Marks v University of Melbourne [1999] FCA 150 (24 February 1999)

Last Updated: 1 March 1999

CATEGORY: NO QUESTION OF PRINCIPLE

FEDERAL COURT OF AUSTRALIA

Marks v University of Melbourne [1999] FCA 150

BERNARD MARKS v UNIVERSITY OF MELBOURNE

VI 1264 OF 1997

BERNARD MARKS v UNIVERSITY OF MELBOURNE

VI 1356 OF 1997

RYAN J

24 FEBRUARY 1999

MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VI 1264 OF 1997

BETWEEN:	BERNARD MARKS Applicant
AND:	UNIVERSITY OF MELBOURNE Respondent
JUDGE:	RYAN J
DATE OF ORDER:	24 FEBRUARY 1999
WHERE MADE:	MELBOURNE

MINUTES OF ORDER

THE COURT ORDERS:

1. That the question directed by the Order of Ryan J of 15 September 1997 to be decided separately from any other questions and before any further trial in the proceedings be answered as follows:

(a) whether on or around 15 August 1996, the Applicant and the Respondent were parties to a contract of employment between them;

Yes.

(b) if yes to (a), whether the contract of employment between the Applicant and the Respondent was terminated:

(i) as a result of a decision taken by; or

(ii) otherwise at the initiative of,

the Respondent

Yes.

2. That there be a directions hearing herein on a date to be fixed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VI 1356 OF 1997

BETWEEN:	BERNARD MARKS Applicant
AND:	UNIVERSITY OF MELBOURNE Respondent
JUDGE:	RYAN J
DATE OF ORDER:	24 FEBRUARY 1999
WHERE MADE:	MELBOURNE

MINUTES OF ORDER

THE COURT ORDERS:

1. That the question directed by the Order of Ryan J of 15 September 1997 to be decided separately from any other questions and before any further trial in the proceedings be answered as follows:

(a) whether on or around 15 August 1996, the Applicant and the Respondent were parties to a contract of employment between them;

Yes.

(b) if yes to (a), whether the contract of employment between the Applicant and the Respondent was terminated:

(i) as a result of a decision taken by; or

(ii) otherwise at the initiative of,

the Respondent

Yes.

2. That there be a directions hearing herein on a date to be fixed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 1264 OF 1997

BETWEEN:	BERNARD MARKS Applicant
AND:	UNIVERSITY OF MELBOURNE Respondent

VI 1356 of 1997

BETWEEN:	BERNARD MARKS Applicant
AND:	UNIVERSITY OF MELBOURNE Respondent

JUDGE:	RYAN J
DATE:	24 FEBRUARY 1999
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1 On 4 November 1985 an Agreement ("the CCH Agreement") was concluded between the University of Melbourne ("the University") and CCH Australia Ltd ("CCH"). The CCH Agreement was prefaced by the following recitals:

"A. C.C.H. wishes to fund a chair in the Faculty of Economics and Commerce at the University to be styled the C.C.H. Research Professor of Taxation Law (`the Chair'):

B. The University is willing to establish the Chair on the terms and conditions set out in this agreement:

C. Bernard Marks, a Reader in Law at the University of Adelaide, is willing to relinquish his tenured position as such Reader in order to be appointed to the Chair:"

2 The body of the CCH Agreement contained, amongst others, these terms:

"1. The University shall enact legislation in the form or to the effect of the form in the schedule to establish the Chair.

2. The tenure of the Chair shall be from 1 January 1986 and during the term of this agreement.

3. The University shall appoint Bernard Marks of 19 Fowlers Road, Glenunga, South Australia, to the Chair and the terms of his appointment and the definition of his duties shall conform to those generally accepted by the University for appointment to Chairs within the University and in particular shall conform to the statutes and regulations of the University concerning staff as they apply from time to time save and except that the tenure of the Chair shall be dependent upon funding to be received from C.C.H. pursuant to this agreement.

4. (1) C.C.H. shall, in each year during the term of this agreement, pay to the University an amount calculated by the University to be the salary of the Professor appointed to the Chair for the calendar year to which the payment relates (`the base charge') such base charge to include a calculation of the cost of contributions made by the University with respect to superannuation, payroll tax, accident compensation and other salary related payments imposed by any governmental judicial or industrial determination and such base charge to be payable by C.C.H. in the manner described in sub-clause (4).

(2) The University shall in respect of any base charge to be paid by C.C.H. under sub-clause (1) advise C.C.H. on or before 31 December of the year to which that base charge relates of any payments incurred by the University in relation to the salary of the Professor which are additional to the base charge paid for that year (`the additional charge') and C.C.H. shall pay the additional charge in accordance with sub-clause (5).

(3) The University shall on or before 10 December in any year during the term of this agreement advise C.C.H. in writing of the base charge under subclause (1) for the year next following.

(4) The base charge under sub-clause (1) in respect of a year shall be paid to the University by C.C.H. in four equal quarterly instalments in advance the first such instalment to be paid on 15 December in the year prior to the year to which the base charge relates and thereafter on the 15th days of March, June and September in the year to which the base charge relates and the date of any such instalment shall be the due date for the purposes of clause 7(i).
(5) The additional charge under sub-clause (2) shall be paid within 30 days of 31 December in the year to which the charge relates.

...

6. This agreement is conditional upon the said Bernard Marks accepting appointment to the Chair. In the event that the said Bernard Marks is not so appointed this agreement shall be of no effect.

7. This agreement shall continue unless terminated by the University in the following circumstances -

(i) at the option of the University if C.C.H. fails by the due date to pay the funding referred to in clause 4 or if C.C.H. is in breach of the covenant contained in clause 9; or

(ii) subject to clause 8 if the University receives notice from the Professor of his resignation; or

(iii) on the retirement or termination of office of the Professor in accordance with the University's statutes and regulations or upon the death of the Professor,

whichever event shall first occur. The University shall give written notice to C.C.H. as soon as possible after the happening of any of the events referred to above.

8. Notwithstanding the provisions of clause 7(ii) and (iii), C.C.H. may at its option provide funding for the Chair for a period of 20 years from the date of this agreement or for such further period as shall be agreed between the parties provided that such option is exercised by C.C.H. by notice in writing to the University given within two months of notification to it of the happening of any of the events under clause 7(ii) or (iii).

12. It is acknowledged and understood between the University and C.C.H. that this agreement shall constitute a fundamental term of the contract of employment between the University and Bernard Marks relating to the Chair."

3 Also on 4 November 1985, the Council of the University resolved to this effect:

"14.2 Council noted the recommendation of the Committee on Personal Chairs, Professorial Associates and Professorial Research Fellows which, having examined the record and referee's reports of the person proposed for appointment to the C.C.H. Research Chair in Taxation Law, had recommended that the person whose curriculum vitae was distributed at the meeting be offered appointment to the Chair. (Item C.11(a).2)

14.3 After discussion, Council adopted the following recommendations:

14.3.1 that the Statute 3.5 be amended in the form recommended by the Legislation Committee (Item C.7) and, as set out in the schedule to Appendix B to the paper;

14.3.2 that the draft agreement between the University and C.C.H., as set out in Appendix B, be approved; and

14.3.3 that Mr. Bernard Marks, whose curriculum vitae was tabled at the meeting of Council, be offered appointment to the C.C.H. Australia Limited Research Chair in Taxation Law with effect from as soon as possible after 1 January, 1986."

4 On 19 November 1985, the University by its Registrar, Mr Potter, wrote to the applicant the following letter:

"On behalf of the University Council, I have pleasure in offering you appointment as the CCH Research Professor of Taxation Law in the University from as soon as possible after 1 January, 1986.

The appointment is subject to the Statutes and Regulations of the University of Melbourne as enacted or amended from time to time, in particular Statute 3.5 - `The Professors', and to terms and conditions on which this offer of appointment is made. These terms and conditions are contained in these documents attached, namely a copy of Statute 3.5, referred to above, a copy of the University's `General Conditions of Appointment for a Professor', a copy of the agreement with CCH Australia Limited referred to in Statute 3.5 to which is scheduled the amendments to Statute 3.5 which establish this chair, and a memorandum on paid outside work. The appointment which is to be located in the Department of Accounting and Business Law, Faculty of Economics and Commerce, is principally for the purpose of research into taxation law and practice.

The salary for CCH Research Professor of Taxation law is $A54,948 per annum but this is subject to change following the recent National Wage decision.

I am able to advise that the result of your recent medical examination was satisfactory and this completes the requirements set out in paragraph 3.4 of the `General Conditions of Appointment for a Professor'.

I hope that you will be able to accept this appointment and look forward to your reply and, in particular, if you accept this offer, to your advice about the date on which you can undertake to assume the duties of the appointment."

5 That offer was accepted by the applicant by letter dated 26 November 1985 in which he indicated that he wished to take up his appointment on 1 January 1986. Subsequently, the amendment to Statute 3.5 which had been adopted by Council on 4 November 1985 was sealed on 25 November 1985 and was allowed and countersigned by the Lieutenant-Governor on 3 December 1985. Statute 3.5.1 as so amended provided:

"There shall be the following professors:

...

(j) a professor of Taxation Law to be styled the C.C.H. Research Professor of Taxation Law."

6 At the same time Statute 3.5.4 was amended by inserting the following paragraph:

"(5K) Notwithstanding anything to the contrary the C.C.H. research professor of Taxation Law shall hold office only during the term of the agreement between the University and C.C.H. Australia Limited dated the fourth day of November 1985."

7 In an explanatory note circulated to the University Council when those amendments were adopted it was recited:

"C.C.H. Australia Limited, a company involved in the publication of text books and practice manuals in many areas of law, wishes to fund a chair in Taxation Law. The period of appointment of the professor is subject to the receipt by the University of funding for the Chair pursuant to the terms of an agreement made the fourth day of November 1985. The following legislation is proposed."

8 From 1 January 1986 the applicant took up the appointment as CCH Research Professor of Taxation Law. Subsequent amendments were made to the University Statutes and allowed by the Governor on 2 December 1988 which had the effect that the former Statute 3.5 became Statute 7.2, a footnote to sub-paragraph 7.2.5 of which noted:

"Special conditions are established by standing resolution of Council in relation to the following professors -

...

the C.C.H. research professor of Taxation Law."

9 It was contended on behalf of the University that the resolution of the Council of 4 November 1985 was a standing resolution for the purpose of the new Statute 7.2.5. From January 1995 a new Statute 7.1 was adopted which provided under the heading "ACADEMIC AND GENERAL STAFF":

"Appointment of staff
7.1.1 (1) The council must appoint staff in such categories and on such terms and conditions as are specified by regulation under this statute.

(2) The general administration of the matters dealt with under this statute are to be carried out in accordance with the procedures published, as a regulation, by the registrar under section 1.4.

Effect of award
7.1.2 Where any provision in any regulation made under section 1 is inconsistent with a provision contained in the Australian Universities Academic Staff (Conditions of Employment) Award or any other applicable award ("the award") the provision contained in the award prevails.

Limitations
7.1.3 Nothing in this statute or any regulation made under it is to be construed as limiting or removing any powers or rights vested in the University by any contract or by the laws of Victoria.

Contracts
7.1.4 (1) The Council may on behalf of the University contract with any members of staff of the University, either at the time of appointment of the member or subsequently, to pay to that member for future services to be rendered to the University by the member such salary, pension or provision for retirement as may be agreed between the University and the member.

(2) The Council may make any such contract-

(a) under the seal of the University; or

(b) signed by any person duly authorised for the purpose by regulation of the Council.

(3) Contracts of the kind referred to in this section which were entered into by the Council on behalf of the University or by a person authorised for the purpose by the Council before this statute came into force are binding.

10 Among the regulations made under that new Statute 7.1 were the following:

"7.1.R2 - THE PROFESSORS
Appointment of professors
1. Subject to Statute 7.1.2 the Council may appoint professors to the numbered chairs listed in Schedule A to this regulation and may also appoint professors on special conditions to the chairs listed in Schedule B to this regulation.

...

Special conditions of appointment
5. The appointment of any professor under section 1 is subject to any special conditions determined by the Council."

11 Schedule B to the regulations made under the new Statute 7.1 stipulated:

"Special conditions are established by Council in relation to the following professors -

...

(k) A professor of Taxation Law to be styled the C.C.H. research professor of Taxation Law."

12 It was submitted on behalf of the University that the special conditions established by Council in relation to the C.C.H. research professor of Taxation Law were those which had been established by the resolution of the Council of 4 November 1985.

13 On 20 March 1996, the applicant wrote to the Dean of the Faculty of Law within the University a letter which, omitting formal parts, was in these terms:

"I refer to your advice to me last Monday evening that Mrs Judith Sperling, the managing director of CCH Australia Limited, had advised the Vice Chancellor that the company proposed the termination or variation of its contract with the University for funding the CCH Research Chair in Taxation Law.

This will be the fourth time that Mrs Sperling has attempted to terminate the contract since her appointment as managing director in late 1992. On the first occasion (January 1993), after consultation with the Vice Chancellor and the University Solicitor, I wrote a letter to Mrs Sperling and she backed off. On the second occasion, she met with myself and the Chancellor at the University where the binding nature of the contract was discussed. On the third occasion (early 1994), CCH retained Baker and McKenzie in Sydney to negotiate with me a buy-out of the contract (a financial inducement for me to resign from the University). I resisted any negotiations and when Baker and McKenzie advised me that CCH intended to repudiate the contract I retained lawyers; after a signed but unfiled statement of claim was sent to Baker and McKenzie, Mrs Sperling attended a conference with my solicitors in Melbourne where she asked that the proceedings not commence.

I understand from our conversation that this time Mrs Sperling has referred to the takeover late last year of Commerce Clearing House Inc (the parent company of CCH Australia Limited) by the Kluwer Group in Holland.

At our meeting I said that I would speak with the University Solicitor about the matter. I spoke with Glenda Harvey yesterday and told her that I would ask my solicitors to speak with her. I believe that the advice of my solicitors will be to obtain an interlocutory injunction restraining any breach of the contract."

14 On the following day, 21 March 1996, CCH wrote to the Vice-Chancellor of the University, the following letter:

"I am writing to thank you for the opportunity of meeting with you last week.

As a result of the take-over by Wolters Kluwer of the world-wide CCH enterprise we have been involved in significant restructuring.

I have received assurances that we can continue to fund the CCH Research Chair of Taxation Law until the end of this year, but not beyond that period.

I look forward to your assistance in dealing with the matter in a way that will preserve the historically good relationship between CCH Australia Limited and the University of Melbourne."

15 On 3 April 1996, the Vice-Chancellor of the University wrote to the applicant advising that:

"I expect that by now you have received informal notice of the likelihood that CCH Australia Limited, following a take-over by Wolters Kluwer, would cease to fund the CCH Research Chair of Taxation Law. I had an informal meeting with the Managing Director with CCH Australia a week ago at which she informed me that the take-over had occurred, warned me that continued funding was in jeopardy and undertook to provide formal advice following a planned meeting with representatives of Wolters Kluwer.

I now write to confirm that funding for the Chair will continue until the end of 1996, but not beyond that period. I attach a copy of the letter from the CCH Managing Director, dated 21 March 1996 (but received by me only yesterday on my return from overseas).

I regret having to pass on such bad news. My understanding is that the tenure of the Chair is tied to CCH funding in the sense that the University has an option to terminate the agreement in the event of funding being withdrawn.

I will refer the correspondence also to the Dean of Law, seeking his advice."

16 On 17 May 1996, the applicant advised the Dean of the Faculty of Law by letter of his intention to commence proceedings (apparently against CCH alone). Proceedings of that kind were, in fact, issued on behalf of the applicant out of the Supreme Court of Victoria on 21 May 1996 and were numbered 2197 of 1996.

17 On 6 July 1996 the managing director of CCH wrote this letter to the Vice-Chancellor of the University:

"I refer to previous communications and in particular to my letter of 21 March 1996.

The current position is the CCH's new owner, the Dutch based Wolters Kluwer corporation, has announced that it will be appointing someone from overseas to a new position as Head of the company's Asia-Pacific operations. That person will be based in Sydney and I understand will direct appropriate restructuring in relation to CCH Australia. We expect that the new appointee will take up the position later in 1996.

I have also been given to understand that there will soon be changes to the composition of the Board of the Australian company.

In light of these coming changes, the Board of Wolters Kluwer and that of CCH Australia will be making no decisions in relation to the CCH Research Chair of Taxation Law at the present time.

I fully appreciate that the University needs to have as much notice as possible of any future change. I understand that, until and unless the University were to receive advice of CCH's intention not to continue with its funding of the CCH Research Chair of Taxation Law, the University would not give any consideration to its possible future actions in relation to that Chair, including consideration of the University's organising continued funding of the Chair from another source. However, I am, for the reasons above, not able to provide any such advice to you at this time.

I enclose a copy of a letter sent by CCH's legal advisors to Professor Marks' solicitors to the same effect."

18 On 24 July 1996, the managing director of CCH again wrote to the Vice-Chancellor of the University advising:

"I have had discussions with the new head of CCH's Asia-Pacific operations subsequent to my letter to you of 21 March 1996. Following these discussions the Board of CCH Australia Limited has resolved to discontinue payments pursuant to the professorial agreement in respect of the period after 31 December 1996. This letter is formal notice to the University of that decision.

Professor Marks has over the years advised CCH Australia that the University derives significant financial benefits from the CCH Research Chair of Taxation Law. This is apparently attributable to the courses in tax run by Professor Marks for fee-paying students, generally from off the campus, from which we understand the University derives considerable revenue. It is my hope that, by virtue of the fact that the Chair is profitable, the University will decide to continue with the Chair and these activities, and that Professor Marks' employment with the University will consequently continue. I also understand from my discussions with Professor Marks over the years that he personally derives significant income from his consulting activities. It may be possible that his ongoing employment could be facilitated if those activities were carried on for the benefit of the University.

Without prejudice to CCH Australia's rights, and without admitting that it has any responsibility to the University or to Professor Marks, CCH Australia is willing to assist the University in funding its obligations (if any) to Professor Marks if it terminates Professor Marks' employment. CCH Australia will pay the University $50,000 if the University is obliged to make a payment in lieu of notice or otherwise to compensate Professor Marks for the termination of his employment. This amount will, however, be reduced by an amount equivalent to the amount (if any) which CCH Australia may be obliged to pay to Professor Marks (whether pursuant to a Court order or by settlement) in relation to the current proceedings instituted by Professor Marks against CCH Australia.

CCH Australia has had an ongoing relationship with the University in relation to the Chair for more than a decade. I believe that the association has been beneficial for the University. No doubt opportunities will arise in the future where there will be opportunities for CCH Australia to collaborate with the University. If and when we recognise appropriate opportunities which may have benefits for the University, we will contact the University; similarly we should appreciate it if the University would contact us with any opportunities it recognises to renew its association with CCH Australia.

Please let me know what is decided by the University in relation to Professor Marks' employment. This is relevant to the issues between CCH Australia and Professor Marks and our proposed assistance to the University.

As requested by you, none of us at CCH has made contact directly with Professor Marks and I leave it to you to communicate with Professor Marks as appropriate."

19 On 15 August 1996 the Vice-Chancellor of the University wrote two letters, one to CCH and the other to the applicant. That to CCH was in these terms:

"In your letter, you say that C.C.H. Limited has resolved to discontinue payments pursuant to the professorial agreement (`the Agreement') in respect of the period after 31 December 1996.

Let me say immediately that the University recognises and is grateful for the support which C.C.H. Limited has given to the University over the past 11 years. The C.C.H. Research Chair of Taxation Law has provided benefits to the University and, we hope, to C.C.H.

The obligation on C.C.H. Limited to continue payments is fundamental to and a condition of the Agreement. Your resolution to discontinue payments is a repudiation of the Agreement. The University accepts your repudiation, hereby terminates the Agreement pursuant to law and, as we are sure you will understand, necessarily preserves all its rights."

20 The letter to the applicant advised him that:

"Enclosed is a letter from C.C.H. Australia Ltd (`C.C.H.') dated 24 July 1996.

The Managing Director of C.C.H. has informed me that it has resolved to discontinue payments pursuant to the professorial agreement dated 4 November 1985 in respect of the period after 31 December 1996.

The professorial agreement between the University and C.C.H. provides, inter alia, that `the tenure of the Chair shall be dependent upon funding to be received from C.C.H. pursuant to this agreement'.

As the funding for the Chair is to be discontinued, your appointment will necessarily be terminated. The University has terminated the professorial agreement. Accordingly, the University thereby gives notice that your appointment to the Chair styled `C.C.H. Research Professor of Taxation Law' will be terminated on 31 December 1996.

On 23 May 1996, your solicitor provided the University's solicitor with a copy of the Writ issued on your behalf against C.C.H. in matter 1996 No. 2197. The University understands that you are prosecuting that proceeding against C.C.H.

As the litigation exists, and has about it the possibility of affecting the University, the University has chose to reserve all its rights against C.C.H."

21 On 12 September 1996 the applicant's Supreme Court proceedings were amended to add the University as a defendant. The amended statement of claim included the following paragraphs charging the added defendant:

"12. At all material times and by reason of the terms and conditions of the Professorial Agreement, the University and CCH intended:

[a] that the Plaintiff would derive rights and benefits under the Professorial Agreement; and

[b] that the rights and benefits to be derived by the Plaintiff from the Professorial Agreement were his appointment to the Chair, the remuneration and professorial standing consequent upon that appointment.

13. In the premises, by its entry into the Professorial Agreement, CCH, alternatively, the University constituted itself as trustee for the Plaintiff of the rights and benefits referred to in paragraph 12 hereof, the performance of which trust may be enforced by the Plaintiff.

13A. Further, by reason of the CCH and/or University being the trustee for the Plaintiff of the rights and benefits referred to in paragraph 12 hereof, each of CCH and the University owed to the Plaintiff a fiduciary duty not to do any act or take any step which could prejudice the interests of the Plaintiff as CCH Research Professor of Taxation Law at the University.

...

22. In circumstances where the University was in 1985 and has at all times since been aware:

[a] of the matters referred to in paragraphs 8, 16 and 17 hereof;

[b] of CCH's obligation to the Plaintiff to abide by the terms and conditions of the Professorial Agreement; and

[c] of its own fiduciary duty to the Plaintiff referred to in paragraph 13A hereof;

the decision by the University to accept CCH's purported repudiation of the Professorial Agreement and to terminate the Agreement constituted a breach by the University of its fiduciary duty to the Plaintiff and accordingly the notice given to the Plaintiff by the University that the University intends to terminate the Plaintiff's appointment on 31 December 1996 is invalid, of no effect in law and should be withdrawn."

22 By his prayer for relief against the University in the Supreme Court proceedings, the applicant claimed:

"A. An injunction restraining the Second Defendant from:

(a) acting upon any purported termination by it of the Professional Agreement;

(b) acting upon the wrongful repudiation by CCH of the Professorial Agreement; or

(c) taking any step to terminate the Plaintiff's appointment to the Chair prior to, on, or following 31 December 1996.

B. An order requiring the Second Defendant to revoke or withdraw the notice given by it to the Plaintiff of its intention to terminate the employment agreement on 31 December 1996.

C. An order requiring the Second Defendant to withdraw or revoke its purported termination of the Professorial Agreement, alternatively an order requiring the University to reinstate the Professorial Agreement and to specifically perform the same.

D. A Declaration that the Second Defendant is obliged to continue the Plaintiff's appointment as CCH Professor of Taxation Law at the University of Melbourne unless and until the Professorial Agreement is determined according to law.

E. Damages.

F. Equitable compensation.

G. Interest.

H. Costs.

I. Such further or other order as the Court deems appropriate."

23 On 12 September 1996 judgment was given by Mandie J in the Supreme Court proceedings dismissing the applicant's action against both defendants. On 21 February 1997 the applicant applied by the present proceedings numbered VI 97/1264 to the Industrial Relations Court of Australia pursuant to s 170EA of the Industrial Relations Act 1988 ("the Act"). On 6 May 1997 the applicant made a further application, also to the Industrial Relations Court, for penalties to be imposed on the University for breach of the Universities and Post Compulsory Academic Conditions Award ("the Award") constituted by its failure to comply with cl 21 thereof. By his consolidated statement of claim after both proceedings had been transferred to this Court, the applicant alleged that the termination of his employment by the University was in breach of Part VIA Div 3 of the Act and further or alternatively was in breach of the Award.

24 Clause 5 of the Award contains this definition of "Termination of employment":

"(b) `Termination of employment' means termination of employment at the initiative of the employer institution."

25 That definition is made relevant to the present application by cl 9 of the Award which contains, amongst others, these paragraphs:

"(a) All decisions to discipline or terminate the employment of an academic must be in accordance with this clause.

(b) Except as specifically provided herein to the contrary, the terms of this award shall cover exhaustively the subject matter concerned, and are to the exclusion of:

(i) State and Territory law (including any written or unwritten law pursuant to which the Visitor to any employer may exercise any jurisdiction or power) in respect of any matter subject to this award; and

(ii) any law of the Commonwealth or an internal Territory of the Commonwealth, in respect of which the Australian Industrial Relations Commission has power to make an award which is not consistent with that law by reason of section 121 of the Act (including any written or unwritten law pursuant to which the Visitor to any employer may exercise any jurisdiction or power) in respect of any matter subject to this award to the extent that this award is not consistent with that law.

Provided that the provisions in this award shall be subject to and shall not affect the operation of:

(A) any law empowering a State or Commonwealth industrial tribunal to order re-instatement of or compensation to a staff member or to otherwise deal with the dismissal of that staff member;

(B) any other law empowering any court or tribunal external to an employer (other than a Visitor to that employer) which has jurisdiction to deal with any causes of action or claims arising from actions taken by an employer pursuant to this award.

...

(d) An institution must not terminate the employment of an academic unless the academic has been given notice and/or compensation as required by section 170DB of the Act, provided that:

(i) the institution may terminate without notice the employment of an academic found to have engaged in conduct of a kind envisaged in section 170DB(1)(b) of the Act such that it would be unreasonable to require the employer to continue employment during a period of notice;

(ii) Greater notice and/or compensation specified in the academic's contract of employment or in the terms of the 1991 Academic Award Restructuring Agreement or in this award shall prevail over the terms of section 170DB of the Act.

(e) This award is to be read in conjunction with Division 3 of Part VIA of the Act provided that an academic shall be entitled to the benefit of:

(i) any award clause which is more favourable to the academic than any corresponding provision in the Act;

(ii) any procedural step required by the award in addition to the required procedural steps of the Act."

26 Clause 21 of the Award which was renumbered 22 with effect from 30 January 1999 contained detailed provisions governing the obligations of an institution which "has decided to terminate the employment of one or more staff members for reasons of an economic, structural or similar nature".

27 On 15 September 1997, I ordered that the following questions be decided separately from any other questions and before any further trial in the proceedings:

"(a) whether on or around 15 August 1996, the Applicant and the Respondent were parties to a contract of employment between them; and

(b) if yes to (a), whether the contract of employment between the Applicant and the Respondent was terminated:

(i) as a result of a decision taken by; or

(ii) otherwise at the initiative of,

the Respondent."

28 At one point in the present proceedings, the University wished to contend that the applicant had been the holder of an office and not an employee. Question (a) owed its existence to that contention which, during the hearing, was expressly abandoned. Accordingly, it is common ground that question (a) should be answered, yes.

29 Question (b) arises from the terms of s 170DE(1) of the Act which provided:

"An employer must not terminate an employee's employment unless there is a valid reason, or valid reasons, connected with the employee's capacity or conduct or based on the operational requirements of the undertaking, establishment or service."

30 That sub-section found its place in Division 3 of Part VIA of the Act which included s 170CA(1) providing:

"The object of this Division is to give effect, or give further effect, to:

(a) the Termination of Employment Convention; and

(b) the Termination of Employment Recommendation, 1982, which the General Conference of the International Labour Organisation adopted on 22 June 1982 and is also known as Recommendation No 166, and a copy of the English text of which is set out in Schedule 11."

31 Section 170CB in the same Division of the Act stipulated:

"An expression has the same meaning in this Division as in the Termination of Employment Convention."

32 The full title of the Termination of Employment Convention ("the Convention"), the English text of which is set out in Schedule 10 to the Act is "Convention Concerning Termination of Employment at the Initiative of the Employer". By Article 3 of the Convention it is provided:

"For the purpose of this Convention the terms "termination" and "termination of employment" mean termination of employment at the initiative of the employer."

33 The Convention's principal prescription which was reflected by s 170DE(1) of the Act is to be found in Article 4:

"The employment of a worker shall not be terminated unless there is a valid reason for such termination connected with the capacity or conduct of the worker or based on the operational requirements of the undertaking, establishment or service."

34 A right of appeal against an allegedly unjustifiable termination is provided by Article 8 of the Convention which stipulates:

"1 A worker who considers that his employment has been unjustifiably terminated shall be entitled to appeal against that termination to an impartial body, such as a court, labour tribunal, arbitration committee or arbitrator.

2 Where termination has been authorised by a competent authority the application of paragraph 1 of this Article may be varied according to national law and practice.

3 A worker may be deemed to have waived his right to appeal against the termination of his employment if he has not exercised that right within a reasonable period of time after termination."

35 It is clear that the framers of the Convention regarded the employment with which it is concerned as arising under a contract between an employer and a worker. Thus, Article 2 provides by cl 2:

"A Member may exclude the following categories of employed persons from all or some of the provisions of this Convention:

(a) workers engaged under a contract of employment for a specified period of time or a specified task;

(b) workers serving a period of probation or a qualifying period of employment, determined in advance and of reasonable duration;

(c) workers engaged on a casual basis for a short period."

36 Clause 3 of the same Article provides:

"Adequate safeguards shall be provided against recourse to contracts of employment for a specified period of time the aim of which is to avoid the protection resulting from this Convention."

37 The framers of the Convention have not dealt specifically with the ways in which a contract of employment may be brought to an end and have, I infer, left permissible modes of termination to be ascertained by reference to the domestic law of each Member State. In several Australian cases in which the concept of termination at the initiative of the employer has arisen for consideration it has been held that it does not embrace a termination brought about by the mutual agreement of the employer and the employee. Thus, in Mohazab v Dick Smith Electronics Pty Ltd [No 2] (1995) 62 IR 200 a Full Court of the Industrial Relations Court of Australia observed, at 205:

"In many, if not most, situations the act of the employer that terminates the employment relationship is not only the act that puts in train the process leading to its termination but is, in substance, the entire process. An example would be a situation where the employer decided to dismiss an employee and did so orally or in writing with immediate effect. Other situations may be more complex as exemplified by the circumstances considered by Moore J in Grout v Gunnedah Shire Council (1994) 1 IRCR 143; 57 IR 243 where an employee had given written notice purporting to terminate the employment relationship. The notice was not reasonable but was accepted by the employer which later refused to allow the employee to withdraw the notice. A question arose as to whether that was a termination of the employment at the initiative of the employer and his Honour held it was. His Honour said at 160-161; 259:

`I have already said that Div 3 concerns termination at the initiative of the employer. The respondent submits that "initiate" means "to begin, commence, enter upon; to introduce, set going, or initiate": see Shorter Oxford English Dictionary. In this matter, it is submitted, it was the applicant and not the respondent that initiated the termination by writing the letter of 18 May. This, in my opinion, gives the expression "termination" in the Act, read in conjunction with Art 3 of the Convention which speaks of "termination ... at the initiative of the employer", a narrow meaning that was not intended. A principal purpose, if not the sole purpose, of Div 3 is to provide an employee with a right to seek a remedy in circumstances where the employee did not voluntarily leave the employment. An employee may do some act which is the first in a chain of events that leads to termination. An example would be an employee who engaged in misconduct at work which ultimately led to the employer dismissing the employee. However, that situation and the present are not situations where the termination was at the initiative of the employee. In both instances the step or steps that effectively terminated the employment or purported to do so were taken by the employer.'


In these proceedings it is unnecessary and undesirable to endeavour to formulate an exhaustive description of what is termination at the initiative of the employer but plainly an important feature is that the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship. This issue was addressed by Wilcox CJ in APESMA v David Graphics Pty Ltd (unreported, Industrial Relations Court of Australia, 12 July 1995, Wilcox CJ). His Honour, at p 3, referred to the situation of an employee who resigned because `he felt he had no other option'. His Honour described those circumstances as:

`... a termination of employment at the instance [of] the employer rather than of the employee.'

And at p 5:

I agree with the proposition that termination may involve more than one action. But I think it is necessary to ask oneself what was the critical action, or what were the critical actions, that constituted a termination of the employment.'

38 That passage makes it clear that a termination of employment may occur at the initiative of the employer even though it is not an act or decision of the employer which sets the process of termination in motion. In the present case, the precipitating act or decision in that sense was that of CCH in determining to withhold funding for the applicant's Chair from the end of 1996. Of course, a contract of employment may be terminated by agreement between the employer and the employee and, in that event, is not brought about unilaterally by, or at the initiative of, the employer; see e.g. Victoria v Australian Teachers' Union (1993) 49 IR 149.

39 Agreement about events outside the control of either party which will bring about a termination of a contract of employment may be embodied in the contract of employment itself. Accordingly, upon the happening of one of those events, the termination will occur also by agreement of the parties and not at the initiative of the employer. I regard the judgment of Moore J in Australian Liquor, Hospitality and Miscellaneous Workers Union v Commonwealth (1994) 55 IR 18 as consistent with this view. In that case, s 76V of the Public Service Act 1922 provided:

"Subsequent to subsection (2) an officer shall, by force of this subsection, be retired from the Service upon attaining the maximum retiring age."

40 The maximum retiring age for the relevant retiring officer, Mr Simmons, was 65 years. His Honour concluded, at 19:

"In my view, the termination of the employment of Mr Simmons was not termination at the initiative of the employer but rather, as is submitted by the respondent, termination resulting from the operation of an Act of parliament. Accordingly, the application to the Court is one that does not concern termination of the type to which the relevant legislative provisions are directed."

41 The effect of s 76V, I consider, was to import a statutory term into Mr Simmons' contract of employment which had the effect that, upon his attaining the age of 65, his employment was terminated by agreement or, as his Honour said, by operation of law and not at the initiative of the employer. There was nothing which the employer could have done on its own initiative to prevent the termination from taking effect immediately upon the employee's having attained the age of 65. In the present case, however, the applicant's contract of employment did not stipulate that it was to come to an end upon CCH's failure to make one of the payments stipulated in cl 4 of the CCH Agreement. Rather, cl 7(i) of the CCH Agreement, the whole of which was incorporated, so far as it could be, into the contract of employment between the applicant and the University, gave the University the option of terminating the CCH Agreement and the contract of employment in the event of a default by CCH in payment of the funding. That interpretation of both the CCH Agreement and the contract of employment is reinforced by the acknowledgment by the University's Vice-Chancellor in his letter to the applicant of 3 April 1996 of his "understanding that the tenure of the Chair is tied to CCH funding in the sense that the University has an option to terminate the agreement in the event of funding being withdrawn" (emphasis added).

42 On that view, the exercise of the option by the University amounted to a termination of the contract of employment at the initiative of the University. It is true that the default which precipitated the exercise of the option did not occur at the initiative of the University but, as explained in Mohazab, that did not prevent the termination which was brought about by exercise of the option from being at the initiative of the employer in the requisite sense.

43 I accept that Statute 3.5.4(5K) was adopted by the University Council in November 1985 specifically to accommodate the special circumstances surrounding the creation of Mr Marks' Chair. I also consider that, after the substantial amendments to the University Statutes which came into effect respectively in December 1986 and January 1995, the special conditions referred to in the footnote to Statute 7.2.5 and later in Schedule B to the regulations made under Statute 7.1 as having been established for the CCH research professor of Taxation Law were those embodied in the former Statute 3.5.4.

44 In that context, Counsel for the University invoked this passage from the joint judgment in the High Court in the Industrial Relations Act Case; Victoria v The Commonwealth (1996) 187 CLR 416 at 519:

"It is also necessary to consider whether, in terms, the prohibitions in ss 170DB, 170DC 170DE(1) and 170DF impair the right of the States to determine `the term of appointment [of those whom they wish to employ]' Re Australian Education Union [1995] HCA 71; (1995) 184 CLR 188 at 232. The relevant words of each prohibition are that `[a]n employer must not terminate an employee's employment'. In the case of s 170DC, the prohibition is elaborated by reference to a specific reason and, in the case of ss 170DE(1) and 170DF, by reference to specific reasons. As a matter of ordinary language, an employer does not terminate an employee's employment when his or her term of employment expires. Rather, employment comes to an end by agreement, or, where the term is fixed by award or statute, by operation of law.

There is nothing in the Act to suggest that the words `a[n] employer must not terminate an employee's employment' are to be construed other than in accordance with their ordinary meaning. So construed, they do not apply to the situation where employment comes to an end because its term has expired. To put the matter another way, the prohibitions are concerned with termination for reasons unconnected with the term of employment. And that is manifestly clear when regard is had to ss 170DC, 170DE(1) and 170DF. The prohibitions effected by those sections are directed, respectively, to termination for a specified reason and termination for one or more specified reasons, none of which includes the expiry of the employee's term of appointment."

45 However, I do not regard the stipulation in paragraph (5K) of Statute of 3.5.4 that the CCH research professor of Taxation Law should "hold office only during the term of the agreement between the University and CCH Australia Limited" dated 4 November 1995 as fixing "the term" or point of expiration of Mr Marks' contract of employment so as to bring his tenure of the Chair to an end upon CCH's withholding of funds. The University Statutes, including the former Statute 3.5.4(5K) were only one of the documentary embodiments of Mr Marks' contract of employment. The others, as detailed in the Registrar's letter of 19 November 1995, were the CCH Agreement and a memorandum on paid outside work. The CCH Agreement, it will be recalled, was, by cl 12 thereof, to "constitute a fundamental term of the contract of employment between the University and Bernard Marks". The possibility of CCH's failing to pay the funding referred to in cl 4 was adverted to in cl 7 as giving the University the option of terminating the CCH Agreement. In those circumstances, I consider that the reference to "the term" of the CCH Agreement in the former Statute 3.5.4(5K) was to the term defined in cl 7 of the CCH Agreement, that is a period ending upon the exercise of an option by the University, in the event of CCH's default in providing the funding, or upon Professor Marks' resignation, retirement or death or some other termination of his tenure of the Chair. For the term of the CCH Agreement to expire in any of those ways, the exercise by the University of its option was essential. Accordingly, neither the CCH Agreement nor Mr Marks contract of employment which incorporated the CCH Agreement by reference, came to an end automatically upon the default by CCH in the provision of funding whenever that might be regarded as having occurred.

46 Another available analysis of the termination of the CCH Agreement is that it occurred upon acceptance by the University of CCH's repudiation of the CCH Agreement. However, as with the contractual exercise of the University's option discussed above, the University's acceptance of CCH's repudiation was at the initiative of the University in the sense that it was a matter for it to elect whether or not to take that course. Instead of accepting CCH's repudiation of the CCH Agreement, the University could have sought specific performance of CCH's obligation to continue to provide funding until that Agreement had been terminated at the option of the University upon the happening of one or other of the events stipulated in cl 7(ii) and (iii).

47 The conclusions which I have reached are confirmed by the view expressed in Chitty on Contracts Specific Contracts, 27^th Edn p 800 where it is observed:

"As a matter of general contract principle, the wrongful repudiation or wrongful purported termination of a contract cannot in itself terminate the contract [of employment] ..."

48 This "elective view of termination of the contract of employment" (ibid p 801), I consider, must be taken even more strongly where, as here, the repudiatory action or conduct is that of a party to a contract collateral to the contract of employment and not directly bound by the terms of that contract. That is not to say that the repudiatory conduct of the third party cannot justify termination by the employer of the contract of employment. However, that is a matter going to the issue of "valid reason" under s 170DE(1) of the Act and not to whether the termination was "at the initiative of the employer".

49 The interpretation which I prefer of the CCH Agreement as incorporated in Mr Marks' contract of employment also entails the rejection of the University's alternative contention based on estoppel. That contention was expressed in this way:

"During the term of his employment, the applicant and the Respondent proceeded on the mutual assumption that his contract of employment included a condition that, in the event of CCH ceasing to fund the position held by the Applicant, the Applicant's employment would terminate."

50 In my view, the applicant's contract of employment included a condition that, in the event of CCH's ceasing to fund the Chair, the contract of employment was terminable at the option of the University. Nothing which either the University or Mr Marks did during his tenure of the Chair was inconsistent with that interpretation. Accordingly, there is no scope in the present case for invoking the modern doctrine of estoppel as explained, for example, by Deane J in The Commonwealth v Verwayen (1990) 170 CLR 394 at 444-446.

51 For these reasons, I have been led to conclude that the termination of the applicant's contract of employment occurred at the initiative of the University manifested by its exercising the election given to it by the contract itself. The questions formulated by my earlier order should therefore each be answered in the affirmative. There will be a directions hearing on a date to be fixed with a view to arranging for the determination of the remaining issues in the substantive applications.

I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan.

Associate:

Dated: 24 February 1999

Counsel for the Applicant:	Mr B Lawrence
Solicitors for the Applicant:	Holding Redlich
Counsel for the Respondent:	Mr P Hanks
Solicitors for the Respondent:	Arthur Robinson & Hedderwicks
Date of Hearing:	1 and 2 December 1997
Date of Judgment:	24 February 1999