Burgess and Ors v Mount Thorley Operation Pty Ltd

APPELLANT Mr S J Howells of counsel Solicitor: Mr R L Whyburn R L Whyburn & Associates LEGAL REPRESENTATIVES: RESPONDENT Mr J J Dixon SC of counsel Solicitor: Mr G Watson Freehills

JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: WRIGHT J, President WALTON J, Vice-President BOLAND J Wednesday 28 July 2004

Matter Nos IRC 3321-3334 of 2002 and 1369 of 2003 BURGESS AND ORS v MOUNT THORLEY OPERATIONS PTY LTD Applications by Michael John Burgess and others for leave to appeal and appeal against decisions of Justice Schmidt given on 21 May 2002 and 13 February 2003 in Matter No IRC 3614 of 1998 and other matters

JUDGMENT OF THE COURT [2004] NSWIRComm 180

1 The appellants had been employed by the respondent at the Mount Thorley open cut coalmine in Singleton, New South Wales in various staff or supervisory positions, with service ranging from 5 to 23 years. The appellants were made redundant in November 1997 following a restructuring of the Mine's operations. An Award ("the 1990 Award") and Enterprise Agreement ("EA") of the Australian Industrial Relations Commission ("AIRC") had applied to the employment of the appellants.

2 Having been made redundant the appellants sought relief pursuant to s 106 of the Industrial Relations Act 1996. In a judgment given on 21 May 2002, Schmidt J dismissed the appellants' summonses for relief on the basis that there was no jurisdiction in the Commission in Court Session to make the orders sought due to what her Honour regarded as inconsistencies between the orders sought by the appellants and the 1990 Award and EA made by the AIRC: Burgess & Ors v Mount Thorley Operations Pty Limited (2002) 115 IR 13. The appellants appealed. 3 In a judgment given on 12 December 2003 (Burgess and Ors v Mount Thorley Operations Pty Ltd [2003] NSWIRComm 432) we rejected the principal bases of the appeal but reserved a number of matters, including costs, for further consideration. In doing so we made the following main findings at [174]: (1) That neither the Award nor the EA had been incorporated or imported into the appellants' employment contracts with the respondent. (2) That neither cl 24 of the Award nor a system of seniority based on length of service at the Mine and in particular classifications was part of the appellants' contracts of employment and other arrangements. (3) That cl 37 of the EA did not form part of the appellants' contracts of employment or arrangements or collateral arrangements. (4) That Schmidt J was correct in declining to entertain the appellants' claim to vary the appellants' contracts of employment or arrangements or collateral arrangements to include a system of seniority and assurances about job security. (5) That there were no arrangements or collateral arrangements between the appellants and the respondent within the meaning of section 106 of the Industrial Relations Act 1996 (NSW) capable of being varied to incorporate the alternative claims identified in the appellants' closing submissions before Schmidt J. The claim for an order in par A2 of the summonses is, therefore, not available to the appellants. (6) That the appellants did not establish on the balance of probabilities the respondent, from the outset, had a secret strategy to downsize the workforce and that this strategy was deliberately kept from the appellants at the time the EA was negotiated. (7) That the evidence does not support a finding that the respondent's conduct was unfair in relation to the giving of assurances regarding job security at the time the EA was submitted for approval by the appellants in September 1996. (8) That no order in the form of the orders sought in pars D2 and D3 of the summonses is available to the appellants. (9) That the orders sought in pars A1 and A4 of the summonses are the only primary orders available to the appellants that would underpin an order for the payment of money under s 106(5) of the Act. (10) That an order wholly voiding the employment contracts, especially from commencement, is completely inconsistent with a case the central element of which was that employments contracts were unfair because the respondent breached terms relating to seniority and job security. (11) That an order wholly voiding the employment contracts would mean that there was no relationship of employer and employee between the respondent and the appellants thereby depriving the federal industrial instruments, depending as they do on such a relationship being in existence, of any application. The inconsistency between such an order and the federal instruments is obvious. It would negate completely the rights, obligations and privileges conferred by the EA and Award. (12) That in the alternative, the claim in par A1 of the summonses seeks to have the employment contracts declared partly void either from commencement or some other time. No particulars were provided as to how this was to be done. It is difficult to see how an order declaring the employment contracts partly void could be made in the circumstances of this case without encountering the obstacle of constitutional inconsistency. But whatever form it took it could only be in respect of a finding of unfair conduct arising out of the appellants' claims relating to their unconscionable and humiliating treatment at the hands of the respondent. (13) That the parties are to be provided with an opportunity to address the narrow issue of whether an order could be made, and on what terms, declaring the appellants' employment contracts partly void either from commencement or some other time, having regard to what we have decided in this judgment and the observations contained herein. (14) That an order in the form of order A3 would be inconsistent with the terms of the 1990 Award. (15) That the claims in order A4(a) and (b) of the summonses, which seek greater notice of termination or payment in lieu and higher redundancy benefits than what the respondent is required to provide under the Award and EA, inevitably lead to the conclusion that an order in the form of A4(a) and (b) would be inconsistent with cl 7(d) as to notice of termination, cl 30 as to redundancy, cl 31 as to severance and retrenchment of the EA and cl 5 Contract of Employment and cl 26 Severance and Retrenchment Pay of the 1990 Award. Accordingly, there is no jurisdiction to entertain the claims in order A4(a) and (b) of the summonses. (16) That an order in the form of the order in par A4(c) of the summonses would be inconsistent with the 1990 Award. (17) That for the same reasons expressed as to the inconsistency in relation to order A4(a) and (b), the claim in order A6, in so far as it involves money orders relating to payment in lieu of notice and redundancy pay, also leads to direct inconsistency with the relevant Award and EA provisions. (18) That there was no evidence superannuation was the subject of regulation by the federal industrial instruments or that orders in respect of superannuation were otherwise capable of giving rise to inconsistency. Subject to whether an order can be made partly voiding the appellants' employment contracts and the form of such an order the parties are to be given the opportunity of addressing the question of superannuation further. (19) That, subject to whether an order can be made partly voiding the appellants' employment contracts and the form of such an order, the parties are to be given an opportunity of addressing whether the rate for calculating redundancy pay for each of the applicants should be a rate higher than the base rate of pay.

4 The following orders and directions were also made: 1. The appellants are to file and serve short minutes of order in respect of the appeal and submissions in writing in relation to the matters referred to in par 174(13), (18) and (19) hereof and the costs of the appeal within 21 days of the date of this judgment. 2. The respondent is to file and serve written submissions in reply within 14 days of receiving the appellants' submission. 3. The Full Bench shall sit at 9.30 am for one hour on Wednesday 4 February 2004 to hear any oral submissions regarding the outstanding issues. 4. Leave is granted to extend time for appeal in relation to costs at first instance. The question of costs, including that relating to the Commonwealth's intervention, is reserved.

5 The parties subsequently filed further submissions and counsel for the appellants sought leave to file a further affidavit of William Robert Hoye. There was some delay in the filing of the submissions and in hearing the outstanding issues but this was completed in May 2004.

6 The onus on the appellants flowing from our previous judgment was to show how it was that the Full Bench could make an order declaring their employment contracts partly void, from commencement or some other time, as a consequence of those contracts being rendered unfair because of the appellants' alleged unconscionable and humiliating treatment at the hands of the respondent. If the appellants were successful in discharging that onus it would then be necessary for us to consider whether any consequential money orders could be made pursuant to s 106(5) of the Act in relation to the matters referred to in our previous judgment.

7 At [146] to [150] of our previous decision we said: 146 In the alternative, the claim in order A1 seeks to have the employment contracts declared partly void either from commencement or some other time. No particulars were provided as to how this was to be done. It is difficult to see how an order declaring the employment contracts partly void could be made in the circumstances of this case without encountering the obstacle of constitutional inconsistency. But whatever form it took it could only be in respect of a finding of unfair conduct arising out of the appellants' claims relating to their unconscionable treatment at the hands of the respondent. 147 We acknowledge that in this case the appellants had sought to make out a case of unfair conduct beyond the circumstances of termination and monies paid on termination. The appellants referred to the conduct by the respondent in 1996 in misleading the appellants into believing that if they agreed to the EA they would be secure in their jobs thereby enticing them to give up certain of their industrial rights. However, we have earlier concluded that the evidence was insufficient to demonstrate that appellants were misled. The remaining unfair conduct alleged by the appellants is all related to the restructuring of the respondent's operations, and the effect of this on the appellants, and to the process, and fact, of termination and the effects of the aftermath of termination on such matters as the appellants' work reputations, prospects of future employment and health. 148 In relation to the process leading up to their termination the appellants variously claimed that there was a lack of proper communication about the restructuring process, use of "phantom interviews", inadequate job descriptions in the new structure, gross incompetence on the part of the respondent's officers in the interviewing process, unfair decisions about which staff employees would be eligible for positions in the new structure and an absence of an overall fair selection procedure as to who would be retained in employment and who would be retrenched. The appellants contended that the whole selection process was a sham. 149 The respondent, on the other hand, contended in this respect that the federal instruments covered the field and there was no scope for any orders to be made under s 106 providing relief to an employee covered by a federal award who complained, for example, that in being selected for retrenchment he or she was subjected to humiliating or unconscionable treatment or that his or her work reputation or health had been damaged by being unfairly selected for retrenchment. 150 Given the way the parties argued their cases on appeal we do not consider we have been provided with complete assistance on the relevant issue and, therefore, consider it appropriate to provide the parties with an opportunity to address this relatively narrow issue of whether an order could be made, and on what terms, declaring the appellants' employment contracts partly void either from commencement or some other time, having regard to what we have decided in this judgment and the observations contained herein.

8 In their further submissions the appellants sought an order under paragraph [A1] of the summonses declaring the contracts void in part, in that, or to the extent that, they: (a) allowed a sham process of restructure and deselection which was grossly unfair to the Appellants;

(b) allowed behaviour and treatment to cause suffering to the Appellants, including adverse effects upon their work reputations, prospect of future employment and health;

(c) did not adequately compensate or provide for reparation to the Appellants for the unfairness;

(d) allowed the money which was paid to the Appellants on termination to be paid without additional sums or other sums relating to the conduct referred to in paragraphs (a), (b) and (c) above.

9 Whereas it may have been open to the appellants to seek a variation of the relevant contracts on the basis that the conduct of the respondents had rendered the contracts unfair, this was not what the appellants had sought in paragraph [A1] of the summonses. The orders sought in [A1] were: "Orders declaring void in whole or in part the contracts of employment between the respondent and the appellants either from commencement or from some other time".

10 As to an order declaring void the whole of the contracts, we said in our previous judgment at [144]-[145]: 144 As to the claim relating to order A1, an order wholly voiding the employment contracts, especially from commencement, is completely inconsistent with a case the central element of which was that employments contracts were unfair because the respondent breached terms relating to seniority and job security. The ritualistic framing of summons for relief under s 106 to reflect the entire range of relief under that section of the Act without proper regard to the nature of the case to be conducted would seem to us to be an unwise and potentially fatal practice.

145 An order wholly voiding the employment contracts would also mean that there was no relationship of employer and employee between the respondent and the appellants thereby depriving the federal industrial instruments, depending as they do on such a relationship being in existence, of any application. The inconsistency between such an order and the federal instruments is obvious. It would negate completely the rights, obligations and privileges conferred by the EA and 1990 Award.

11 As to the partial avoiding of the contracts, the appellants have been unable to show that there was a contractual provision, as opposed to a term of the Award or EA, dealing with a process of restructure and deselection that could be voided for unfairness because of the respondent's conduct or because of a variation to the contract or for any other reason. Accordingly, there is no basis in this respect upon which the Court could find that there was an unfair contract. Because the adverse effects said to have been experienced by the appellants arose from the restructuring and deselection process, in the absence of that process being a term of the appellants' contracts, there is also no contractual term relating to these alleged adverse effects that could be voided for unfairness.

12 The appellants also sought an order declaring the contracts void in part in that they did not adequately compensate or provide for reparation to the appellants for the unfairness. This is a non sequitur. It does not follow that because the appellants were not adequately compensated, it supports an order for the contracts to be declared void in part. What part, it may be asked? This question was not answered by the appellants.

13 We agree with the respondent that the appellants have failed to discharge the onus of showing how we could make an order declaring their employment contracts partly void, from commencement or some other time, as a consequence of those contracts being rendered unfair because of the appellants' alleged unconscionable and humiliating treatment at the hands of the respondent. It follows that no money orders are available to the appellants pursuant to s 106(5) of the Act. In the absence of any declaratory orders being available under s 106, s 154 of the Act is not available to the appellants in the alternative. The appeals should be dismissed with costs. There should be no costs order in respect of the intervenor.

14 We make the following orders: 1. Leave to appeal is granted. 2. The appeal is dismissed. 3. The appellants shall pay the respondent's costs of the appeal and the application to extend time to appeal. There is no order as to costs in respect of the Commonwealth's intervention.

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