appear, one being a Mr Trevor Kalms … Do you understand that to be the Trevor Kalms involved in the Fair Work Ombudsman proceedings in this matter?

A:    Yes.

73    The Shift Workers Agreement, together with the s 346M notice was then tendered. The evidence in chief of Mr Atkins then continued:

Q:    Mr Atkins, you noted that Mr Kalms had signed the document that you signed, the document being the collective agreement document on 5 August 2008?

A:    Yes.

Q:     … [S]ubsequently in December 2008 did your company, Atkins Freight Service Pty Ltd, employ a Mr Wayne Latham?

A:    Yes.

Q:    And was he also an employee pursuant to the collective agreement?

A:    Yes.

Q:    That was as a shift worker?

A:    Yes.

Q:    Did you provide Mr Latham via your operations manager, Mr Gary [Sandercock], with a letter of 23 December 2008 affirming that he would be undertaking shift work for the company?

A:    Yes.

74    That was the extent of the evidence which Mr Atkins gave concerning Mr Latham and the Shift Workers Agreement. Again, the weight which could be given to Mr Atkins’ answers is diminished by the leading nature of the questions to which they were responsive.

75    Mr Atkins did not give any evidence as to the terms of Mr Latham’s employment contract, nor the actual work performed by Mr Latham, nor the circumstances and arrangements concerning the performance of this work. The Industrial Magistrate was not provided with any primary evidence by which he could determine whether Mr Latham was properly characterised as a shift worker at all, let alone one to whom the Shift Workers Agreement applied. Mr Atkins’ conclusionary statement was insufficient for that purpose as it was no more than an assertion of the matter to be established. Evidence of the primary matters is usually required to resolve disputes about the coverage of industrial awards and agreements. Moreover, Atkins Freight did not lead any evidence that the terms “local shift worker” or “heavy vehicle employees” had a meaning in its business which was commonly understood at the time the Shift Workers Agreement was made, by which meaning could have been given to the undefined terms in the Agreement. Nor did it lead evidence by which the employment arrangements of Mr Kalms and Mr Latham could have been compared with those of its other drivers.

76    In short, Atkins Freight relied on a certified agreement containing inconsistent statements as to the persons it covered; and which did not contain any definition of the persons to whom it applied. Atkins Fright did not lead evidence by which the Industrial Magistrate could have made a determination that Mr Latham was properly characterised as a “shift worker”, let alone a “local” shift worker; and it did not lead evidence comparing Mr Latham’s employment and duties with those of Mr Cochrane and Mr Kalms. In those circumstances, it is unsurprising that the Industrial Magistrate concluded that Atkins Freight had not discharged the onus of establishing that Mr Latham’s employment was covered by the Shift Workers Agreement.

77    Some of the submissions made by Atkins Freight on the appeal were to the effect that the Industrial Magistrate had erred in regarding Atkins Freight as carrying the onus of establishing these matters. I do not uphold that submission. In litigation, the principle generally applied is that it is the party asserting the affirmative case who has the onus of establishing that case. “He who asserts must prove”: The Commonwealth v Muratore (1978) 141 CLR 296 at 303. The discharge of this onus can sometimes require plaintiffs/applicants to prove a negative proposition if that proposition is an essential part of the cause of action or entitlement relied upon. In the present case, it was Atkins Freight which was invoking s 349(1) of the WR Act to defeat the FWO’s claim. It was making the affirmative proposition, namely, that it was Shift Workers Agreement and not the Oil Industry Award which applied to Mr Latham’s employment. Moreover, it had raised the Shift Workers Agreement only belatedly in the trial, and after the FWO had closed her case. There would be additional unfairness in these circumstances if the FWO had an onus. In these circumstances, I consider that Atkins Freight held the onus, or, at the very least, an evidential onus. It is plain that it did not discharge its onus.

78    For these reasons Ground 3 fails.

Summary

79    For the reasons given above, the appeal is dismissed. I will hear from the parties in relation to any consequential matters.

Associate:

Dated:    22 September 2017