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Steamships Trading Company Ltd v Taylor [1976] PNGLR 303 (26 July 1976)

Papua New Guinea Law Reports - 1976

[1976] PNGLR 303 - Steamships Trading Co Ltd v James Taylor Skedden 

[1976] PNGLR 303

SC100

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

STEAMSHIPS TRADING COMPANY LIMITED

V

DANDI, RE SKEDDEN

Waigani

Frost CJ Prentice DCJ Williams J

23 June 1976

26 July 1976

PREROGATIVE WRITS - Prohibition - Industrial tribunal - Jurisdiction - Industrial dispute - Claim within three months after termination of contract of employment for pro-rata leave back pay upon terms more beneficial to the employee than as provided in the contract held to be industrial dispute - Industrial Relations Act, 1962-1971, ss. 23, 27 - Industrial Organizations Act, 1962-1973, s. 4 (1)[cccxliii]1.

INDUSTRIAL LAW - Tribunal - Jurisdiction - Industrial dispute - Claim within three months after termination of contract of employment for pro-rata leave back pay upon terms more beneficial to the employee than as provided in the contract, held to be industrial dispute - Industrial Relations Act, 1962-1971, ss. 23, 27 - Industrial Organizations Act, 1962-1973, s. 4 (1)[cccxliv]2.

S. was employed by Steamships Trading Company Limited under a written staff agreement dated 21st December, 1973, which provided for two calendar months leave with full pay at the expiration of each two year period of continuous satisfactory service, and further provided that if the employee left his employment he would be entitled to pro-rata leave only after twelve months’ service, calculated on the basis of three weeks leave per year. On 30th November, 1974, S. resigned his position and claimed pro-rata leave for the period of his employment, which was refused. The appropriate procedure having been taken under the Industrial Relations Act 1962-1973, the matter was referred to the Industrial Tribunal which held that it had jurisdiction to hear and determine the matter.

On the return of an order nisi for prohibition directed to the Tribunal, and granted on the grounds that the Tribunal had no jurisdiction in that: (a) at no material time did any industrial dispute exist; and (b) the matter before the Tribunal was not an industrial matter;

Held

(1)      The Industrial Relations Act 1962-1971 and the Industrial Organizations Act 1962-1973, properly construed, do not preclude an industrial dispute arising where an individual employee seeks simply to overturn the clear terms of an employment contract freely entered into.

Ela Motors Ltd. v. McCrudden; Ex parte Hoepper, [1973] P.N.G.L.R. 436 followed.

(2)      The expression “particulars of a contract” used in s. 4(1)(g)[cccxlv]³ of the Industrial Organizations Act 1962-1973 includes the term of a contract, and a dispute in which a claim is made for the variation of a term providing for pro-rata entitlement of recreation leave is a plain case of a dispute arising from a contract of employment in which that term or “particular” is “contested”. The word “contested” in relation to “the particulars of the contract”, cannot further delimit the ambit of a “dispute”, for it is to be given the meaning appropriate to the range of matters in issue to be decided by the Tribunal. It thus includes a contest going beyond legal entitlement, and extends to a claim, such as the present one, that the term of the contract in question is “harsh in the light of prevailing conditions for the majority of workers”.

Ela Motors Ltd. v. McCrudden; Ex parte Hoepper, [1973] P.N.G.L.R. 436 applied.

(3)      Accordingly, the Tribunal had jurisdiction and the order nisi should be discharged.

Prohibition

This was the return of an order nisi for prohibition sought against Mr. P. R. Dandi, acting as an Arbitration Tribunal under the Industrial Relations Act 1962-1971. The Tribunal having held that it had jurisdiction to entertain the matter before it, an order nisi was sought and granted on the grounds that the Tribunal had no jurisdiction in that (a) at no material time did any industrial dispute exist, and (b) the matter before the Tribunal was not an industrial matter.

Counsel

J. A. Griffin, for the prosecution: There is no “industrial dispute” within the meaning of s. 4 (1) of the Industrial Organizations Act; there can be no dispute where there is no “contest” as to the “particulars” of the contract. The claim was not made until the employment relationship was terminated and in any event, an industrial dispute can never arise when an individual employee seeks simply to overturn the clear terms of an employment contract which he has freely entered into. The mere fact that the Industrial Relations Act and the Industrial Organizations Act make it possible for an “industrial dispute” to arise between an individual employee and an individual employer is not sufficient to justify such an unusual result. A “matter” does not become an “industrial matter” or the subject of an “industrial dispute” simply because it is a matter with respect to which persons who are employers and employees are disputing. (R. v. Kelly [1950] HCA 7; (1950) 81 C.L.R. 64 at p. 85).

J. E. Byrne, for the respondent: The Arbitration Tribunal has jurisdiction to hear this case because there is an “industrial dispute” within the meaning of s. 4 (1) of the Industrial Organizations Act. The dispute is between an employer and an employee and it arose from a contract of employment the particulars of which were contested within three months after the termination of that contract. The particulars of that contract are being contested: it is in reality an application to have one of the particulars of the contract varied. The Legislature in enacting s. 4 (i) (g) envisaged industrial disputes occurring after contracts of employment had ended, even if these amounted to a claim by an individual to have the terms of the contract altered or re-written; and the “fairness or propriety of a claim has nothing to do with the question whether it is capable of forming a dispute as to an industrial matter”: (R. v. Findlay; Ex parte Commonwealth Steamship Owners’ Association [1953] HCA 81; (1954) 90 C.L.R. 621 at p. 631.

Cur. adv. vult.

26 July 1976

FROST CJ:  This is the return of an order nisi for prohibition which is sought against Mr. P. R. Dandi acting as a Tribunal established under the Industrial Relations Act 1962.

The facts of the case, as is stated in the decision of the Tribunal, are not in dispute. Mr. J. T. Skedden entered into a staff agreement dated 21st December, 1973, with the prosecutor, Steamships Trading Company Limited, for employment as an accountant. In addition to the usual heads of agreement, provision was made for two calendar months’ leave with full pay at the expiration of each two-year period of continuous satisfactory service (para. 5). The agreement then went on to provide, “If you leave the Company, you will be entitled to pro-rata leave only after twelve (12) months’ service, calculated on the basis of three (3) weeks’ leave per year.”

Mr. Skedden duly tendered his resignation, which was accepted, to take effect from 30th November, 1974, which meant that his service was less than the requisite period of twelve months under the contract. The fact that he then worked for the prosecutor in a casual capacity until 10th December, 1974, does not appear to have any relevance to the issue. In his statement dated 13th December, 1975, Mr. Skedden claimed from the prosecutor pro-rata leave pay for the period of his employment. In addition to setting out the facts relating to his employment, and also the claim, the statement included the following:

“4.      That, although the Staff Agreement did not allow for pro-rata leave pay until the completion of one year’s service, I felt that this provision was harsh in the light of the prevailing conditions for the majority of workers in this country whereby they are granted pro-rata leave pay after six month’s service.

5.       That, relying on the case of Ela Motors Ltd. v. Hoepper, I have brought this matter to Arbitration after failing to reach agreement with Steamships Trading Company Ltd.”

In the case referred to in the above statement, following the decision of the Full Court of the pre-Independence Supreme Court in Ela Motors Ltd. v. McCrudden; Ex parte Hoepper[cccxlvi]⁴ upholding the jurisdiction of the Tribunal, a Tribunal granted pro-rata leave entitlement after six months’ service with the employer, although the contract of employment made no provision for pro-rata leave entitlement.

It was common ground that Mr. Skedden took the appropriate procedure under the Industrial Relations Act pursuant to which an industrial dispute between the parties was referred to the Tribunal for decision and the making of an award.

At the hearing before the Tribunal counsel for the employer submitted that the Tribunal had no jurisdiction. He submitted that since there was a specific provision in the Staff Agreement dealing with pro-rata recreation leave this provision must prevail. Because of this specific provision it was submitted that the claim was not an industrial matter within the meaning of the Industrial Organizations Act, s. 4 (1), nor was there any industrial dispute within the meaning of the Industrial Relations Act. The Full Court decision (supra)[cccxlvii]⁵ was to be distinguished, it was argued, on the basis that in that case there was no provision in the contract dealing with pro-rata recreation leave.

The Tribunal rejected this submission and held that the case cited was applicable, and thus that the Tribunal had jurisdiction to hear and determine the claim.

The grounds upon which the order nisi for prohibition was granted by this Court are, in substance, that the arbitration Tribunal “had no jurisdiction in that: (a) at no material time did any industrial dispute exist, (b) the matter before the Tribunal was not an industrial matter”.

The jurisdiction of the arbitration Tribunal to make an award is to be found in the Industrial Relations Act 1962. The scheme of that Act will be found succinctly stated by Clarkson J. in the Full Court case (supra)[cccxlviii]⁶. The Full Court held that the existence of an “industrial dispute” was a necessary prerequisite to the Tribunal having jurisdiction to hear and determine the matter in dispute. The term is defined in the Industrial Organizations Act 1962 with which the Industrial Relations Act is incorporated and is to be read as one, Industrial Relations Act, s. 3. An “industrial dispute” is defined, so far as is relevant to this case, as accepted by both counsel, as follows:

“ ‘industrial dispute’ means a dispute or difference between:

(a)      an employer and an employee or employees;

...

connected with an industrial matter and includes:

...

(g)      a dispute arising from a contract of employment the particulars of which are contested by either party to that contract within 3 months after the termination of the contract.”

It is crucial to the prosecutor’s argument before this Court that certain words in that paragraph, viz. “the particulars of which are contested” which were inserted in the definition by the Industrial Organizations (Definition of Industrial Disputes) Act 1973, s. 3, came into operation after the Full Court decision (supra)[cccxlix]⁷. (In fact the Act was passed and reserved on 6th July, 1973, which was prior to the hearing before the Full Court (supra)[cccl]⁸, and the assent was notified on 11th October, 1973, that is during the period when the case was being considered by the Court for judgment).

The relevant statutory provisions also include ss. 23 and 27 of the Industrial Relations Act. Section 23 confers on the Tribunal jurisdiction to inquire into the industrial dispute, and to make an award deciding the matters in issue between the parties to the dispute; s. 27 excepts from the general and conditional provision against an award being given retrospective operation, an award given in an industrial dispute specified in para. (g). Indeed para. (g) would be nugatory unless such an exception had been made.

Now the authority of Ela Motors Ltd. v. McCrudden; Ex parte Hoepper[cccli]⁹ was not challenged in this Court. The Full Court decided in that case, as stated in the headnote, that the effect of the legislation is that “a tribunal is empowered to make an award deciding the industrial matters in issue in an industrial dispute arising from a contract of employment and arising within three months after the termination of that contract and that the definition of industrial dispute in s. 4 (1) of the Industrial Organizations Ordinance, 1962-1971, is wide enough to cover a disputed claim for payment of pro-rata recreational leave whether it is alleged that the payment is a present legal entitlement or not; the power is to go to the actual matters in dispute, irrespective of the actual description of the dispute (s. 23).”

It is clear from the Full Court decision that an industrial dispute may go beyond an employee’s legal entitlement, and includes a claim by the claimant, in the words of Clarkson J. (in whose judgment Minogue C.J. agreed) “as to what ought to be granted in accordance with accepted industrial principles”[ccclii]¹⁰, and, in the words of Prentice J. as he then was, “that the contract at the time of his original complaint, should have been varied so as to allow for a pro-rata entitlement of holiday leave”[cccliii]¹¹. Indeed it is implicit in the legislation that an award may vary the wages and the conditions of employment which were originally provided by a contract between an employer and employee (see s. 34 (2)), and whilst generally the award operates only after the date when the dispute was reported, an award under para. (g) may be given, as stated, a retrospective operation. This unusual range of the Tribunal’s jurisdiction led Clarkson J. to observe, “if the claim is for something he was admittedly never entitled to under the contract many will view with alarm the prospect that after the contract is terminated he may be able to persuade a tribunal to reassess completely the value of his services and to rewrite the contract”[cccliv]¹²; and Prentice J. (as he then was), in referring to the claim as one for variation of the contract, to state that “one would think it to come surprisingly, from a person who had benefited from a written contract and made no complaint as to its conditions during the first term thereof nor until he wished to be released from it many months after the second term had begun”[ccclv]¹³.

For myself I am content to adopt the view of the judges of the Full Court as the correct construction of the legislation. This conclusion is sufficient to dispose of the submission, as helpfully summarized in writing by counsel for the prosecutor, that an industrial dispute can never arise when an individual employee seeks simply to overturn the clear terms of an employment contract which he has freely entered into. Indeed counsel’s submissions were put as high as this, “If this sort of claim is within the tribunal’s jurisdiction, no employer or employee would know where he stood, particularly in the light of the retrospectivity allowed by s. 27. It is wrong in principle to allow the possibility of claims for the re-assessment of the work of past services where the parties have for years abided by the terms of a clear contract of employment which was freely entered into.” It is clear that these submissions cannot succeed because they fail to take account of the plain effect of the statutory provisions, different as they may be, in some respects, from the Australian statutes which were the original source of the legislation of Papua New Guinea. However, as Clarkson J. pointed out, the legislation provides means whereby injustice may be avoided. The appropriate authority “directs an industrial dispute to be referred to a tribunal only if he thinks fit and a tribunal has a wide discretion to refuse a claim”[ccclvi]¹⁴.

Further, in my opinion, there is no warrant to be found in either the Industrial Relations Act or the Industrial Organizations Act to remove from the jurisdiction to make an award under s. 23, or from the general operation of s. 34, cases in which industrial disputes arise between an individual employer and employee. Such an argument cannot stand with the Full Court decision (supra)[ccclvii]¹⁵.

This brings me to the main submission by counsel for the prosecutor, that the Full Court judgments (supra)[ccclviii]¹⁶are distinguishable following the amendment to para. (g). Counsel submitted that the legislature must have intended to place a dispute such as arose in that case outside the ambit of para. (g). Mr. Hoepper’s claim had been, of course, before a Tribunal prior to the Act being passed. Whilst it is not clear to my mind that the amendment was directed to that type of case, the definition of a dispute as “a dispute arising from a contract of employment” is indeed a wide one, and some restriction of operation may well have been intended. The question is whether the amendment affects such a case as the present.

Now the intention of the legislature is to be ascertained from the words used. The expression “particulars of a contract” includes, in my opinion, the term of a contract, and a dispute in which a claim is made for the variation of a term providing pro-rata entitlement of recreation leave would seem to be a plain case of a dispute arising from a contract of employment in which that term or “particular” is contested. The word “contested” in relation to “the particulars of the contract”, in my opinion, cannot further delimit the ambit of a “dispute”, for it is to be given the meaning appropriate to the range of matters in issue to be decided by the Tribunal. It thus includes a contest going beyond legal entitlement, and extends to a claim, such as the present one, that the term of the contract in question is “harsh in the light of prevailing conditions for the majority of workers ...”.

In my opinion the dispute in this case falls within para. (g) of the definition. Accordingly the Tribunal had jurisdiction to make an award deciding the matters in issue between the parties.

In my opinion the order nisi should be discharged.

PRENTICE DCJ:  The Minister for Labour and Industry on 12th December, 1975, referred an “industrial dispute” under the Industrial Relations Act to Mr. Phillip Dandi as arbitrator. The jurisdiction of the Tribunal was challenged on the basis that no “industrial dispute” existed within the meaning of the Act. The arbitrator ruled that he had jurisdiction. In these proceedings it is sought to prohibit continuance of the hearing by the arbitrator.

The controversy arises following the termination of the contract of employment of one Skedden with Steamships Trading Company Ltd. As to leave, his written contract provided that if the employee left the company he would be “entitled to pro-rata leave only after 12 months’ service calculated on the basis of 3 weeks leave per year”. The employee had not been with the company for 12 months, and would not therefore have been entitled to leave under the terms of the contract. He claims nevertheless that he is entitled to an award (by the arbitrator) of pro-rata leave for the length of his service less than 12 months. A dispute is said to exist within the meaning of the definition of “industrial dispute” in para. (g) of s. 4 of the Industrial Organizations Act 1962. At the time of Hoepper’s case[ccclix]¹⁷ the appropriate words of this section read:

“A dispute arising from a contract of employment by either party to that contract within 3 months after termination of the contract.”

By an amendment introduced by Act No. 60 of 1973, they now read:

“A dispute arising from a contract of employment the particulars of which are contested by either party to that contract within 3 months after the termination of the contract.”

Mr. Griffin for the prosecutor contends that such a “dispute” cannot arise after termination of contract, where there is no “contest” as to the particulars of the contract (i.e. where the particulars are undisputed); but it is merely sought to vary them. He asserts that the particulars of the contract are not contested here within the meaning of the section. He submits that the amendment was intended to, and does work a narrowing of the previously existing category set out in the s. 4 definition (g) of “industrial dispute”.

Alternatively he asks this Court to distinguish the Hoepper’s[ccclx]¹⁸ decision of the pre-Independence Full Court, on the basis that Hoepper’s contract made no provision for pro-rata leave, whereas Skedden’s makes specific provision for pro-rata leave. As I understand his argument; he then went on, without mounting a direct challenge to Hoepper’s case[ccclxi]¹⁹ to ask this Court in effect not to follow it. The Act should not be read, he says, so as to allow an “industrial dispute” to exist where a single employee seeks to overturn the clear terms of his contract after the contract has been terminated. An examination of comparable legislation in Australia indicates that in industrial law a contract of employment yields to awards only of general application or specific enactment. This branch of his alternative argument follows roughly the lines of that advanced unsuccessfully in Hoepper’s case[ccclxii]²⁰.

The pre-Independence Full Court of the Supreme Court in Hoepper’s case[ccclxiii]²¹ held that under para. (g) of the definition of “industrial dispute” as it then stood, an arbitrator was permitted to entertain a claim for pro-rata leave within 3 months of the termination of the contract when the contract provided otherwise. I remain unpersuaded that Hoepper’s case[ccclxiv]²² was wrongly decided. I do not think it can be distinguished on its facts from those in this case, merely because in the contract with which it was concerned no provision for pro-rata leave appeared, whereas in the contract now being considered a provision of a limited nature for pro-rata leave was made. Clarkson J. expressed himself therein in these terms (at p. 445):

“It seems to me that with one possible limitation to which I shall refer the effect of the legislation is that a tribunal is empowered to make an award deciding the industrial matters in issue in an industrial dispute arising from a contract of employment and arising within three months after the termination of that contract and that the definition of ‘industrial dispute’ is wide enough to cover a disputed claim for payment of prorata recreational leave whether it is alleged that the payment is a present legal entitlement or not.... The result may be surprising to those familiar with Australian industrial arbitration systems but it is open to Parliament to confer judicial power on an arbitration tribunal if it so chooses and there is nothing which requires the function of the Tribunal to be restricted to dealing with the future regulation of industrial matters in industry.”[ccclxv]²³

As his Honour pointed out safe-guards against abuse of para. (g) exist in the other provisions of the Act. His remarks I consider are apposite to a consideration of the legislation as it exists in its altered form. In my opinion, that is sufficient to dispose of Mr. Griffin’s argument based on the unusual nature of the power purportedly vested in an arbitrator to make retroactive invasion of contractual rights.

The scheme of procedure arising from the Act has been set out with clarity in Clarkson J.’s judgment in the abovementioned decision. It appears unnecessary to repeat it here. I turn now to a consideration of whether the instant dispute comes within the meaning of the section as it now stands.

The reason for the introduction of an altered para. (g) of the Act No. 63 of 1973 is not apparent. Additional words “the particulars of which are contested” have been included. Mr. Griffin contends that the words must have a narrowing effect. The timing of the legislation in comparison with the events of Hoepper’s case[ccclxvi]²⁴ does not seem to assist the construction of the new definition. Certainly the words are inapt to amplify the category of “industrial disputes” epitomised in para. (g). I consider they must be intended to narrow it in comparison with that obtaining under the former definition. That disputes may arise between ex-employers and ex-employees, which do not emerge from a contest about the particulars of the contract being discussed, is exemplified by the decision in Reg. v. Smith[ccclxvii]²⁵.

In the contract now under consideration, pro-rata leave was provided for, but only after the lapse of 12 months. Mr. Skedden in his claim of 13th December, 1975 makes it plain that his contention is that this provision is harsh and inequitable. Once he had made this claim within the statutory period, and his claim had been rejected, an “industrial dispute” it seems to me, involving the contestation of contract particulars, existed within the meaning of para. (g). I do not think it is for this Court to attempt in this particular case a definition of circumstances in which such a contest arises and of circumstances in which such a contest does not arise.

For the above reasons I am of the opinion that the arbitrator has jurisdiction to proceed to make an award deciding the matters in issue and I would wish the order nisi to be discharged.

WILLIAMS J:  The facts giving rise to this matter, the relevant statutory provisions and authorities and the arguments of counsel are set out in the judgments of the other members of the Court and there is no need for me to repeat them.

It seems to me that the decision of the pre-Independence Full Court in Ela Motors Ltd. v. McCrudden; Ex parte Hoepper (supra)[ccclxviii]²⁶determines the questions raised in this proceeding unless that decision can be distinguished on the basis of the new definition of an “industrial dispute” contained in the Industrial Organizations (Determination of Disputes) Act 1973.

It is difficult to see what the legislature had in mind when effecting the amendment to the definition. Possibly it was to narrow in some way the earlier definition. However, it seems to me that the matter falls within the literal words of the new definition. The contract of employment contained a provision relating to pro-rata leave. The former employee disputes the fairness of this particular provision and contests it.

The result may be alarming to employers with whom individual employees have freely entered into contracts of employment in fields of employment not covered by general awards and who may find themselves faced with the prospect of having contracts rewritten with retrospective operation. However, this seems to me to be plainly the effect of the legislation. This consideration is one which, no doubt, the Tribunal would take into account when considering the merits of an employee’s claim: however it is not a consideration which deprives the Tribunal of jurisdiction to deal with the claim.

Order nisi for prohibition discharged.

Solicitor for the prosecutor: N. A. Malik

Solicitor for the respondent: B. W. Kidu, State Solicitor

[cccxliii]Section 4(1) of the Industrial Organizations Act 1962-1973 provides where relevant:

“ ‘industrial dispute’ means a dispute or difference between--

(a)        an employer and an employee or employees; connected with an industrial matter and includes--

...

(g)        A dispute arising from a contract of employment the particulars of which are contested by either party to that contract within 3 months after the termination of the contract.”

[cccxliv]Section 4(1) of the Industrial Organizations Act 1962-1973 provides where relevant:

“ ‘industrial dispute’ means a dispute or difference between--

(a)        an employer and an employee or employees; connected with an industrial matter and includes--

...

(g)        A dispute arising from a contract of employment the particulars of which are contested by either party to that contract within 3 months after the termination of the contract.”

[cccxlv]p.303

[cccxlvi][1973] P.N.G.L.R. 436.

[cccxlvii][1973] P.N.G.L.R. 436.

[cccxlviii][1973] P.N.G.L.R. 436 at pp. 445-446.

[cccxlix][1973] P.N.G.L.R. 436.

[cccl][1973] P.N.G.L.R. 436.

[cccli][1973] P.N.G.L.R. 436.

[ccclii][1973] P.N.G.L.R. 436 at p. 443.

[cccliii][1973] P.N.G.L.R. 436 at p. 449.

[cccliv][1973] P.N.G.L.R. 436 at p. 446.

[ccclv][1973] P.N.G.L.R. 436 at p. 449.

[ccclvi][1973] P.N.G.L.R. 436 at p. 446.

[ccclvii][1973] P.N.G.L.R. 436.

[ccclviii][1973] P.N.G.L.R. 436.

[ccclix][1973] P.N.G.L.R. 436.

[ccclx][1973] P.N.G.L.R. 436.

[ccclxi][1973] P.N.G.L.R. 436.

[ccclxii][1973] P.N.G.L.R. 436.

[ccclxiii][1973] P.N.G.L.R. 436.

[ccclxiv][1973] P.N.G.L.R. 436.

[ccclxv][1973] P.N.G.L.R. 436 at p. 445.

[ccclxvi][1973] P.N.G.L.R. 436.

[ccclxvii][1974] P.N.G.L.R. 293 at p. 307.

[ccclxviii][1973] P.N.G.L.R. 436.