The contract claim
72 AIPA's case was that, by the time of the terms of settlement (dated 4 August 2005), or at the latest by the time of the Explanatory Note (dated 28 September 2005), there existed a binding agreement between AIPA and Qantas concerning non-pertaining provisions. The agreement was said to fall within the first class referred to in Masters v Cameron (1954) 91 CLR 353 at 360, or into the "fourth class", said to be identified by McLelland J in Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 at 628.
73 In Masters v Cameron at 360, the High Court said:
Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
At 360-361, the High Court went on to point out that, in each of the first two cases, there is a binding contract, but not in the third.
74 The "fourth class", identified by McLelland J in the Baulkham Hills caseat 628 is there described using the words of Knox CJ, Rich and Dixon JJ in Sinclair, Scott & Co Ltd v Naughton (1929) 43 CLR 310 at 317:
one in which the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms.
75 There must be some doubt as to whether a case described in these terms falls within a fourth class, additional to those described in Masters v Cameron. Assuming the existence of a binding agreement, it is always open to the parties to that agreement to vary it by adding additional terms. Viewed in that light, the so-called fourth class appears not to differ from the first or second classes referred to in Masters v Cameron. Although the New South Wales Court of Appeal upheld McLelland J's judgment, there is no reference in the judgment of McHugh JA, with whom Kirby P and Glass JA agreed, to Masters v Cameron, or to a "fourth class". In G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 635-636, McHugh JA said:
If the parties agreed on additional terms, they would be added to the formal contract. If they did not, the formal contract would give effect only to the agreed terms and conditions of the correspondence. The case, therefore, is one where the parties were bound by the informal agreement but expected to make a further contract which by consent might contain additional terms: Sinclair, Scott & Co Ltd v Naughton.
76 In the present case, there is no indication that either AIPA or Qantas gave expression to the possibility that there would be any need for them to agree to extra terms. The question in the present case is whether the case falls within the first or third category in Masters v Cameron. The attempt to rely on a fourth class seems to have been prompted by the fact that, following the signing of the Explanatory Memorandum, AIPA and Qantas did negotiate upon and apparently agree to an additional term, relating to the sharing between them of any liability that might arise from the transfer of terms that were formally in EBA6 into a document other than EBA7.
77 The contention that the terms of settlement amounted to a final agreement between the parties is difficult to sustain. It was not until after the terms of settlement had been signed and the parties had engaged in the task of converting them into detailed documents that attention was given by either party to identifying the non-pertaining provisions that ought to be removed, to ensure the certification of EBA7. There had been a concern on the part of some people within AIPA that cll 45 and 46 of EBA6 and the other provisions relating to those clauses would probably fall into that category, but there is no evidence that any negotiation took place about the content of any alternative document until after the terms of settlement had been signed.
78 By 28 September 2005, when the Explanatory Memorandum was signed, the provisions that would be transferred into another document had been identified, and were listed in the Explanatory Memorandum itself. Indeed, cl 2.5 of that document uses the past perfect tense, so as to convey to the reader that the memorandum of understanding is already in existence. Little, if any, weight can be attached to this fact in determining whether there was a final agreement. Clause 2.5 is inconsistent with cl 2.4 of the Explanatory Memorandum, which records merely that the parties "have agreed to transfer" the non-pertaining provisions into "a" memorandum of understanding. The statement in cl 2.5 that, in relation to the additional provisions there listed, this had already been done, was incorrect as a matter of fact.
79 It is common ground between AIPA and Qantas that, as at the date of the Explanatory Memorandum, there had been no express agreement as to the starting date for the relevant side agreement, or as to its finishing date. It is also common ground that some provision fixing the duration of any agreement about those matters was an essential term, without which there could not be a binding agreement. The case for AIPA is that the absence of this essential term is cured by the implication of a term to the effect that the side agreement would be of the same duration as EBA7, ie that it would start to operate when EBA7 was certified and would continue in operation until EBA7 was replaced by a further certified agreement, or otherwise ceased to be binding. This term was said to satisfy the requirements for a term to be implied into a contract, laid down in B.P. Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283:
(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.
80 Before considering whether the suggested implied term meets these criteria, it is necessary to deal with one argument. That argument is based on the proposition found in the judgment of Kaye J, with whom Marks and Teague JJ agreed, in Australian and New Zealand Banking Group Ltd v Frost Holdings Pty Ltd [1989] VR 695 at 702, that "the law does not permit a court to imply a term into a bargain between parties for the purposes of making their bargain an enforceable contract." If this proposition is to be taken at face value, it is hard to see how most of the cases in which it has been held that there are implied terms in contracts could have been so decided. There have been numerous cases in which courts have held that implied terms that the performance of agreed obligations take place within a reasonable time, or that a party may bring about the termination of agreed obligations by giving reasonable notice, are available to ensure the binding nature of those agreed obligations. In the words of the Privy Council in the B.P. case, such implied terms are "necessary to give business efficacy" to the contracts of which they are found to be part. The danger of taking the proposition expressed by Kaye J at face value is obvious. Such a proposition could lead to arguments akin to those about whether the chicken came before the egg, or the egg before the chicken. Was there already an agreement, so that it can be supplemented by an implied term to give it efficacy, or was there no binding agreement because there was no express agreement about the subject matter of the implied term? In my view, Kaye J intended to mean no more than that the parties must have agreed to be bound by the obligations they have expressed in their negotiations, before the question whether a term can be implied to give that agreement efficacy can be addressed. It is on that basis that I approach the present case.
81 There can be little doubt that AIPA and Qantas had reached agreement by 28 September 2005 that the provisions of EBA6 referred to in cll 2.4 and 2.5 of the Explanatory Memorandum were not to appear in EBA7, but were to appear in a separate document. AIPA's case depends upon the assumption that 28 September 2005 was the final point in negotiations between the parties about the issue, so that, but for the gap sought to be filled by the implied term, there was a complete agreement. The case for Qantas is that the production of the Explanatory Memorandum on 28 September 2005 was merely a stage in ongoing negotiations, as a result of which it became clear that there was no agreement between the parties.
82 Counsel for AIPA objected to evidence about negotiations between the parties after 28 September 2005, except to the extent that their content might cast light on the meaning of terms already expressed between the parties, as was suggested in Australian Broadcasting Corporation v XIVTH Commonwealth Games Ltd (1988) 18 NSWLR 540 at 550 per Gleeson CJ, with whom Hope JA and Mahoney JA agreed. In my view, what took place between AIPA and Qantas after 28 September 2005 is relevant in determining whether there remained matters unresolved between the parties. If one of those unresolved matters was the question of duration, then there was no concluded agreement, because an essential term was never agreed.
83 Before examining the relevant communications between the parties subsequent to 28 September 2005, it is worthwhile to apply the criteria in the B.P. case to the implied term advanced by AIPA on the pleadings. In this respect, it is clear that the alleged implied term cannot survive being tested against the third criterion, that the term must be so obvious that "it goes without saying".
84 The parties were agreeing to transfer the non-pertaining provisions into a document separate from EBA7 on the assumption that, in the light of Electrolux, they were provisions that would not be acceptable to the Commission and would therefore prevent the certification of EBA7. It is true that there was no absolute recognition that the non-pertaining provisions fell outside the description in s 170LI(1), namely matters pertaining to the relationship between an employer and the relevant employees. As appears from my examination of the implications of Electrolux in [113]-[116] below, certainty about whether a particular provision did or did not fall within s 170LI(1) would have been extremely difficult to achieve. Nevertheless, it is clear that the parties, and particularly AIPA, contemplated that cll 45 and 46 and the related provisions, as they appeared in EBA6, might very well be unenforceable as a matter of law. If this had not been the case, there would have been no suggestion from either party that those provisions should be removed from EBA7. On this basis, it is legitimate to ask (as the mythical officious bystander might have asked) whether it was obvious that the starting points of the obligations would be the commencement of the operation of EBA7. If it be accepted that the parties were transferring the non-pertaining provisions into a separate document in order to ensure their continued operation as enforceable provisions, there would be every reason why such an agreement should operate as soon as it was reached, and not await the certification of EBA7. The circumstance that Qantas had continued to apply the Association Business Provisions in EBA6 does not diminish the force of this proposition. Objectively, it appears more likely that the parties would want any agreement to have been binding forthwith, rather than from a later date.
85 Similarly, the question of a date of termination of the obligations did not necessarily have a relationship with the duration of EBA7. In this respect, the parties could have chosen a termination date, or mechanism, from a range of possibilities. For instance, it might have been agreed that the side agreement should continue to operate until such time as one or other party terminated it by giving some agreed period of notice. A specific termination date might have been chosen, with or without the possibility of termination by notice. The existence of such a range of reasonable possibilities is fatal to the satisfaction of the third criterion in the B.P. case. It must be remembered that the criteria in the B.P. case must be satisfied by a particular term. It is not open to the Court to choose from a range of possible implied terms, for the purpose of making an agreement into a final one. The particular term advanced must be so obvious that it is unnecessary to express it, because both parties will recognise that it is present in their agreement. The implied term pleaded in the present case clearly does not satisfy that requirement.
86 The negotiations between the parties subsequent to 28 September 2005 confirm that, as at that date, the implied term pleaded was not at all obvious. In her first draft of the memorandum of understanding, Ms Starke chose a different term altogether. Her proposal was that the agreement would come into effect on certification of EBA7 and continue to operate forever, unless varied, replaced, rescinded or terminated by agreement between the parties. Qantas responded with a proposal that the side agreement expire on the nominal expiry date of EBA7. Only then did Ms Starke, on behalf of AIPA, propose something like what is now said to be the obvious term, in an attempt to ensure that the side agreement should continue in force if EBA7 endured beyond its expiry date, in accordance with s 170LX of the WR Act. In her submissions to the Commission on 16 November 2005, when she was seeking to have the application for certification of EBA7 adjourned, Ms Starke did not contend that there was a binding agreement containing an implied term that the memorandum of understanding would have the same duration as EBA7. She contended that there was no completed agreement. It may be true that her perception of the situation was not conclusive of the non-existence of a binding agreement. It is equally true that the term that AIPA now contends was so obvious as to go without saying was not obvious to Ms Starke, who had the principal responsibility for finalising the memorandum of understanding on behalf of AIPA.
87 At a very late stage in the trial of the proceeding, in submissions in reply, counsel for AIPA applied to amend the statement of claim, so as to allege in the alternative an implied term to the effect that the agreement containing the non-pertaining provisions would come into operation immediately and would continue until either party terminated it on reasonable notice. I reserved the question whether leave to amend at that stage ought to be granted. As I have said, the objective observer of the terms expressed in the Explanatory Memorandum of 28 September 2005 would have been more likely to have formed the view that the terms agreed on would come into effect immediately, and would continue until terminated by reasonable notice. Such a term is more obvious than the one originally pleaded in this case. The question remains, however, whether it is so obvious that it goes without saying. Given the existence of a range of possible provisions as to duration, it is impossible in my view to select any one as being the obvious provision, so that any expression of a term as to duration was unnecessary.
88 The subsequent negotiations of the parties about the wording of a duration clause are inconsistent with any proposition that they must be taken to have accepted that any particular term relating to duration was so obvious that its content did not require expression for the agreement to be binding. The reality is that the parties did not regard themselves as having reached a concluded agreement about the non-pertaining matters at 28 September 2005. What remained to be done was not a mere drafting exercise, but the negotiation of the terms of the agreement proposed. The correspondence between the parties about the content of the duration agreement is clear evidence of this. So also is the negotiation that took place about the sharing of any liability that might arise from the implementation of the proposed agreement. It is a reasonable inference that it was not until some time after 28 September 2005, and probably when they were exchanging drafts in November 2005, that the parties began to realise that there were potential legal difficulties confronting the proposal to transfer the non-pertaining provisions into another document. The principal difficulty was obvious. At the time when they were agreed, and were included in EBA5 and EBA6, on the assumption that the provisions were valid, there was no difficulty about the effect that they had in relation to the obligations of Qantas under EBA5 and EBA6. Once the provisions were removed, however, and the terms that they had qualified were left unqualified in EBA7, those terms would become enforceable under the WR Act in their unqualified form. It would have been possible for an inspector, or an employee whose employment was subject to EBA7, to institute a proceeding pursuant to s 178(1) of the WR Act (as it then stood), seeking to recover a penalty in respect of any breach of any term of EBA7 brought about by an attempt to modify the operation of the terms of EBA7 by applying any of the non-pertaining provisions. It seems that this realisation gave rise to Qantas's proposal in relation to the sharing of liability. Far from refusing to countenance this proposal, on the basis that there was already a concluded agreement, AIPA proposed a modification of the clause that would provide equivalent protection to AIPA in the event of any liability. The course of these negotiations is evidence that the parties were still in negotiation about what would be the terms of any memorandum of understanding that might be entered into in consequence of what was said in cll 2.4 and 2.5 of the Explanatory Memorandum.
89 Counsel for AIPA relied on authorities in which it was held that agreements were subject to implied terms that their duration would match the duration of other agreements to which they were related. The specific cases areGibson Motor Sport Merchandise Pty Ltd v Forbes [2005] FCA 749 and Caltex Properties Ltd (in liq) v Love and Ors (unreported, Supreme Court of Western Australia, Parker J, 14 May 1995). These cases turn on their own facts. They do not establish the existence of any principle that, because two agreements can be said to be related, a term must be implied into the one lacking any express term about duration that its duration will match that of the other, the duration of which has been agreed expressly.
90 The positions adopted by the parties after 28 September 2005 do not suggest that they regarded themselves as having arrived at a concluded agreement. As I have said, the submissions that Ms Starke made to the Commission on 16 November 2005 did not involve any assertion that there was a concluded agreement between AIPA and Qantas. On the contrary, AIPA through Ms Starke clearly represented to the Commission, and to the Qantas representatives who were present, that there was an outstanding matter between the parties, namely the duration of the memorandum of understanding. It was not until 9 December 2005 that AIPA, through Captain McNeil, began to assert in correspondence to Qantas that there was a binding agreement. In his letter of that date to Ms Bussell, Captain McNeil demanded that Qantas "acknowledge as in force and binding" the agreement referred to in the Explanatory Memorandum. The letter referred indirectly to the question of duration, but contained no express assertion that there had been agreement as to any particular duration. This assertion did not come until Captain McNeil's letter dated 13 December 2005 to Ms Bussell. In his letter dated 16 December 2005 to Ms Bussell, Mr Jennings was not quite so bold, suggesting only that the memorandum of understanding "should have the same currency as EBA7." Nor did AIPA subsequently assert its claim that the duration of the memorandum of understanding had already been determined. Captain McNeil put the case for a longer duration than that proposed by Qantas in his letter to Mr Borghetti dated 12 January 2006. Captain Woods's letter dated 17 January 2006 to Mr Borghetti also seeks to make the case for the continued operation of the Association Business Provisions, by way of persuading Qantas, rather than making a claim that Qantas was bound by a concluded agreement that included a provision as to duration. As the subsequent correspondence shows, there was further negotiation between the parties, leading to AIPA's acceptance "under protest" of yet another formulation, proposed by Qantas, of the duration clause. By that time, the Qantas representatives had made it clear that any final agreement was dependent upon the approval of Qantas's senior management. Negotiations came to an end when Mr Dixon made it clear in his letter of 14 March 2006 to Captain Woods that Qantas would not sign the memorandum of understanding.
91 Of course, what the parties thought their position was after 28 September 2005 is not conclusive as to whether an agreement had been reached at that date. What they represented to each other after that date does have significance, however, in the determination of that issue. It is significant (although again not conclusive) that, with the possible exception of Captain McNeil in December 2005, nobody on either side of the negotiations actually expressed the view that final agreement had been reached. All acted as though this had not occurred.
92 The demonstrated perceptions of the participants in the relevant events and the objective assessment of the evidence both lead to the same result. There was a course of negotiations that began in September 2004 and continued until March 2006, when they ended with disagreement about what the proposed agreement should provide as to its duration. That was a matter acknowledged by both AIPA and Qantas in this proceeding to be an essential term of any agreement between them. The case put by AIPA seeks to rule a line through that course of negotiations on 28 September 2005, and to contend that what was expressed in the Explanatory Memorandum amounts to a concluded agreement. The gap left by the absence of any agreement about duration is said to have been filled by an implied term. The implied term was first expressed in one form, and then, at a late stage and in the alternative, in another. It is not possible to say that there was an implied term in either form. Neither can be said to be so obvious that it goes without saying. Both are among a range of possible provisions that might equally well have been made for duration. None of the possibilities stands out from within the range as the obvious one. As a matter of fact, the continuation of negotiations makes it impossible to draw the line proposed by AIPA. The result is that no concluded agreement was ever reached. To the extent to which it is based on such an agreement, AIPA's claim in this proceeding must be dismissed.
93 In deference to the full argument about other issues related to AIPA's contract claim, and in case an appeal court should take a different view about the existence of a concluded agreement, I should state briefly my views about three other issues: whether the parties, if they did reach a concluded agreement, intended it to be legally binding; whether AIPA suffered loss and damage from Qantas's failure to comply with the terms of the agreement; and whether any remedy other than damages should be granted in the event of a finding that there was breach.
94 As to whether the parties intended to create a legally binding agreement, or an agreement binding in honour only, there are factors pointing in both directions. The refusal of Qantas to enter into a deed, accepted by AIPA, and the choice of "memorandum of understanding" as the title of the document, again accepted by AIPA, suggests that there was no intention to create legal relations. The title is not conclusive, however. The course of negotiations, particularly the detailed attention given by both parties to the precise wording of the document, tends to suggest that they were looking towards the letter, rather than merely the spirit, of an agreement, and therefore towards enforceability. Again, this is not conclusive. Nor is the history of the provisions that were being transferred from EBA6 into the memorandum of understanding. When they were first negotiated as part of EBA5, and carried into EBA6, the non-pertaining provisions were assumed to be enforceable. Following Electrolux, the parties were of one mind that the non-pertaining provisions were, at least potentially, unenforceable at law. This potential unenforceability and its possible effect in jeopardising the certification of EBA7 constituted the motivation for placing the non-pertaining provisions in another document. In these circumstances, it is difficult to say that the history of the provisions gives a clue either way as to whether the parties were agreed that the provisions should be legally enforceable or binding in honour. What seems to me to be the decisive factor in favour of legal enforceability is the agreement about the clause relating to the sharing of legal liability. Once it was realised that Qantas's compliance with the non-pertaining provisions, in a document outside EBA7, could place Qantas in a difficult position in the event of conflict between its obligations under EBA7 and its obligations under any separate agreement, the parties had a choice. They could have chosen expressly to make the memorandum of understanding binding in honour only, and liable to give way in the event that any actual conflict appeared. Alternatively, they could have done what they did, which was to assume that such conflict would occur and to make provision for the sharing of any liability flowing from it. This agreement suggests to the objective observer that both parties regarded the obligations under the transferred non-pertaining provisions as legally binding, so that provision needed to be made for the actuality of conflict between those provisions and the provisions of EBA7. For this reason, if it had been necessary to do so, I should have had little difficulty in finding that the agreement between AIPA and Qantas, to be expressed in the memorandum of understanding, was legally binding.
95 The question of damage flowing from Qantas's non-observants of the agreement is more difficult. It is necessary to detail some further facts. The claim consists of two elements. One is the salary of Peter Somerville, who was engaged as the General Manager of AIPA from 24 April 2006. The second is a payment made by AIPA to Captain Woods, designed to compensate him for the failure of Qantas to pay his salary at the rate designated for the President by cl 46.2 of EBA6.
96 At the same time as Captain Woods became President of AIPA, on 7 November 2005, Captain McNeil became Secretary, Captain John Dowe Assistant Secretary and Captain Andrew Percival Treasurer. The new regime was determined to reform the manner in which AIPA was administered. At that time, Ms Starke was employed as Legal Counsel and Industrial Relations Manager. Attached to her written contract of employment, dated 17 May 2000, was a schedule of duties, setting out the following duties and responsibilities:
· Advise the President and COM generally on industrial issues
· Negotiate industrial and employment matters affecting technical aircrew
employed by Qantas Airways Limited and provide relevant documentation
· Assess, prioritise and coordinate all industrial relations matters as they arise
and develop
· Advise the President, Executive and COM on corporate governance and
organisational compliance issues, including reporting and accountability
issues, professional indemnity insurance
· Coordinate and prepare documents and returns required under the relevant
legislation for the Association and AIFEA
· Generally advise the Association's members on industrial/employment law
issues
· Represent technical aircrew in grievances & disciplinary matters
· Represent the Association and provide advocacy in relevant jurisdictions
(including the AIRC, IRC (NSW) and the Federal Court of Australia)
· Supervise and appraise industrial relations staff
· Supervise and appraise administrative support staff
· Manage all human resource issues
· Assess need for outsourcing matters for professional opinions/assistance
· Assess and monitor ongoing educational and professional needs of industrial
relations staff and administrative support staff, including attendances at seminars/workshops/professional functions
· Monitor office expenditure
· Assess and monitor subscriptions to professional publications
97 As Ms Starke said in her evidence:
Essentially my role was one of a general management role for the office and staff and within that overarching management role I looked after a number of separate categories, legal and industrial relations matters, administrative matters, going to compliance, corporate governance matters, reporting to the board, reporting to the committee of management I should say which met every month.
By November 2005, Ms Starke's salary package was $292,723.
98 It is apparent that Ms Starke's responsibilities were substantially wider than the title of her position suggested. When Captain Woods and his team took office, they intended to make substantial changes to the way in which AIPA was administered. Those changes involved utilising cll 45 and 46 of EBA6 and the related provisions, so as to make best use of the AIPA elected officers in the day-to-day management of AIPA. According to Captain Woods's calculation, cll 45 and 46 and the related provisions of EBA6 made available to AIPA the equivalent of the full-time services of two pilots, who would be paid by Qantas. It was intended to establish a secretariat in the office of AIPA. One of the full-time equivalent positions would be shared between Captain McNeil, Captain Dowe and Captain Percival, who would run the secretariat. The other full-time equivalent position would be shared between Captain Woods and a Vice-President. The intention was that the officers would be more directly involved in the affairs of AIPA. Captain Woods proposed that Ms Starke's role should be recast as that of General Counsel, and that she would be engaged more than she had been in the representation of AIPA and its members in courts and tribunals. There appears to have been a disagreement between Captain Woods and Ms Starke about her reassignment. On 17 November 2005, the day after she had appeared for AIPA in the Commission to oppose the certification of EBA7, Ms Starke was dismissed from her employment.
99 On 18 November 2005, Captain McNeil sent a memorandum to all AIPA staff and Committee of Management members, detailing the nature of the restructure that was proposed. Mr Jennings was to head an industrial advocacy unit. One other person was named to be part of this unit as a consultant and the memorandum said that other experienced officers would be expected to join the unit in 2006. The legal unit was to remain in place "as a functional unit separate from, but reporting directly to, the Secretariat." Four persons, including Ms Starke and Ms Jensen were named as working in the legal unit. Another named person was to be personal assistant to the President and the head of the secretariat. Two more were described as having modified roles within the new structure. The names of the Accounts Manager, the Communications Coordinator and the Administrative Assistant (Communications) were also given. It was made clear that "All administration management, tasking and coordination are now the responsibility of the A.I.P.A.'s Secretariat." The legal and industrial advocacy units and the office administration were all to report to the secretariat.
100 Following the certification of EBA7, Qantas ceased to approve applications by pilots for relief from flying under the Association Business Provisions. Initially, both Captain McNeil and Captain Woods were on leave in November, and were able to devote their leave time to working in the AIPA office as planned. Thereafter, each had some sick leave. Captain Woods injured his knee and was on sick leave for approximately six months from some time in January 2006. In addition, each utilised rostered days off to perform work for AIPA. When Captain McNeil had to return to regular flying, he continued to provide as much assistance as he could until the end of March 2006, when he resigned as Secretary of AIPA. In his evidence, Captain Woods characterised Captain McNeil's resignation as "for family reasons and for reasons that I appointed Mr Somerville as a general manager". Captain Dowe also spent time in the office regularly and continued to do so until June 2007. So did Captain Percival, to the extent of approximately one day per week over the first 12 months, although it is not clear whether he continued to work in the AIPA office after that time.
101 Mr Somerville commenced work as General Manager of AIPA on 24 April 2006, although the terms of his contract of employment were not finalised until 7 July 2006, when a written contract was signed. From April until June or July 2006, he worked on a part-time basis. Thereafter, he worked full-time. Mr Somerville's salary was calculated in accordance with a formula set out in the contract of employment, based on hourly rates payable "to B744 First Officers". Mr Somerville's salary was approximately $175,000 per annum. Attached to his contract of employment was a schedule containing the position description. The position was described as "General Manager & Industrial Relations Manager". There was a list of duties and responsibilities as follows:
· Advise the President and COM generally on industrial and administrative
issues;
· Negotiate industrial and employment matters affecting technical aircrew
employed by Qantas Airways Limited and provide relevant documentation;
· Advising on Awards, Certified Agreements, industrial agreements and related
documents (including employment manuals, protocols, work practices and
policy manuals) governing the employment of the Association's members;
· Assess, prioritise and coordinate all industrial relations matters as they arise
and develop;
· Advise the President, Corporate Governance Committee and Committee of
Management on corporate governance and organisational compliance issues,
including reporting and accountability issues, professional indemnity
insurance;
· Coordinate and prepare documents and returns required under the relevant
legalisation [sic] for the Association and AIPEA;
· Generally advise the Association's members on industrial/employment law
issues;
· Represent technical aircrew in grievances & disciplinary matters;
· Represent the Association and provide advocacy in relevant jurisdictions
(including the AIRC, IRC (NSW) and the Federal Court of Australia);
· Supervise and appraise industrial relations staff;
· Supervise and appraise legal staff;
· Supervise and appraise administrative support staff;
· Manage all human resource issues;
· Access need for outsourcing matters for professional opinions/assistance;
· Access and monitor ongoing educational and professional needs of industrial
relations staff and administrative support staff, including attendances at
seminars/workshops/professional functions;
· Monitor office expenditure;
· Assess and monitor subscriptions to professional publications;
· Document drafting and professional database consolidation;
· Editorial functions associated with the Association's communications to its
members;
· Assisting generally with organisational compliance matters; and
· Preparation of written reports on work in progress, as required.
102 It will be seen that the majority of these duties and responsibilities are identical or very similar to those found in the position description attached to Ms Starke's contract of employment. The tenor of Captain Woods's evidence was to minimise the range of duties Ms Starke performed and maximise those of Mr Somerville. He described the duties and responsibilities listed in Mr Somerville's contract of employment as the minimum that Mr Somerville was required to perform. I take the summary of Ms Starke's areas of responsibility, which I have set out in [96] above, and her evidence of what she did, as closer to the fact than Captain Woods's account.
103 In effect, when Captain Woods and his team came to office, Ms Starke was the Chief Executive Officer of AIPA. From July 2007 Mr Somerville was the Chief Executive Officer of AIPA. His remuneration was significantly less than that of Ms Starke.
104 AIPA's claim for damages equal to Mr Somerville's salary is based on the proposition that his appointment was necessary because Qantas's failure to give effect to the provisions formerly in cll 45 and 46 and the related provisions of EBA6 made it impossible for AIPA to operate according to its planned restructure, and therefore necessitated Mr Somerville's engagement. I do not think that the evidence establishes this causal link. In his evidence-in-chief, Captain Woods was asked, in the context of the proposed restructure, whether any consideration was given to employing anyone in the role of General Manager or Chief Executive Officer. His answer was:
Look, there was some vague - the idea was floated. Had - if the association developed as was expected, then down the track, we believed that the workload on the secretariat and the office of the president would be such that we could justify the employment of a general manager.
105 Captain Woods was then asked if this option was taken up, what was intended for the President and the Secretary. He said "different work". He then explained the nature of the different work contemplated. There was no evidence that the restructuring had not led to a situation in which there was a need, or a desire, to appoint a general manager by the time of Mr Somerville's appointment. Although Captain McNeil's memorandum of 18 November 2005 was quite specific as to the roles of a number of named people, there was no evidence as to who was employed in the AIPA office or what their duties and functions were by April or July 2006. Legal work had been outsourced to a law firm, and lawyers were no longer employed. There was no specific evidence of the work that Captain McNeil, Captain Dowe and Captain Percival had done in the AIPA office, and how this compared to the duties and functions of Mr Somerville. There is nothing that would enable a determination to be made of whether Mr Somerville's range of duties extended beyond that of the elected officers when they worked in the office. Captain Woods delegated some of his functions to Mr Somerville.
106 In addition, to facilitate his own involvement in the administration of AIPA, despite the failure of Qantas to apply EBA6 provisions that were not included in EBA7, Captain Woods was able to negotiate with Captain Manning an arrangement under which Captain Woods would only apply for and be allocated two-thirds of the normal pilot's allocation of duty. This gave him some time to attend to the business of AIPA. When Qantas threatened to revoke this arrangement in July 2007, Marshall J granted an interlocutory injunction to preserve the arrangement until the hearing and determination of this proceeding or further order. The question whether all or any of Mr Somerville's salary can be regarded as loss by AIPA attributed to Qantas's failure to give effect to the provisions remains open so far as the evidence goes.
107 The issue of the amount paid by AIPA to Captain Woods to make up for the refusal of Qantas to pay him at the rate of salary required for the President can be dealt with more easily. The payment was an entirely voluntary one by AIPA, which was under no obligation to reimburse Captain Woods for any loss of entitlement under the former cl 46 of EBA6. The letter, dated 3 August 2006, from Captain Dowe (as AIPA Secretary) to Captain Woods was phrased relevantly as follows:
As you are aware, AIPA is in litigation with Qantas regarding our claim that Qantas is obliged to support the cost of office of AIPA President. In its March 2006 meeting, the COM resolved that AIPA will bear this cost and seek reimbursement from Qantas as part of the litigation.
Until now the office of President has not been entitled to remuneration, but in view of the fact that Qantas has withdrawn its financial support for the office of President, AIPA is pleased to offer you an annual remuneration package as President in the amount of $4,500.00 payable in fortnightly instalments.
108 It is my view that the voluntary nature of the payment is sufficient to break any causal link between Qantas's failure to give effect to the provisions concerning the salary of the President, even if enforceable, and the cost to AIPA of making up Captain Woods's salary.
109 For these reasons, I am of the view that, even if a binding agreement existed between Qantas and AIPA with respect to the application of the removed provisions, AIPA has failed to prove that it suffered loss and damage as a result of any breach of that agreement or, if it has, has failed to prove the amount of that loss and damage.
110 There was also a claim for specific performance of the alleged contract. In the course of argument, it became clear that, in the exercise of the ordinary discretion attaching to the consideration of remedies in the nature of specific performance, the Court would be very unlikely to order that Qantas perform the terms of the supposed agreement containing cll 45 and 46 and the related provisions of EBA6. One issue is the difficulty of enforcing those provisions in the light of Qantas's conflicting obligations under EBA7. It would be unlikely that the Court would order Qantas to allow the AIPA President priority in bidding for scheduled flights, when it had obligations to conduct its rostering process in accordance with EBA7. Similarly, it would be unlikely that the Court would impose on Qantas potential liability for contempt of court when making its decisions about operational requirements following the making of applications for relief from flying. In the course of submissions, AIPA refined its specific performance claim to one seeking an order that Qantas execute an agreement in the terms of the relevant clauses of the Explanatory Memorandum dated 28 September 2005, with the addition of an appropriate duration clause. As a matter of discretion, I would also have refused to make such an order. By the time of the trial of the proceeding, EBA7 had passed its nominal expiry date. I was told by counsel that the parties were engaged in prolonged negotiations for an agreement to replace EBA7. In the circumstances, it seemed unlikely that any agreement in terms of cll 45 and 46 and the related provisions of EBA6 would have a significant time to run, at least in terms of the duration clause primarily advanced by AIPA.
111 For all of the above reasons, AIPA's amended application must be dismissed, so far as it seeks orders dependent upon the establishment of the existence of a binding contract between AIPA and Qantas.