Berkeley Challenge Pty Ltd v United Workers Union; Spotless Services Australia v Fair Work Ombudsman [2020] HCATrans 219 (11 December 2020)

Last Updated: 15 December 2020

[2020] HCATrans 219

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Brisbane No B46 of 2020

B e t w e e n -

BERKELEY CHALLENGE PTY LTD

Applicant

and

UNITED WORKERS UNION

Respondent

Office of the Registry
Perth No P37 of 2020

B e t w e e n -

SPOTLESS SERVICES AUSTRALIA LIMITED (ACN 005 309 320)

Applicant

and

FAIR WORK OMBUDSMAN

Respondent

Applications for special leave to appeal

KIEFEL CJ
STEWARD J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 11 DECEMBER 2020, AT 9.30 AM

Copyright in the High Court of Australia

____________________

KIEFEL CJ: MR I.M. NEIL, SC appears with MS H.R. MILLAR for Berkeley Challenge Pty Ltd and also for Spotless Services Australia Ltd. (instructed by Corrs Chambers Westgarth)

MR C.W. DOWLING, SC with MR T.C. BORGEEST and MR C.J. TRAN appear for United Voice. (instructed by Hall Payne Lawyers)

MR Y. SHARIFF, SC with MR M.C.L. SECK appears for the Fair Work Ombudsman. (instructed by Australian Government Solicitor)

KIEFEL CJ: Mr Dowling, I think there is an application in relation to a change of name?

MR DOWLING: There is, Chief Justice, and you will find that in the application book from page 359. We understand that is consented to. The change of name is from United Voice to United Workers Union.

KIEFEL CJ: I see. Yes, there will be an order in those terms, thank you, Mr Dowling. Yes, Mr Neil.

MR NEIL: If it please the Court, in Mondelez this Court recently held that the Fair Work Act was intended, amongst other objects, to provide certainty and stability for employers and their employees. The Act is intended to be applied by both employers and employees in a practical way and, the applicants submit, so far as possible without requiring nuanced evaluations. Where the Act operates prescriptively, as here it did, by requiring payment of redundancy pay in some but not all circumstances ‑ where the Act operates prescriptively in that way, employers should readily be able to ascertain whether that obligation applies to them. Employees, for their part, should be able to know at the same time whether they are or are not entitled to redundancy pay.

In our submission, the test articulated by the Full Federal Court for the determination of whether an employee’s redundancy is due to the ordinary and customary turnover of labour is antithetical to the statutory objectives of certainty and stability. That, in our submission, is because it requires a highly nuanced, indeterminate, multifactorial evaluation, the application of which, by lay employers and lay employees, is, the applicants submit, impractical.

At bottom, the applicants’ case for special leave is that the question of public importance is whether a test that has those features is the correct test or whether the correct test is instead one that can be applied in a practical way. That.....as here. The test is a central element – or the test applies to a central element – of the Act’s treatment of redundancy pay, in other words, an important feature of an important statute of wide general application throughout the Australian economy.

The test for which the applicants contend is, we submit, simple and straightforward, and practical of application. The words “ordinary and customary”, the applicants submit, require that the turnover of labour in question be a normal feature of the employer’s business. As your Honours have seen, we take that test from the termination change and redundancy case – a decision of the then Conciliation and Arbitration Commission – by which this element of entitlement to redundancy pay was introduced into industrial regulation at the federal level. The passage in question, as your Honours have seen, was relied upon by this Court in Amcor. The test for which the applicants contend ‑ ‑ ‑

STEWARD J: Mr Neil, may I ask a question?

MR NEIL: Yes, your Honour.

STEWARD J: Are we looking at the turnover of labour of the Spotless Group or the turnover of labour of the two individual entities?

MR NEIL: The latter.

STEWARD J: The latter. So, what do you say about the evidence that was put to the court below, which seemed to be struck at the generality of the Spotless Group?

MR NEIL: So far as the Spotless case is concerned, the finding of fact that answers your Honour’s question was that Spotless Services, the employer, was a part of the Spotless Group and for practical purposes its approach to – its business was the same as that of the Spotless Group and the way in which it approached the consequences of the loss of contracts were the same as those that applied to the Spotless Group. For practical purposes, so the finding of fact was, the evidence of what applied across the Spotless Group applied to or embraced Spotless Services.

So far as Berkeley Challenge is concerned, the position is less clear, complicated by the fact that Berkeley Challenge.....Spotless Group had as its business the service of a longstanding contractual relationship with a particular client and had a stable workforce, but the evidence was that when that contract was lost the consequences that followed were those that applied across the Spotless Group.

STEWARD J: Just pausing there, when we look at the table at application book 262 ‑ ‑ ‑

MR NEIL: I am sorry, your Honour, 262?

STEWARD J: ‑ ‑ ‑ .....263, the table appears in the judgment of Justice Reeves of the.....people there employed for five years, 10 years six, seven or 12, 17. One person was employed at least 20 years, 10 years. Looking at that group as a factual proposition, leaving aside the nuances of the test, there does not look like a lot of turnover for that entity of employees.

MR NEIL: There was not. There was not. That was a distinguishing feature in the Berkeley Challenge Case ‑ ‑ ‑

STEWARD J: How can you win, even on your test?

MR NEIL: Well, for this reason. In the Berkeley Challenge Case, the main reason why the employee’s employment was terminated was because Berkeley Challenge had lost the contract in which they were employed. The evidence was that the terminations were the result of the application of the.....that applied throughout the Spotless Group when service contracts were lost. But we accept that that is a feature of the Berkeley Challenge Case that distinguishes it from the Spotless Case.

KIEFEL CJ: Well, what does that mean, one should be given special leave and the other not? One is an appropriate vehicle and the other is not?

MR NEIL: On the legal issues, the two cases are the same, but there are factual differences which mean that they do not necessarily have to travel together. It follows that, in our submission, it would be open to grant special leave in the Spotless Case but not in the Berkeley Challenge Case.

KIEFEL CJ: More generally, do you support the reasoning of Justice Reeves?

MR NEIL: As to the relevance of employee expectations? Yes.

KIEFEL CJ: Yes, which was regarded by the Full Court as an incorrect test.

MR NEIL: Correct.

KIEFEL CJ: But their Honours concluded that even if his Honour had applied what the Full Court considered to be the correct test, the outcome would be the same.

MR NEIL: Yes, because the Full Court’s reasoning on that question turned substantially on the significance of employee expectations of ongoing employment, consideration which, in our submission, is irrelevant, as his Honour Justice Reeves held.

KIEFEL CJ: This is in the Spotless Case, is it not, so do you disagree.....holding that the outcome would have been the same in either event whichever approach one took to it?

MR NEIL: No, in our submission, if the correct – if the test for which the applicants contend was applied in both the Spotless Case and the Berkeley Challenge Case, the result would be different. We would satisfy – both employers would satisfy the test.

STEWARD J: What do you say about the findings in the Spotless Case of Justice Colvin at application book 46, paragraphs 150, 152, where his Honour found:

The evidence was to the effect that Spotless wanted to keep its employees and where possible to allocate them to a different contract where a particular contract came to an end.

MR NEIL: I am having difficulty hearing your Honour.

STEWARD J: I am so sorry, Mr Neil; application book 46.

MR NEIL: Yes, thank you, I have heard that now and your Honour is directing me to?

STEWARD J: The finding at 150 and 152.

MR NEIL: They do not matter, in our submission.

STEWARD J: They do not matter.

MR NEIL: Justice Colvin and the Full Court seem to think ‑ attach some significance to the – indeed, to think that it was decisive, but the practice throughout the Spotless Group and of the two applicants was that where a service contract was lost efforts would be made to redeploy employees working on those contracts to other service contracts if that were possible. But that, in our submission, is not determinative. The critical fact is that it was not always possible to do so. Indeed, the evidence was that only about 40 per cent of employees who worked on service contracts that were lost were redeployed. The rest were turned over.

STEWARD J: Is that a finding about the Spotless Group or about the entity?

MR NEIL: About the – there were findings at various – there was evidence at various levels that started at the Spotless Group and went down to the entity.

STEWARD J: Do you know what the figure is for Spotless Services, the entity?

MR NEIL: Around 40 per cent. The actual figures were as to Spotless taken alone, of the 3,987 employees who had been employed over the period.....to work on a contract that was lost only 1,604 were redeployed. That was not possible, and the evidence was that employees were redeployed if work could be found for them elsewhere. It followed that if they were not redeployed there was no work for them to do.

So, in our submission, the findings at paragraph 150 and thereabouts in Justice Colvin’s judgment do not determine the issue one way or the other. The fact was that it was a normal feature of the business of Spotless and across the Spotless Group that when service contracts were lost and no other work could be found for employees who were engaged to work on those contracts elsewhere, then their employment came to an end.

The reasons why that happened do not matter, in our submission. What mattered was that was a normal feature of the business and it was a feature of the business that was a rational response to an inherent feature of the business of both applicants, and the Spotless Group generally, which was that contracts were won and lost, employees were engaged to work on those contracts, and when contracts were lost and no work could be found for them on other contracts, there was no work for them to do.

KIEFEL CJ: The view of Justice Colvin, with which the Full Court agreed, was that the focus was on the nature of the job undertaken, rather than the business circumstances and it is that focus which engendered his Honour’s view about expectations associated with the employment.

MR NEIL: Correct. As your Honours have seen, that is a proposition that we seek – or a.....the applicant seeks special leave to challenge. In our submission, the correct test is really captured in a passage from a judgment of a Full Bench of the Fair Work Commission in the Compass Case; your Honours, we hope, have that. We have in mind paragraph 27 on page 44 of the judgment of the Full Bench.

KIEFEL CJ: What paragraph was that, Mr Neil?

MR NEIL: Paragraph 27, if it please your Honour.

STEWARD J: Can I ask you, Mr Neil, does your test differentiate between employees who, for example, might be cleaners who are turned over apparently regularly, as against someone who is an employee of the company who is not a cleaner, for example performs a more permanent role? I have in mind in the case of Spotless Services, Mr Campilan ‑ I hope I have pronounced that correctly ‑ who commenced employment in 1982 as the accountant. If he is ‑ - -

MR NEIL: But the test would not – I am sorry, your Honour.

STEWARD J: No, I am just completing the question. Does he get dealt with differentially, or does he get caught up with everybody else?

MR NEIL: The test would be the same, but its application in his case might be different. Indeed, it might in his case not come to an application of the test at all. But essentially the test would be the same. If there was no.....contract there was no work for him to do, and he was terminated for that reason, and that was a normal feature of the applicants’ business – as we contend on the evidence it was – then yes, he would be included in the test, caught up in the test, as your Honour has put it.

KIEFEL CJ: Justice Colvin’s view, I think, really commences with an understanding of the purpose of a redundancy payment.

MR NEIL: Yes.

KIEFEL CJ: So, the focus comes to be upon the employee and the nature of the employment because his Honour really appears to be approaching the construction of section 119 by reference to, really, a contextual approach.

MR NEIL: Yes.

KIEFEL CJ: What is wrong with that approach? Why would not notions of the purpose of a redundancy payment, as a compensation for termination of employment that was otherwise indefinite, inform the meaning of the words “ordinary and customary” turnover?

MR NEIL: It would, but not in the way that his Honour contends. In our submission, if one looks at section 119(1)(a), one sees there a composite expression which is designed to delineate those classes of terminations that will attract redundancy pay. In our submission, the policy – the legislative policy – was different than that that his Honour identified and acted upon. The legislative policy is that employers whose business has a turnover of labour as a normal or an ordinary or a customary feature should not be required to bear the cost of redundancy pay. That, in our submission, is an explicable policy choice and the one reflected in the legislation here.

It was a policy choice that informed the reasons of Justice Fisher in Crocker’s Case which, as your Honours know, is the decision that first introduced the expression, “ordinary and customary turnover of labour” to this area of discourse. His Honour held that it would be an unjustifiable impost on employers who had, as a normal feature of their business, the loss of contracts to require them to make redundancy payments in circumstances where employees lost their jobs following upon the loss of a contract. So, that policy choice was there right in the very beginning.

KIEFEL CJ: Against that has to be.....trying to find a policy provision such as this, which are often difficult.

MR NEIL: .....accept that.

KIEFEL CJ: Might have an expectation of ongoing employment – I mean, that is the constructional choice, is it not?

MR NEIL: Yes, and we accept the proposition that your Honour has put but, in our submission, that is a circumstance that tells in favour of a grant of special leave. There are constructional choices to be made here and the question of which is the right choice is a question of public importance – of great public importance. We come back to where we began – that is, at bottom, our case for a grant of special leave.

KIEFEL CJ: You still have to face the questions of whether these matters are appropriate vehicles?

MR NEIL: We accept that, we accept that. In our submission, there cannot be – that is clear in the case of the Spotless Case where the findings of fact that were made would lead to the applicant satisfying the test for which it contends. The position is less clear in relation to the Berkeley challenge case, we accept that.

KIEFEL CJ: Yes, thank you, Mr Neil.

MR NEIL: If it please.

KIEFEL CJ: Mr Dowling.

MR DOWLING: Thank you, your Honour. The principle for which the applicant contends is that the ordinary and customary turnover of labour depends only on the practices of the employer concerned. The alleged practice here was to terminate employment upon the loss of a client contract. The applicant, in our submission, would lose the appeal even if the Court accepted the principle it propounds. This is therefore an unsuitable vehicle to explore the issue of principle.

To explain why, could the Court please go to the primary judge in the Berkeley matter judgment at application book page 260, and at paragraph 3 the Court will see that Berkeley:

began providing the contract services at the Sunshine Plaza in 1994 -

When Berkeley began providing those services in 1994 it conducted its affairs on its own behalf and independently. From paragraph 4, on the same page, the Court will see that:

In 1999, Berkeley was acquired by the Spotless Group of Companies –

However, Berkeley.....affected employees throughout the whole of the relevant period from 1994 until 2014. Over the page it is remarked upon at paragraph 9, on application book 262. The Court will see the relevant employees, those performing cleaning and security services had been employed at the Sunshine Plaza for a number of years, ranging between four and 20. Those findings lead to the important finding of the primary judge at paragraph 80, application book 290, where there, commencing from the third line, his Honour found:

by the time Spotless lost its contract with Lend Lease, the contractual relationship with Lend Lease had existed continually for more than 20 years, that throughout that period Berkeley had employed all the employees necessary to provide the contract services and that the affected employees had been employed by Berkeley for that purpose for between four and 21 years.

What these unchallenged primary facts showed was that Berkeley itself had no practice or experience of turnover of labour, let alone a turnover of labour that could be described as “ordinary and customary”. That is, in our submission, an important finding of the lack of evidence to support the applicants’ case – that is at paragraph 80.

Importantly, the primary judge’s findings about Berkeley itself were not disturbed by the Full Court and can I summarise, without taking the Court to it, the findings of their Honours Justices Collier and Rangiah in a joint judgment – the reference is application book 160 to 265 - but their finding was that:

The evidence did not demonstrate that the employment of employees of Berkeley was, or had ever been, contingent on any external contract.

Additionally:

In the circumstances of the case, the appellant had had minimal turnover of labour because of its long‑standing contract with Lend Lease and a stable workforce –

The judgment of his Honour Justice Rares was to the same effect – that for Berkeley as an employer, the terminations of the affected employees were:

uncommon and extraordinary and not a matter of long‑continued practice -

It follows that if the Court applies a principle that has regard to the employer’s business, Berkeley’s appeal will still fail, given those concurrent findings of fact about Berkeley. Now, we understand the way the case is put in respect of the Spotless Group. As we understand it, the applicant can succeed if Berkeley’s business is taken to be the business of the Spotless Group as a whole, in a manner that attributes the practices of the Spotless Group to Berkeley. In the Full Court, we accept that Justices Collier and Rangiah accepted that the:

evidence across the Spotless Group was relevant to the question of ordinary and customary turnover of labour -

for Berkeley. The applicant gets that far. But what the applicant lacks is any finding that the practices of members of the Spotless Group were indeed to be treated as practices of Berkeley.

Further, and fatally, we say, the practices of the Spotless Group were equivocal. To make good that proposition, could I take the Court, please, to application book page 275, where the primary judge set out the evidence of Mr Potter, who was the national human resources manager of the Spotless Group. At paragraph 43 – or perhaps the paragraphs with Mr Potter’s evidence that are extracted, the second and third paragraphs of the evidence record that there were some instances where employment did not end as a consequence of the termination of contract for services to a Spotless client because, for example, the employees were redeployed, and some instances where employment did end.

That does not demonstrate an established practice of ceasing employment, and there was no exploration of that issue, or findings sufficient to establish a practice for the Spotless Group below. The factual record is either against Berkeley, at worst, or unclear at best. There is no issue of principle in the factual dispute about Berkeley’s practices, and the Spotless Group’s practices, and the findings that were made would not entitle Berkeley to success, that is, this Court would need to make additional findings in Berkeley’s favour. For those reasons, we say this is an unsuitable vehicle to explore the issue raised.

Can we next deal with the question of uncertainty. The applicant criticises the Full Court’s judgment ‑ ‑ ‑

STEWARD J: Just before you move on, Mr Dowling, do I take it that, as I understand your submission, that even accepting the test as propounded by Mr Neil, namely, you look to the entity to see whether it is a normal feature of its business that there is a turnover of labour, putting aside employee expectations, that the evidence falls short in both cases of demonstrating a normal turnover as an objective fact for both entities, and that what the Spotless Group’s practice was is frankly neither here nor there. Is that how you put it?

MR DOWLING: Correct, your Honour. But we do go further and say, even if you were with the Spotless Group you could not be satisfied – and certainly there were no findings that the group’s practices could be ‑ ‑ ‑

STEWARD J: There is no equivalent in the Fair Work Act to the consolidation provisions to be found in the Income Tax Assessment Act.

MR DOWLING: Correct, your Honour. On the question of.....the applicant criticises the Full Court’s judgment for rendering section 119 unclear, but, in our submission, that is overstated. Multifactorial tests are by no means.....had sharp lines been intended, the Parliament could have enacted them. Also, we say this indeed was foreseen by the Spotless Group itself in the memorandum that it distributed to its employees – which is found at application book page 87, paragraph 27, which the Court does not need to go but can I summarise it by saying the memorandum makes clear that the employer there had no difficulty in identifying who would be entitled to redundancy. There was no certainty for it.

Nextly, in respect of uncertainty, we say that the applicants’ proposed solution to any uncertainty is entirely one‑sided. They want certainty for the employer only without any role for certainty for employees. That is not what this Court said in Mondelez relied upon by the applicant. Proper reference there was to certainty and stability for employers and their employees and that, in our submission, is unsurprisingly so because the statute strikes a balance rather than pursuing a single‑minded purpose.

Lastly, in respect of uncertainty, there is no statutory basis, we say, to adopt an interpretation that has maximum certainty for employers. That is an a priori assumption used to interpret the text rather than a purpose evident from the text as a whole and not an appropriate method of interpretation.

Can I then, lastly, deal with the test adopted by the Full Court and start by making clear that, in our submission, you cannot and should not try and understand the exceptions separate from the entitlement. Dealing with the entitlement, redundancy payments are made to employees to compensate employees for the unexpected inconvenience and hardship imposed on employees from the loss of their job. The exception is intended to apply in circumstances where that rationale for redundancy payment is not obtained. That is, the loss of job is not unexpected so as not to call for compensation.

The Full Court’s judgment, in our submission, gave expression to that understanding of section 119 and the textual approach was appropriate. The joint judgment.....determined that the exception to redundancy entitlements – those employees to whom employment is terminated “due to the ordinary and customary turnover of labour” is directed at the nature of the work in order to determine whether it is the kind of work that is expected to terminate in the ordinary course and, therefore, would not result in redundancy payment.

The Full Court, certainly the joint judgment of their Honours Justices Collier and Rangiah, did so by adopting the reasons that Justice Colvin, particularly at paragraphs 132, 133 of his judgment, particularly the last sentence where his Honour Justice Colvin said:

That which is inherent in the nature of the work and, in a sense, inevitable, comes to pass.

For completeness, the judgment of his Honour Justice Rares which adopted a reasonable person test, in our submission.....another way of saying..... The Full Court went on to say all of the circumstances bearing upon the
nature of the work are then relevant and that is a multifactorial approach and that is correct, in our submission.

The applicants’ position is extreme and is only correct if the only relevant factor in section 119 is.....and the employees.....and there is no basis in the statutory text for those..... We say that for the following reasons. First, it is implausible that the employee’s perspective should be so unimportant in circumstances where we are considering a national employment standard and where the exception arises in the context of a particular employment relationship. The opening words of section 119 refer to “employee’s employment”, a textual indicator, we say, to consider the employee.

Secondly, the expression “ordinary and customary turnover of labour” is unlikely to focus only on the specific business. Had that been intended, the section could have said after referring the employer “its ordinary and customary turnover of labour”. The language, in our submission, “the ordinary and customary turnover” points to a broader and richer consideration.

Thirdly, and lastly, we say the history of decisions on industrial bodies.....show that the hard lines are..... The history reveals again the broader and richer consideration factors. That is entirely consistent with the statutory language. That history was well canvassed by his Honour Justice Colvin and endorsed by the Full Court and we have set out the relevant references in paragraph 8 of our response from application book page 339.

It follows, therefore.....out of step with decades worth of understanding on redundancy pay and certainly it cannot be said to be contrary to a clear vein of pre‑existing law and there is no warrant for this Court to review something which is consistent with how the law has operated for some time. Unless I can be of any further assistance, they are the submissions of the respondent.

KIEFEL CJ: Yes, thank you, Mr Dowling. Mr Shariff.

MR SHARIFF: May it please your Honours. The application for special leave in the Spotless Services matter fails for two reasons. First.....by the primary judge Justice Colvin and which were not challenged in the Full Court by Spotless whether one ascribes to the expression “ordinary and customary turnover of labour” the meaning given to it by Spotless or that which was found by the Full Court. Spotless simply did not establish its case. As Justice Rares put it at application book page 88, paragraph 29, the case was “hopeless” even on Spotless’s construction.

Secondly, the construction advanced by Spotless is wrong and does not disclose error on the part of the Full Court. Spotless’ construction seeks to elevate as a single reductive factor a test whether the ordinary and customary turnover of labour is a normal feature of the business of the employer which is itself a test that is devoid of content. For these reasons, we say the application does not have any prospect of success and, in any event, on the facts it is an inappropriate vehicle.

I propose to first deal with the factual findings that were made and then come back to the constructional questions. Spotless’ case on construction before the primary judge, and the evidentiary case that it advanced before Justice Colvin was that the ordinary and customary turnover of labour could be established if it merely established that first it was in the business of winning and losing contracts, and second if it could establish that the loss of contract was something that was an ordinary part of its business and that the termination of employees working on that contract was a matter that followed as an ordinary and customary course. That is the construction of it.

KIEFEL CJ: Mr Shariff, does that mean, on this approach to his Honour’s reasoning, that in some cases the focus will be on the employer’s business and in other cases it will not be?

MR SHARIFF: I do not think – in the plurality’s judgment, the question of the normal features of the business were not said to be an irrelevant factor and, indeed, were said to be a relevant factor. I can take your Honours immediately to that, if your Honours will find that at application book page 151, paragraph 227, where the joint judgment says:

That is not to say that the “normal” features of the employer’s business are irrelevant. The size of the employer, whether the employer is part of a corporate group and the practices of that group, the manner in which the employer is managed . . . labour turnover frequency and practices . . . and the manner in which an employer (and potentially the corporate group) conducts its business, are factors to be taken into account.

We say that is rather unremarkable.

KIEFEL CJ: Well, how does that sit conformably with the approach that Justice Colvin took to construction, which proceeds from an understanding of what an employee might expect to be compensated for, and which has regard to the turnover relating to employees generally?

MR SHARIFF: I think the first step in the answer to your Honour’s question is to identify that in the statutory text, the relevant question is whether the termination is due to the ordinary and customary turnover of labour which then raises the question what is meant by the ordinary and customary turnover of labour. If I could take your Honours to what Justice Colvin said about the meaning of that expression at application book page 42, paragraph 133. Your Honours will there see that his Honour says that:

the terminology connotes a termination where the employer no longer requires the job to be performed because termination in the particular case is common or usual, both in the sense that it is commonly observed and in the sense that it is habitual or of long‑standing practice. Because it has that character it is expected.

That, we say, does not preclude an assessment of the features of the employer’s business, or.....the employee’s business, but equally what it includes is the expectation of the employees as engendered by the operation of business and the nature of the work. So to answer your Honour’s question, we do not see, as said in our written submissions, the two approaches, that is, normal features of the business, or the expectations of employees, objectively construed as being in tension or in competition. We say they are both directed to answering the ultimate question, which is the terminations ‑ ‑ ‑

KIEFEL CJ: But his Honour’s approach only has regard to the business in relation to the particular termination being required. It is still consistent with an approach that focuses upon the employee’s job. The question then is whether it is required ‑ ‑ ‑

MR SHARIFF: .....

KIEFEL CJ: The connection with the business is there, but it is not a business-focused approach, is it?

MR SHARIFF: Well, we say it is because it is looking at both of those matters in order to determine whether based on the operation of the business there is an expectation engendered in employees that their employment will be ongoing or not ongoing. As I said, we do not see the two matters being intention, we see them as part of two sides of the same coin in answering the ultimate question, whether what has happened is a termination due to the ordinary and customary turnover of labour.

KIEFEL CJ: Well, on your approach, his Honour’s approach is less clear, frankly.

MR SHARIFF: Well, no, your Honour. We say that approach is in fact consistent with what the joint judgment of Justices Collier and Rangiah said at paragraph 215 at application book page 149:

Whether there was “ordinary and customary turnover of labour” in any particular case depends on the facts of that case.

One cannot stipulate all the factors but one takes into account a range of factors in answering that question which would include – I am sorry, your Honour.

KIEFEL CJ: But it is not – it cannot be an entirely factual question. The question is essentially one of construction, and I know that in this area of the law questions of construction seem to have a greater degree of difficulty than most. But it is essentially a question of construction. That is what you conclude before you determine how that is to be applied to the facts. You do not apply a fact-driven approach to questions of construction about what is the ordinary and customary turnover of labour.

MR SHARIFF: Well, of course we accept that, your Honour, and what we say is one has to start with the meaning of the words “ordinary and customary turnover of labour” and they have come to have a particular meaning that in a sense has been fact driven because it has been determined by 40‑odd years of industrial cases in this area which have looked at a series of factors, so that the expression, “ordinary and customary turnover of labour” has come to have the meaning of the type discussed by – or addressed by Justice Colvin at paragraph 133 of his Honour’s judgment. Your Honours, could I just ‑ ‑‑ ‑

STEWARD J: Mr Shariff, could I ask you, to the extent that they are relevant, are they the subjective expectations of employees ‑ ‑ ‑

MR SHARIFF: What we say is relevant is the objective expectations – as established by the evidence – and the reasonable expectations of employees in the.....

KIEFEL CJ: Once you start talking about “reasonable expectations”, you are really talking about an objective test, are you not.....an employee in the position.

MR SHARIFF: That is precisely what the joint judgment found at application book, page 149, at paragraph 216.

STEWARD J: Mr Shariff, if there was an objective high turnover of labour for a particular company, why would you not infer that the reasonable expectations of employees.....they would expect to be turned over.

MR SHARIFF: If it was known – if it was an objective feature that was known to both parties – that would be, certainly, a relevant factor. But what we say here – and if I could just ‑ ‑ ‑

STEWARD J: When you say known, are you saying subjectively known, or not? I am just trying to work out – once you have established that there is an objective turnover of people because you have short‑term cleaning contracts, for example, and you cannot employ people on a long‑term basis, what else do you need? What is the relevance of an inquiry about.....

MR SHARIFF: Whether the contracts of employment for the particular employees in question communicated that fact, the policies and practices of the employer as to redeployment and how the group, as here – the Spotless Group – organised its labour more broadly, not contract specific as were the findings here. I should say, we take issue with Mr Neil’s submission that there was a finding of 40 per cent turnover. In fact, to the contrary. Sorry, Mr Neil says there was evidence of that. But, the difficulty with that evidence is – if I could take your Honours to the findings made by the primary judge, Justice Colvin, commencing at application book, page 50, at paragraph 170, there is reference made to the analysis that was provided by Mr Potter which made assumptions about a large number of employees being turned over and his Honour found that:

The analysis assumed that all employees whose employment came to an end on or after the day . . . had their employment terminated as a direct consequence . . . In its closing submissions, Spotless did not contend for the correctness of that assumption.

Then, your Honours will find at paragraph 171 that, for the first time in closing, Spotless attempted to prepare an aide‑mémoire of sorts to try and reinterpret the data. As your Honours will find, that was rejected at paragraph 172. Then, at paragraph 173, at line 20, can I draw your Honours’ attention to the finding made by Justice Colvin that:

the data is not a reliable basis upon which to draw conclusions as to the actual practice followed when contracts came to an end. It is notable that Spotless did not seek to lead evidence as to that practice from those who were involved in the day to day activities when contracts came to an end. These were matters especially within the knowledge of Spotless.

STEWARD J: Was that finding challenged on appeal, Mr Shariff?

MR SHARIFF: It was not challenged, and that is why, if I can take your Honours to Justice Rares’ judgment - and that is at application book page 88 commencing at paragraph 29 - I should start at paragraph 28, from the sentence:

Rather, those terminations –

and then draw your Honours’ attention to paragraph 29, and then at paragraph 30:

The primary judge’s credibility based findings . . . were supported by the documentary evidence –

and at 31:

Berkeley did not challenge –

and so on. So these factual findings were not challenged, and just going back to the primary judge’s findings at application book page 51, at paragraph 174 at line 40, Justice Colvin found that:

Spotless had access to the information by which such an assertion –

which it wished to prove:

may be demonstrated . . . but it did not lead any evidence to that effect. Mr Potter specifically acknowledged that he could not attest to what employees were told at the time they were engaged. His evidence was directly inconsistent with the redundancy payments –

and so on, so that whilst Mr Neil refers to some evidence of percentages, the fact is that that data was found to be unreliable and not accepted, and on any view of it, on the factual findings that were made and not challenged in the Full Court, Spotless’ case was hopeless even on its own construction, because it did not establish the essential premises of its case.

Your Honours, in relation to questions of construction, I did not wish to repeat what Mr Dowling had said, and I think I have addressed the central points that I wished to raise in answer to your Honour the Chief Justice’s questions. Unless there is anything further, those are the submissions we rely upon to say that on any view of it, the appeal has insufficient prospects, it is an inappropriate vehicle, and should be dismissed.

KIEFEL CJ: Thank you, Mr Shariff. Mr Neil, do you have anything in reply?

MR NEIL: Three short points, if it please. First, Justice Colvin’s treatment of the data upon which Spotless relied does not matter. Justice Colvin held that Spotless had not, by that data, proved why employees had ceased to be employed by it upon the loss of the contracts on which they worked, but on the applicants’ case, what was important was the fact that those employees ceased to be employed upon the loss of the contracts upon which they were – not the reason why they did so, the fact that they ceased to be employed when the contracts were lost demonstrated that, on Spotless’ case, that the turnover of their labour was a normal feature of Spotless’ business.

There was no finding that bore upon the evidence of the number of employees in question who were successfully redeployed to other contracts – that fact was certain. All other employees were turned over; the labour of all other employees was turned over.

Second, the constructional choice, choices really, in our submission come down to this. On the one hand, there is a construction that has what your Honour the Chief Justice has called a “business focus”. On the other hand, there is a construction adopted by Justice Colvin and by the Full Court that takes as the critical or fundamental element of the test, the expectations of employees. In our submission, that is the error.

The third point we wish to make is this, and it relates to the second. While we accept that the language of “reasonableness”, when appended to employee expectations, connotes an objective test, as your Honours will see, the application of the test by Justice Colvin and by the Full Court, particularly the plurality, drifted from objective into subjective considerations. The question was all about what the actual employees actually knew. That, in our submission, compounds the error of giving regard to employee expectations at all. If it please, those are the submissions we make by way of reply.

KIEFEL CJ: Yes, thank you, Mr Neil. The Court will adjourn to consider the course it will take.

AT 10.24 AM SHORT ADJOURNMENT

UPON RESUMING AT 10.27 AM:

KIEFEL CJ: We consider that each of these matters are inappropriate vehicles for the questions that they seek to raise. Each application is refused with costs.

The Court will now adjourn until 10.30 am.

AT 10.27 AM THE MATTER WAS CONCLUDED