Chalmers v Deakin University

(a) the Industrial Relations Court had begun the substantive hearing in proceedings in that Court; or

(b) proceedings had been completed in the Industrial Relations Court before that day.

(2) On and after the transfer day, the jurisdiction and powers to which this item applies:

(a) cease to be vested in or exercisable by the Industrial Relations Court or a Judge of that Court; and

(b) are, subject to subitem (3), vested in the Federal Court." 20 Item 62 of Schedule 16 defines the terms "proceeding" and transfer day": "proceeding means a proceeding in a court, whether or not between parties, and includes:

(a) an incidental proceeding in the course of, or in connection with, a proceeding; and

(b) an appeal. transfer day means the day on which the Federal Court is invested with jurisdiction under Division 2 of this Part, being the day on which Part 1 of this Schedule commences." 21 Section (2) of the WRAOLA Act dealt with commencement. Section 2(1) provided that: "Subject to this section, this Act commences on the day on which it receives the Royal Assent." That day was 25 November 1996. 22 Section 2(2) and (3) provided: "(2) Subject to subsection (3), the items of the Schedules, other than Schedule 5, item 1 of Schedule 9, item 90 of Schedule 16 and the items of Schedules 12 and 19, commence on a day or days to be fixed by Proclamation. (3) If an item of a Schedule does not commence under subsection (2) within the period of 6 months beginning on the day on which this Act receives the Royal Assent, it commences on the first day after the end of that period." 23 No relevant item of Schedule 16 commenced under s 2(2). It follows that those items commenced on the first day after the end of the period of six months beginning on the day on which the Act received the Royal Assent. The six months period beginning on 25 November 1996 expires on 24 May 1997, so that the commencement day for the items in Schedule 16 was 25 May 1997. That is "the transfer day". 24 The effect of Item 64 of Schedule 16 is to transfer proceedings commenced in the Industrial Relations Court, in respect of which the Industrial Relations Court had not begun the substantive hearing before the transfer day, to the Federal Court. If jurisdiction in a matter is not so divested the Industrial Relations Court remains the court empowered to resolve the controversy that constitutes the matter. 25 In this case there is no question that as at 25 May 1997 the substantive hearing in the proceedings commenced in the Industrial Relations Court had begun. The judicial registrar had heard the respective cases of the parties and had announced his judgment on 16 May 1997. That determination by Judicial Registrar Murphy was the exercise of judicial power, delegated by the Court pursuant to s 376(3) of the Industrial Relations Act 1998 (Cth). 26 The Full Court of the Federal Court, constituted by Lee, Hill and Merkel JJ, in Autistic Association of New South Wales v Dodson [1999] FCA 439 concluded that the Federal Court lacked jurisdiction to entertain a review of a determination by a judicial registrar of an application in respect of unlawful termination which had been commenced prior to the transfer day. It accordingly held that an appeal from a review of a judge of the Federal Court of Australia of that determination by a judicial registrar was incompetent and should be dismissed. The Court said, at paras 25 and 26: "Pursuant to s 376(4) delegated power exercised by a Judicial Registrar is taken to have been exercised by the Court. It follows that unless, or until, a Judicial Registrar's decision is set aside upon review by a Judge under s 377 of the Act it is an order of the Industrial Relations Court and 'as much an exercise of the Court's jurisdiction as a decision of a judge'. (See: Shackley v Australian Croation Club Ltd (1996) 141 ALR 736 per Wilcox CJ at 741.) The fact that a decision of a Judicial Registrar may be reviewed by a Judge does not make the hearing conducted by the Judicial Registrar, or the decision of the Judicial Registrar, any less a hearing, or exercise of judicial power, by the Industrial Relations Court.

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.

Solicitor for the Respondent: Arthur Robinson & Hedderwicks

Date of Hearing: 24 and 27 May 1999