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Busby v Air Niugini Pty Ltd [2001] PGNC 77; N2155 (20 December 2001)

N2155
PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE AT WAIGANI]

WS 162 of 1998

BETWEEN:

PAUL BUSBY & ORS

Plaintiffs

AND:

AIR NIUGINI PTY LIMITED

Defendants

Waigani: Kapi, DCJ
21st, 27th September, 4th October & 20th December 2001

CONTRACT – Whether claim for overtime pay is governed by Clauses 7.4 & 7.11 of the contract of employment or by the terms of a new shift system introduced on an experiment basis.

Counsel:
G.J. Sheppard for the plaintiff
P. Payne & R. Bradshaw for the defendant

20th December 2001

KAPI DCJ: The plaintiffs are expatriate aircraft engineers employed by the defendant on terms and conditions set out in their respective contracts of employment.

The claim has come before me to determine whether, the defendant is liable to pay overtime on double time in accordance with clause 7.4 and clause 7.11 of individual contracts of employment. Each of the plaintiffs are employed on standard contracts and the question of liability to pay overtime is identical. The relevant clauses provide:

"Clause 7.4. A shift worker shall mean an employee whose aggregate hours of duty shall be eighty (80) hours in each period of two (2) roster weeks comprising 14 consecutive calendar days. Such hours shall subject to clause 7.10 (sic) herein be worked on the basis of eight (8) hours per shift."

"Clause 7.11 A shift worker shall receive overtime at the rate of double time for all hours worked in excess of the hours defined in clause 7.4 herein."

The facts giving rise to the issue before me are these. Prior to the 3rd May 1993, the plaintiffs were on an eight-hour shift roster in accordance with clauses 7.4 and 7.11.

In 1992, the defendant experimented with four foremen on twelve-hour shift roster. This proved to be satisfactory.

This experiment subsequently resulted in the Memorandum of Agreement dated 19th April 1993 between the Aircraft Engineers Association (representing the interests of the plaintiffs) and the defendant to introduce the twelve-hour shift for a trial period for six months to commence on 3rd May 1993. The trial was to be completed on 7th November 1993. The agreement provides:

"In the fortnight prior to the completion date, the Association and the Company will convene a meeting to discuss the success or otherwise of the 12 Hour Shift arrangement. If both parties agree to continue the arrangement, the 12 Hour Shift pattern will continue in force until otherwise terminated. If both parties agree to discontinue the arrangement, the provisions of the 1989 National Aircraft Engineers Award or any subsequent Award will become effective from Monday 4th October 1993. If both parties fail to agree to continue or discontinue the arrangement the decision of the Employer will become final."

The agreement provides that ordinary hours of work within the twelve hour shift will be paid for on ordinary time. It also provides for overtime for approved work performed beyond twelve hours.

In a memo dated 23rd April 1993, the defendant advised all shift workers of the introduction of the twelve-hour shift for a trial period of 6 months, to commence on 2nd May 1993. Shift workers were advised to contact the Manager, Aircraft Maintenance if they had any queries regarding the twelve-hour shift.

It is apparent that some queries were raised on the new shift system. This is reflected in the defendant’s response in memo dated 29th April 1993. The relevant paragraph states:

"A number of queries have been raised regarding the administration of the 12 Hour shift system and I have set out following the suggested solutions.

Firstly this Department has always taken the view that the introduction of a 12 hour system must be cost effective, and that there should not be any financial penalty to the company. We expect to pay the same number of kina for the same number of hours worked, under a 12 hour shift system, as we currently pay under the 8 hour system. We also expect that the Annual Leave and Public Holiday credits accrued over a 12 month period would have the same monitory value under the new 12 hour system as under the present 8 hour system."

Mr West Dixon Mathews, one of the plaintiffs, gave evidence that he complained to the defendant before the new system was introduced. He did not elaborate on the nature of the complaint but he explained that the defendant imposed the new system unilaterally and he had no option but to accept it.

I conclude that queries including the "complaint" by Mr Mathews would have raised payment of overtime for work performed beyond 8 hours under the new shift system in view of the provision in clause 7.11 of the contract. His complaint would have been taken into account in the response given by the defendant in the memo dated 29th April 1993.

All plaintiffs performed their work in accordance with the new shift system for the initial six months period.

The trial period of six months has long since expired. There is no evidence before me that the parties discussed the future of the new shift system in accordance with the Memorandum of Agreement. I have already set out in full the terms of the trial period and the options stated therein.

The parties accept that the new 12 hour shift has continued to date. They also accept that all current contracts have maintained clauses 7.4 and 7.11 on the same terms.

All the plaintiffs, including Mr. Mathews did not claim overtime for hours worked beyond 8 hour nor did they refuse to comply with the new shift system until the memo dated 22nd November 1997. This claim was triggered by the National Engineers Award, which came into operation on 1st January 1997. The plaintiffs put their claim in the following terms:

"From our records we note that since we started the 12 hour shift pattern in 1993 we have been working an 84 hour fortnight which is four hours longer than our contracted hours of work. According to our contract these extra hours should be paid at double time (overtime rates) but our records again reveal that they have only been paid at single time rates."

The plaintiffs claim overtime on double time in accordance with clause 7.11 for extra hours worked in accordance with the new 12 hour shift system.

The defendant denies liability on the basis that the plaintiffs by their conduct varied clauses 7.4 and 7.11 of the contract by substituting it with the new 12 hour shift agreement and the terms contained therein. Therefore, the defendant claims that the plaintiffs are estopped from relying on clauses 7.4 and 7.11.

Counsel for the plaintiffs in response submits that the defendant cannot rely on variation of the contract by conduct because the contract can only be varied in accordance with clause 17 of the contract. Clause 17 in the latest contract admitted in evidence, dated 22nd April 1997 provides:

"Should there be an agreement between the Employer and the employee to change the Employee’s position, remuneration or allowance during the term of this agreement, the parties to this Agreement shall execute a Variation Agreement in the form set out in Annexure ‘A’ herein. Upon execution of such Variation the employment of the Employee by the Employer shall continue subject to the terms and conditions herein contained."

The form then sets out the changes that may be made in respect of position, remuneration or allowances as the case may be.

Counsel for the defendant objected to any reliance on clause 17 during the trial on the ground that it has not been pleaded.

Counsel for the defendant further submitted that if the plaintiffs are allowed to raise clause 17, the defendant should be allowed to amend its defence and plead that all the parties made a mistake in not amending 7.4 and 7.11 of the contract to reflect the 12 hour shift system.

I indicated to the parties that it was important that they should bring all relevant issues of dispute in the trial.

After considering the matters, the parties agreed (1) the plaintiffs should be allowed to rely on clause 17 and (2) the defendant may be permitted to plead that both parties were mistaken in executing subsequent contracts of employment with clauses 7,4 and 7.11 without any amendments.

I adjourned the trial to enable parties to consider their readiness to argue these issues and I pointed out to counsel for the defendant that he should consider whether, he should call further evidence on the defence of mistake. After a short adjournment, both counsel decided to proceed and counsel for the defendant advised that he would rely on evidence already admitted in the agreed facts and list of documents.

I can briefly deal with the defence of mistake. The parties did not call any evidence to suggest that they were mistaken in including clauses 7.4 and 7.11 in their present terms. Therefore, this issue does not arise for consideration.

I turn now to consider whether 7.4 and 7.11 of the contract have been varied. Counsel for both parties agreed on the general proposition of law that a contract may be varied by conduct of parties, subject to any exclusive method for variation that may be stipulated under the contract. I have proceeded on this premise to deal with the matters of dispute between the parties.

Counsel for the plaintiffs submits that the conduct of plaintiffs in adopting the new 12 hour shift is irrelevant as clause 17 of the contract of employment provides the exclusive method for varying the contract. The method for changing the terms of the contract, he submits, is for parties to execute a Variation Agreement in accordance with clause 17. He submits that the parties have not executed such an agreement and clauses 7.4 and 7.11 have remained the same.

Counsel for the defendant on the other hand, submits that clause 17 of the contract is not applicable because it makes provision for the appropriate form of variation of the contract and makes provision for change of position, remuneration and allowances but does not provide for payment of overtime. Therefore, he submits that the contract in respect of overtime pay may be varied by conduct, and in fact was varied by conduct of the plaintiffs in adopting the 12 hour shift system.
Alternatively, counsel for the defendant submits that while terms of clauses 7.4 and 7.11 have remained the same, the Memorandum of Agreement executed on 19th April 1993 introduced a new shift system on a trial basis. As I understand this submission, this agreement stands on its own and is binding on all parties during the trial period.

In considering the application of clause 17, I have had regard to the contract (document 17 in the list of documents) a contract dated 11th February 1990 and the contract dated 22nd October 1997 (document 20). The wording of clause 17 in both contracts is similar except the 1997 contract prescribes the form of the Variation Agreement (Annexure "A").

The application of clause 17 is to be determined by reference to its terms and not merely by reference to the form. I have considered the strength of submission by counsel for the defendant but in the final analysis, I accept the submission by counsel for the plaintiffs that the words "remuneration" and "allowance" in clause 17 necessarily include remuneration for overtime pay. Therefore, clause 17 is applicable to the issue before me.

The next question is, whether, the contract in respect of remuneration for overtime as set out under clauses 7.4 and 7.11 has been varied in accordance with clause 17. There is no dispute that none of the plaintiffs executed any Variation Agreements in respect of each of their contracts. The result is that clauses 7.4 and 7.11 have not been varied in accordance with clause 17.
However, I find the alternative argument by counsel for the defendant attractive. The plaintiffs collectively (through the Aircraft Engineers Association) and the defendant agreed to introduce a 12 hour shift system on a trial basis in the Memorandum of Agreement executed on 19th April 1993 and it stand on its own and is binding on the parties.

The issue that has arisen for determination is, whether, the remuneration for hours worked under the trial of 12 hour shift system should be paid in accordance with clause 7.11 of the contract?

No question has been raised on the validity of the Memorandum of Agreement executed on 19th April 1993. It determines the hours of work, the shift roster, the remuneration and the duration of the trial period. I conclude that the terms of this agreement are binding on the parties so far as the trial of the 12 hour shift system is concerned.

The two shift systems are quite different in terms of hours of work and remuneration for overtime. They stand on their own and cannot be given a combined effect. I consider that the only rational way of resolving the terms of the two different shift systems, is to treat the 12 hour shift as an experiment on a trial basis.

While the rights of plaintiffs are regulated primarily by clauses 7.4 and 7.11, the Memorandum of Agreement of 19th April 1993 introduced an option to experiment with a 12 hour shift system. On this premise, it was open to each of the plaintiffs to either maintain their rights under 7.4 and 7.11, or alternatively, experiment with the 12 hour shift system.

If the plaintiffs agreed to accept the 12 hour shift on a trial basis, the hours of work, shift roster and remuneration would be governed by the Memorandum of Agreement dated 19th April 1993.

What did the plaintiffs do in this case? The agreed facts suggest that the plaintiffs agreed to experiment with the 12 hour shift system. The plaintiffs may have raised some queries or complaints, but in the end, they adopted the new shift system on a trial basis. The new shift system was in place during the six months stipulated in the agreement. The plaintiffs’ remuneration is to be determined by the terms of the Memorandum of Agreement for that period. In my opinion, the plaintiffs cannot claim for overtime for hours worked under the 12 hour shift system in accordance with clause 7.11

This brings me to consider the period after the six months period expired. The Memorandum of Agreement stipulated three options at the expiration of the six months period. First, the parties may agree to continue with the trial until terminated or, the parties may discontinue the trial or, if both parties fail to agree to continue or discontinue the arrangement, the decision of the defendant would be final.

No direct evidence was led before me to indicate if any of these options were discussed. However, parties are agreed that the 12 hour shift is continuing to date. I can only infer from the agreed facts that the parties agreed to continue the 12 hour shift in accordance with option one set out in the Memorandum of Agreement. It is up to the parties when to terminate this arrangement.

I conclude from this that the 12 hour shift is currently in operation in accordance with the Memorandum of Agreement on 19th April 1993. Any claim for remuneration for the hours worked during the 12 hour shift have to be determined in accordance with the Memorandum of Agreement. I accept the submission by counsel for the defendant that the plaintiffs cannot claim the 12 hours worked under the experiment as basis for claiming overtime pay on double time in accordance with clause 7.11. They cannot have the benefit of the two shift systems in this way. I have reached this conclusion in accordance with the terms of the Memorandum of Agreement and not based on any principle of estoppel by conduct.

Therefore, the true position between the parties is this. The 12 hour shift experiment has continued by agreement of the parties to date. They may terminate it at any time in accordance with the Memorandum of Agreement.

Alternatively, they may wish to vary 7.4 and 7.11 and adopt the 12 hour shift by way of executing a Variation Agreement in accordance with clause 17 during the currency of the present contracts.

At the end of the present contracts, the parties should clearly determine the appropriate shift system and the remuneration for overtime rates of pay and include these terms in the new contract of employment.

In the result I find that the defendant is not liable to pay overtime on double time in accordance with 7.11 for hours worked under the 12 hour shift experiment. I would dismiss the action with costs to the defendant.
________________________________________________________________________

Lawyers for the Plaintiffs : MALADINAS

Lawyers for the Defendant : BLAKE DAWSON WALDRON