Ahearn v State of New South Wales Department of Gaming and Racing [2004] NSWIRComm 40 (8 March 2004)

Last Updated: 11 March 2004

NEW SOUTH WALES INDUSTRIAL RELATIONS COMMISSION

CITATION : Ahearn v State of New South Wales Department of Gaming and Racing [2004] NSWIRComm 40

FILE NUMBER(S): IRC 4980

HEARING DATE(S): 03/03/2004

DECISION DATE: 08/03/2004

PARTIES:

CATHERINE MERLE AHEARN

Applicant

STATE OF NEW SOUTH WALES DEPARTMENT OF GAMING AND RACING

Respondent

JUDGMENT OF: Schmidt J

LEGAL REPRESENTATIVES

APPLICANT:

Mr JP Berwick of counsel

SOLICITORS:

Craddock Murray and Neumann

RESPONDENT:

Mr JW Nolan of counsel

SOLICITORS:

IV Knight, Crown Solicitor

CASES CITED: Director-General of Education v Suttling (1987) 162 CLR 427

Grant v State of New South Wales (No 2) (1991) 48 IR 314

Nagle (t/as WD and JL Nagle & Sons) v Tilburg (1993) 51 IR 8

Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 355

William v Byron [1995] NSWIRC 114 (29 June 1995)

LEGISLATION CITED: Industrial Relations Act 1996

Industrial Relations Act 1940

Public Sector Management Act 1988

Public Sector Employment and Management Act 2002

JUDGMENT:

- 1 -

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

IN COURT SESSION

CORAM: Schmidt J

DATE: 8 March 2004

Matter Number IRC 4980 of 2003

CATHERINE MERLE AHEARN v STATE OF NEW SOUTH WALES DEPARTMENT OF GAMING AND RACING

Application under section 106 of the Industrial Relations Act 1996

JUDGMENT

1 This judgment concerns a motion filed by the respondent. The proceedings were commenced by summons brought by the applicant under s106 of the Industrial Relations Act 1996 ('the Act'). The orders sought in an amended summons filed without objection at the hearing of the motion were:

1. An order declaring void as an unfair contract pursuant to Section 106 of the Industrial Relations Act 1996 (NSW) ("the Act"), in whole or in part, either from its commencement or from some other time the contract, contracts or the arrangements between the Applicant and the Respondent whereby the Applicant performed work for the Respondent.

2. Further, in addition, an order that any contract or any collateral arrangement or related conditions to such contract, contracts or arrangements between the Applicant and the Respondent whereby the Applicant performed work for the Respondent or any collateral arrangements or related conditions to such contract or arrangement was unfair, harsh, and unconscionable and contrary to the public interest pursuant to Section 105 of the Act.

2A. A declaration pursuant to Section 154 of the Act that the Applicant had a right to have the promise of conflict resolution made to her by the CEO put into effect.

3. Further, in addition, an order varying the contracts or the arrangements between the Applicant and the Respondent whereby the Applicant was employed by the Respondent to perform work for the Respondent or any collateral arrangement or related condition to such contracts or arrangements from its commencement so as to include the following term:

(a) To the extend that it does not conflict with any power residing in the Head of Department pursuant to any statute governing the New South Wales Public Sector that there is a term of trust and confidence governing the relationship between the employer and the employee such that the employer will not damage the relationship between the two by making inaccurate and unreasonably critical assessments of her work performance so as to prejudice her prospects of attaining security employment.

4. An order that the Respondent pay to the Applicant an amount equal to two years salary.

5. In the alternative to 4 above an order that the Respondent pay to the Applicant an amount the Commission considers just in the circumstances of the case.

6. An order that the Respondent pay the Applicant's costs incurred in these proceedings.

7. An order for interest.

8. Any other order which the Commission considers necessary to justly dispose of this case.

2 The money orders sought were also amended to:

2 years salary $160,000.00

Psychological distress $40,000.00

3 It was common ground that in 2001 the applicant had been employed as a probationary employee in the Department of Gaming and Racing. The provisions of the Public Sector Management Act 1988 ('the PSMA') applied to the employment. The applicant resigned from the employment in March 2003. Her probationary employment had in the meantime been extended. The Public Sector Employment and Management Act 2002 ('the PSEMA') subsequently came into force.

4 The parties' pleadings raised questions of whether or not there had been poor performance by the employee and fair treatment by the employer during the employment, amongst other matters. The amended summons also referred to the question of whether there had been adherence to the provisions of an award applying to the employment and various applicable guidelines in relation to complaints of harassment and bullying made by the applicant during the course of her employment.

5 The motion sought, amongst other things, 'a declaration under s.154 of the Industrial Relations Act 1996 and Rule 82(1)(g) of the Industrial Relations Commission Rules 1996 that upon the proper construction of s.22 of the Public Sector Employment and Management Act 2002, that the Commission has no jurisdiction to hear and determine the claims that the Applicant has made in these proceedings.'

6 The case put for the respondent by Mr Nolan of counsel was that the application was a novel one. There was no rationale for the money claim, nor any redress sought in connection with the employment. The claim was, of necessity, an arbitrary one, given the statutory fetters upon any other remedy in the context of this statutory employment.

7 There was no attack upon the resignation as amounting to a constructive dismissal of the applicant by the respondent. This followed, it was submitted, because of the employer's statutory right to annul the appointment at any time. The claim for two years' salary was plainly misconceived in the circumstances.

8 There was no statutory obligation on the respondent to take any particular step prior to annulment of probationary employment. While the Public Service Personnel Handbook contained guidelines, they had no statutory force and were steps which might be regarded as being in the public interest, before the power of annulment or conformation of appointment were exercised. They were not, however, referable to any contract of employment or collateral arrangement, but rather to the statutory regulation of probationary employment.

9 Section 29 of the PSMA applied at the time of employment and permitted annulment at any time during or after the period of probation. This right was unfettered and permitted no recourse to the Commission under the unfair dismissal provisions of the Act, including in relation to any step taken prior to the annulment. In that context, it would be seen that there was no room for operation of s106, in relation to a review of such steps. The orders sought were designed with this difficulty in mind and were submitted to seek to circumvent the statutory regime, which also precluded any review of a failure to appoint a public servant.

10 The summons sought to make s106 a new source of jurisdiction to litigate disputes about probationary employment. This would result in a complete circumvention of the applicable statutory scheme. As a matter of statutory construction, it was necessary to read the statutes as a whole and to determine whether the legislature intended that steps taken prior to a decision to annul appointment of a probationary employee, would be amenable to review under s106, if the decision to annul, itself, was not.

11 It was argued that steps taken prior to a decision to annul were plainly referable to that decision and not to any contract or arrangement between the parties. There was no room for the operation of any contract in this area because the matter was comprehensively dealt with by the statute.

12 It followed that there was no jurisdiction to entertain the application, which should be dismissed.

13 The case advanced for the applicant by Mr Berwick of counsel was that the relationship between the parties was contractual and that regard would be paid by the Court to the width and generality of s106, as well as its intractable terms. It was relevant in this respect that while the statutory regulation of the employment of members of the senior executive service excluded the operation of s106, the same regime did not operate for public servants like the applicant.

14 The onus which fell upon the respondent in a strike out motion such as this, was particularly high and the Court would be slow to fail to exercise the conciliatory jurisdiction imposed by the Act. The matters raised in the pleadings showed that the claims fell within the 'jurisdictional heartland' of s106. The respondent's case raised questions of whether the PSMA was a code which excluded all other remedies which a public servant such as the applicant might have; that probationary employees under the PSMA were without rights under s106 and that no order within jurisdiction could possibly be made.

15 It was submitted that statutory construction required a rigorous approach and that it was relevant that the legislation in question was beneficial and should thus be given its full operation. Public servants should not be denied such benefits. The history of the legislation supported the view that they had such rights, particularly given that the Act expressly provided in s404 that it binds the Crown. It also needed to be remembered that while s29 of the PSMA dealt with annulment and confirmation, here there was no attack on such a decision. It also did not follow that while probationary employees might be excluded from consideration under the unfair dismissal provision of the Act, that a similar exclusion operated under s106.

16 It was further argued that the approach required by Nagle (t/as WD and JL Nagle & Sons) v Tilburg (1993) 51 IR 8 did not permit the orders sought by the respondent, at this stage of the proceedings.

17 In reply it was submitted that the Court's primary inquiry will be whether the legislature intended the section to operate to provide a remedy for probationary public servants, having regard to the context and legislative history of the section.

18 The claim was novel, a matter which would give rise to circumspection. It was relevant that in a comprehensive text on public sector employment, Aspects of Public Sector Employment, Professor McCarry had not even mentioned the predecessor to s106, s88F of the Industrial Relations Act 1940. That the legislature never intended that public servants employed under the PSMA could invoke s88F was effectively found in Grant v State of New South Wales (No 2) (1991) 48 IR 314, applied in relevantly similar circumstances in William v Byron [1995] NSWIRC 114 (29 June 1995).

19 It followed that the legislature did not intend that s106, when enacted, would be available to be used in the manner here sought. The statutory nature of the offices considered in Grant and William were the same as that of the applicant, even though she was a probationary employee.

20 The claim required that explicit steps taken in her employment, in relation to the decision making process under the statutory regime, would be subject to review by the Court. This was inconsistent with the legislative intention and required an artificial disaggregation of a seamless statutory decision making process, into parts which were statutory and those which were contractual. The decision in Director-General of Education v Suttling (1987) 162 CLR 427 exposed this as a flawed process, making otiose inquiries regarding contractual relations in employment of this kind.

21 The statutory power to determine probationary employment would be taken to include all things necessary and expedient to effect the exercise of the statutory power. The process would not be conceptually broken down, into parts, only some of which could be scrutinised. That the applicant could sidestep all of these difficulties by a timely resignation, suggested that probationary employees could pre-empt adverse treatment by an employer by undertaking routine inquiries at the moment an appointment was to be annulled. It could not be seriously contemplated that the legislature intended to provide redress in relation to the steps leading to annulment, but put the annulment itself beyond reach.

22 This was simply a grievance which had no legal remedy and the summons should be dismissed.

Consideration

23 The motion raises a question of statutory construction. The simple answer to the point raised appears to flow from s404 of the Act, which expressly provides that the Act applies to the Crown. It follows that unless the Act or the PSMA makes some contrary provision, the provisions of s106 of the Act apply to the parties to these proceedings.

24 While the employment was the subject of the statutory regime provided by the PSMA, it is not readily arguable that the parties were not bound by a contract of employment, albeit one for probationary employment. It appears that the contract attracted not only the guidelines established by the Public Service Handbook for the regulation of certain aspects of the employment, but also the provisions of an award of the Commission. Amongst other things, the summons complains that certain of those requirements were not observed, making the contract an unfair one, as that term is defined in s105 of the Act. Questions of bullying and harassment are alleged to have been involved.

25 This circumstance, it appears to me, provides the answer to the issues raised by the motion.

26 It may well prove to be the case that, properly analysed, all of the complaints and claims advanced in the summons are not within jurisdiction, or if they are, that they would not lead to any remedy, in the proper exercise of the discretion given by the section. It, nevertheless, appears on the face of the claim that there must be jurisdiction to consider whether, as is alleged, the contract and arrangements in question were unfair, as the term is defined. The definition, after all, includes in s105(c), the notion that the contract avoids the provisions of an industrial instrument and in s105(b), the wider notion that the contract is against the public interest.

27 There has been no suggestion that the award and guidelines in question do not apply to probationary employees.

28 It seems to me that the construction point argued has some other difficulties. These include that the unfair dismissal provisions of the Act generally apply to public sector employees and that it is not all probationary employees who are excluded from that regime by the Regulations. In the case of those employed on probation for more than three months, the exclusion only operates if the period is reasonable, having regard to the nature and circumstances of the employment. There is no similar exclusion of probationary employees from the operation of s106 of the Act. Indeed, to the contrary, s404 makes it clear that the section applies to the Crown.

29 Section 29 of the PSMA made decisions of confirmation or annulment of probation matters for the relevant Department head. Section 22 of the PESMA, like its predecessor, certainly provides expressly that a decision to appoint or not to appoint to the public service are not industrial matters for the purposes of the Act and that other proceedings do not lie in respect of such decisions. Such a decision does not, however, appear to arise for consideration on the case here brought, there having been a resignation by the employee. The claims concern the unfairness of the contract and other arrangements while the contract persisted.

30 Neither the PSMA nor the PESMA otherwise suggest that s106 of the Act does not apply to probationary employees.

31 To the contrary, s10 of the Act empowers the Commission to make an award fixing 'fair and reasonable conditions of employment'. There is no reason to think that this power might not be exercised in respect of probationary contracts of employment. This also makes difficult the conclusion that the fairness of such contracts cannot be considered by the Court, under s106. That s105 raises for consideration whether the contract is designed to, or does avoid the provisions of such an award, further reinforces this conclusion.

32 It must follow that the fairness of the contract of probationary employment, while it persisted, is not excluded from consideration under the Act. Given that the effect of s28 of the PSMA and now s23 of the PESMA appears to be that probationary employment may extend for periods in excess of two years, this does not seem an especially surprising result.

33 The parties referred to various earlier decided cases, which they argued supported the conclusions which they each urged. For its part, the respondent also argued that some of the decisions relied upon by the applicant were wrongly decided and should not be followed. I find it unnecessary to consider the correctness of these cases, given the conclusions which I have reached on the questions here in issue. I am also unable to conclude that the other authorities relied upon by the respondent provide an answer to the point of statutory construction which here arises for consideration.

34 The respondent also argued that the jurisdictional point was clear from a proper consideration of the intention of the two pieces of legislation, read as a whole and their proper interaction, relying upon the approach of the High Court in Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 355.

35 While I entirely agree with the approach to statutory construction eloquently urged by Mr Nolan, I am unable to agree that it properly leads to the construction for which the respondent contended. I am satisfied that a proper consideration of the whole of the statutes in question and their interaction in the context of probationary employment, cannot lead to the conclusion that the legislature intended that there be no room for review of the fairness of probationary contracts of employment, such as here in question.

36 It follows that despite their apparent novelty, I am unable to conclude at this stage that the Court does not have jurisdiction to entertain the claims made. What their prospects of success might be, is a different question, which does not arise for consideration at this stage of the proceedings. Given the approach which must be adopted to applications such as this, as outlined by the Full Court in Nagle v Tilberg, I am unable to conclude that the proper or available course is the dismissal of the application at this early stage of the proceedings.

Orders

37 For all of the reasons given, the motion is dismissed. The matter will now be programmed for concilation.

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LAST UPDATED: 08/03/2004