Re Australian Industrial Relations Commission and Arends; exparte Commonwealth of Australia [2005] FCAFC 204 (16 September 2005)

Last Updated: 16 September 2005

FEDERAL COURT OF AUSTRALIA

Re Australian Industrial Relations Commission and Arends; ex parte Commonwealth of Australia [2005] FCAFC 204

INDUSTRIAL LAW – Application to Australian Industrial Relations Commission (‘the Commission’) for relief against Commonwealth pursuant to Part VIA of Workplace Relations Act 1966 (‘WRA’) – Applicant was a health practitioner at a naval base – Applicant held to be an ‘employee’ of the Commonwealth by the Commission – Jurisdiction of the Commission – Whether applicant was an ‘employee’ within meaning of s 170CE of WRA – Whether applicant was a ‘Commonwealth public sector employee’ – Effect of the Commission’s determination about status of applicant


Workplace Relations Act 1996 (Cth) ss 170CB, 170CD, 170CE
Defence Act 1903 (Cth) ss 8, 9A
Public Service Act 1999 (Cth) s 6




Director-General of Education (NSW) v Suttling [1987] HCA 3; (1987) 162 CLR 427 applied















THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION AND MALCOLM ARENDS; EX PARTE COMMONWEALTH OF AUSTRALIA
NSD 1834 of 2004

WILCOX, GYLES AND BENNETT JJ
16 SEPTEMBER 2005
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1834 of 2004

ON REMITTAL FROM THE HIGH COURT OF AUSTRALIA

IN THE MATTER of an Application for Writs of Prohibition and Certiorari

BETWEEN:	THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION FIRST RESPONDENT
AND:	MALCOLM ARENDS SECOND RESPONDENT Ex parte: COMMONWEALTH OF AUSTRALIA APPLICANT
JUDGES:	WILCOX, GYLES AND BENNETT JJ
DATE OF ORDER:	16 SEPTEMBER 2005
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. A writ of certiorari issue to bring in and quash the decisions of the Australian Industrial Relations Commission made by the Full Bench (Justice Munro, Senior Deputy President O’Callaghan and Commissioner Deegan) on 28 July 2003 and by Senior Deputy President Drake on 25 September 2002;
2. A writ of prohibition issue prohibiting the first respondent, the Australian Industrial Relations Commission, from further hearing and determining the proceeding in matter number C2002/2273 in the New South Wales District Registry of the first respondent; and prohibiting the second respondent, Malcolm Arends, from further proceeding against the Department of Defence in matter number C2002/2273 in the New South Wales District Registry of the first respondent.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1834 of 2004

ON REMITTAL FROM THE HIGH COURT OF AUSTRALIA

IN THE MATTER of an Application for Writs of Prohibition and Certiorari

BETWEEN:	THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION FIRST RESPONDENT
AND:	MALCOLM ARENDS SECOND RESPONDENT Ex parte: COMMONWEALTH OF AUSTRALIA APPLICANT

JUDGES:	WILCOX, GYLES AND BENNETT JJ
DATE:	16 SEPTEMBER 2005
PLACE:	SYDNEY

REASONS FOR JUDGMENT

THE COURT:

1 On 28 January 2004, the Commonwealth of Australia (‘the Commonwealth’) filed in the High Court of Australia a notice of motion seeking an order that two respondents, the Australian Industrial Relations Commission (‘the Commission’) and Malcolm Arends (‘Mr Arends’), show cause why writs of prohibition and certiorari should not issue against them. The Commission and Mr Arends were named, respectively, as first and second respondents to the motion.

2 On the same day, the Commonwealth filed a draft order nisi and two supporting affidavits made by James Hutton Heard, the solicitor acting in the matter on its behalf. Those affidavits reveal that the Commonwealth is contesting the jurisdiction of the Commission to hear and determine an application made to it by Mr Arends pursuant to s 170CE of the Workplace Relations Act 1996 (Cth) (‘the Act’).

3 On 24 November 2004, Gleeson CJ made an order, pursuant to s 44 of the Judiciary Act 1903 (Cth), remitting the matter to this Court. No order nisi was made in the High Court. Notwithstanding this, in accordance with the procedure provided by Order 51A rule 5 of the Federal Court Rules, the Full Court has heard argument on the merits of the proceeding. In accordance with usual practice, the Commission took no part in the argument before us.

The facts

4 Mr Arends worked as a radiographer at the Medical Centre at HMAS Albatross, Nowra for a period of almost eight years, from 6 July 1994 to 24 April 2002. During that period, he signed six contracts, five for a term of one year and one for 14 months. In each contract Mr Arends was described as ‘an independent contractor’ to the Commonwealth.

5 The following table shows the dates of signature of each written contract and the duration of the contracts. There is an 18 months gap between the second and third contract. Mr Arends worked for some seven weeks beyond the end date of the last contract.

Contract number	Date of signature	Duration of contract
1	11 July 1994	6 July 1994 - 5 July 1995
2	20 June 1995	6 July 1995 - 5 July 1996
3	12 January 1998	6 January 1998 - 5 March 1999
4	18 February 1999	5 March 1999 – 4 March 2000
5	16 February 2000	5 March 2000 – 4 March 2001
6	15 March 2001	5 March 2001 – 4 March 2002

6 Shortly before the end date of the last contract, Mr Arends’ position was advertised. Mr Arends applied for the position but was unsuccessful. At the request of his supervisor, Mr Arends worked until his replacement was ready to commence and then left the position.

7 On 26 April 2002, Mr Arends filed with the Commission an application under s 170CE of the Act by which he sought relief on two grounds:

(i) that the termination of his employment was harsh, unjust or unreasonable; and/or
(ii) that the Commonwealth was in breach of s 170CK of the Act.

8 The Commonwealth objected that the Commission had no jurisdiction in the matter. That objection was overruled by Senior Deputy President Drake: Arends v Department of Defence PR922852, 25 September 2002. An appeal from her decision was dismissed by a Full Bench of the Commission (Justice Munro, Senior Deputy President O’Callaghan and Commissioner Deegan): Arends v Department of Defence PR935265, 28 July 2003; 127 IR 261. The present proceeding, in effect, challenges the correctness of the Full Bench decision.

The relevant legislation

9 Part VIA of the Act is headed ‘Minimum entitlements of employees’. It includes Division 3 (ss 170CA –170HI). Subdivision A of that Division sets out (amongst other things) the object of the Division (s 170CA), its application (s 170CB) and some definitions (s 170CD). Subdivision B deals with applications to the Commission for relief in respect of termination of employment. Subdivision C specifies what constitutes unlawful termination of employment by an employer.

10 Section 170CB (1) lists the circumstances, in which subdivision B applies, to an application to the Commission for relief in relation to the termination of employment of an employee on the ground that the termination was harsh, unjust or unreasonable. Before the termination, the employee must have fallen within one of the four categories specified in paras (a), (b), (c) and (d) of s 170CB(1). In the present case, the only possibly relevant category is that specified in para (a), ‘a Commonwealth public sector employee’. That term is defined in s 170CD(1) as ‘a person in employment’:

‘(a) under the Public Service Act 1999 or the Parliamentary Service Act 1999; or
(b) by or in the service of a Commonwealth authority; or
(c) by authority of a law of the Commonwealth.’

It is agreed between the parties that neither para (a) or para (b) applied to Mr Arends. The question is whether para (c) applied.

11 The word ‘employee’ is defined by s 4 of the Act, but only as including ‘any person whose usual occupation is that of employee’.

12 Section 170CB (2) deals with applications to the Commission for relief in relation to contravention (amongst other provisions) of s 170CK of the Act. Section 170CB (2) provides that Subdivision B applies ‘if the employee concerned is an employee in relation to whose termination of employment Subdivision C applies in accordance with this section’.

13 Section 170CB (3) makes Subdivision C (among other Subdivisions) applicable ‘in relation to the termination of employment of an employee’.

14 Section 170CE(1), which is in Subdivision B of Division 3, confers a right of application. It reads:

‘Subject to subsections (5) and (5A), an employee whose employment has been terminated by the employer may apply to the Commission for relief in respect of the termination of that employment:

(a) on the ground that the termination was harsh, unjust or unreasonable; or
(b) on the ground of an alleged contravention of section 170CK, 170CL, 170CM or 170CN; or
(c) on any combination of grounds in paragraph (b) or on a ground or grounds in paragraph (b) and the ground in paragraph (a).’

15 Subsection (5) is the only other part of s 170CE that is relevant to this case. It reads:

‘An application under subsection (1) may not be made:

(a) on the ground referred to in paragraph (1)(a) or on grounds that include that ground – unless, under subsection 170CB(1), Subdivision B applies to that application; or
(b) on a ground referred to in paragraph (1)(b) – unless Subdivision C applies to that application.’

The decision of Senior Deputy President Drake

16 Senior Deputy President Drake determined that Mr Arends was an employee of the Commonwealth rather than an independent contractor. In reaching that conclusion, she detailed relevant documentary and oral evidence and said, at [26] – [37]:

‘In determining what form of contract existed between the parties I have considered the various principles discussed by the High Court in Stevens and Brodribb Sawmilling Pty Ltd [1986 [1986] HCA 1; 160 CLR 16] in determining whether or not an employment relationship existed between the parties.
The type of work, hours of work and method of work of the applicant were all in the control of the respondent. The method of payment of salary, payment of superannuation contributions and other financial arrangements indicate an employment relationship.
I formed this view despite the applicant having acquired a ABN number and having completed tax invoices at the request of the respondent after the introduction of the GST.
In conjunction with the completion of the various back dated contracts, the GST forms appear to me to be no more than window dressing to clothe the structural arrangements between the applicant and the respondent to ensure that the arrangements resembled those that the respondent wished to adopt even though the actual arrangements were something entirely different.
I have examined the particular terms of the contract which characterise the arrangements as those of an independent contractor and the term in the later contracts which negated the characterisation of the relationship as one of employment.
After taking into account the manner in which the parties conducted themselves at the work place, the performance of work and the arrangements for payment for that work, as well as the applicant’s place in the structure at the base at Nowra, I am not persuaded that the contract terms are conclusive as to the arrangements between the parties.
The applicant had an expectation of continuous employment which was reasonable and appears to have been confirmed by the conduct of all the other employees of the respondent and officers of the Defence Forces with whom the applicant came into contact, until the arrival of Lieutenant Bryant who wished to apply the respondent’s employment policies for the first time in seven years.
I considered these matters and others about which parties presented evidence. From an examination of the contractual arrangements, the method of work, the control of the respondent, the applicant’s performance, the failure of the respondent to apply its employment policies and the organisational arrangements between the parties I have determined that the applicant was for all purposes an employee.

He probably became an employee when his first contract with the employer expired and he was allowed to thereafter continue performing work.

The backdating of contracts appears to me to have been merely paper compliance by the relevant officers with the requirements of their superiors for the application of the respondents policy.

In every respect except for the payment of annual leave the applicant appeared to be an employee and to have employees entitlements.

Whether or not there is an employment relationship it is a matter for determination on the facts in each case. On the facts before me I have concluded the applicant was an employee of the respondent.’

17 Senior Deputy President Drake did not decide whether Mr Arends had been a ‘Commonwealth public sector employee’, within the meaning of s 170 CD(1) of the Act. Notwithstanding this omission, she held the Commission had jurisdiction to determine Mr Arends’ application.

The Full Bench decision

18 The Commonwealth sought leave to appeal against the decision of Senior Deputy President Drake. The Full Bench granted leave but dismissed the appeal.

19 At [12] of its Decision, the Full Bench described the jurisdictional issue it had to determine:

‘In the decision subject to appeal, Drake SDP found inter alia that the engagement of Mr Arends, under a form of a contract for services, gave rise in law to an employment relationship. The appeal does not challenge her Honour’s finding about the weight of the indicia of a contract of service. That concession is made without resiling from a contention that the Department at no time considered Mr Arends to be an employee. On appeal, the Department contends that a bare characterisation of the relationship that resulted from the contracts as a common law employment, does not go far enough. It maintains that any employment relationship would be outside the jurisdictional scope of the Act for the purposes of Part VIA. To be employment within the jurisdiction established under Part VIA of the Act, any such contractual employment relationship would need to be within any of three categories of engagement by the Commonwealth that are expressed in the Act. It was contended that Mr Arends was not.’

20 The ‘three categories of engagement’ mentioned by the Full Bench, apparently, are the categories described in paras (a), (b) and (c) of the definition of ‘Commonwealth public sector employee’ in s 170 CD(1) of the Act: see para 10 above.

21 In a comprehensive survey of the evidence, the Full Bench noted the terms of an instrument called ‘Defence Instructions (General) Administration 24.1’ or ‘DI(G) ADMIN 24.1’. This was an instrument issued pursuant to s 9A(2) of the Defence Act 1903 (Cth) (‘the Defence Act’). Section 9A relevantly provides:

‘(1) Subject to section 8, the Secretary and the chief of the Defence Force shall jointly have the administration of the Defence Force except with respect to:

(a) matters falling within the command of the Defence Force by the Chief of the Defence Force or the command of an arm of the Defence Force by the chief of staff of that arm of the Defence Force; or

(b) any other matter specified by the Minister.

(2) Instructions issued by or with the authority of the Secretary and the Chief of the Defence Force in pursuance of the powers vested in them jointly by virtue of subsection (1) shall be known as Defence Instructions (General).’

Section 8 requires the powers conferred by s 9A to be exercised subject to, and in accordance with, any directions of the Minister.

22 At [34], the Full Bench noted that DI(G) ADMIN 24.1 ‘is the source of the authority by which the Department [of Defence] says the contracts with Mr Arends were made’. The Full Bench noted the substantial similarity between each of the agreements made with Mr Arends and the template form annexed to the version of DI(G) ADMIN 24.1, that was in force at the time of the agreement.

23 At [98], the Full Bench stated the ‘appeal was conducted on the basis that Mr Arends’ relationship with the Commonwealth was that of common law employee’. After some discussion, the Full Bench indicated it would proceed on this basis and commented it was ‘therefore necessary that we determine the question of whether or not any such employment came within the jurisdiction established by Part VIB of the Act’.

24 After considering other possibilities, the Full Bench concluded that Mr Arends fell within para (c) of the s 170CD definition of ‘Commonwealth public sector employee’. He was a ‘person in employment ... by authority of a law of the Commonwealth’; namely, DI(G) ADMIN 24.1. At [159] – [162], the Full Bench said:

‘Under the preceding headings we have analysed the legislative framework that applied in the past, and now applies to the Department as an employer. That analysis leads us to accept that the apparently minor saving made by subsection 6(3) of the PS Act 1999 has proved to be full of meaning. Subsection 6(1) creates an obligation for all persons engaged as employees to be engaged under the PS Act 1999, or under the authority of another Act. Subsection 6(3) declares that obligation does not by implication affect any power that an Agency Head might have to engage persons as independent contractorshttp://www.airc.gov.au/fullbench/ - P1136_157764.

A concession is made in this case that the use of such a power has given rise to a relationship that may properly be characterised as a common law employment. On the evidence, and on our analysis of the statutory and administrative background, the circumstances of this case are not accidental. Indeed, it may reasonably be concluded, and we do conclude, that a deliberate use is made of a form of contract for services in circumstances where requirements for a statutorily authorised employment or a common law employment are clearly met. Mr Arends' first and last contracts were made to meet the circumstance that a uniformed health practitioner is not available and a vacancy exists within the unit establishment.

It follows that the resort to a contract for services with Mr Arends was a purposeful substitute for an employment. Moreover, it appears reasonable to infer from the evidence generally, that for there to be a vacancy in the unit establishment, an authorisation for an employment existed prior to the action to engage Mr Arends. More than likely any such authorisation would have been for a member of the Defence Force; but that is another of the points of detail on which no conclusive evidential material is available. Of course, authorisation of a position in an establishment is not the same as authorisation of the filling of it, or authorisation of the engagement of a person as an employee in the establishment. None the less, the conditions for and practice associated with the engagement and use of CHPs, reinforces our conclusion that Mr Arends' contract for services was incidental to a systemic use of that form of engagement to meet a known ongoing need for service not readily distinguishable from the service required of an employee.

Accordingly, we see no reason why the authorisation under the Defence Act and related provisions of a contract for services is any less an authorisation where it transpires that the contract, as a matter of law, is to be characterised as a contract of service.’ (Original emphasis; footnotes omitted)

25 At [165], the Full Bench said:

‘In our view the authorisation of Mr Arends' serial contracts for services was effectively an authorisation under the Defence Act and DI(G) ADMIN 24-1 of a contract of service. Therefore, he was at all material times up to the termination of his service, a person in employment by authority of a law of the Commonwealth. On the test we have summarised at [112], Mr Arends was a Commonwealth public sector employee and therefore within jurisdiction for purposes of sections 170CE and 170CK. Moreover, and for separate reasons, including those we have already given at [121], and [159] to [160], Mr Arends was an employee, and therefore within jurisdiction for purposes of section 170CK of the Act.’

26 The Full Bench concluded, at [169] – [170] as follows:

‘In summary: we conclude that the contract held by Mr Arends was approved by authority of a law of the Commonwealth. Indeed, the contract was in the form mandated by the DI (G) ADMIN 24-1 instruction. The operational execution of that form of agreement caused it to be, in law, a contract of service. A legal characterization of the contract in its total operation to that effect was in contemplation by the Department as the Agency responsible for the continued use of that form of engagement. However the Department sought to rely upon the availability but non-use of other, statutory, forms of employment to escape that consequence for purposes of the Act. The use of the statutorily available forms of employment for Mr. Arends was eschewed by the Department. That avoidance occurred within a legislative administrative perspective that appears to have been designed to allow, perhaps even encourage, a more or less arbitrary substitution of "independent contractor" engagements for the statutory forms of employment enabled, or more recently mandated by the PS Act 1999 under a regulatory regime said to espouse merit and equity principles. Mr Arends' relationship with the Department was characterised as effectively an employment for purposes of the superannuation and taxation regimes. We can find no adequate reason in the relevant definitions of the Act to characterize it otherwise, or to read them as intended to exclude it. No other enactment precludes Mr Arends' contract and service from being held to be an employment.

For the reasons given, we grant leave to appeal, we find that Mr Arends was at all relevant times a Commonwealth Public Sector employee, and an employee for the purposes of Part VIA of the Act; we dismiss the Department’s objection to jurisdiction; we dismiss the appeal.’

The Commonwealth’s argument

27 Counsel for the Commonwealth, Mr S Gageler SC, indicated his client maintained its concession, as recorded by the Full Bench at [12] of its Decision: see para 19 above. However, he said, that does not mean the Commonwealth conceded Mr Arends was an employee. He contended that, in fact, Mr Arends was not an employee and was certainly not a ‘Commonwealth public sector employee’.

28 Mr Gageler argued that s 6 of the Public Service Act 1999 (Cth) (‘PSA99’) ‘provides the sole source of authority for the Commonwealth to engage employees in a Department of State’. He said that ‘[e]mployees in a Department of State can only be engaged under an Act of the Commonwealth’ and referred to a statement of Brennan J in Director-General of Education (NSW) v Suttling [1987] HCA 3; (1987) 162 CLR 427 at 437:

‘No agent of the [Commonwealth] has authority to engage a servant on terms at variance with the statute. ... The statute itself controls the terms of service.’

29 Mr Gageler said:

‘The Defence Act does not authorise the making of contracts of employment. ... It does not authorise the making of a Defence Instruction that would authorise the making of a contract of employment. DI(G) ADMIN 24-1 does not authorise employment. Indeed, cl 2 specifically provides that ‘[t]he contractual arrangements described in this instruction only apply to situations where the contract is to be a contract for services rendered.’

30 Mr Gageler argued that, as the contracts with Mr Arends were not made under PSA99, and ‘could not have been, and were not, made under the Defence Act’, no law of the Commonwealth authorised the employment of Mr Arends. He said:

‘It necessarily follows that Mr Arends could not in these circumstances meet the statutory description of a Commonwealth public sector employee as defined in s 170CD(1).

For essentially the same reason, Mr Arends could not meet the description of an employee.

The reference to an employee in Pt VIA of [the Act] is to a person lawfully employed.’

Consideration

31 The proceeding was argued upon the footing that the Full Bench had found the necessary employment relationship as a jurisdictional fact, and that the existence of that jurisdictional fact could be determined in this Court without any challenge to the Full Bench’s primary findings of fact. The consequence is that this Court must decide, upon those primary facts, whether there was the necessary employment relationship to give rise to the relief available under the Act.

32 We note, in particular, the matters not in dispute:

• The Commission only has jurisdiction to hear and determine the application under s 170CE(1)(c) of the Act if Mr Arends was employed by authority of a law of the Commonwealth.
• Mr Arends was not engaged under the Public Service Act 1999 (Cth).
• The terms of the written contracts with the Commonwealth were mandated by DI(G) ADMIN 24-1, issued pursuant to s 9A of the Defence Act 1903 (Cth).
• Mr Arends was an employee according to common law tests. The terms of the concession by the Commonwealth were made without resiling from a contention that he was not an employee within the meaning of the Act.

33 The issue that determines whether Mr Arends was a Commonwealth public sector employee is whether he was a person in employment by authority of a law of the Commonwealth (s 170 CD(1) of the Act). In our opinion, the process of reasoning by which the Full Bench reached the conclusion that there was a contract of service authorised by the Defence Act 1903 (Cth) by virtue of the Defence Instruction (General) ADMIN 24-1 (DI(G) ADMIN 24-1) cannot be supported. On any view, the form provided for by DI(G) ADMIN 24-1 reflected a contract for services according to its terms. That conclusion is not dependent upon, but is supported by, the express description in the document itself (Australian Mutual Provident Society v Chaplin & Anor (1978) 18 ALR 385; sub-nom Australian Mutual Provident Society v Allan & Anor (1978) 52 ALJR 407; Narich Pty Ltd v Commissioner of Pay-Roll Tax (NSW) (1983) 58 ALJR 30, [1983] 2 NSWLR 597, (1983) 50 ALR 417; Building Workers Industrial Union of Australia v Odco Pty Ltd (1991) 29 FCR 104) (the Troubleshooters Case)). In our opinion, that contract could not be classed as a contract of service and the relationship to which it would give rise could not be described as that of employer and employee. The statutory authority to which reference is made was to engage persons in accordance with a standard form of contract for services. That authority is inconsistent with a finding that, by entering into such contract, a contract of service resulted.

34 The reasoning of the Full Bench is also inconsistent with the findings of primary fact by the Senior Deputy President Drake set out in para 16 above.

35 The gist of those findings is that, notwithstanding the terms of the written contract, the actual operation of the relationship in practice was such that, at least after the conclusion of the first contractual period, the relationship was not limited to, or by, the written terms of the contract alone but included conduct that, taken as a whole, led to a finding that there was a relationship of employer and employee in accordance with the principles laid down by Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; (1986) 160 CLR 16 and Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21 (assuming those principles to be applicable). That reasoning is quite different from that of the Full Bench.

36 We agree with the submission of counsel for the applicant that it is insufficient to meet the test of employment by authority of a law of the Commonwealth that the law of the Commonwealth to be relied upon authorises the making of a contract for services under which a relationship is established that may in practice develop features of an employment relationship. Such a development does not change the character of the authority conferred by the law.

37 The proceeding cannot be disposed of by simply disagreeing with the finding by the Full Bench. The question remains for this Court as to whether there was the necessary employment relationship to found relief. The principal issue is whether Mr Arends was a person ‘in employment by authority of a law of the Commonwealth’. The definition of ‘Commonwealth public sector employee’ in s 170CD(1) of the Act does not include any person engaged by the Commonwealth pursuant to the executive power without legislative authorisation.

38 There may be scope for debate about the content of the phrase ‘by authority of a law of the Commonwealth’ in this context (see, for example, the discussion by Gummow, Callinan and Heydon JJ in Griffith University v Tang [2005] HCA 7; (2005) 213 ALR 724 at [64]–[96]). However, a law of the Commonwealth there must be. The fact of engagement of a person by an officer of the Commonwealth on behalf of the Commonwealth on terms that can be classified as that of an employee does not establish the existence of such a law for the purposes of the relevant statutory definition. The Full Bench expressly held that Mr Arends was at no time engaged under the Public Service Act 1999 (Cth) or the Naval Defence Act 1910 (Cth) and limited consideration of the application of the Defence Act 1903 to the DI(G) ADMIN 24-1 instruction. The Defence Act 1903 does not expressly authorise the making of contracts of employment. The analysis of the legislation by the Full Bench indicates that civilian employees of the Navy have to be engaged pursuant to the Public Service Act 1999 but that s 6(3) of that Act has the effect that that obligation does not affect any power that an agency head might have to engage persons as independent contractors – hence, no doubt, the form of DI(G) ADMIN 24-1.

39 Mr Arends relies on DI(G) ADMIN 24-1. That document is specific in its scope. In the introduction at paragraph 2 it is clearly stated that ‘the contractual arrangements described in this instruction only apply to situations where the contract is to be a contract for services rendered. It would not be appropriate to use these arrangements where the practitioner will be subject to control by, or integration into, the Defence to the extent that they could reasonably be deemed to be the Department’s common law employee’.

40 Under the heading ‘contract arrangements and conditions’ reference is made to the need for a health practitioner to effect and maintain professional indemnity cover and it is affirmed, for the purposes of income protection insurance and workers compensation that ‘at no time is the health practitioner an employee of the Commonwealth’.

41 It cannot be said that DI(G) ADMIN 24-1 disclosed any intention to apply the authority of the Commonwealth to make a person with whom a contract was entered into pursuant to that administrative arrangement an employee of the Commonwealth.

42 Mr Arends’ submission is that ‘the operational execution of [DI(G) ADMIN 24-1] caused it to be, in law, a contract of service’. The fact that subsequent ‘operational’ factors such as method of work and performance would have the hypothetical effect at common law that Mr Arends was an employee does not mean that he was in employment by authority of a law of the Commonwealth, particularly in circumstances where the instrument under which the contract was made was specific in stating that the contract did not effect employment. His own belief as to his status is not relevant.

43 As the result of questions raised during argument, it was put on behalf of Mr Arends that the presumption of regularity and the doctrine of ostensible authority could be relied upon for the necessary finding of fact. Reference was made to Northside Developments Pty Ltd v Registrar-General [1990] HCA 32; (1990) 170 CLR 146 per Brennan J at 176 and to E Campbell, Ostensible Authority in Public Law, (1999) 27 FLRev 1 – see also N Seddon, Government Contracts, 3^rd edn, The Federation Press, 2004, pars 3.13–3.17, 5.12–5.13, 5.25. Reference was also made to the de facto officer doctrine.

44 In our opinion, these principles do not assist Mr Arends as to the identification and application of a relevant Commonwealth law. The only Commonwealth law identified was the Defence Act 1903 by virtue of DI(G) ADMIN 24-1. No question has been raised about the authority of those authorising and entering into the successive contracts pursuant to that provision.

45 In our opinion, it has not been established that Mr Arends was a ‘Commonwealth public sector employee’. It follows that the Commission had no jurisdiction to grant relief pursuant to subdivision B of Div 3 of Pt VIA of the Act.

46 It was submitted for Mr Arends that, even if he were not a ‘Commonwealth public sector employee’, he was an ‘employee’ within ordinary concepts and so entitled to pursue a claim for relief in respect of the termination of his employment on the ground of an alleged contravention of s 170CK of the Act pursuant to s 170CE(1)(b) being (inter alia) within s 170CB(3). It was submitted for the applicant, first, that Mr Arends was not an ‘employee’ for relevant purposes and, secondly, that such a claim could not be pursued for procedural reasons arising from the framework of the Act.

47 It is necessary to note that, by virtue of the coming into force of the Workplace Relations Amendment (Fair Termination) Act 2003, s 170CD(2), upon which reliance was placed on behalf of Mr Arends (cf Konrad v Victoria Police [1999] FCA 988; (1999) 91 FCR 95), was not applicable in circumstances like the present until after the termination of the applicant’s engagement and after the matter was heard and determined by the Commission.

48 There is support for the view that there can be a relationship of master and servant between the Crown and a person engaged to perform executive functions (eg, Dixon J in Attorney-General (NSW) v Perpetual Trustee Co Ltd [1952] HCA 2; (1952) 85 CLR 237 at 248–9) although it may not be contractual (cf Rich J in Commonwealth v Quince [1944] HCA 1; (1944) 68 CLR 227 at 242). There is no reason why that should not apply in principle to the Commonwealth exercising executive power (s 61 and s 67 of the Constitution; Victoria v Commonwealth [1975] HCA 52; (1975) 134 CLR 338). However, at common law, Crown servants could be dismissed at pleasure and without notice (Kaye v Attorney-General (Tas) [1956] HCA 3; (1956) 94 CLR 193 at 203; Coutts v Commonwealth [1985] HCA 40; (1985) 157 CLR 91 at 98–99, 119–120). The engagement of servants by Commonwealth Departments of State in that sense has generally been governed by statute from at least the coming into force of the Public Service Act 1922 (Cth) and there are many statutes dealing with particular situations. Any residual executive power that may exist to engage employees would clearly not apply to a position like the present.

49 The following passage from the judgment of Brennan J in Director-General of Education v Suttling [1987] HCA 3; (1987) 162 CLR 427 at 437–8 is apposite, albeit dealing with a State statute:

‘Members of the Service are appointed pursuant to the Act and their rights must be ascertained by reference to its provisions. The relationship between a civil servant of the Crown and the Crown has often been described as contractual, though the civil servant has been appointed pursuant to statute: see, e.g., Gould v Stuart [1896] AC 575 at 577; Carey v Commonwealth [1921] HCA 54; (1921) 30 CLR 132 at 137; Lucy v The Commonwealth [1923] HCA 32; (1923) 33 CLR 229 at 238, 249, 253. However, the contractual nature of the relationship has not been universally accepted: see, e.g., Monckton v The Commonwealth [1920] HCA 3; (1920) 27 CLR 149 at 155, 156; Lucy v The Commonwealth, at 244; Geddes v Magrath; Morgan v Geddes [1933] HCA 57; (1933) 50 CLR 520 at 533–34; The Commonwealth v Welsh [1947] HCA 14; (1947) 74 CLR 245 at 262, 274; and cf Ryder v Foley [1906] HCA 61; (1906) 4 CLR 422 at 440. And sometimes an espousal of one view rather than the other has been avoided: see, e.g., Reilly v The King [1934] AC 176 at 180; Kodeeswaran v Attorney- General of Ceylon [1970] AC 1111 at 1118. If the relationship is contractual, the contract must be consistent with any statutory provision which affects the relationship. No agent of the Crown has authority to engage a servant on terms at variance with the statute. To the extent that the statute governs the relationship, it is idle to inquire whether there is a contract which embodies its provisions. The statute itself controls the terms of service: McVicar v Commissioner for Railways (NSW) [1951] HCA 50; (1951) 83 CLR 521 at 527.’

50 Whilst we would not rule out the application of the presumption of regularity and the principles of ostensible authority and estoppel in appropriate circumstances without further consideration, we do not see any scope for operation of those principles here. There was a clear and deliberate formal process undertaken between the parties on successive occasions over many years. There is no basis for a finding of misleading or unconscionable conduct on the part of the officers concerned that was relied upon in any relevant respect by Mr Arends to his detriment. Indeed, as remarked upon by the Full Bench, it may have been to his advantage that the s 6(3) loophole was availed of in his case. The finding of a jurisdictional fact such as employment under the Public Service Act 1999 or by authority of the Defence Act 1903 would be contrary to the evidence and cannot be presumed.

51 In our opinion, Mr Arends was not an employee in any sense relevant to relief under subdivision C of Div 3 of Pt VIA of the Act. We need not deal with the procedural issues relied upon by the applicant.

Disposition

52 The applicant has established that the Commission lacked jurisdiction to grant the relief sought. The Commonwealth’s objection to competency ought to have been upheld both by Drake SDP and by the Full Bench. Orders should be made as sought. No costs are sought by the applicant.

53 At the hearing of the motion, Mr A Rich of counsel sought leave to intervene on behalf of the Community and Public Sector Union (‘CEPU’). There being no opposition to this application, leave was granted. However, it transpired that CEPU’s interest in the case was confined to the possibility that the Court might say something about the operation of the Public Employment (Consequential and Transitional) Amendment Act 1999 (Cth) (‘the Transitional Act’). Once it became clear that neither party wished to rely on that Act, Mr Rich indicated he did not wish to put substantive submissions. Nothing said above is intended to reflect any view about the operation of the Transitional Act.

I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.

Associate:

Dated: 16 September 2005

Counsel for the Commonwealth of Australia:	Mr S Gageler SC and Mr R Crow
Solicitors for the Commonwealth of Australia:	Australian Government Solicitor
Solicitor for Mr Malcolm Arends:	Mr P Brady
Counsel for the Community and Public Sector Union:	Mr A Rich
No appearance for the Australian Industrial Relations Commission
Date of Hearing:	16 June 2005
Date of Final Submissions:	4 July 2005
Date of Judgment:	16 September 2005