Consideration
147Any finding of unfairness must relate to the contract or arrangement and not the conduct of the parties. In other words, whilst conduct may be unfair, in order to find unfairness under s 105 and s 106 of the Act the unfair conduct must render the contract or arrangement unfair: see Sydney Water Corporation Ltd v Industrial Relations Commission of NSW [2004] NSWCA 436; (2004) 61 NSWLR 661 at [25] and [47].
148The effect of Sydney Water was explained by the Full Bench in Bowman v Ricegrowers Limited (formerly Ricegrowers' Co-operative Limited) [2007] NSWIRComm 204; (2007) 167 IR 325 at [66]-[70] and [72]:
[66] ... Mason P found, in conformity with longstanding authority, that the availability of an action for breach of contract did not preclude relief under s 106 (at [31]); that remedies under s 106(3) and (5) were available even though applied after termination and/or against a party to the contract who has acted in breach or repudiation of its terms (at [28]); and that unfairness, for the purposes of s 106, may stem from what the contract failed to provide, for example as regards termination procedures (at [25]). Thus, a contract may be found to be unfair because it permits termination that is unfair and discriminatory (at [32] and see Walker v Industrial Court of NSW (1994) 53 121 at 149). In such cases, no remedies are available in the general law for breach of contract.
[67] Again, in conformity with longstanding authority, in Sydney Water the Court of Appeal also held that the Commission may examine not merely the contract (or arrangement) as originally negotiated, but also the manner in which it worked out and operated between the parties to it (at [26]). The remedies granted by the Commission may include the payment of monies under a contract reformulated by the Commission (at [28]), although all remedies must stem from a finding that the contract (or arrangement) is or has become relevantly unfair (at [29]).
[68] However, Mason P (with whom McColl JA agreed in this respect, but not Hodgson JA) found that he was:
...unable to conceive how a contract allows or fails to prevent conduct that is in contravention or fundamental breach thereof, whether or not that contract is unfair. To be contravening or repudiatory the conduct must be in defiance of the contract exposing the party at fault to a range of adverse consequences under the general law (at [35]).
[69] His Honour had less difficulty in concluding that the Commission had jurisdiction to deal with a contract that failed to make appropriate provisions for addressing the consequences of conduct that was, or was arguably, in breach (at [36]), provided the Commission was able to conclude that the remedies of the general law were "unfairly deficient" in their application to the contract.
[70] Mason P found that even though s 106 was not excluded merely because a party was in breach of contract, it did not follow that "the contract of employment is unfair because or whenever it leaves the employee to remedies under the general law" (at [40]). However, his Honour concluded (at [42]):
On the other hand, one can envisage arguments about the unfairness of non-statutory employment law that permits dismissal without procedural fairness or that enables the "innocent" party to be discharged from future performance entirely in certain circumstances. From this standpoint, the idea that the Commission could find a particular contract of employment unfair because it did not contain a positive regime of fair investigation pre-dismissal becomes less problematic, with the consequence that it is easier to envisage that Parliament may have committed such inquiry to the Commission by s 106.
...
[72] It follows in our view, that the decision in Sydney Water is not of assistance to the respondent in these proceedings. The mere fact that the respondent may be in breach of the contract for summarily dismissing the appellant in circumstances where the contract provided for one month's notice does not, of itself, exclude the jurisdiction of the Commission. Where the express provision of the contract providing for notice was unfair in consequence of its own terms or because of the way the contract worked out, having regard, inter alia, to Mr Bowman's length of service with Ricegrowers, his seniority, experience, level of remuneration, personal circumstances or his contribution to the employer's business, then the contract may be reformulated so as to make the provision for notice fair, even though Ricegrowers may be in breach of the provisions of the contract regarding notice. Thus, a contract may 'permit' - in the sense used by Sheller JA (with which Meagher JA agreed) in Walker - certain conduct by expressly sanctioning it (see Sydney Water at [33]) and such conduct may be found to be unfair. In the present case, the contract provided for one month's notice of termination irrespective of the circumstances of Mr Bowman's employment at termination that, as a matter of fairness, required a period of notice of longer duration. Having found unfairness the Court may then assess compensation under s 106(5).
149In relation to the first aspect of the first limb of the applicant's contentions, the applicant's case was that in the absence of a term in the contract that any complaint made by the applicant in regard to her role would not prejudice her application for the position of AEO, it permitted the respondent to regard the making of complaints as counting against the applicant in what was an unfair selection process that resulted in the applicant failing to gain the permanent AEO position. That rendered the contract unfair.
150There are very real concerns about the events that led up to the decision by Ms Coddington not to renew Ms Brown's employment contract in April 2010 and about the interview and selection process itself:
(a) Ms Coddington advised Ms Brown in February 2010 that the permanent AEO position would probably be advertised at the end of the term. Nothing was said at that stage about not renewing Ms Brown's employment contract;
(b) in about February or March 2010, while the applicant was on long service leave, Mrs Coddington compiled a contemporaneous handwritten note about the applicant, which included personal and professional issues Mrs Coddington had with the applicant, including criticisms of the applicant, for example, "long breaks outside school", "dobbed me in about furniture twice!", can't look you in the eye when talking", "Wants Les [Ms Brown's partner] at all meetings!!", "Intimidated Lesley while I was at Principal's Conference...", "no enthusiasm at work" and noted that Ms Brown's temporary employment would finish at the end of Term 1. The note asked rhetorically whether Ms Coddington had to employ the applicant;
(c) Ms Brown filed a complaint against Ms Coddington on 9 March 2010. Ms Coddington became aware of the complaint via Mr Loxley before 25 March 2010. This is inconsistent with Ms Coddington's evidence that she became aware of complaints against her after 25 March 2010. On that date, when Ms Brown was still absent from work because of floods in the area, Ms Coddington had a telephone conversation with Ms Brown. Even on Ms Coddington's version of the conversation Ms Brown was advised that the permanent AEO position would not be advertised until the Principal's position was filled and that the applicant's temporary appointment, which was coming to an end in April 2010, would not be extended because "we were" close to advertising the permanent AEO position;
(d) Ms Coddington was appointed to the Principal's position in mid-April 2010;
(e) the AEO position was advertised in May 2010. The applicant and Ms Annis-Brown were the only applicants for the position. In June 2010, the applicant was notified that she was unsuccessful in securing the permanent AEO position at the School;
(f) Ms Coddington did not sit on the selection panel and maintained she did not discuss the candidates with anyone on the selection panel, but I note she asked Mr Hall to perform the convenor role;
(g) according to the evidence of Mr Hall and Mr Borham's evidence regarding what Mr Hall had told him, Ms Brown was not impressive at the interview; Ms Brown did not get the job because of her "poor interview". Ms Brown's experience and her four years' good performance in the role was not taken into account at all, which, in my opinion, was a major flaw in the interview process. Regardless of whether Ms Brown nominated a referee, the question of her experience, performance and time in the role, all of which were very much in favour of her being selected, should have been followed up by the selection panel. Ms Annis-Brown did nominate a referee, Ms Coddington, who offered strong support for Ms Annis-Brown's application notwithstanding that Ms Annis-Brown's experience in the role of AEO was very much less than that of the applicant;
(h) the interview and selection process disadvantaged Ms Brown;
(i) Ms Brown was advised in June 2010 that she was unsuccessful. Presumably at about the same time Ms Annis-Brown was advised she had been successful. However, Ms Annis-Brown did not take up her appointment until September 2010. This is consistent with Ms Brown's evidence that on 25 March 2010 Ms Coddington told her "There isn't going to be an AEO next term." The reason for not having an AEO in second term was not explained. It could not have been because of a drop in student numbers. Nor could it have been because Ms Davis commenced as a second teacher in April 2010, as Ms Davis continued to be employed in that role after Ms Annis-Brown was appointed to the permanent AEO position in September 2010;
(j) on 3 June 2013, the final day of the hearing of the evidence, the respondent produced four pages of the recruitment file for the permanent AEO position. The applicant had first requested the recruitment file on 14 September 2011 under the Notice to Produce of that date and again under the Summons to Produce filed 16 November 2011. The notes taken by Mr Hall and other members of the selection panel recorded during the interviews of Ms Annis-Brown and the applicant were not produced by the respondent, nor were the application documents and other documents one might expect to find in recruitment files. The only explanation for not producing the whole file was that it was not in the respondent's possession or control at the time. That is difficult to accept given that it is most likely the respondent had an entitlement to control of the file and, therefore, an entitlement to possession and custody of the file. No explanation was given as to why, after so long, only part of the recruitment file could be produced. All this adds to the Court's concern about the validity, transparency and fairness of the interview and selection process.
151There are some countervailing considerations to the foregoing. First, there is Ms Coddington's evidence that it was not her intention to get rid of Ms Brown. In light of Ms Williams having relinquished the permanent AEO position and the staff freeze having been lifted on making permanent appointments, Ms Coddington decided, apparently in consultation with Mr Loxley, that she would not renew Ms Brown's temporary employment contract and would advertise the permanent AEO position. That was a perfectly reasonable position to adopt. Nevertheless, I consider there is a strong inference to be made that Ms Coddington was ill-disposed towards Ms Brown and that her preference was that Ms Brown should not be permanently appointed to the AEO role.
152Secondly, I should have regard to Ms Brown's conduct. It is clearly the case that Ms Brown felt a degree of animosity towards Ms Coddington and this had developed well before the events of March, April and May of 2010. Perhaps it was because Ms Brown had a close friendship with the previous Principal, Mr Tyson, a friendship that she was not able to establish with Ms Coddington and, instead, an animosity developed. But I am only speculating in that regard. I also have a lingering concern about Mr Parker's role and his persistent presence in any dealings between Ms Brown and Ms Coddington. Despite this, Mr Parker was not called to give evidence even for the purpose of collaborating Ms Brown's evidence, which was challenged by Ms Coddington. There was also the fact that the aboriginal community at Weilmoringle seems to have been divided, with Ms Brown in one family faction and Ms Annis-Brown in another. In that respect, Ms Brown stated in her affidavit:
[T]he Weilmoringle Aboriginal community is divided into two factions: the top end and the bottom end. Margarete [Coddington] had some contact with the top end: the tribe of Lesley Annis-Brown's family. She rarely had contact with the bottom end: my family's tribe.
153These matters may have contributed to the development of the poor relationship between Ms Brown and Ms Coddington.
154When one examines the various complaints made by Ms Brown against Ms Coddington one is driven to ask what was it about the matter that caused Ms Brown to be antagonistic towards Ms Coddington. In relation to the Thredbo excursion it appears that students may at least have seen Mr Coddington with only a towel wrapped around the lower half of his body. Ms Coddington denies the "red underpants" allegation. Accepting that what she had seen was an affront to Ms Brown's sense of decency and that it caused her concern for the children's sake, one would expect her to have immediately taken up the matter with Ms Coddington, but she did not. Ms Coddington somehow became aware of Ms Brown's concern and thereafter her husband walked to the showers fully clothed.
155Ms Brown eventually made a complaint about what occurred at Thredbo, but it was not until two years later on 21 April 2010, after her period of temporary employment had ceased. Mr Loxley said he never received the complaint, but one has to question Ms Brown's motives in seeking to make the complaint so long after the incident and following Ms Coddington's advice to her that the temporary employment contract would not be renewed.
156The fact that it was Mr Coddington who may have upset Ms Brown's sensibilities and in circumstances where Ms Brown did not raise the matter with Ms Coddington directly (and there was no evidence Ms Coddington took exception to Ms Brown complaining about the incident), makes it difficult to understand how that incident could have triggered any animosity towards Ms Coddington but it appears it may have and continued festering away in Ms Brown's mind for two years.
157Ms Brown formally complained about the Bathurst excursion, albeit not until three months after the event and, again, without raising it directly with Ms Coddington. The complaint was dismissed, with it being held Ms Coddington acted appropriately, an outcome with which I entirely agree.
158In the normal course it could be expected that if a person harboured a concern about an unaccompanied teacher taking one student shopping the person would raise it with the teacher immediately. Ms Brown did not do that. Perhaps there was some culturally based impediment to Ms Brown raising it directly with Ms Coddington, although I note in the telephone conversation between Ms Brown and Ms Coddington on 25 March 2010, Ms Brown did not feel constrained in calling Ms Coddington an arrogant pig. What is puzzling, however, is why Ms Brown took three months to lodge a formal complaint and why it generated any animus. The complaint was not about any inconvenience to, slight against or criticism of Ms Brown, but rather what Ms Brown perceived to be a contravention of the rule against teachers being alone with students.
159Ms Brown did complain that she had been bullied and/or harassed by Ms Coddington. The applicant claimed that Ms Coddington raised her voice in the conversation that occurred on 25 March 2010 concerning the applicant's future as an AEO. The telephone conversation may well have been a reason for Ms Brown to feel ill-disposed towards Ms Coddington, but it seems to me such feelings had developed well before 25 March 2010.
160The only other example of bullying was in 2009 when Mr Coddington allegedly made fun of the applicant in connection with an incident regarding the applicant's consumption of noodles that were allegedly contaminated. The respondent did not challenge Ms Brown's version of what occurred and so it may be accepted as accurate. When Mr Coddington did make fun of Ms Brown eating contaminated noodles, a foolish and inconsiderate jibe, apparently Ms Coddington was present. It may be accepted that this incident may well have generated ill feeling towards Ms Coddington. However, I also note it took Ms Brown six or seven months to complain and then only after she had been advised her appointment was not to be renewed.
161In my opinion, Ms Brown contributed to the poor relationship with Ms Coddington. It seems she preferred to file complaints about Ms Coddington and never once sought to settle any concern she had by speaking directly to Ms Coddington or by obtaining the assistance available under the respondent's Employee Assistance Program (EAP) in respect of interpersonal conflict.
162On the other hand, of course, evident from Ms Coddington's handwritten note prepared in February or March 2010, she clearly had issues with Ms Brown. I have the impression that Ms Coddington did make some attempt to deal with her concerns directly with Ms Brown but without success. Ms Coddington said in her evidence:
[A]round the beginning of 2009 I noticed a change in the applicant's behaviour and her enthusiasm at school began to noticeably decrease. The applicant was not as keen about being at school and would spend the majority of her recess/lunch breaks outside of the school. She would frequently refuse to meet with me to have discussions about work unless her partner was present.
163It would have been open to Ms Coddington to access the EAP, but it appears she chose not to do that.
164That Ms Brown contributed to the poor relationship with Ms Coddington does not excuse any prejudice visited upon the applicant by the respondent. However, whilst the inference is available that Ms Coddington was ill-disposed towards Ms Brown and her preference was that she not be permanently appointed to the AEO role, there is insufficient evidence to support a conclusion that on the balance of probabilities Ms Coddington or any other representative of the respondent sought to influence the selection process to such an extent that Ms Brown would not be selected.
165It will be recalled that the claim is that the contract was unfair because it did not contain a term that any complaint made by the applicant in regard to her role would not prejudice her application for the position of AEO. In the absence of this term, it was submitted the contract permitted the respondent to regard the making of complaints as counting against the applicant in what was an unfair selection process that resulted in the applicant failing to gain the permanent AEO position. There is a lack of evidence to show that any grudge held by Ms Coddington against Ms Brown because of complaints made by Ms Brown counted against the applicant in the selection process. That connection has not been made.
166In coming to this conclusion I have had particular regard to:
(a) of the circumstances leading to Ms Coddington's decision to advertise the AEO position including the fact she was ill-disposed towards Ms Brown;
(b) the fact that Ms Coddington requested Mr Hall to convene the selection committee;
(c) the fact that Ms Coddington provided Ms Annis-Brown with a strong reference;
(d) the unfair selection process; and
(e) missing documents from the recruitment file.
167However, I am unable to draw an inference from these matters that Ms Coddington or anyone else influenced the selection committee to prefer Ms Annis-Brown to Ms Brown because Ms Coddington was ill-disposed towards Ms Brown.
168The second aspect of the first limb of the applicant's unfairness contentions is, however, made out. That is, the contract did not contain a term that in circumstances where the applicant had performed adequately in the position of AEO over a period of years, that fact would be given significant weight in assessing her application for permanent appointment in that position. In the absence of this term the contract permitted the respondent to disregard the applicant's good performance in conducting what was an unfair selection process for the permanent AEO position.
169In circumstances where Ms Brown had performed the role of AEO under successive temporary contracts over a period of four years; where her performance was rated good in that role; where the applicant failed in her application for the job merely because she did not perform well in the interview (on my observation of Ms Brown in the witness box this may have been because of cultural influences), but where the selection committee failed to follow up the interview of Ms Brown by making inquiries as to her experience and performance in the temporary AEO role; and where the candidate selected for the role had significantly less experience in the AEO role than Ms Brown, the selection process was patently unfair and rendered the contract unfair.
170The third aspect of the applicant's first limb of her unfairness contentions was that the contract did not contain a term that in considering the applicant's suitability for the full-time position of AEO the lack of employment opportunity for her in Weilmoringle would be a consideration. In the absence of this term it permitted the respondent to disregard the lack of employment opportunities in conducting an unfair selection process for the permanent AEO position.
171The evidence established a very distinct lack of employment opportunities in Weilmoringle. However, I am not prepared to accept there was any unfairness because the contract did not contain a term relating to lack of employment opportunities. A term in the contract that lack of employment opportunity should be a consideration would visit unfairness on any other applicant who may suffer the same disadvantage as Ms Brown in being able to find employment. The unfair contract provisions are about providing relief against unfairness not creating it.
172The fourth aspect of the applicant's first limb of her unfairness contentions was that the contract did not contain a term that in circumstances where the applicant had carried out the functions of a qualified teacher, she would be given special consideration in her application for a full-time AEO position. As it will be seen I have found that the work she was performing was not the work of a qualified primary school teacher. Accordingly, no unfairness arises.
173In relation to the first limb of the applicant's unfairness contentions I find the contract was unfair in that the contract did not contain a term that in circumstances where the applicant had performed adequately in the position of AEO over a period of years, that fact would be given significant weight in assessing her application for permanent appointment in that position. In the absence of this term the contract permitted the respondent to disregard the applicant's good performance in conducting what was an unfair selection process for the permanent AEO position. I will vary the contract accordingly.