The strange and slow death of the New South Wales unfair work contracts jurisdiction found in s 106 of the Industrial Relations Act 1996 (NSW) continues apace. The Court of Appeal in a judgment dated 17 April 2009 in Caterpillar of Australia Pty Ltd v Industrial Court of New South Wales [2009] NSWCA 83, has once again dealt a near mortal blow to what remains of the jurisdiction.

Some many years ago, in an unreported decision of the Industrial Relations Commission of Rolles v Donald Scott Surgical Pty Ltd (unreported, Industrial Commission (NSW), Fisher P, Cahill VP and Bauer J, 19 February 1988), the Full Bench of the Commission was somewhat tempting the arrival of Nemesis when it described the unfair contracts jurisdiction as “a major commercial jurisdiction exercised in circumstances frequently having little to do with the industrial arbitration and similar litigation normally encountered by industrial tribunals (at 20). The jurisdictional challenges to this legislation which had the ability to overturn contractual rights accelerated in cases such as Mitchforce v Industrial Relations Commission (2003) 57 NSWLR 212; 124 IR 79; [2003] NSWCA 151 when Justices of the Court of Appeal expressed their concern with the various commercial contracts which had been overturned on the pretext of re-writing “industrial” contracts. Justice Mason, the then President of the Court of Appeal was profoundly troubled by what he saw as “the march of the Commission’s jurisdiction into the heartland of commercial contracts” (at [147]). A trilogy of cases in the High Court further narrowed the jurisdiction (Batterham v QSR Ltd (2006) 225 CLR 237; [2006] HCA 23; Fish v Solution 6 Holdings Ltd (2006) 225 CLR 180; [2006] HCA 22; Old UGC Inc v Industrial Relations Commission (NSW) (2006) 225 CLR 274; [2006] HCA 24). The WorkChoices legislation continued the demise of the legislation when it abolished the jurisdiction where one of the parties to the contract sought to be impugned was a corporation (Workplace Relations Act 1996 (Cth), s 16(1)(d)).

A number of cases filed prior to the operation of the Work Choices legislation have continued in the Courts. The decision in the Caterpillar case is one such matter which has further reduced the scope of the jurisdiction.

The Caterpillar proceeding, prior to it coming before the Court of Appeal, had been instituted in the Year 2000 and been subject to 17 individual judgments by His Honour Justice Boland (at [1]). The case came before the Court of Appeal on the basis of a challenge to the jurisdiction of the Industrial Court. The contracts sought to be varied under s 106 were various Dealership Agreements between the United States parent company Caterpillar, the world’s largest manufacturer of construction and mining equipment and the dealers selling and servicing such equipment in New South Wales and the Australian Capital Territory (at [9], [10]). It was claimed that the Dealership Agreements constituted the work said to be performed in an industry in order to come within the gateway of s 106. The proceedings were instituted in response to a notice of termination of the Dealership Agreement. Gough & Gilmour, the local dealers, sought a continuation of the agreement albeit on varied terms (at [18]). Orders had been made in the Industrial Court to vary the overall arrangement as found to exist (at [19]). Ultimately, further notices of termination were issued upon the failure to sell to Caterpillar’s preferred alternative dealer and the variation orders then sought monetary compensation (at [21]). In the Industrial Court, Justice Boland had resolved the jurisdictional issue on the basis that the personal applicants were “working proprietors” or “dealer principals” and as a consequence of which, there was a relationship akin to an employment one (at [25], [26]). The fundamental stumbling block for bringing cases of such commercial magnitude before the Industrial Court under s 106 is neatly summed up by Chief Justice Spigelman as follows:

“The IR Act, including the whole of Chapter 2, is not concerned to regulate multi-million dollar investments or relationships which cannot be seen to involve anything analogous to the employer/ employee relationship that lies at the heart of the concept an “industrial” matter.” (at [99])

By reading the statute as a whole and considering the context in which s 106 finds itself, that is the basis on which the unfair contracts jurisdiction must be interpreted (at [100]). This, he says, is consistent with the High Court’s contemporary approach to statutory interpretation (at [101]). Spigelman CJ ultimately looked at the whole relationship governing the various contracts including the personal applicants’ employment relationship and their characterisation as working proprietors as not being determinative. He said that the legislative scheme was directed at regulating persons where the former contractual relations had changed from that of employer/ employee to that of independent contractor. His Honour said that the surrounding circumstances must be reviewed to assess the nature of the relationship (at [137]). The Judge, however, said that dealerships or franchise relationships are still capable of falling within the jurisdiction of s 106. It depends upon which side of the line the relationship falls as to whether it truly is akin to employment or whether it is one of entrepreneurs conducting businesses of significant scale involving millions of capital investment with hundreds of employees (at [137]-[140]). Ultimately, this decision, which was unanimous, was a fundamental and complete blow to the use by the local dealers of the unfair contract legislation against Caterpillar. Also, an order of significant magnitude was made in relation to the calculation of damages sustained by Caterpillar as a result of the interlocutory orders made for the benefit of the local dealers in 2001.

In a recent decision of the Federal Court in Van Efferen v CMA Corporation Ltd [2009] FCA 597, Justice Tracey considered a claim for damages for a breach of an Australian Workplace Agreement and also whether the term of good faith is implied into a contract of employment.

The case dealt with a barge master employed at Port Hedland and various difficulties which he had in relation to his position at the port and his ultimate termination said to be because of redundancy (at [17]). The applicant said his termination was brought about through difficulties which had taken place on the Dolphin Project at Port Hedland and had nothing to do with the fact he had been returned to CMA’s premises at Geelong where there was no work for him to perform. It was said on behalf of the company that he needed to be transferred from the Dolphin Project as his behaviour was such that it put into doubt the continued business relationship the company had with its client and in order to ensure the effect of operation of the project.

Mr Van Efferen’s Australian Workplace Agreement had a grievance provision. The company said notwithstanding that, it had a right to require him to move back to Geelong. The applicant claimed damages for breach of the grievance provision pursuant to s 721 of the Workplace Relations Act 1996 (Cth). Justice Tracey, in looking at the general nature of grievance provisions said that the purpose was “a form of protection to an employee whose conduct has, for any reason, given the employer cause for concern. It is designed to ensure that the employee is informed of the nature of those concerns and has the opportunity to disabuse the employer or to have the opportunity (in most instances) of rectifying any shortcomings which have given rise to the employer’s misgivings (at [44]). His Honour found that grievance clauses must be read and applied in a sensible and practical manner rather than concern itself with trivial issues (at [48]). The applicant was successful in having the Judge conclude that the grievance provision was breached (at [50]). The question was whether the loss or damage he suffered was a proximate cause to the breach of the provision (at [52]). This, His Honour said, was a question of fact (at [51]). His Honour found that the process which did not take place would have taken some time and would not have inevitably led to the termination of the applicant’s employment (at [61]). His Honour found had CMA not breached the grievance provision, the contract would not have been terminated and Mr Van Efferen would have continued working at Port Hedland until the completion of the Dolphin Project in April 2008. It was found therefore that a breach of the provision was a proximate cause to the loss of salary and other benefits he would have been entitled to as Marine Supervisor (at [62]).

Relying on the High Court authority of Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54, Justice Tracey found that the applicant should be placed in the same situation as far as money may do it as if the contract had been performed (at [63]). The losses calculated by the Judge related to the life of the project and ultimately less alternative earnings and the Judge assessed his loss at $304,765.53. The redundancy pay he received was not deducted from these damages as he argued he would have been likely to have been made redundant at the conclusion of the Dolphin Project in any event. Such an argument was accepted (at [71]). The Judge however made a discount of 10% for the contingency that the contract might have been validly terminated prior to April 2002 and consequently the damages were assessed at $274,288.00 (at [72]).

His Honour also deals with a claim for damages for “loss of a chance” which ultimately he found was not appropriate to this case. Further, he does deal with some useful authority for cases where “loss of a chance” damages are applicable in employment contracts. See [75]–[78].

His Honour then dealt with the question of the implied terms which can be tersely referred to as those implying “good faith”. His Honour did not deal to any great degree with this on the basis of his other orders. However, he made some short observations. His Honour then dealt with the New South Wales Supreme Court case of Russell v Trustees of Roman Catholic Church for the Archdiocese of Sydney (2007) 69 NSWLR 198; [2007] NSWSC 104 and the Court of Appeal decision at (2008) 176 IR 82; [2008] NSWCA 217. He noted that in the Federal Court, single judges have adopted a far more guarded approach to the implication of such terms into contracts of employment (at [83]). In this regard, he followed the earlier Federal Court proceedings which doubted the implication of such terms.

This is a very useful case, particularly dealing with the employment protection provisions provided by grievance provisions found not only in Australian Workplace Agreements but also in Awards, Enterprise Agreements and in some common law contracts. Clearly this opens up, because of the size of the damages awarded, major areas of potential litigation.

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia – Communications Division v Australia Postal Corporation [2009] AIRCFB 145  (11 February 2009).

This appeal before the Full Bench of the Australian Industrial Relations Commission comprising the President, Justice Giudice, a Deputy President, Mr Hamilton and Commissioner Spencer handed down in Melbourne on 11 February 2009 deals with the often difficult and touchy subject of an application that a member of a Tribunal withdraw on account of “apprehended bias”. This case involved Australia Post introducing a new delivery operations program known as Future Delivery Design (FDD). Australia Post had invited the Union, the CEPU, by letter to a briefing it proposed to give to Commissioner Foggo. Commissioner Foggo, no doubt pursuant to the Panel System used by the Commission, was a Commissioner who regularly dealt with applications affecting both Australia Post and the CEPU. The CEPU, despite being invited to nominate three representatives to participate in the briefing, did not attend. The briefing proceeded. Thereafter, the CEPU wrote to the Commissioner seeking to have her recuse herself from any matter dealing with Australia Post’s new system called FDD and the CEPU.

The Commission set out the principles of making a successful apprehended bias application and it was based upon this test: “Whether the parties or the public, might, in the circumstances, entertain a reasonable apprehension that the Commission might not bring an impartial or unprejudiced mind to the proceedings.” (at [10]). The Full Bench noted the statutory injunction together with authority to the effect that Commission members shall keep themselves acquainted with industrial affairs and conditions (see s 78 of the Workplace Relations Act 1996 (Cth)). Reference is also made to the decision of Re Finance Sector Union of Australia; Ex parte Illaton Pty Ltd (No 1) (1992) 107 ALR 581; 42 IR 352 at 582-583 (ALR). The Commissioner, in her judgment upon which the appeal was based, referred to the fact that a CEPU representative did attend the inspection of the FDD system at Australia Post’s Acacia Ridge premises in Queensland. No problem regarding the attendance of the Commission was raised by that representative of the Union. This subsequent visit to the Acacia Ridge premises had taken place on 3 April 2008; the earlier briefing which the CEPU did not attend was on 7 March 2008. The Commission identified the force of s 78 of the Act when they said:

“Members of the Commission are expected to be in touch with developments which might be relevant to their work. So much is clear from s 78 of the Act. The panel system, the prevailing method of organising dispute resolution with the Commission, is designed to give individual members a degree of specialised knowledge of the industries in their panel. Even so, briefing by an employer in the absence of the relevant Union should be approached with caution. It is not desirable, however, to generalise about that matter. The circumstances alter cases and each application must be considered in the context of particular facts and circumstances.” (at [22])

The case for the Union failed because it was invited to the 7 March briefing and did not attend, nor did it communicate its concern about the briefing on that day to the Commissioner. Subsequently, and most importantly, when the matter was back before the Commissioner on 3 April 2008, and the Union was represented, it made no objection to what took place, and it was only much later that any objection to the Commissioner having attended the premises of Australia Post at Acacia Ridge was raised. The Commission found that the Union case failed because it was incumbent upon the CEPU to object to the briefing as soon as practicable. As a consequence, the CEPU has waived any right it had to object to the Commissioner dealing with the application on the ground of apprehended bias.

The Bench, however, does sound a warning to members of the Commission and parties that if such matters are to take place, everybody is made aware of them, that any objections which could be made are made at the earliest opportunity, and that any private inspections of new equipment or processes are only held with the knowledge and/or presence of the Union. This puts a gloss upon s 78 so as to make sure that the Commission is seen to follow the principles of procedural fairness and natural justice.

Australian Workers Union of Employees, Queensland v. Ethridge Shire Council (No 2) [2009] FCA 58 (6 February 2009).

This is a judgment dealing with costs of a successful action brought by the Australian Workers’ Union of Employees against Etheridge Shire Council. In the primary case, Australian Workers’ Union of Employees, Queensland and Ors v Etheridge Shire Council and Anor (2008) 171 FCR 102; 250 ALR 485; 175 IR 383, the Queensland Branch of the Australian Workers’ Union (AWU) was successful in arguing that the Etheridge Shire Council was not a trading corporation within the terms of the Constitution and was therefore not an employer for the purposes of the Workplace Relations Act 1996 (Cth). The AWU was successful and, as a consequence, sought its costs. The Respondent Council sought to avoid the “usual order as to costs” on two bases. First, it relied upon s 824 of the Workplace Relations Act 1996 which says that costs are only awarded when proceedings are instituted vexatiously or without reasonable cause.

Second, it sought to resist an order for costs on the basis that the matter was a “test case”. Reference was made to comments by Kirby J in Oshlack v Richmond River Council (1998) 193 CLR 72; 152 ALR 83; [1998] HCA 11 to the effect that if a matter is a test case, the court may exercise its discretion to refrain from following the usual principle of costs follow the event (Australian Workers’ Union of Employees, Queensland v Etheridge Shire Council (No 2) [2009] FCA 58 at [10]). The Respondent Council, in reliance upon s 824 of the Act, said that the proceeding was a matter arising under the Act and therefore the exemption provided by s 824 applied. This was opposed by the Union.

Justice Spender resolved the issue of costs, relying upon the precise identification of “the matter” in the present case. “Matter” he held, means “the judicial controversy between the parties” (at [24]). In dealing with what the controversy was, in order to determine whether Etheridge Shire Council was an employer for the purpose of the Workplace Relations Act 1996, his Honour found that that was a matter arising under the Act and, as a consequence, the exemption found in s 824(1) of the Act applied in the proceedings. Further, the exemption applied to the institution of proceedings; Etheridge Shire Council did not institute either proceeding and therefore it followed that it could not have instituted either proceeding vexatiously or without reasonable cause. However, his Honour also found that, even if he was wrong on the statutory interpretation and because the case was a test case, he could not see that as a basis why he should refrain from the usual principle of “costs follow the event” (at [29]).