The Grounds for Termination under Section 37
67 The second issue raised by these appeals, which impacts on the third relating to the content of procedural fairness, is the basis upon which the power to terminate the Secretary's appointment under s 37 can be exercised. It was submitted for Mr Barratt that the subject matter of the power strongly suggests that it is to be exercised only for cause constituted by some fault or incapacity of a fundamental nature. The subject matter is termination of what is specifically described in s 37 as a "fixed term" appointment. It is not termination of an appointment expressed to be at will. The power was characterised by Mr Barratt's counsel as final and devastating in its effect. The propounded construction was said also to be strongly supported by the words in s 37(7) "by reason only". The stress on the word "only" is that it is not enough that one of these other sets of provisions has been brought into play by serious misconduct or commissions of an offence. There must be something in addition. This would suggest, it was said, that the ground relied on must be serious indeed. The Governor-General's power therefore can only be exercised, the argument ran, if there are facts and grounds to justify it. Parliament did not intend that notwithstanding a fixed term appointment, the appointment could be terminated at pleasure. Also invoked were the objects set out in s 6 of the Act.
68 It was submitted on behalf of Mr Barratt that there can be no failure on the part of a Secretary to fulfil his duty as an officer without some finding of fault on his part. Reference was made to s 56(f)(ii) which includes, within the concept of failure to fulfil his duty as an officer, a failure to comply with the terms and conditions upon which he is employed. So it was submitted that if, as in the present case, the Minister asserts that he has lost trust and confidence in the ability of the incumbent to perform the duties of Secretary he should proceed under s 57(2). The section, it was said, is specifically directed to Secretaries, covers the subject matter of their inability to fulfil their duties and provides a procedure for dealing with it. The holding of a subjective view by the Minister on such a matter, not grounded in any reasonable belief, could not have been intended to provide a means of avoiding the procedural protections of s 57. Alternatively, it was submitted that any ground of termination under s 37 must be based on fault in the Secretary, for s 37(7) carves out from the power under s 37(5) the power to terminate an appointment on disciplinary grounds only, dealt with separately under s 58. In so doing, it was submitted, s 37(7) makes it clear that for there to be a "reason" or "ground" justifying dismissal by the Governor-General, there must be something over and above that which would justify disciplinary action under Division 6. The clear contemplation of s 37(7) was said to be that for fault to constitute a "reason" or "ground" for termination, the fault must be fundamental and that requirement was not met by fault judged upon the subjective view of the Minister.
69 Reliance was also placed upon ss 76D and 76E. It was submitted that the power conferred by s 37(5) in relation to fixed term appointees is analogous in consequence to the power conferred by s 76D, rather than that conferred by s 76E. And what s 76D shows, it is contended, is that a Secretary who is allegedly inefficient or incompetent can only be terminated after investigation and report by the Board. It was said to be illogical that a fixed term appointment could have been intended to be subject to termination on such a ground under s 37 without a similar procedure, or without the ground being made out in fact.
70 In our view, the touchstone for the consideration of these submissions is again the language of s 37 and its statutory context. The section provides for fixed term appointments. It is submitted by the Solicitor-General that the meaning of that term is to be derived from the content of the section itself, including its provision for termination. But the language which describes appointments under s 37 as "fixed term" must be given weight preferably in accordance with its ordinary meaning. It is incompatible with the notion of a fixed term appointment that it is terminable at pleasure - see the observations of von Doussa J on the words "contract of employment for a specified period of time" in Article 2 of the Termination of Employment Convention, Andersen v Umbakumba (1994) 126 ALR 121 at 125 - 126 and see Cooper v Darwin Rugby League (1994) 57 IR 238 per Northrop J.
71 The procedural requirements of s 37 comprising a report from the Secretary to the Department of the Prime Minister and Cabinet to the Prime Minister and a recommendation from the Prime Minister to the Governor-General are powerful indicators of the seriousness with which the legislature viewed termination of an appointment to the office of Secretary. This is reflected in other provisions of the Act which have been mentioned already in relation to termination processes affecting this class of public office. While it is possible to argue that termination at pleasure is compatible with such provisions, the better view, in our opinion, is that the requirement for report and recommendation contemplates that some positive ground or grounds for termination will be identified before the power is invoked. The report must have some subject matter, and plainly the recommendation of the Prime Minister, while not bound to adopt the report, is intended to be made following a consideration of its contents. The prohibition in s 37(7) requiring that the power of termination not be exercised "by reason only" of the fact that it is based on misconduct or criminal convictions which attract the operation of Division 6, also supports the implication that there will be some identifiable ground or grounds for termination under s 37. Such grounds, it is to be noted, may include grounds of the kind contemplated in Division 6 provided they are not limited to such grounds.
72 In our opinion therefore, termination of a fixed term appointment under s 37(5) must be based on some ground or grounds. A fixed term appointment is not held at pleasure. Moreover, the discretion to terminate which is conferred by s 37 is to be exercised like all statutory discretions "according to the rules of reason and justice, not according to private opinion; according to law, and not humour, and within those limits within which an honest man, competent to discharge the duties of his office, ought to confine himself" - R v Anderson; Ex parte Ipec-Air Pty Ltd (1965) 113 CLR 177 at 189 (Kitto J); R v The Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45 at 49.
73 The question then arises, what, if any, constraints are there upon the range of grounds which may be relied upon in the exercise of the power under s 37(5)? The answer, in our opinion, is to be found in s 6 in defining the chief object of the Act. The discretion to terminate must be exercised to protect, maintain or advance the efficient, equitable and proper conduct, in accordance with sound management practices, of the public administration of the Australian Government. The range of permissible purposes of termination in advancement of that object is wide. It is not confined to considerations of management or administrative issues, but is referable also to the subject matter of the administration which is the Australian Government. So political and policy considerations may be legitimate aspects of the basis upon which the power may be exercised. The discretion thus widely defined will nevertheless exclude criteria for termination which are extraneous to those objectives or otherwise capricious or whimsical.
74 It follows that we reject the contention made on behalf of Mr Barratt that termination can only be effected under s 37(5) where there has been some "fundamental fault" demonstrated on the part of the Secretary. On that basis, senior counsel for Mr Barratt had sought to equate the statutory grounds for termination to those required by the common law as grounds for dismissal of an employee - conduct incompatible with the fulfilment of an employee's duty on important matters or involving an opposition or conflict between the employee's interest and duty to the employer, impeding the faithful performance of the employee's obligations or destructive of the necessary confidence between employer and employee - Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 at 81. But there is nothing in the language of s 37 that suggests that termination is to occur only where unsuitability or unfitness for office or other culpable conduct is established. The permissible purposes of termination under s 37 run far wider than those served by that ground. There is no basis demonstrated for importing into the statutory scheme common law principles relating to the lawful termination of employment as limiting the circumstances in which termination of the appointment of a Secretary can occur under s 37.
75 Sections 57 and 58 deal with termination for misconduct or for the commission of criminal offences. The definition of misconduct in s 56 encompasses a range of acts or omissions, each of which involves an element of fault. It is reasonable to suppose that the classes of misconduct or criminal offences within that range which will attract the ultimate sanction of termination will be at the more serious end of it, and involve significant culpability on the part of the officer concerned. An adverse finding under those provisions associated with termination of office, quite apart from the sanctions it may attract, will also significantly affect the reputation of the individual concerned. It is not surprising that there should be a special scheme of procedural fairness in those circumstances. But its existence in relation to termination for misconduct or criminal offences does not support an implication that termination under s 37 can only be for some form of misconduct, albeit more "fundamental" than that covered by ss 57 and 58. The clear intent of s 37(7) is that, if the only reason for action to be taken under s 37(5) is conduct the subject of ss 57 and 58, s 37(5) must not be resorted to, as to do so will undermine the carefully prescribed statutory procedures in Division 6 to deal with such conduct. Sections 57 and 58 lend no support to the submission on behalf of Mr Barratt on this point. Nor do ss 76D and 76E, which deal with the retirement and termination of office of Secretaries appointed other than for fixed terms, support any such implication.