Chalmers v Deakin University

REASONS FOR JUDGMENT 1 This is an application pursuant to the former s 377 of the Workplace Relations Act 1996. The applicant, Alan Douglas Chalmers, seeks a review of the decision of Judicial Registrar Murphy given on 16 April 1997 to dismiss an application brought by Mr Chalmers under s 170EA of the then Industrial Relations Act 1988 for relief in relation to unlawful termination of his employment. 2 So to state the nature of the application is to conceal significant aspects of the history of this litigation, as what follows will hopefully illuminate. 3 Mr Chalmers commenced employment with Victoria College, a predecessor of Deakin University, in 1973. In its employment of Mr Chalmers as lecturer, the university was bound by its obligations as a party to the Universities and Post Compulsory Academic Conditions Award 1995 (the 1995 Award) and the Victorian Post-Compulsory and Higher Education Academic and Teaching Staff (Conditions of Employment) Interim Award 1990 (the 1990 Award). Both awards were federal awards. Mr Chalmers' employment with Victoria College was the subject of printed terms and conditions. In 1992 the University became the successor to Victoria College. 4 Mr Chalmers last worked as a lecturer on 23 March 1992, subsequent to which he was totally incapacitated for work. At least by 8 September 1994 it is agreed by both the university and Mr Chalmers that his incapacity for work was total and permanent. Between 23 March 1992 and 7 June 1996 Mr Chalmers did not work. 5 The university forwarded a letter dated 13 April 1994 to Mr Chalmers requiring him to undergo a medical examination relevant to his capacity for work. Mr Chalmers refused to undertake a medical examination. In 1995, particularly, there was a large volume of correspondence between Mr Chalmers and various officers of the university concerning, amongst other things, Mr Chalmers' entitlements under the State Superannuation Act 1988 (Vic) and the Accident Compensation Act 1985 (Vic) as well as the position of Mr Chalmers' accrued sick leave. 6 By letter dated 8 December 1995 the university gave Mr Chalmers notice of the termination of his employment, to take effect from the close of business on 7 June 1996. Clause 16 of the 1995 Award provided that the Chief Executive Officer could terminate employment by giving six months notice where a medical examination revealed that an employee "is unable to perform his or her duties and is unlikely to be able to resume them within a reasonable period, being not less than 12 months …" 7 On 3 June 1996, Mr Chalmers lodged with the Australian Industrial Relations Commission (the Commission) an application in Form R28 for relief in respect of termination of employment, referring to s 170EA of the Industrial Relations Act 1988 (Cth). In that application Mr Chalmers indicated that he received written notice of his termination (the letter of 8 December 1995) on 27 December 1995, and that he sought reinstatement. In relation to compensation, he indicated that, as he was seeking reinstatement, he was "…at this juncture, not seeking compensation in lieu of reinstatement", but that consistent with "requests for compensation in the form of a disability settlement" he enclosed figures which as at 23 June 1995 totalled $534,624, and in addition he sought damages. On 3 June 1996 Commissioner Whelan of the Commission granted Mr Chalmers an extension of time within which to lodge that application. 8 Judicial Registrar Murphy heard the application of Mr Chalmers on 16 April 1997. Mr Chalmers gave evidence and was represented by his then solicitor, Mr Keith Elliott. Judicial Registrar Murphy decided that the university has discharged its onus of proving that it had a valid reason for the termination of Mr Chalmers' employment being, in essence, Mr Chalmers' total and permanent inability to perform his duties. The judicial registrar ordered Mr Chalmers to pay the university's costs of the application, which he considered had been "doomed to fail" as, on Mr Chalmers' own version of the facts, he had been unable to work at all times from 1992. 9 On 13 June 1997 Mr Chalmers forwarded a letter to Wilcox CJ of the Industrial Relations Court of Australia (the Industrial Relations Court), giving formal written notice of his intention "to complain extensively about" and seek "a review and/or appeal" of Murphy JR's decision. Wilcox CJ's associate replied by way of letter dated 18 June 1997 informing him of his right of review and further indicating that a motion seeking review was ordinarily required to be filed within twenty-one days of the decision and that leave of a judge would be required to file a motion for review outside the normal time limit. 10 On 1 July 1997 Mr Chalmers consulted with Maurice Blackburn & Co, who on 3 July 1997 filed a notice of motion on Mr Chalmers' behalf applying for review of the judicial registrar's decision and for leave to file the motion out of time. That motion was filed in the Victorian registry of the Federal Court of Australia (the Federal Court). On 11 August 1997 Marshall J dismissed Mr Chalmers' notice of motion and refused to extend the time within which Mr Chalmers could obtain a review of the judicial registrar's decision. That judgment and the reasons for it indicate that Marshall J was purporting to exercise jurisdiction as a Federal Court judge. 11 On 11 August 1997 Mr Chalmers did not apply orally to Marshall J for leave to appeal, pursuant to O 52 r 2B of the Industrial Relations Court Rules, from his Honour's refusal of his application, nor did he file a notice of motion seeking leave to appeal from a single judge or a Full Court within twenty-one days of the date of judgment, 11 August 1997, as required by O 52 rr 3, 4 and 5 of the Industrial Relations Court Rules. On 28 August 1997 Mr Chalmers filed in the Victorian registry of the Federal Court of Australia a document entitled "Notice of Appeal" seeking that Marshall J's order of 11 August 1997 be set aside, that Murphy JR's decision be reviewed, that the award of costs ordered by Murphy JR be set aside or stayed, and that leave be granted to file a notice of appeal outside the normal time limit. The document styled "Notice of Appeal" was accompanied by a detailed statement of grounds of appeal. 12 On 12 November 1997 the university filed in the Federal Court's Victorian registry, and served, a notice of motion seeking orders that Mr Chalmers' proceeding be dismissed or stayed and that Mr Chalmers pay the costs of the application. On 17 November 1997, Chief Justice Black of the Federal Court refused to dismiss Mr Chalmers' appeal as incompetent, and ordered that all issues be determined by the Full Court on appeal. On 23 September 1998, a Full Court of the Federal Court, constituted by Ryan, Olney and North JJ, ordered that Mr Chalmers be granted an extension of time within which to seek leave to appeal; that leave to appeal be granted; that the appeal from the judgment of Marshall J be allowed; and that Mr Chalmers be granted an extension of time within which to seek a review of the decision of Murphy JR. The court further ordered that the appellant's application for review be remitted for hearing by a single judge. 13 It was as a consequence of those Full Court orders that the application to review the decision of Judicial Registrar Murphy commenced in the Federal Court before me on 24 May 1999. In the course of that hearing, I raised the question whether in fact the application for relief in respect of unlawful termination, which commenced by the filing of the application in the Industrial Relations Commission on 7 June 1996, was a proceeding for review in respect of which the Federal Court had no jurisdiction, as a consequence of the provisions of the Workplace Relations and Other Legislation Amendment Act 1996 (the WRAOLA Act), being Act 60 of 1996 (Cth). 14 On Thursday 27 May 1999, I informed the parties of my view that the purported review by the Federal Court of the decision of Murphy JR, as contemplated by the order of the Full Court of the Federal Court of 23 September 1998, by remittal to a single judge of the Federal Court was not competent; that Marshall J, as a judge of the Federal Court, had no jurisdiction to entertain the application for an extension of time within which to have the decision of the Judicial Registrar reviewed; and that the Full Court of the Federal Court of Australia had no jurisdiction to entertain an application for leave to appeal from the order of Marshall J. 15 I will state below my reasons for those views but, in the light of that conclusion, I indicated that it was competent for me, as a judge of the Industrial Relations Court, to entertain an application for an extension of time for the review of the decision of Murphy JR pursuant to O 74 r 3 of the Industrial Relations Court Rules; that I would grant leave for the extension of such time to 28 January 1998, being the date of the filing by Mr Chalmers of the notice of motion seeking leave to appeal from Marshall J's refusal of an extension of time; that I would treat that notice of motion as an application pursuant to O 74 r 3 of the Industrial Relations Court Rules for an extension of time for an application to review the decision of Murphy JR to be allowed by a judge of the Industrial Relations Court. 16 For the reasons which were expressed by the Full Court of the Federal Court in its reasons for judgment of 23 September 1998, I thought it right to grant such extension. 17 On 27 May 1997 the parties agreed to treat the evidence that had been adduced before me on 24 May 1997 as the evidence on the application to review, by a judge of the Industrial Relations Court, the decision of Murphy JR of 16 April 1997. That evidence included the evidence that had been given before Judicial Registrar Murphy. The parties further agreed that the submissions that had been made in relation to that evidence would be the submissions in respect of the review. 18 The reason for the course above described that I adopted is as follows. 19 Schedule 16 of the WRAOLA Act dealt with the transfer of jurisdiction from the Industrial Relations Court to the Federal Court. Item 63(1) and (2) of Schedule 16 provided: "(1) This item applies to jurisdiction and powers vested in or exercisable by the Industrial Relations Court or a Judge of that Court immediately before the transfer day in relation to an act or omission occurring before the transfer day, except in relation to matters for which:

If a proceeding for review of a Judicial Registrar's decision is initiated, that proceeding does not define a new matter but is a further proceeding in proceedings which seek resolution of the one matter, namely, determination of a controversy as to the lawfulness of the termination of the employment of Ms Dodson by the Association. (See: Shackley per Wilcox CJ at 746.)" 27 In my opinion, the application seeking an extension of time within which to have a review of a judicial registrar's decision (an application contemplated by O 74 r 3 of the Industrial Relations Court Rules) is part of the proceeding as defined in Item 62 of Part 3 of Schedule 16 of the WRAOLA Act. It follows that it was not competent for the Federal Court to entertain that application and, in my respectful opinion, the appeal to the Full Court of the Federal Court from the decision by the Federal Court on that application was also incompetent. 28 Order 74 r 3 of the Industrial Relations Court Rules provides: "For the purposes of section 377(1) of the Act, the time prescribed in relation to an application to review the exercise of a power by a Judicial Registrar is 21 days or such further time as is allowed by the Court or a Judge for special reasons upon application at any time." 29 Pursuant to that rule it is competent for a judge of the Industrial Relations Court to entertain an application to extend the time to review the exercise of a judicial registrar's power to make orders on an application for unlawful termination and, notwithstanding the time that has elapsed since the filing of a notice of motion on 28 January 1998, having regard to the matters the subject of the reasons of the Full Court of the Federal Court of 23 September 1998, it is appropriate that the Industrial Relations Court extend the time to review the decision of Judicial Registrar Murphy of 16 April 1997. 30 What follows then are my reasons for judgment on the review pursuant to the former s 377 of the Workplace Relations Act 1996 as it applied immediately before the transfer day. 31 The material on which this review is based is all of the evidence that was before Judicial Registrar Murphy, the affidavits which have subsequently been filed in these proceedings by Mr Chalmers and on behalf of the university, and the oral evidence given to the Federal Court on the review. 32 The case for Deakin University is short. The university says that Mr Chalmers was employed as a lecturer by Deakin University. He was totally and permanently incapacitated for work because of his heart condition. His employment was terminated on 7 June 1996 because of his incapacity. In respect of s 170DE of the then Industrial Relations Act 1988 the High Court held in Victoria v The Commonwealth (1996) 187 CLR 416 that s 170DE(2) was constitutionally invalid. As a consequence, Mr Chalmers can rely only on s 170DE(1) which provides: "An employer must not terminate an employee's employment unless there is a valid reason or valid reasons connected with the employee's capacity or conduct or based on the operational requirements of the undertaking, establishment or service." 33 The university submits that Mr Chalmers conceded that he was totally and permanently incapacitated. The university therefore submits that the university had a valid reason to terminate his employment. 34 The onus, of course, is on the university to establish that it had a valid reason for terminating Mr Chalmers' employment; that is, its reason for terminating his employment was sound, defensible and well founded: Cosco Holdings Pty Ltd v Do (1997) 150 ALR 127 at 132; Qantas Airways Ltd v Cornwall (1988) 83 IR 102 at 105. 35 It is not clear what precisely is the basis on which Mr Chalmers challenges the entitlement of the university to terminate his employment pursuant to s 170DE of the Industrial Relations Act 1988. As best as I can understand it, Mr Chalmers claims: "As it suffered no financial or organisational/operational harm, by continuing to employ me, then under Section 170DE of the Industrial Relations Act, Deakin University had no valid reason to dismiss me but, in so doing, deprived me of considerable financial entitlements." 36 This, the primary contention of Mr Chalmers, seems to be premised on the consideration that unless there is some financial or organisational harm suffered by an employer, there can be no valid reason to dismiss an employee. 37 Mr Chalmers submitted, as he did to Wilcox CJ on 13 June 1997, that: "… the punitive and discriminatory way in which the manner/process of dismissal, undertaken by my employer, not only cut across ongoing negotiations but was also clearly an unjust and unfair attempt to deprive me of financial entitlements …" 38 The essence of Mr Chalmers' complaint is: "My employment was terminated on 7.6.96 on the grounds of my ill health, while I was a then current Totally and Permanently Disabled, 'seriously ill Workcover benefit recipient', that is, I was on statutory sick leave - itself a fact which clearly distinguishes my situation from those circumstances conventionally the target of the award provisions used against me … One can only speculate but if I had not been a Workcover benefit recipient, I would presumably have, in simplistic terms, worked through my sick leave on full pay and then become a superannuation disability pensioner." 39 Mr Chalmers submitted that the termination provisions in the award which applied to him were not intended to be used in cases where the employee was a current workers compensation benefit recipient. The primary argument for Mr Chalmers was that, because he was receiving compensation on the basis that he was totally and permanently incapable of performing his duties, he was not able to be dismissed on that very ground. 40 That contention, however, does not do full justice to his complaints. He asserts that the process on which the university embarked had the effect of depriving him of benefits by way of various entitlements to which he says he was entitled and would otherwise have received, had not the university proceeded as it did. The essence of his claim is contained in his affidavit filed 3 May 1999 where he asserted that he was: "…able to establish that the University suffered no financial or operational/ organisational harm as the result of my not working, since 23/3/93. It could replace me, it contributed nothing to my weekly benefits which were paid in full by Workcover, and it therefore incurred no salary oncosts . In fact, by dismissing me, the Respondent was able to deprive me of accumulated sick leave, shortpay my accrued annual and long service leave and deprive me of, or endanger, other financial entitlements." 41 He submitted: "… my disability pension will remain at risk while ever the valid dismissal order of Murphy JR remains on the books. Only a reversal, to invalid dismissal, and its replacement with disability retirement, as part of my claims settlement against the Respondents will ensure future pension receipts." 42 In the context of those submissions it is important to note some facts. First, the university does not dispute that its obligations towards Mr Chalmers are determined by the 1990 and 1995 Awards. I refer in particular to clause 16 of the 1995 Award, dealing with termination of employment on the grounds of ill health, and to sub-clauses (a), (b), (e) and (h). I refer also to the 1990 Award, which provides in clause 10.6: "Where an employee resigns or retires or is dismissed or otherwise terminated from employment, the employee shall receive in lieu of recreational leave accrued but not taken …" And further in that clause: "In all instances payment in lieu shall be for all recreational leave accrued for each completed year of service, plus a pro rata amount for the current year of service calculated on a daily basis." I note also clause 11.1 to 11.2, dealing with sick leave. 43 It is necessary to have regard, in relation to the claims by Mr Chalmers, to some aspects of the chronology of his relationship with the university. On 11 March 1993 an officer concerned with occupational health and safety at the university wrote to Mr Chalmers stating that as at 24 March 1993 he would have been off work for a total of 52 weeks as a result of compensable injury. On 8 April 1993 Professor John Hay, then Vice-Chancellor of Deakin University, wrote to Mr Wotherspoon, an officer of the university, indicating that under the terms of the award governing the employment of members of academic staff, the Vice-Chancellor wished to proceed with an investigation into Mr Chalmers' ability to continue to carry out his duties and responsibilities, as set out in clause 10 "Termination of employment on grounds of ill-health". 44 On 13 April 1994, a letter written on behalf of Mr Wotherspoon, who was Director of Personnel at Deakin University, and signed by Dr Sue Gould, was sent to Mr Chalmers stating that the university was concerned about his state of health, and had reached a point where it was necessary to investigate the termination of his employment on the grounds of ill health. The letter stated that, in accordance with the award provisions concerning the employment of academic staff, Mr Wotherspoon required Mr Chalmers to undertake a medical examination to determine his fitness to undertake his duties. 45 On 25 May 1994, Mr Chalmers wrote in a letter to Dr Gould that he objected in the strongest possible terms to her invoking the process of terminating his employment on the grounds of ill health; he asked her to explain why the current initiative was not in contravention of the Workcover legislation, and why he was not entitled to his accrued sick leave which exceeded 300 working days. He stated that he would not be attending what he considered to be "a premature and 'illegal'/contrived [medical] appointment." 46 There were a number of discussions following this correspondence. Towards the end of 1994, there was a discussion in which Mr Wotherspoon suggested to Mr Chalmers that the university might consider a payment equivalent or approximately equivalent to his accrued sick leave, which would extinguish his sick leave and enable him to accept a disability pension. That suggestion was not accepted by Mr Chalmers. There were also other proposals made, none of which was acceptable to Mr Chalmers. 47 On 22 February 1995 Mr Wotherspoon wrote to Mr Chalmers referring to a letter which Mr Chalmers had sent to the Vice-Chancellor on 1 February 1995, in which Mr Chalmers had indicated that he was totally and permanently disabled and that Mr Wotherspoon was "only prepared to make an oral offer of one year's salary" on behalf of the university. In the letter of 22 February 1995, Mr Wotherspoon said that since Mr Chalmers had declined to accept the university's offer of settlement, and since the university was unable to vary that offer, the most appropriate course was to maintain the status quo, thus continuing the Workcover benefits. 48 Notwithstanding Mr Chalmers' protestation that this offer had not in fact been made to him, I am satisfied that it was. 49 On 2 June 1995 there was a letter from Mr Elliott, the Vice-President, Administration, to Mr Chalmers referring to the history of the matter and to an offer by the university of a lump-sum payment of one year's salary in order to resolve the matter. 50 Mr Chalmers rejected that offer. Subsequent to that time there was a host of correspondence between officers of the university and Mr Chalmers concerning the basis on which his employment might be terminated. In late 1995, the university made a decision to terminate Mr Chalmers' employment on the grounds of ill health. The reason for that decision was that, because of his health, he could not work. The understanding of the university and the basis on which the decision was made was that Mr Chalmers had a total and permanent incapacity classification from Workcover; he had also been accepted on the basis of a permanent disability entitlement from the Superannuation Board and was therefore eligible for an ongoing disability benefit which was not a temporary disability benefit. 51 The evidence admits of no other conclusion than that Mr Chalmers was incapable of performing his duties as a lecturer. It was common ground that Mr Chalmers was totally and permanently incapacitated. In my view it is uncontestable that the university had a valid reason to terminate the employment of Mr Chalmers. I do not accept that there was any conspiracy to deprive Mr Chalmers of his legal entitlements. In fact, a review of the history of the negotiations and the correspondence leads me to conclude that, if anything, the university was tender in its consideration of Mr Chalmers' position. 52 I am quite satisfied that the university had a valid reason to terminate Mr Chalmers' employment. That reason was his incapacity to perform his duties as a lecturer. He has, since the termination of his employment, continued to receive Workcover benefits. The fact that there is a dispute concerning the quantum of the sick leave and long service leave and other entitlements, while genuinely entertained by Mr Chalmers, is in my view not material to the determination of his present application. 53 As to the specific complaints by Mr Chalmers, I deal with them in turn. The primary contention was that, notwithstanding the acceptance that he was totally and permanently incapable of carrying out his duties as a lecturer on the grounds of ill health, the university could not terminate his employment because he was at that time receiving Workcover payments. The short point is that clause 16 of the 1995 Award permitted the university to terminate Mr Chalmers' employment on that basis. The provision of clause 16(h) of that Award, preserving entitlements under Workcare and Workcover and other provisions, does not affect the entitlement of the university to terminate his employment . The termination had no effect on Mr Chalmers' entitlement to Workcover payments, and there was nothing in the Accident Compensation Act 1985 which prevented the university from terminating his employment on the basis of the ground contemplated by clause 16 of the 1995 Award. 54 Deakin University concedes that Mr Chalmers did not receive six months notice of termination. He received, on the facts, some two and a half weeks less than the six months notice to which he was entitled. However, I find that he suffered no loss as a result of the failure by the university to give the six months notice. 55 As to the complaint that the university refused to allow Mr Chalmers to use his sick leave, and that as a result of the termination by the university he lost his accrued sick leave, the short conclusion is that the university was not obliged to allow Mr Chalmers to use his accrued sick leave. His entitlement in the circumstances was entirely determined by clauses 29 and 30 of the 1990 Award and clause 16 of the 1995 Award. But a fortiori, it seems to me that whether there was any loss of accrued sick leave as a result of the decision by the university to terminate him for incapacity, that consideration is not relevant to whether the university had a valid reason to terminate his employment. In my judgment, the university had such a reason. 56 It was also the subject of complaint by Mr Chalmers that a letter of 22 August 1995 constituted an undertaking or an offer by the university to ensure that Mr Chalmers received 95% of his salary if he accepted a disability pension from the State Superannuation Board. Whether or not such letter constituted such an offer or undertaking, the fact is that Mr Chalmers did not accept it. 57 There is a further complaint that the superannuation disability pension of Mr Chalmers was at risk because Deakin University had originally stated that Mr Chalmers had resigned. That error was subsequently corrected by the university which advised the Superannuation Board that the reason for the cessation of Mr Chalmers' employment was "disability retirement". As a consequence, Mr Chalmers received and continued to receive his disability pension. 58 I am also satisfied that the further complaint by Mr Chalmers, that upon his termination by the university paid his accrued recreation leave and long service leave at an incorrect rate of salary, is not correct. There has been a considerable body of evidence directed to the minutiae of the correctness of the payout to Mr Chalmers and, in particular, in respect of his accrued recreation leave and long service leave. It is unnecessary to refer in detail to the evidence touching on that question, but that on the evidence, as I understand it, I am satisfied that Mr Chalmers was paid the correct amounts for accrued recreation leave and long service leave upon the termination of his employment. 59 It follows that I am satisfied that there was a valid reason for the university to terminate Mr Chalmers' employment, and that his application based on unlawful termination of employment must fail. 60 I indicated at the hearing of oral submissions in this matter that I would hear the parties on the question of costs. I am conscious that Judicial Registrar Murphy was of the view that the application was doomed to fail, and that he awarded costs to the university of the hearing before him, which costs he fixed. There is, of course, power pursuant to s 347 of the Workplace Relations Act 1996 for the Court to award costs, but my present view is that notwithstanding the view of Judicial Registrar Murphy, the Court should not invoke the special course open to it pursuant to that section to award costs against this unsuccessful applicant. Given the history of the matter, and in particular the view which the Full Court expressed that the prospects of success of Mr Chalmers on his application were "not inconsiderable", my present view is that the Court ought not make any order against him in respect of his constitutional right of review of the decision of Judicial Registrar Murphy. 61 For the reasons which I have expressed above, the application should be dismissed. I set aside the order of Murphy JR as to costs. While my present view is that there should be no order as to costs, in accordance with my instruction that the respondent should have an opportunity to be heard on costs, any submissions by the university for a costs order should be filed and served within seven (7) days, and Mr Chalmers should file and serve any submissions in response within a further seven (7) days. I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender J.

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