Arthurson v State of Victoria [2001] VSC 244

Supreme Court of Victoria|2001-07-27|Before: Gillard J

POLICE - Contract of Employment with Crown - Appointment to new position - whether any implied term in contractual relationship with employer concerning subsidised

housing - estoppel not established - no implied term - admissibility of post-contract conduct on implication of a term.

The first plaintiff, David Mark Arthurson ("Sergeant Arthurson"), is a sergeant employed in the Victorian Police Force ("The Force"), stationed at Hurstbridge.

The second plaintiff, Malcolm Peter Davey ("Sergeant Davey"), is a senior sergeant employed in the Force, stationed at Kyabram.

The third plaintiff, Keith George Walker ("Sergeant Walker"), is a sergeant employed in the Force, stationed at Warrandyte.

The fourth plaintiff, Christine Patricia McIntyre ("Sergeant McIntyre"), is a sergeant employed in the Force, stationed at Diamond Creek.

Each of the said plaintiffs is in charge of the police station where he or she is stationed. There was a fifth plaintiff but he is no longer a party to the proceeding.

The sixth plaintiff, Henry Thomas Button ("Mr Button"), was a chief inspector employed in the Force, in the N-District No. 2 Division at Swan Hill. He retired from the Force on 17 July 1999.

The defendant, the State of Victoria ("the State"), is sued representing the Crown in the right of the State of Victoria pursuant to the Crown Proceedings Act (1958) - see s.23.

Each of the plaintiffs joined the Force many years ago. Sergeant Arthurson was appointed a constable on 10 March 1981, Sergeant Davey was sworn in as a constable on 14 October 1971, Sergeant Walker was sworn in as a constable on 26 May 1975, Sergeant McIntyre was appointed a constable on 5 June 1972, and Mr Button was sworn in as a constable on 14 November 1966.

Sergeant Arthurson was appointed a sergeant in 1990; Sergeant Davey was appointed a sergeant in 1979; Sergeant Walker was appointed a sergeant in January 1987; Sergeant McIntyre was appointed a sergeant in 1981; and Mr Button was appointed a sergeant in 1980, an inspector in 1986, chief inspector in 1989, and retired on 17 July 1999.

From time to time, the Force published, in the Victorian Police Gazette, an advertisement inviting members to apply for a position of station commander at a particular police station. Some positions required the successful applicant to occupy the residential premises adjoining the police station.

During the period from March 1990 to August 1994, each of the plaintiffs successfully applied to take up the position of station commander at a particular police station. The position required occupancy of the residence adjacent to the station. Each, with their family, moved into a residence provided by the Force.

Sergeant Arthurson moved into the premises adjoining the police station at Hurstbridge in November 1994, Sergeant Davey moved into the premises adjoining the police station at Sorrento in July 1990, Sergeant Walker moved into the premises adjoining the police station at Warrandyte in August 1992, Sergeant McIntyre moved into the premises adjoining the police station at Diamond Creek in August 1994, and Mr Button moved into the premises situated in Swan Hill in December 1992.

The rental paid by the four plaintiffs, who are sergeants, was 3% of their salary. The Force paid the balance of the rent.

Mr Button paid 6% of his salary for rent, and the Force subsidised the balance.

On 1 October 1991, the house occupied by Sergeant Davey at Sorrento was transferred to a government authority known as the Government Employees Housing Authority ("G.E.H.A."), which is a body corporate established by the Government Employee Housing Authority Act 1981.

The houses that were subsequently leased to the other plaintiffs were owned by G.E.H.A. on and after 1 October 1991.

After transfer of the ownership of the houses to G.E.H.A., it was a matter for the Force to make a decision as to whether or not the houses, that were transferred and which were occupied by members of the Force, were houses that were required to be occupied ("R.T.O."). The houses occupied by each of the plaintiffs were classified as R.T.O..

Over the 12 months, from about October 1993 through to October 1994, the government of the day applied a policy that State owned residences should be sold, unless required by the Force. The government adopted a policy of selling the residences through G.E.H.A., unless the Force decided that police occupied housing were essential for operational purposes. In that event, the houses would be retained for police occupation.

On 12 October 1994, the Acting Chief Commissioner wrote to G.E.H.A. indicating what residences could be sold, and amongst those listed were the ones occupied by each of the plaintiffs.

On 10 November 1994, each plaintiff was told that the house he or she occupied was to be sold and could be purchased by the plaintiff.

The result was that each of the plaintiffs vacated their houses during the period March to June 1995.

After leaving the residences, each plaintiff was given a rental subsidy equivalent to what had been provided when they occupied the police house, and it ceased on 30 June 1996.

Each plaintiff contends that it was a term of their contractual arrangement with their employer that, for so long as he or she held the position of station commander, he or she was entitled to subsidised housing. It was alleged that from 1 July 1996, the plaintiffs suffered damage.

On 19 December 1997, the plaintiffs issued a writ against the State claiming declaratory relief and damages for breach of contract.

Subsequently, the statement of claim was amended, pursuant to which Sergeants Arthurson and McIntyre relied upon a plea of equitable estoppel to the effect that, the State was estopped from denying that a term of their contract of employment was that each was entitled to occupy premises supplied by the Force so long as each was in charge of the police station to which each had been transferred.

The pleadings and the rival contentions of the parties raise the following main issues for consideration and determination:

(i) What were the nature and terms of the contract of employment between each plaintiff and his or her employer?

(ii) Was there a term of any contract between each plaintiff and his or her employer with respect to occupation of the police residence?

If so -

(a) Was the term a term of their contract of employment? or

(b) Was there a new and discrete contract between the parties concerning occupation? or

(c) Did the appointment to the position result in a variation of the contract of employment?

(iii) What were the terms of the original contract, or the varied or new contracts, concerning the residence, the right to occupy and the right to subsidy, in the event that the residence was no longer made available to the plaintiff?

(iv) If a new contract or a variation, was there any consideration?

(v) Is the State estopped from denying that it was a term of the contract of employment that Sergeants Arthurson and McIntyre were entitled to occupy the premises at a rental of 3% of their respective salaries, so long as they continued to be in charge of their respective police station or if the premises were no longer available, to be provided with alternative accommodation on the same terms?

(vi) Was there a breach of the said term or terms?

(vii) If there was a breach of any terms, what relief is each plaintiff entitled to?

Facts

There was no dispute of any substance concerning the facts, save as to what a Chief Superintendent told Sergeant Arthurson. The State did not call any oral evidence. It tendered documents and a report from an accountant on the issue of damages.

I make the following findings, but it will be necessary, when determining the issues, to further consider and determine factual matters.

Each of the plaintiffs was appointed a constable and a sergeant as set out in the following table.

Mr Button was appointed an inspector on 2 July 1986, and on 11 January 1993, he was appointed Chief Inspector in Charge of the N-District No. 2 Division at Swan Hill. He retired from the Force on 17 July 1999.

Each plaintiff, upon appointment as a constable, took and subscribed an oath. As a result, each of the plaintiffs entered into a written agreement with, and was bound to serve, Her Majesty as a member of the Force pursuant to s.13(3) of the Police Regulation Act 1958 ("the Act").

The Act contained a number of provisions which regulated the relationship between each plaintiff and the Crown. By the beginning of 1990, the relationship between each plaintiff and the Crown was the subject of the statutory contract under the Act, the provisions of the Act and the regulations made thereunder, and also determinations made by the Police Service Board. It will be necessary hereafter to closely analyse the relationship between each plaintiff and the Crown.

At the beginning of 1990, the regulations made pursuant to the Act were the Police Regulations of 1979 (S.R. 389/1979).

The Governor-in-Council was empowered by s.130 of the Act to make regulations for or with respect to, inter alia, regulating the conduct of members of the Force, requiring any members of the Force to reside in a district or reside in any particular premises, and any matter necessary or expedient to promote the efficiency of the Force. See s.130(dc), (dd) and (dg).

Part IX of the 1979 Regulations dealt with transfers. Regulation 901 provided that -

"901. In order to maintain the discipline and efficiency of the Force, members of the Force are liable to immediate transfer to any part of the State of Victoria."

The following regulations set out the procedure which was to be followed in the event of a member of the Force applying for transfer from one district to another. Regulation 904 provided that the Chief Commissioner could cause an advertisement of a vacancy to be published in the Police Gazette.

On 19 May 1981, the Government Employee Housing Authority Act ("G.E.H.A. Act") was assented to. It established a body corporate known as the Government Employee Housing Authority ("G.E.H.A.") which, subject to the provisions of the Act and to the control of a Minister of the Crown, was to supply suitable houses for government employees in participating departments. See s.3(2)(a)

Section 12 of the said Act gave power to the Governor-in-Council to declare that a department of the Public Service is a participating department for the purposes of the Act, and also empowered the Governor-in-Council to transfer to the Authority, inter alia, premises vested in or held by the Minister of the Crown and used for government employees in the participating department.

Section 13 set out the powers of the Authority, which included letting houses, at such rent and on such terms and conditions as the Authority thought fit, to government employees, and entering into arrangements and agreements with any department with respect to, inter alia, letting or renting houses.

Section 13(3) gave power to the Authority to sell, let or otherwise dispose of property.

Section 13(5) provided that the Authority shall not let a house to an employee unless it is satisfied that the person was unable to obtain, privately, housing accommodation of a reasonable standard, in a reasonable location and at a reasonable rent.

That power was subject to sub-s.(6) which provided -

"(6) Notwithstanding anything to the contrary in sub-section (5), where the permanent head of a participating department certifies to the authority that the special nature of an office in the participating department makes it necessary for the government employee holding that office to reside in a particular house vested in ... the authority, the authority may let the house to the government employee notwithstanding that he is or would be able to obtain privately housing accommodation that is of a reasonable standard, in a reasonable location and available at a reasonable rent."

In or about September 1991, the government determined to transfer all departmental employee housing to G.E.H.A.

By order of the Governor-in-Council dated 18 February 1992, all properties held by the Minister for Police and Emergency Services were transferred to G.E.H.A. The order operated from 23 February 1992. Among the houses transferred were, the house occupied by Sergeant Davey and the houses which were ultimately occupied by the other four plaintiffs.

On 17 February 1992, G.E.H.A. and the Force entered into an agreement, pursuant to which the Force transferred 336 residences. The parties agreed that the Force would classify the houses into required to be occupied ("R.T.O.") and not required to be occupied ("NR.T.O."). G.E.H.A. agreed to make available all R.T.O. residences to the police on a first use basis. It was also agreed that from 1 July 1992, the Force was to arrange for rental to be based on 3% or 6% of an officer's salary, as determined by the Force, and the balance was to be invoiced separately and paid by the Force.

The Force was a participating department within the meaning of the G.E.H.A. Act.

Sergeant Davey was born on 14 April 1953, and is presently aged 48 years.

At the beginning of 1990, he was stationed at Rye. On 12 March 1990, an advertisement appeared in the Police Gazette in the following terms -

"Sorrento (595/695) 40/04109/001 - In Charge. Will be required to occupy Government premises (class 'C' (rent 3%)). Will be required to assume responsibility for all operational matters related to the sub-districts. Applicants are required to have a satisfactory standard of physical fitness and capability to perform all aspects of the duties related to this position. Qualifications and experience to be stated. Senior Constables eligible for promotion may also apply. 'C' driver or qualified."

Sergeant Davey applied for the position, and ultimately appeared before a selection panel in March/April 1990. Prior to the hearing, he inspected the premises at Sorrento.

He was the successful applicant, and his transfer was reported in the Police Gazette on 2 July 1990. It was a condition of his appointment that he reside at the premises provided by the Force at Sorrento. He moved into the premises in July 1990.

He gave evidence, which was not disputed, that it was his intention, in moving to Sorrento, to stay as Officer in Charge for a long period of time, and probably until retirement at age 60. He had been at Rye for a period of some three years, enjoyed the area and was happy to work there. He had been divorced in 1987 and was obliged to support two children. The benefit of subsidised housing was extremely attractive to him, and was a matter that motivated him in accepting the Sorrento appointment.

On 24 February 1992, after G.E.H.A. acquired ownership of various properties, it wrote to Sergeant Davey, welcoming him as a tenant of the Authority and informing him, as an employee tenant, that rental would continue to be deducted from his fortnightly pay in accordance with the then industrial determinations.

He was paying rent at 3% of his salary, and the balance of the rental payable to the Authority was paid by the Force.

In November 1994, Sergeant Davey received a letter from Mr G.D. Cliffe, who was the Director of the Corporate Resources Department of the Force. The letter noted that G.E.H.A. had been disposing of government residences because the Authority was not satisfied that the persons occupying the residences were unable to obtain private housing accommodation. The letter went on to provide -

"The Force can only justify retention of a residence where it is 'essential for operational needs'. Section 13(6) of the G.E.H.A. Act enables the Permanent Head of an agency, in this case the Chief Commissioner, to certify that the special nature of the office makes it necessary for the employee to reside in a particular residence. Following a review of the operational needs as they relate to the position you occupy, your 'Required to Occupy' position has now been re-classified as 'Not required to Occupy'. This re-classification will take effect from the date of this letter."

He was informed that he could purchase the premises if he wished. The letter went on to provide -

"The issue of a continuing rental subsidy is under consideration by the Chief Commissioner, who is holding discussions with the Police Association on the matter. You will be advised of any decision on this matter as soon as possible. In the interim, your current rental subsidy will continue."

Sergeant Davey decided in January 1995 not to purchase the premises.

At the end of January 1995, Sergeant Davey purchased a home at Normanby Road, Sorrento. He remained in the Force premises until 25 May 1995, when he moved into his home in Normanby Road. He received a subsidy of $573.96 per month from the Force. On 1 July 1996, the rental subsidy ceased.

He was subsequently transferred to Kyabram on 2 August 1998 and promoted to senior sergeant

Sergeant Davey was reimbursed for his expenses incurred moving into and out of the police residence.

He claims the loss of the rental subsidy from 1 July 1996 to 2 August 1998 at the rate of $573.96 per month, making a total of $14,349. He also claims damages arising from the sale of a property at McCrae and the costs associated with his purchase of the home at 2 Normanby Road, Sorrento.

At the time when Sergeant Davey was appointed to the position at Sorrento, namely, 2 July 1990, his relationship with the Force was subject to the Act, the Police Regulations 1979, and parts of Determination No. 179 of the Police Service Board dated 25 January 1972, as amended by Determination No. 245 dated 10 October 1975.

On 4 May 1992, an advertisement appeared in the Police Gazette for the vacant position of Officer in Charge of the Warrandyte Police Station. On that day, Sergeant Walker applied for the position. He was born on 24 November 1956 and is presently aged 44 years. He inspected the premises as was required. He appeared before the selection panel. The position was a R.T.O.. He was informed that he was the successful candidate in or about July 1992.

In the meantime, on 23 June 1992, a new set of Police Regulations were passed. See S.R. No. 118/1992. Part 5 of the Regulations deals with, inter alia, transfers of officers.

He moved into the premises at Warrandyte with his family. He had worked in a country environment and considered a posting to Warrandyte to be in the same category. He intended to remain at Warrandyte as Officer in Charge until retirement, and intended to work until 60 years. He was required to pay 3% of his salary as rental, the balance being paid by the Force to G.E.H.A.. He was satisfied that there were investment advantages for the family if they resided in the premises. 3% of his salary was $48.11 per fortnight, and the Force paid the balance of approximately $128 per week.

On 17 February 1994, Sergeant Walker received a message sent to all members of the Force that certain properties had been re-classified as not essential for operational purposes. The station at Warrandyte was not on the list. The message went on to note -

"All other houses currently occupied by members have been classified as 'essential for operational purposes'. G.E.H.A. is expected to object to this classification being applied to some housing in regional centres but the Force will argue for the retention of all such housing. Members occupying houses in regional centres will be kept advised."

The message was sent by Assistant Commissioner Graham I. Sinclair.

By letter dated 10 November 1994, Sergeant Walker was informed by Mr G.D. Cliffe that his residence had been re-classified as NRO. The letter was the standard letter which had been sent to Sergeant Davey.

He was given the opportunity to purchase the residence, which he declined, and he remained at the residence until May 1996. He purchased a home in North Warrandyte in May 1996 and left the police residence. He received a rental subsidy from 16 May 1996 to 30 June 1996.

He claims the loss of the rental subsidy at $128 per week from 1 July 1996 to the expected date of his retirement. In the alternative, he claims the interest paid on his mortgage on his residential property less the amount of the subsidy.

Sergeant Walker has two children, aged 11 and eight. He stated that it was his intention to work until at least 60 years of age.

He was reimbursed for all expenses incurred moving into and out of the police residence.

Sergeant Walker was appointed to the position at Warrandyte on 27 July 1992. His relationship with the Force, was subject to the Act, the Regulations of 1992, and parts of the Victoria Police Force Award No. 1 of 1992, made by the Victorian Police Force Conciliation and Arbitration Board on 17 July 1992. The Board was appointed pursuant to the Industrial Relations Act 1979 - see s.24. That Act was made applicable to the Police Force by the Police (Industrial Functions) Act 1992.

The Board was given considerable power. Section 7 of the Police (Industrial Functions) Act 1992, inserted s.68A into the Act. Sub-section (3) provided -

"(3) Despite anything to the contrary in this Act, the Police Service Board and the Chief Commissioner do not have power to determine or otherwise deal with any matter that after the commencement of s.7 of the Police (Industrial Functions) Act 1992 is within the powers or duties of the Industrial Relations Commission or a Conciliation and Arbitration Board constituted under the Industrial Relations Act 1979."

Section 25(1) of the Police (Industrial Functions) Act 1992 provided -

"(1) An award, order or determination of the Industrial Relations Commission or of a Conciliation and Arbitration Board constituted under the Industrial Relations Act 1979 that applies to a person appointed under s.8, 8A, 103 or 118B of the Police Regulation Act 1958 supersedes any inconsistent provision in regulations or determinations made under the Police Regulation Act 1958 to the extent of the inconsistency."

Division XI of the Victoria Police Force Award No. 1 of 1992 dealt with the occupation of government premises. It will be necessary to turn to the provisions later.

On 7 September 1992, an advertisement appeared in the Police Gazette, advertising the position of Chief Inspector, Officer in Charge of the Division, being "N" District No. 2 Division at Swan Hill.

On 5 October, a correction was published in the Gazette noting that the successful applicant "will be required to occupy government premises".

Mr Button applied for the position. On 24 November 1992, he was interviewed by the selection board and was informed, at the time, that he was obliged to occupy the government housing premises situated in Swan Hill. He was confirmed as the successful applicant on 14 December 1992. He moved into the residence in February 1993 and paid 6% of his salary, for rental, to G.E.H.A..

Mr Button stated that it was his intention to stay as Officer in Charge for a long period, and possibly until his retirement. He had worked in country areas in the past, and was familiar with the lifestyle and policing work involved in country areas. He was very pleased to be located in the country. It gave him an opportunity to financially benefit his family as he rented out the family home in Melbourne.

Like Sergeants Davey and Walker, he received the letter dated 10 November 1994 from Mr Cliffe informing him that the premises had been re-classified.

Mr Button did not seek to purchase the residence, and it was sold at auction on 29 March 1995. Mr Button continued to rent the premises from the purchasers. His rental was subsidised to the extent of $112 per week. The subsidy ceased on 30 June 1996.

Mr Button was reimbursed for all expenses incurred moving in and out of the police residence. He claims loss of the rental subsidy from 1 July 1996 until his retirement, which occurred on 17 July 1999, at a rate of $112 per week. In the alternative, he claims the cost of interest paid on a mortgage on his rental property less the amount of the subsidy.

Mr Button was born on 7 September 1945, and is presently aged 55 years. When he retired from the Force on 17 July 1999, he was aged 53 years and 10 months.

On retirement, he received a lump sum superannuation which was calculated at 8.1 times his last year's salary, which was determined by averaging the last two years' salary.

Like Sergeant Walker, he was subject to the same provisions of the Act, the Regulations and the Police Force Award of 1992.

On 24 November 1992, the Employee Relations Act was assented to. Various sections came into operation in November 1992 and January 1993, and the balance of the Act on 1 March 1993. On and from 27 November 1992, the Act applied to members of the Force - see s.7(1).

By reason of s.172(6), all awards relating to members of the Force in operation, in force on 1 March 1993, expired on that day.

As a result, s.24(3) applied which provided -

"(3) If an award expires, each employee, who continues to be employed by the employer, and the employer are, unless a new award is made or the employee and the employer make an employment agreement, bound by an individual employment agreement with the same terms and conditions as those that applied to the employee and employer under the expired award."

These provisions are of some relevance to the relationship of the two plaintiffs, Sergeants Arthurson and McIntyre, with their employer.

In the latter part of 1993, there were rumours within the Force that G.E.H.A. was proposing to sell some of the police residences.

On 15 December 1993, Assistant Commissioner Graham I. Sinclair, who was in charge of the Corporate Resources Department, sent a message to all members of the Force.

The first paragraph of the message stated that the Ministry of Finance, through G.E.H.A., was moving towards selling off government owned housing throughout Victoria, including police occupied housing.

"The Force is currently surveying police occupied housing to identify those which are essential for operational purposes (E.O.P.). One member stations and (sic) with a station commander's residence adjacent (S.C.R.A.) will all be classified as E.O.P. These premises will then be sold by G.E.H.A. with a ten year commercial lease, with options for further leases by the Force. All 'other' houses are subject to review/negotiation by the Force with G.E.H.A. Members occupying houses in this category will be advised in due course of the outcome of those negotiations."

The message then described what was to happen to "other houses" and provided -

"Members should not be concerned by this action and should ensure that local populations understand that policing services will continue."

An invitation was extended to members who had queries or concerns to contact the office of Mr Sinclair, the Assistant Commissioner.

Sergeant Arthurson was born on 10 November 1956, and is presently aged 44 years. He has three children by his first marriage and one child by his second wife. Another child is due any moment.

In early 1994, he spoke to another member of the Force about rumours about the sale of police residences, and he was shown a copy of the patrol message sent out on 15 December 1993. He understood from reading that message that all premises with an adjacent residence would be classified as essential for operational purposes and would not be sold. He also stated that he understood from the message that if premises were sold, he would be entitled to subsidised rental.

On 11 January 1994, the position of Station Commander of the Hurstbridge Police Station was advertised in the Police Gazette. The advertisement advertised the position of Station Commander, and stated -

"For initial duty at Hurstbridge Police Station. Will be required to occupy government premises (rent 3%), contact officer in charge of district for further details."

Sergeant Arthurson, upon seeing the advertisement, was interested. He had heard the rumours that police residences were being sold, and wished to clarify the position. He had recently been divorced and had three children. His priority was to find a stable and permanent home close to his ex-wife and children. He was also concerned about his financial position and was interested in obtaining a police residence.

After seeing the advertisement, he telephoned Chief Superintendent Bateman, who was in charge of the area in which the Hurstbridge Station was located, to ascertain what the position was in relation to the residence. The telephone discussion occurred some time between 11 and 18 July 1994.

He told Mr Bateman that he was concerned, as he wished to establish a stable home, and asked whether the residence would be sold. He gave evidence that he was told that the residence was classified as "required to occupy" and "that as a result, it was permanent and would not be sold". He was told by Mr Bateman that he had received confirmation of this from his superiors. He visited Mr Bateman at his office on, or about, 18 July 1994.

Having been given the assurance by Mr Bateman and based upon what he understood from the patrol message, he applied for the position at Hurstbridge.

Sergeant Arthurson went through the selection panel process, but was unsuccessful. He then appealed to the Police Review Commission. He was successful and was appointed to the position.

He transferred to the position of Officer in Charge at Hurstbridge on 6 November 1994.

He was paying 3% of his salary for rent and, taking into account the rental subsidy, was receiving a net salary that was equivalent to an inspector. Accordingly, he came to the view that he would not seek promotion to the rank of senior sergeant. At the time when he moved into the house, he thought he would retire at 65. He saw the transfer as giving him financial security.

Within a matter of days, he received the standard form letter from Mr Cliffe dated 10 November 1994. Not surprisingly, Sergeant Arthurson was outraged upon receiving the letter.

Sergeant Arthurson was fully reimbursed for the expenses incurred moving in and out of the residence. He vacated the residence on 23 March 1995. At that date, he was paying $22 per week to G.E.H.A. for rent and was receiving a rental subsidy of $128. He moved into a rental property in South Morang and thereafter, received a rental subsidy of $155.94 per week up to 30 June 1996.

Sergeant Arthurson is still the Officer in Charge of the Hurstbridge Police Station. The residence has now become a police station.

He claims loss of the rental subsidy of $156 per week from 1 July 1996 until the date of his retirement. In the alternative, he claims the cost of interest paid on the mortgage on his residential property less the amount of the subsidy.

John Stewart Bateman gave evidence. He was a Chief Superintendent of Police who retired on 19 August 1996. He was in charge of Q-District at all relevant times. There were two police stations which had residences supplied for the Sergeant in Charge in his district, namely, Diamond Creek and Hurstbridge.

He gave evidence that he received a phone call from Sergeant Arthurson, who was concerned about whether the residence would be retained, and that he told Mr Arthurson that the person appointed had to occupy the residence "and that it was my understanding that both residences at Diamond Creek and Hurstbridge would not be sold". He recalls Sergeant Arthurson visiting his office at Heidelberg to discuss the matter.

He also received a call from Sergeant McIntyre, who was concerned about whether or not the residence at Diamond Creek would be sold, and he assured her that it was his understanding that it would not be sold. In giving that information, Mr Bateman had been assured by a senior member of the Property Services Division that the properties would not be sold.

There was no dispute that Mr Bateman was authorised to make the representations he did.

Counsel for the State did not really challenge any of the evidence of the plaintiffs, save for a piece of evidence given by Sergeant Arthurson.

"He (Mr Bateman) told me that the residence was classified as 'required to occupy' and that as a result, it was permanent and would not be sold. Chief Superintendent Bateman assured me that he received confirmation of this from his superiors."

He was challenged that he had been told that "as a result it was permanent". He maintained that it was his memory that Mr Bateman used words to that effect.

Mr Bateman, in giving evidence, did not say that the position was permanent. Indeed, he could hardly be in a position to say that. Sergeant Arthurson was relying on his memory of a conversation which took place nearly seven years ago, and he took no notes of the conversation at the time. Mr Hammond QC, who appeared with Mr Rinaldi for the State, submitted that I should not accept the evidence. He emphasised the matters just mentioned, and further stated that the particulars provided by Sergeant Arthurson of the alleged representation were not in those terms, nor in the pleading.

In my opinion, Sergeant Arthurson was mistaken as to this and even though, in his own mind, he may have thought that to be the position, I am not persuaded that Mr Bateman stated that "as a result it was permanent and would not be sold".

At the date of his appointment, namely, 12 October 1994, Sergeant Arthurson's relationship with his employer, the State, was regulated by the Act, the Regulations made thereunder, and the deemed individual employment agreements arising out of the Employee Relations Act 1992, which incorporated the Victoria Police Force Award of 1992.

Sergeant McIntyre was born on 14 June 1951, and turned 50 on 14 June 2001. She is married with two children, aged 18 and 15. Her husband works in Kew.

On 11 July 1994, an advertisement appeared in the Police Gazette for a Station Commander at Diamond Creek. The advertisement provided -

"Station Commander. For initial duty at Diamond Creek Police Station. Will be required to occupy government premises (rent 3%), contact Officer in Charge of District for further details."

Sergeant McIntyre was interested in applying for the position. It had a number of advantages to her. She was keen to pursue the position in order to broaden her experience and to serve the community in the Force. She had been a sergeant for some 13 years and did not intend to seek promotion to senior sergeant. In order to obtain promotion to senior sergeant, it is not necessary to pursue any course of study. Promotion is available when there is a vacancy for the position. Sergeant McIntyre was attracted to the area, which was some 10 minutes from where she lived at North Eltham with her family. She envisaged that she would remain as Officer in Charge until her retirement, which she thought was at least to the age of 55.

At the time, she was aware of the requirement to occupy the premises. She was also aware of rumours that police residences were marked for sale by the government, and she thought that the Diamond Creek residence may be one of them.

In May or June 1994, she had a discussion with Sergeant Scully, who was then the Officer in Charge at Diamond Creek, and he showed her a copy of the patrol message dated 15 December 1993. Sergeant McIntyre recalled that she had seen a copy of that message sometime in December 1993.

She understood from the message that all police stations with an adjacent residence would be classified as essential for operational purposes, that the residence would not be sold and that this applied to Diamond Creek. She also stated that she understood the message to mean that if the premises were sold, she would get subsidised rental.

Having seen the advertisement, she telephoned the District Commander, Chief Superintendent Bateman. She believed this was sometime in July 1994. She discussed the position and raised the question whether she could get an exemption from the requirement to occupy the premises. She, her husband and children had inspected the premises which they found to be in poor condition and too small for the family's needs. Even though the premises were not far from the family home, it would be necessary to transport the children to school. Despite this, she was very keen to apply for the position.

Mr Bateman told her that it was a requirement of the position that she occupy the residence as Officer in Charge. She stated that she had heard rumours concerning the sale of residences and that Mr Bateman told her that he had confirmation that the residence would not be sold. She then visited Mr Bateman at Heidelberg and he reiterated that the residence would not be sold.

Relying upon what had been in the patrol message, as understood by her, and the statements made to her by Mr Bateman, she applied for the position at Diamond Creek. If she had not had the assurances, she would not have applied for the position.

She applied for the position and was interviewed by the selection panel in early August 1994. On 22 August 1994, she was appointed to the position.

She moved into the residence on 24 September 1994, having been transferred to the police station on 19 September 1994.

Upon moving into the residence, it was necessary to carry out repairs and improvements, which were done. The house was less than comfortable compared with the family home, but the family accepted the position.

Some six weeks after Sergeant McIntyre and her family moved into the residence, she received the standard form letter dated 10 November 1994 from Mr Cliffe.

The letter was in the same form as that received by the other plaintiffs.

Sergeant McIntyre did not take up the option of purchasing the residence, and she and her family moved to rented premises on 15 May 1995. From that time on, she received a $156 subsidy per week from the Force until 30 June 1996.

Sergeant McIntyre continues to be the Officer in Charge at Diamond Creek, and she expects to occupy the position until 60, when she intends to retire.

She was reimbursed for the costs incurred moving into and out of the police residence. She claims the loss of the subsidy from 1 July 1996, at the rate of $156 per week, until the expected date of her retirement in June 2011. In the alternative, she claims the cost of interest paid on the mortgage on her residential property. In addition, she claims the sum of $1,659, being the cost of breaking the lease on her home, which the family moved back into on 13 July 1996. It was necessary to pay the tenants $1,659 as consideration for surrendering the lease.

I am satisfied that Sergeant McIntyre would not have moved into the police residence at Diamond Creek unless she was assured that it was not to be sold. She viewed the move not only to further her career in the Force but also as a commercial venture, because she and her husband were able to lease their family home.

In 1972, when she joined the Force, there were 120 females in the Force. There are now in excess of 1,200. She enjoys being in the Force and intends to stay until 55 to 60 years of age. She frankly admitted that police work was stressful and that she did not like working shift work and weekends.

She frankly conceded that she was reluctant to move into the home but accepted that she had to. She accepted that she did pursue the position to broaden her experience for future promotion and to serve the community. She said that in a letter to the Police Association on 29 December 1994. In that letter, she stated that she reluctantly gave an undertaking to occupy the premises at Diamond Creek.

Sergeant McIntyre's employment was subject to the provisions of the Act, the Regulations made thereunder, and the deemed individual employment agreements arising under the Employee Relations Act 1992, incorporating the Victoria Police Force Award of 1992.

Each plaintiff was cross-examined as to the disadvantages of moving into the police residence. The disadvantages were identified as, first, being required to reside in a home which may not be of good standard and in good repair; living in a location which may not be the most satisfactory; being required to obtain permission for renovations, repairs and maintenance from the Force and G.E.H.A.; being effectively on call 24 hours a day because of the close proximity to the police station; and being required to answer phone calls at all hours.

The plaintiffs stated that steps were taken with respect to the telephone calls which meant that they were not obliged to answer all calls. But each plaintiff, whilst recognising the so-called disadvantages, was of the one mind, namely, that the benefits clearly outweighed the alleged disadvantages. Each occupied a position of command, each had a number of members of the Force under his or her control, each was working in an area which was attractive and to their liking, namely, country or semi-country positions, and more importantly, each recognised the substantial financial benefits which flowed from occupying the premises.

Today, a sergeant receives approximately $55,000 salary. Each plaintiff was able to take advantage of the position by leasing out their own homes. There is no doubt that each recognised that there were considerable financial advantages in taking the position. Each expressed the view, other than Mr Button, that he or she did not intend to seek further promotion because of the attractiveness of the position.

Each plaintiff was cross-examined in respect of the incentive to members of the Force, who had completed 30 years' service, to leave the Force because of the attractive superannuation payment at that stage in their careers. At the end of 30 years, the member is entitled to retire. The superannuation pay out is 8.1 times the yearly salary averaged over the previous two years. It is said that there is a real incentive to retire because the superannuation amount peaks at that time and there is no interest payable on the amount thereafter. Whilst in one sense it does peak, it is misleading to view it as the maximum amount. Two consequences flow from continuing in the Force. First, the substantial contribution made each week to the superannuation fund is eliminated. The amount is in excess of $100 per week, which represents a substantial increase in take home pay. Secondly, if the member remains in the Force, the final pay out is 8.1 times the amount of the last year's salary averaged over the two year period and, in accordance with expected pay rises, the amount payable at age, say, 60, would be considerably more.

The evidence revealed that a number of police have retired between the ages of 50 to 55, taking with them the substantial lump sum.

Despite this evidence, each plaintiff, other than Mr Button who has retired, maintained that he or she would continue in the Force until the age of 60, and in the case of Sergeant Arthurson, until 65. I accept the evidence of each plaintiff, although it must be steadily borne in mind that that was, and is, their intention. Their intention could change in the future.

Section 16A of the Act required members of the Force to retire on attaining the age of 60 years.

By reason of the Equal Opportunity Act 1995, s.16A was substituted, with the result that there is no retiring age and that members of the Force were entitled to elect to retire upon attaining the age of 50 years or at any time thereafter.

Hence, it is open to any of the plaintiffs, other than Mr Button, to retire at 65 years of age.

As I stated, there was no real dispute with respect to the evidence given by the plaintiffs, although the inferences that should be drawn were a matter of argument. It will be necessary to further consider and determine some of the factual matters when considering the issues.

The claim brought by each plaintiff is in contract. Each alleged that the contract with the State contained a term that the State breached, and caused damage. It is contended that the term was implied.

Each contract is put on three alternative bases. First, that the implied term was a term of the contract of employment between each plaintiff and the State, alternatively, that when each plaintiff applied and was appointed to the new position, the contract of employment was varied, and finally, that upon application and appointment, a new contract came into being between each plaintiff and the State.

The State denies that there was any implied term, as contended for by the plaintiffs, and further alleges that the term could not be implied into the contractual relationship between each plaintiff and the State, because to do so would be contrary and inconsistent with the statutory powers given to the State and which can be exercised from time to time. In other words, the existence of the implied term would be contrary to the statutory powers given to the State and would fetter their exercise.

Sergeants Arthurson and McIntyre have an alternative basis for their claim, namely, that representations were made to them concerning the residences and that the State is estopped from denying the representations and their effect.

The implied term pleaded and relied upon by the plaintiffs is -

"That for so long as the plaintiff held the position (as officer in charge of the police station) he or she would:

(a) have the benefit of accommodation in the residence or, in the alternative other appropriate accommodation provided by the defendant; and

(b) pay rental for the occupation of the residence at the rate of 3% or, in the case of the sixth plaintiff, 6% of his or her salary."

(Emphasis added).

The reference to the sixth plaintiff is Mr Button.

It is noted that the said implied term required the State to provide each plaintiff with the benefit of accommodation in a residence that is attached to the police station or some other appropriate accommodation, and that each plaintiff would pay a minimal rent of 3% or 6%, as the case may be, of his or her salary. Of considerable significance is the contention, that the obligation on the State was to continue so long as the plaintiff held the position of Officer in Charge of the particular police station or, in the case of Mr Button, the district.

Each plaintiff was appointed to the position at a certain date, and took up the new position pursuant to a transfer shortly thereafter.

The date when the alleged implied term became part of the contractual relationship with the State, will vary according to the circumstances. Insofar as it is alleged that the terms were already part of the contract of employment at the date of application, it is necessary to consider the position as at that date. Insofar as it is alleged that there was a variation to the contract of employment or the creation of a new contract, the relevant dates will be the date when the said variation occurred or when the new contract was created.

In order to determine the question whether there was any such implied term, it is necessary to consider and determine what the provisions were which regulated the relationship between each plaintiff and the State and in particular, whether the provisions were contractual. It is clear that each plaintiff has to prove that at the relevant time, the contractual relationship with the State contained the alleged implied term.

It is convenient to determine the relationship by considering the position of the first plaintiff in time, namely, Sergeant Malcolm Davey. He applied for his position at Sorrento pursuant to the advertisement which appeared on 12 March 1990, and he was appointed to the position on 2 July 1990.

There is no dispute that each plaintiff is a member of the Force and a servant of the Crown in the right of the State.

The Force was established at the beginning of 1853 by an Act for the Regulation of the Police Force, passed by Lieutenant-Governor La Trobe of the Colony of Victoria with the advice and consent of the Legislative Council.

Up until 1853, the police force in the Colony was the New South Wales Police Force.

Section 2 of the Act authorised the Lieutenant-Governor to appoint the Chief Commissioner of Police, who "shall be charged and invested with the general control and management of the police force of the said Colony". The power of appointment of members of the Force was given to the Lieutenant-Governor and the Chief Commissioner. Power was also given to the Lieutenant-Governor, with the advice of the Executive Council, to frame rules, orders and regulations for the government of the Force and with respect to their places of residence. Every member of the Force was required to take an oath before he was permitted to serve.

Section XI was an important section because it provided that upon taking an oath, the member of the Force entered into a written agreement with the Crown. It is in similar form today.

The Act was repealed and re-enacted a number of times after 1853. It is now the Police Regulation Act 1958.

The nature of the contract and the rights given to a member of the Force were discussed by the Full Court in the case of Power v R (1873) 4 AJR 144.

A former member of the police force brought a petition of right against the Crown alleging a number of counts. He failed in his claims for wrongful dismissal.

At one stage, he was a sergeant, and he was later reduced to the rank of constable. He claimed the difference between his pay as a sergeant and that of a constable prior to his final dismissal, and recovered the sum of £3 8s.

The Full Court discussed his right to recover this amount on a quasi contractual claim. The Court said at p.145 -

"His rights depend on the nature of the contract under which he served. Members of the Police Force enter into an engagement to serve by taking and subscribing an oath, which is set out in the Police Regulations Statute 1865."

The Full Court accepted that he had a right to recover his pay prior to dismissal.

With respect to the right to dismiss, the Court said -

"... We are of the opinion that the agreement created by the statute includes a concurrence between the parties. By it the petitioner promised to serve as long as it would please Her Majesty to employ. On this condition his promise was accepted. But this does not include a mutuality or reciprocity of contract and liability. There is in fact but one contracting party, that is the petitioner. Nothing can be clearer than that the engagement entered into is unilateral only, not mutual. It binds him to serve, but does not oblige Her Majesty to retain him in her service beyond the period which circumstances may render necessary." (Emphases added).

In Bertrand v R [1949] VicLawRp 10; (1949) VLR 49, the Full Court said of Power's case -

"The case is thus a definite authority not only that there is an obligation upon the Crown to pay policemen for services rendered, but also the obligation is enforceable by the subject upon the petition of right."

In Green v R [1891] VicLawRp 73; (1891) 17 VLR 329, the Full Court said at p.332 -

"The contract entered into by each member of the Police Force, both officers and constables, by virtue of taking and subscribing the oath, is a unilateral contract, and implies no corresponding obligation on the part of the Crown to retain the member in the service: Power v The Queen. The contract is terminable at the pleasure of the Crown."

What the Full Court said in Power v The Queen was quoted with approval by Barton J in Ryder v Foley [1906] HCA 61; (1906) 4 CLR 422 at 440-41.

The 1853 Police Regulation Act and the following Acts all decreed that upon taking the oath, the member of the Force entered into a written agreement with the Crown. The members of the Force were servants of the Crown and they held their offices during the pleasure of the Crown. A statutory agreement was established. The common law concerning Crown servants applied to that contract. Because the member of the Force held his office during the pleasure of the Crown, he had no remedy for wrongful dismissal. The member had a right to sue for pay, but statute apart, had no rights of substance. At common law, there was no contract between the Crown and servants of the Crown - see Allpine v The Commonwealth [1948] HCA 19; (1948) 77 CLR 62 at 76, Coutts v The Commonwealth [1985] HCA 40; (1984) 157 CLR 91 at 98-99, Marks v The Commonwealth [1964] HCA 45; (1964) 111 CLR 549, and Shenton v Smith (1895) AC 229.

The Act establishes a contract, but a contract with very few rights enforceable by a member of the Force.

These common law propositions are, of course, subject to any contractual term to the contrary and, of course, subject to statute. See Gould v Stewart (1896) AC 575 at 577.

At a glance

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Judgment (519 paragraphs)

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Cases Cited (27)