Re Australian Bank Employees Union v the National Australia Bank [1989] FCA 48; 31 IR 436 (8 March 1989)

FEDERAL COURT OF AUSTRALIA

Re: THE AUSTRALIAN BANK EMPLOYEES UNION
And: THE NATIONAL AUSTRALIA BANK
Nos. VI 164, 165 of 1987
FED No. 72
Industrial Law
31 IR 436

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
INDUSTRIAL DIVISION
Gray J.(1)

CATCHWORDS

Industrial Law - award - breach - refusal by employee to perform all obligations under contract of employment - entitlement of employee to salary under award - whether performance of services is a condition precedent for payment of remuneration - whether employees' services could be declined - whether employees were absent from duty without consent of employer.

Conciliation and Arbitration Act 1904 s.119

Industrial Relations Act 1988

Industrial Relations (Consequential Provisions) Act 1988 ss. 3, 4(2), 67(1)

Bank Officials (Federal) (1963) Award Cl. 6, 12

HEARING

MELBOURNE
8:3:1989

Counsel for the applicant: Mr. Hinkley

Solicitors for the applicant: Maurice Blackburn & Co.

Counsel for the respondent: Mr. Goldberg with Mr. Turner

Solicitors for the respondent: Freehill Hollingdale & Page.

ORDER

THE COURT ORDERS THAT the proceeding is adjourned to a date to be fixed for further hearing.

NOTE: Settlement and entry of orders is dealt with by O. 36 of the Federal Court Rules.

DECISION

The events the subject of these two proceedings took place in December 1986, in a small town called Katanning, in Western Australia. The respondent, a company which carries on the business of banking, conducts a branch there. It is a small branCh At the relevant time, a manager, an accountant and five other staff were working there. One further staff member was on leave.

2. Some of the staff were members of the applicant, which is an organization of employees, registered pursuant to the Conciliation and Arbitration Act 1904 ("the Act").

3. In December 1986, the applicant was engaged in a dispute with the respondent and other banks, concerning the proposed withdrawal of fringe benefits for bank employees. These benefits included low interest rates on housing loans and on credit card borrowings. The respondent and other banks were seeking to withdraw fringe benefits because of the impact of fringe benefits tax.

4. The applicant sent a circular to its members, suggesting various forms of industrial action which might be taken in support of continued fringe benefits. One form of industrial action was to "restrict trading hours". This involved not opening the doors of a bank at 9.30 a.m., the usual starting time, but opening them instead at 10.00 a.m., and closing the doors an hour earlier than the usual closing time. The usual closing time was 4.00 pm, except on Fridays, when it was 5.00 pm.

5. On Wednesday 10th December 1986, Terence Mahony, the manager of the respondent's branch at Katanning, called all of the staff of the branch together. Mr. Mahony was a member of the applicant. He wished to discuss the matters raised in the applicant's circular. After a discussion of the options for industrial action, those present resolved by majority to adopt the restricted hours option. Mr. Mahony dissented, as did Ms. Fay Cappleman, a part-time teller.

6. On the following morning, Thursday 11th December 1986, all the staff at the branch attended for work as usual. In accordance with the normal practice, a courier bag arrived at about 9.00 a.m., containing cheques and other documents from the respondent's other branches, and from other banks. As usual, work from this bag was distributed to those who normally did it, and work began on the contents of the courier bag.

7. At or about 9.30 a.m., Mr. Mahony called all the staff to his office. He asked whether they intended to take the industrial action which had been discussed on the previous day. All but Ms. Cappleman indicated that they did. They then left the office, and Mr. Mahony telephoned the respondent's regional office in Bunbury. Following his conversation with the regional office, he gathered the staff together again. He then read to them the following paragraph from a circular sent by the respondent to its senior officers:
"Since you are not prepared to perform all of

the duties alloted to you under your contract
of employment, the bank is not prepared to
allocate to you any duties unless and until
you are prepared to perform all of the duties
alloted to you. You are to return all bank
property immediately. No further work will
be alloted to you, no bank property will be
re-issued to you and you will not be paid. If
and when you undertake to perform all the
duties alloted to you you may resume work in
the normal way."

At that stage, no specific direction was given to anyone to open the doors. No single employee was designated as specifically responsible for opening and closing the doors of the branCh It was a simple task; opening the doors from the inside did not involve the use of a key. Each of the employees at the branch from time to time opened, and closed, the doors.

8. After Mr. Mahony had read the paragraph from the circular, all the employees left his office and returned to their ordinary workplaces. They continued the work that they had been doing. No-one took any step to hand any bank property, whether documents on which work was being performed, or other items such as keys or pens, to Mr. Mahony or to any other senior officer. No step was taken by Mr. Mahony, or by anyone else, to enforce the direction to return bank property, or to check whether work was being performed. Mr. Mahony remained in his office, with his office door closed, reporting to the regional office by telephone. No step was taken to allocate any specific task to any employee. Each employee continued to perform the tasks which he or she would normally have done, with the exception of tasks which would have arisen if the doors had been open and customers had required attendance.

9. At 10.00 a.m., the doors of the branch were opened. No step was taken to seek any undertaking from any employee with respect to the performance of all his or her duties. Work proceeded normally in all respects.

10. Shortly after 10.00 a.m., Mr. Mahony left the branch to attend a seminar. He returned at about 2.55 pm. Again, he called all of the staff together. He asked whether they were going to continue with their industrial action. A positive indication was given. Mr. Mahony again read the paragraph from the respondent's circular. The doors of the branch were shut at about 3.00 pm. The employees returned to their desks and proceeded with their normal work, other than work which might have been performed if the doors had been open and customers had required attendance. No new tasks were alloted to them between 3 o'clock and 4 o'clock. No attempt was made to enforce the direction about the return of bank property. Between 3 o'clock and 4 o'clock, Mr. Mahony remained in his office, with his office door shut, reporting to the regional office on the telephone, and performing other duties. He made no attempt to check whether anyone in the branch was working.

11. Part of the normal work done in the branch during afternoons was the preparation of material to go into a bag to be collected by a courier. This work was done by a person described as a batch clerk. At the relevant time, there was a trainee batch clerk named Nola Anning in the branCh She was being trained and supervised directly by David Burcham, who was employed as lending officer. The courier normally called shortly after 4.00 pm. on Mondays, Tuesdays, Wednesdays and Thursdays, to collect the bag. The courier's run involved visits to a number of branches, and delay at any one could disrupt others. On 11th December 1986, between 3.00 pm. and 4.00 pm, Ms. Anning did the batch clerk's work, under the direct supervision of Mr. Burcham. The courier bag was ready on time.

12. At no time after 3.00 pm was any undertaking sought from or given by any employee at the branch with respect to the performance of all duties.

13. Late in the day on 11th December, Mr. Mahony informed the accountant, Bevan Clark, that he (Mahony) would not be at the branch on the following day. In the absence of the manager, it fell to the accountant to be acting manager. Mr. Clark had voted in favour of industrial action by way of restricting hours, and had been part of the group which had indicated to Mahony the intention to carry out such action on both occasions on 11th December. He was also part of the group to whom the paragraph from the respondent's circular was read. On being told that he was to be acting manager on the following day, Mr. Clark told Mr. Mahony that he would not take further industrial action, but would run the branch in Mr. Mahony's absence on the following day.

14. On the morning of Friday 12th December 1986, the employees at the branch began work as usual. The courier bag arrived, and work from it was distributed. The employees went about their normal work. The doors were not opened at 9.30 a.m. At or about that time, Mr. Clark called the employees into the manager's office. He asked if they were intending to continue taking industrial action, and was told that they were. He then read to them the paragraph from the respondent's circular, which had been read on the previous day. The employees returned to their work stations and resumed their work. No new tasks were alloted to them between 9.30 a.m. and 10.00 a.m. No attempt was made to enforce the direction about returning bank property. Mr. Clark was aware that the employees would resume and did resume work. He had done so himself on the previous day, and had seen others do so. Further, from his own desk on the Friday, he was able to see, and did see, other employees working.

15. No undertaking was sought from, or given by, any employee, with respect to resuming full duties, either at 10.00 a.m., or at any other time.

16. In the afternoon, the procedure was repeated. The doors were shut at 4.00 pm, one hour before the normal closing time. At or about that time, Mr. Clark again called all employees into the manager's office and asked them if the industrial action was going to continue. On being told that it was, he read the paragraph from the respondent's circular again. The employees returned to their work stations and resumed their work. No new tasks were alloted to them before 5.00 pm. No attempt was made to prevent them working, or to enforce the direction about returning bank property. Mr. Clark was aware that employees were working, because of his experience of the earlier events, and because he could see work proceeding. The work included preparation of material for the courier bag by Ms. Anning, under the direct supervision of Mr. Burcham. On Fridays, the courier called shortly after 5.00 pm. On this particular occasion, the courier bag was ready. No undertaking in respect of the resumption of full duties was sought or given.

17. The respondent withheld from the pay of the employees amounts in respect of the half hour between 9.30 a.m. and 10.00 a.m. on each of 11th and 12th December, and the one hour between 3.00 pm and 4.00 pm on 11th December and 4.00 pm and 5.00 pm on 12th December. $13.29 was withheld from the pay of Ms. Louise Mader, who was employed as a ledger examiner and teller. $20.15 was withheld from the pay of Mr. Burcham. Each of Ms. Mader and Mr. Burcham participated in the discussion on 10th December about whether industrial action should be taken, and each voted to take industrial action by restricting hours. Each attended for work on 11th and 12th December. Each was part of the group which indicated to Mr. Mahony twice on 11th December, and to Mr. Clark twice on 12th December, the intention to take or to continue industrial action, and which had read to it the paragraph from the respondent's circular on each occasion. Each resumed and did normal work while the doors were closed during normal opening times. The work done by each was retained and used by the respondent in the normal way.

18. The evidence indicates that the doors were closed early on the two days by one Michael Nolan, and by Ms. Cappleman. There is no evidence enabling a finding to be made as to which of these persons closed the doors on which day. It will be recalled that Ms. Cappleman voted against the taking of industrial action by restricting hours. On each of the occasions on which the employees were asked whether they were taking or continuing the industrial action, Ms. Cappleman indicated that she was not. On the evidence of Mr. Mahony, the probability is that, on the Thursday when he was told that industrial action was to continue, he gave a direction that the doors be closed at 3.00 pm. At no stage did he or Mr. Clark attempt to give a direction that the doors be opened. Nor did Mr. Mahony or Mr. Clark themselves attempt to open the doors during normal hours.

19. The applicant commenced these two proceedings on 17th August 1987. One proceeding relates to Ms. Mader, and the other to Mr. Burcham. In each case, the applicant claims a penalty for breach or non-observance of award, pursuant to s.119 of the Act, and payment to the employee concerned of the amount deducted from her or his pay. The proceedings are required to be dealt with as if the Act had not been repealed, notwithstanding the repeal of the Act on the coming into operation on 1st March 1989 of the Industrial Relations Act 1988. See the Industrial Relations (Consequential Provisions) Act 1988, ss. 3, 4(2) and 67(1).

20. The Award of which it is claimed that the respondent is in breach is entitled the Bank Officials (Federal) (1963) Award ("the Award"). By virtue of clause 4, it is binding upon certain employers, including the respondent, with reference to all bank officers in their employment in a number of states, including Western Australia, and upon the applicant and its officers and members. Clause 6 of the Award provides, so far as is relevant:

"....an officer....shall be paid the salary
hereinafter assigned to his/her age as a
junior or year of service as an adult as the
case may be....".

Thereafter, there appear tables,referring to ages of juniors or years of service of adult officers, with figures for "Salary per Annum". Clause 12 provides for payment of salaries. Sub-clause (a) permits payment fortnightly, and this was the manner in which the respondent paid Ms. Mader and Mr. Burcham. Clause 12(c) provides:

"(c) Notwithstanding anything elsewhere
contained in this Award the Bank concerned
shall be entitled to make a deduction from the
salary of an employee in respect of every hour
or part of an hour that such employee has been
absent from duty without the consent of the
Bank during the period in respect of which the
salary is paid."
There then follows a formula for the calculation of deductions. That

formula was applied in calculating the deductions made from the salaries of Ms. Mader and Mr. Burcham.

21. There are in evidence the contract of employment between the respondent and Ms. Mader, dated 17th January 1986, and the contract of employment between the respondent and Mr. Burcham, dated 12th September 1983. Each contract contains the following clause 2:

"2. The Officer while employed by the Bank
shall at whatever time or times of the day or
week as may be required from time to time
diligently and punctually perform all duties
and tasks which may devolve upon him/her or
with which he/she may be entrusted or which
he/she may be requested to perform, and he/she
shall attend to, obey and carry out the orders
and directions of the Bank relating to the
affairs or business of the Bank and shall
conform to and observe the rules and
regulations of the Bank issued from time to
time for the guidance of officers."

No list of duties existed in December 1986 for the position held by either Ms. Mader or Mr. Burcham. Prior to that time, each had opened and closed the doors of the branch on occasions, as had other employees. As has already been stated, no particular employee at the branch was designated as the door opener or door closer. Each of Ms. Mader and Mr. Burcham had a duty to open or close the doors if directed to do so on a specific occasion by the branch manager or accountant. Each also could be said to have had a general duty to open or close the doors at the normal opening and closing times if no other employee did.

22. The paragraph read from the respondent's circular seems to be based on the assumption that employees will have duties alloted or allocated to them on a regular basis. In fact, much of the work done by the employees at the Katanning branch was routine, from day to day. Each employee, including Ms. Mader and Mr. Burcham, knew the tasks he or she was expected to perform, and each performed them without specific direction on each day from any superior. In addition to such routine work, employees were given specific directions to perform tasks from time to time. The failure to give such specific directions between 9.30 a.m. and 10.00 pm on 11th and 12th December, or between 3.00 pm and 4.00 pm on 11th December or 4.00 pm and 5.00 pm on 12th December, did not mean that the employees had no work with which they could proceed.

23. In the High Court of Australia, in Automatic Fire Sprinklers Pty. Ltd. v. Watson [1946] HCA 25; (1946) 72 CLR 435, it was recognised that a distinction exists between contracts of employment in which the right to remuneration is dependent upon the performance of services, and those in which it is dependent merely upon the holding of the relevant office or position. At p 452, Latham C.J. said, "It is only in an exceptional case, where the payment of money to the servant does not depend upon his doing work, that the servant can recover remuneration without doing work." Further, on the same page, his Honour said, "An agreement may amount to an agreement for an annuity or other periodical payment with an independent promise by the beneficiary to do work for the other party to the agreement, but the ordinary contract of employment is not of that character." At p 465, Dixon J. (as his Honour then was) said, "It is, of course, possible for the parties to make a contract for the payment of periodical sums by the master to the servant independently of his service."

24. As it is possible for the parties to contract on the basis that the performance of services is not a condition precedent for payment of remuneration, so also it is possible for an award made under the Act to provide that the remuneration payable by an employer bound by that award to an employee is not conditional upon the performance of work by the employee. In Gapes v. Commercial Bank of Australia Ltd. (1980) 41 FLR 27, the Full Court held with respect to the Award that the performance of work by an employee of a bank party to the Award was not a condition precedent to the payment of salary to that employee. At pp 28-29, in a joint judgment, Smithers and Evatt JJ. said:

"The obligation under the award to pay a
salary depends upon its terms express or
implied. If the terms of the award provide
unconditionally for the payment of a yearly
salary in stated proportions at stated times
during the continuance of the relevant
relationship of employer and employee, it is
not to the point that at common law
obligations to pay salary under a similar
class of contract to which no award was
relevant might have been regarded by the law
as conditional on a particular degree of work
performance. Where there is an award
applicable to a contract of employment it is
necessary to ascertain that (sic.) the award
does provide expressly or impliedly about
payment of remuneration.
When one looks at this award one finds, save
in cl. 12 (c) thereof, no hint that
non-performance of part of the duties of a
particular category of employment will justify
a reduction in salary. On the proper
construction of the award the obligations
created therein with respect to payment of
salary do not depend upon actual peformance of
particular duties. Accordingly there being a
state of employment to which this award is
applicable the obligation to pay salary as and
when provided therein is not conditional on
work performance. The obligation persists
while the relevant state of employment exists.
In this case the state of employment in the
relevant category was in existence at all
relevant times because while the employee was
performing duties appropriate to his
classification, although not all of such
duties, and the employer was accepting such
performance, it could not be said that the
relevant state of employment did not exist.
The employee was not dismissed and he had not
resigned."

Their Honours went on to point out that a breach by an employee of his or her contract of employment, by failure to perform duties which the employee is obliged to perform, will result in the employer having a claim for damages against that employee, to the extent to which the employer has suffered loss and damage as a result of the breaCh At p 31. their Honours said:

"In this case the award was operative
throughout the period relevant to the issues
in these proceedings because there was in
existence throughout that period a state of
employment arising out of a contract of
employment. The critical issue between the
parties was therefore whether, according to
the terms of the award properly construed,
there was created an unconditional obligation
to pay on the date specified for payment, the
fortnightly component of salary falling due
under the award in respect of the fortnight
during part of which the employee was in
default in respect of performance of part of
his duties. In our opinion the award properly
construed did create an unconditional
obligation to pay the fortnightly component on
the date provided in the award for payment
thereof."

At p 32, Deane J. said:

"Prima facie, the award entitled the
appellant, while he remained in the employ of
the bank, to be paid the annual salary
appropriate to the capacity in which he was
acting. The only express provision in
the award which could arguably be suggested,
in the circumstances of the present matter, to
absolve the bank from the obligation to pay
the appellant in respect of the relevant three
days is to be found in cl. 12 (c) which
entitles an employer bank to make a deduction
in accordance with a formula in respect of
every hour or part of an hour that an employee
"has been absent from duty without the consent
of the bank during the period in respect of
which the salary is paid"."

25. Part of the argument on behalf of the respondent involved the proposition that Gapes was decided incorrectly by the Full Court. Counsel for the respondent put formally the proposition that the respondent was entitled to deduct pay during periods when the employees refused to perform all of their duties, whether or not they did other work, and whether or not the respondent consented to their doing other work, because of their refusal to perform a significant part of their duties. In putting this proposition, counsel for the respondent recognised that a judge at first instance is bound by Gapes, so that the argument was not developed fully.

26. In the alternative, counsel for the respondent sought to outflank Gapes, on the facts of the particular cases. This alternative argument was in the form of ten numbered propositions. It is convenient to state these propositions, and to deal with them one by one.

1. Under their contracts of employment, the employees were
obliged to carry out the tasks given or alloted to them.
I have already quoted the relevant clause from the
contract of employment of each of Ms. Mader and Mr.
Burcham. There can be little doubt as to the accuracy
of this proposition, on the basis of that clause.
2. Part of the duties of the employees was to open the
doors and to make the branch accessible to customers at
the opening hours established by the respondent, and to
leave the doors open and the branch accessible to
customers until the respondent's ordinary closing times.
Some difficulty does arise with respect to this
proposition. As I have already pointed out, it was not
the duty of any specific employee to open or close the
doors. Nevertheless, it could be said that each had a
duty to do so if no-one else did. Certainly, it could
be said that each had a duty not to close the doors at a
time earlier than the normal closing hours. However,
neither Ms. Mader nor Mr. Burcham actually closed the
doors on either day. It was not contended that either
had a duty to re-open the doors if someone else had
closed them early. On 11th December, when Mr. Mahony
had given an instruction that the doors be closed early,
any attempt to re-open them might have amounted to a
breach of contract on the part of Ms. Mader or Mr.
Burcham. No specific instruction was given to either
Ms. Mader or Mr. Burcham to open the doors on either
day. In the circumstances of the present cases, the
highest that the respondent can put the duties of Ms.
Mader and Mr. Burcham is that they were obliged to open
the doors at 9.30 a.m. on each day if no other member of
the staff of the branch did.
3. The employees made a decision to open the doors late and
to close them early.
The evidence establishes this proposition clearly.
There is no doubt that a concerted decision was made to
adopt that form of industrial action described as
restricting trading hours. Each of Ms. Mader and Mr.
Burcham was a party to this decision.
4. The purpose of the decision was, and could only have
been, to exclude customers from the branCh
Again, this proposition is established on the evidence.
The very notion of restricting trading hours involved
rendering the branch incapable of trading during the
hours when the restrictions were imposed. There was
evidence, and argument, concerning the question whether
a decision had actually been made to refuse to serve
customers. Each of Ms. Mader and Mr. Burcham gave
evidence that she and he had not given thought to what
might have happened had the doors been opened at the
normal opening time, or remained open until the normal
closing times. Their evidence, which I accept, was that
they had not made a decision that they would not serve
customers during those hours, if anyone else opened the
doors, or if no-one closed them early. Customers
contacting the branch by telephone while the doors were
closed were dealt with in the normal way. Counsel for
the applicant relied on this evidence to support the
proposition that the employees, including Ms. Mader and
Mr. Burcham, remained ready and willing to perform their
duties. Counsel for the respondent relied on the fact
that the employees had not adverted to the question
whether they would refuse to serve customers as
supporting the proposition that the respondent was
entitled to assume that customers would not be served if
a specific direction with respect to the doors were
given to an employee, and if the doors were opened or
remained open. In my view, the question is not of great
significance. If I were forced to decide it, I think
that the correct view is that, in the absence of any
indication that customers would not be served, the
respondent was not entitled to assume that customers
would not be served if they were able to gain access to
the branCh
5. On that basis, the employees were not prepared to carry
out all of their tasks, or a significant part of them,
and were not ready and willing to do so.
Difficulties with their second proposition, as to the
nature of the employees' duties, made it difficult for
counsel for the respondent to establish this proposition
in the way in which they had put it. It is nevertheless
true that the employees, including Ms. Mader and Mr.
Burcham were not ready and willing to carry out the
whole of their duties. In the case of Ms. Mader and Mr.
Burcham, they indicated on each of the relevant days
that they would not be prepared to comply with a
specific direction to open the doors at the normal
opening time, if such a direction were given. That is
an indication of their not being ready and willing to
perform all of the duties imposed on them by their
contracts of employment. In the circumstances, having
regard to the exclusion of customers that arose from the
restriction of trading hours, the opening of doors in
response to a specific direction would have been a
significant part of their duties.
6. In those circumstances, the respondent was entitled to
decline to pay the employees at the branch during the
period in which they were not ready and willing to carry
out all of their tasks; being so ready and willing was
a condition precedent to being paid under their
contracts of employment, and the award did not preclude
that result.
In support of this proposition, counsel for the
respondent relied on several authorities. In Australian
National Airlines Commission v. Robinson (1977) VR
87, a pilot who reported for duty on terms that he would
stop work for up to twenty-four hours, if called upon to
do so by his trade union, failed in a claim for damages
against his employer, as a result of the non-payment of
his salary whilst he so reported. In Csomore v.
Public Service Board of New South Wales (1987) 10
NSWL.R. 587, public servants who refused to perform
part of their duties were held not to be entitled to
recover those parts of their salaries withheld whilst
they were so refusing. In Miles v. Wakefield
Metropolitan District Council [1987] UKHL 15; (1987) 1 AC 539, the
House of Lords held that a registrar who refused to
conduct marriage ceremonies on Saturdays was not
entitled to recover his salary, which had been withheld
in respect of Saturdays. In Sim v. Rotherham
Metropolitan Borough Council (1987) 1 Ch 216, employers
of school teachers, who refused to perform certain of
their duties, were held to be entitled to set off
against the salaries of those teachers amounts which, it
was agreed, represented a reasonable quantification of
the damage suffered by the employers through the
teachers' breaches. It will be noted that the last
three of these cases involved claims in debt, for the
payment of salary. In each of these three cases, it was
held that the performance of all duties and the payment
of salary were concurrent conditions; it followed that,
on the proper construction of each of the contracts, the
performance of duties was a condition precedent to the
recovery of salary.
Robinson's case involved a claim for damages. At
p 91, the Full Court of the Supreme Court of Victoria
said:
"In any action for breach of contract a
plaintiff must prove that he is ready, willing
and able to perform his part of the bargain
and an allegation to that effect used to be
pleaded: see Jefferson v. Paskell, (1916) 1
KB 57, at p 74."
Further, at pp 94-95, the Full Court quoted a passage
from the judgment of Denning M.R. in Chappell v. Times
Newspapers Ltd. (1975) 1 WLR 482, at p 502, in which
his Lordship cited Smith's Leading Cases, 13th ed. vol.
2, p 10. It is obvious that the Full Court stated the
rule much too widely, in saying that readiness and
willingness to perform is a condition precedent to
success in any action for breach of contract. There are
many cases in which plaintiff and defendant each recover
damages for breaches of contract, on claim and
cross-claim in the same proceeding. If it were correct
that each must prove readiness and willingness to
perform, as a condition precedent to recovery, it would
follow that neither would recover anything. It is well
established that a party may accept repudiation of a
contract by the other party as bringing the contract to
an end, and may sue the other party for damages for
breaCh By accepting the repudiation and treating the
contract as at an end, the party is stating
unequivocally a lack of readiness and willingness to
perform it. A party who has performed services under a
contract is entitled to recover in respect of
substantial performance, suffering a set-off or
cross-claim for the cost of completion of the work, and
in the absence of preparedness to complete. See, for
example, Zamperoni Decorators Pty. Ltd. v. Lo Presti
(1983) VR 338. An examination of the passage from
Smith's Leading Cases, cited by Lord Denning, shows
clearly that it is only in cases "in which the promises
upon the one side are dependent on the promises upon the
other side" that one party must show readiness and
willingness to perform in order to enforce the
obligation of the other party. An obvious example is a
contract of sale; the vendor cannot enforce the promise
to pay without being prepared to perform the promise to
deliver. Jefferson v. Paskell, to which the Full
Court referred, was a case of breach of promise of
marriage, a clear case in which the obligation of each
party to perform the contract is dependent upon the
readiness and willingness of the other party to perform.
It is, therefore, only in contracts of employment
in which the obligation to pay remuneration is dependent
upon the performance of the obligation to work that the
principle will operate that an employee is obliged to
prove readiness and willingness to perform the
obligation to work as a condition precedent of
recovering the remuneration. In a case where the claim
is for damages for breach, and not for remuneration,
such as Robinson's case, the correctness of the
conclusion that readiness and willingness to perform is
a condition precedent to recovery is doubtful. At least
where there is substantial performance, it must be
doubtful whether the employer can withhold salary
completely during a period when the employee is working;
at best, the employer can have a claim, or cross-claim,
for damages, to the extent to which damage is suffered
as a result of the employee's non-performance. Of
course, if equitable relief is sought, the obligations
to do equity, and to have clean hands, will dictate
ordinarily that an employee seeking such relief show
readiness and willingness to perform. See Gordon v.
State of Victoria (198) V.R. 235, especially at p 239.
In cases, such as those referred to earlier as
having been recognised by the High Court of Australia in
Automatic Fire Sprinklers Pty. Ltd. v. Watson [1946] HCA 25; (1946)
72 CLR 435, in which remuneration is for the holding
of an office or the occupation of a position, the
performance of duties is not a condition precedent to
the payment of a remuneration. In a proceeding to
recover remuneration, a party to such a contract would
not be obliged to prove readiness and willingness to
perform the duties under it.
As has already been pointed out, the Award provides
for the payment of remuneration without requiring the
performance of duties as a condition precedent to such
payment. Any attempt by a respondent to the Award to
contract with its employees, whose terms and conditions
are governed by the Award, upon the footing that they
are obliged to work before being entitled to be paid,
would be bound to fail. Any such contract would be
inconsistent with the obligation to pay under the Award,
which is a statutory obligation, by virtue of the
provisions of the Act, particularly s.61. Indeed, the
view taken by the majority of the Full Court in Gregory
v. Philip Morris Ltd.(1988) 80 ALR 455, at pp
478-480 was that a term of an award becomes a term of
the contract between the employer and the employee bound
by that award. It follows that the respective contracts
between the respondent and Ms. Mader and Mr. Burcham
were not contracts in which the obligations to perform
duties and the obligations to pay were concurrent
conditions. The respondent was not entitled to decline
to pay either of those two employees on the ground that
they were not ready and willing to carry out all their
tasks.
7. Alternatively, if being ready and willing to perform
duties was not a condition precedent to being paid, the
respondent was entitled to decline the employees'
services and to refuse to pay them during the period in
which they were not ready and willing to carry out all
of their tasks.
This proposition was based on a passage appearing in the
judgment of Deane J. in Gapes v. Commercial Bank of
Australia Ltd. (1980) 41 FLR 27, at p 33:
"If, when the appellant refused to perform a
significant part of his duties, the bank had
simply directed him to refrain altogether from
working in his job, I would have been of the
view that the appellant was not entitled to be
paid his salary during any period in which he
was absent from his duties in accordance with
that direction or in which he performed some
of his duties in defiance of the bank's
continuing direction to abstain from working
altogether. An employer is entitled to
decline the services of an employee who
refuses to perform significant parts of the
job which he is employed to do, at least for
so long as that refusal of the employee
persists."
This passage was plainly not essential to his Honour's
reasoning on the case. No authority is cited in support
of it. Although the majority of the Full Court in that
case, at p 28, expressed agreement with the conclusions
of Deane J. and the reasons which led him to interpret
the award in the way he did, no agreement was expressed
with this dictum.
It is an established principle of the law of
contract that, in the absence of an express term
permitting suspension, one party may not suspend his,
her or its obligations to the other party. This
principle was applied in relation to contracts of
employment in Re Application by Building Workers'
Industrial Union of Australia [1979] FCA 68; (1979) 41 FLR 192, at
p 194, and in Gregory v. Philip Morris Ltd. (1988) 80
ALR 455, at p 472, in the judgment of Wilcox and
Ryan JJ. Where employment is governed by an award, an
employer cannot deprive an employee of the entitlement
to wages by declining to provide that employee with
work. See Seymour v. Stawell Timber Industries Pty.
Ltd. [1985] FCA 236; (1985) 9 FCR 241. In a case in which the
obligations to perform duties and to make payments were
concurrent, and subject to the doctrine of substantial
performance, it might be possible for an employer to
decline to accept less than total performance of an
employee's obligations under the contract. In a case
such as the present, in which those obligations are not
interdependent, any right which the employer may have to
decline performance which is less than complete can have
no effect on the employer's obligation to make payment.
The passage which I have quoted from the judgment of
Deane J. is inconsistent with his Honour's own
reasoning, and with the reasoning of the majority, in
that case. In fairness to Deane J., his reasoning
appears to have been directed more to the question
whether clause 12(c) of the award applied than to
general propositions. The passage in his Honour's
judgment immediately following that which I have quoted
is quoted later in these reasons for judgment.
8. The respondent in fact declined the services of its
employees and rejected part performance of their
contracts; the reading of the paragraph from the
respondent's circular by Mr. Mahony and Mr. Clark was
intended to be operative.
Strictly, it is unnecessary to determine whether this
proposition is correct, since I have held that the
declining of services cannot affect the obligation to
pay salary. As the matter was argued, however, I should
make some comments on the respondent's submissions in
this regard. It is true that there is uncontradicted
evidence that both Mr Mahony and Mr. Clark were serious
on each occasion on which they read the passage from the
respondent's circular, which has been quoted earlier.
That passage was not altogether effective to achieve the
purpose which the respondent desired. Apart from the
direction to return all bank property, it is expressed
entirely with respect to future allotment or allocation
of work or duties. It seems to proceed on the
assumption that, unless employees had duties allocated
or work alloted to them after the reading of the
passage, they would have nothing to do. As I have
pointed out already, each had duties which he or she was
obliged to perform; the continuance of that work did
not involve any further allocation of duties or
allotment of work. Apart from the direction to return
bank property, there is no hint in the passage of a
direction to cease work altogether.
On one construction, the direction to return bank
property would no doubt have prevented the performance
of much, if not all, of the work which the employees
were doing. There may have been some ambiguity in that
direction, however, in that employees may not have seen
any need to take any step to "return" property which was
already on the premises of the respondent's branCh The
direction did not specify to whom or where the property
was to be returned. The construction which would have
required delivery of property to some superior officer
was not taken literally by anyone at the branch, and no
step was taken to enforce it. There was also ambiguity
in the passage from the circular, by reason of the
phrase, "No further work will be allotted to you", and
the phrase, "...you may resume work in the normal way".
Both of these are consistent with the view being taken
by employees that they were not prevented from
continuing to perform work already alloted or allocated
to them, but could continue with work they already had,
in a way which was other than normal. The passage from
the circular did not tell them in plain terms to cease
all work.
Counsel for the respondent argued that the
employees merely disobeyed the direction by continuing
to work. This may have been so, but the respondent, by
its agents Mr. Mahony on the Thursday and Mr. Clark on
the Friday, was more than prepared to allow that
situation to continue. On the Friday, Mr. Clark was
aware that employees were continuing to work. On the
Thursday, Mr. Mahony was aware that it was likely that
employees would continue to work, and took no steps to
find out whether or not they were in fact working.
Further, the respondent accepted and retained the
benefit of the work which they had done. These
circumstances make it difficult to accept the
respondent's proposition that it declined the services
of the employees. The reading of the passage from the
respondent's circular on each occasion may have been
intended seriously, but it is plain that there was no
serious intent to enforce its terms. No attempt was
made to seek the undertaking contemplated by the passage
at any stage when normal work resumed. Coupled with the
fact that Mr. Mahony himself gave a direction for the
doors to be closed early on the Thursday afternoon,
these facts are indicative of the respondent attempting
to take a middle course, by refraining from paying
salaries, whilst allowing some work to be done which was
beneficial to it. The situation is somewhat similar to
that which was found to have existed in Welbourn v.
Australian Postal Commission (1984) V.R. 257, at p 268.
9. The respondent did not waive that act of declining or
the requirement that the employees not do any work until
prepared to do all their work, nor did it consent to
them working during the relevant period or periods, or
acquiesce in them so working.
The findings which I have already made with respect to
the respondent's eighth proposition cover this one as
well. In my view, the respondent did not insist on the
observance of the instructions contained in the passage
read from its circular.
10. During the relevant periods, the employees were absent
from duty without the consent of the respondent and
under clause 12(c) of the award, the respondent was
entitled to make the deductions it did.
This proposition was based heavily on the passage in the
judgment of Deane J. in Gapes v. Commercial Bank of
Australia Ltd. (1980) 41 FLR 27, at p 33, being the
passage which follows immediately upon that which has
been quoted with respect to the respondent's seventh
proposition:
"The appellant would, in my view, have been
"absent from duty" for the purposes of cl.
12(c) of the award during any period in which
he refused to carry out a significant part of
his duties and was, as a result, either
excluded altogether from the performance of
his duties or working in defiance of an
instruction from the bank to abstain from
working in his job altogether."
It should be noted that, on this aspect, the
majority of the Full Court in Gapes disagreed with the
statement of Deane J. At p 28, Smithers and Evatt JJ.
said:
"We desire, however, to make the following
observations because we are unable to satisfy
ourselves that had the respondent rejected
part performance of the duties of the
appellant and excluded him from carrying out
such part performance cl. 12 (c) of the award
would have been applicable. This is because
we feel that cl. 12 (c) is directed to
circumstances where the absence of the
employee is essentially his own voluntary
act."
Whatever be the appropriate conclusion as to
whether an employee given a direction such as that
contained in the passage in the respondent's circular is
absent from duty, the other essential element of clause
12(c) of the award was not addressed at all by Deane J.
An employer bound by the award is not entitled to make a
deduction from the salary of an employee unless the
employee has been absent from duty "without the consent
of the bank". Clearly, when faced with industrial
action of the kind carried out by the employees in the
present case, the respondent had a number of choices
open to it. One of those choices may have been to
decline any services at all on the part of the employees
participating in the industrial action. If it opted to
decline those services, however, the respondent could
hardly be said to have produced a situation in which the
employees were absent from duty without its consent.
The very reason for any absence would have been the
instruction of the respondent to be absent. In those
circumstances, the reasoning of Deane J. and the
respondent's tenth proposition in the present case are
unsustainable.

27. For all of these reasons, the respondent's argument in the present case cannot be upheld. It follows that, in failing to pay the full salaries of Ms. Mader and Mr. Burcham during the relevant period, the respondent was guilty of breaches or non-observances of clause 6 of the award.

28. This conclusion raises the question of the amount of any penalty to be imposed, and also questions relating to consequential orders. These include the question whether the breaches arose out of a course of conduct, within the meaning of s.119(1A) of the Act. The Court is aware that there are other proceedings, as yet unresolved, against the respondent, alleging breaches of the same term of the award as that which is the subject of the present proceedings. There are also questions of payment of salary to the employees concerned, pursuant to s.119(3), and the identity of the recipient of any penalty, pursuant to s.120 of the Act. No submissions have yet been addressed to the Court on these issues. Accordingly, the proper order is to adjourn the proceedings to a date to be fixed, so that submissions on these matters may be heard.