Submissions
49 Mr Nolan for ASMOF, relied on the material contained in the affidavit of Mr Mead (Exhibit 1) and took the Commission to relevant correspondence and the chronology of events. It was submitted that the material demonstrated beyond argument that the only relevant event that had led to the dispute between the parties and to ASMOF's application to vary the Award, had been the unilateral change of position by NSW Health.
50 Since the agreement was made in 2002, the parties had acted upon the faith of the agreement up until the October 2007 letter from the Department. In February 2006, an additional salary packaging benefit was introduced (Relocation/Living Away from Home Expenses) to both the ASMOF and the general schemes. There was no suggestion at all that the treatment of this benefit would be in any way different to or at variance with the 2002 agreement.
51 It was submitted that the introduction of this benefit demonstrated that the parties had no doubt about the clear meaning and the intention of the 2002 agreement.
52 Varying the Award was the most suitable vehicle for resolving the dispute between the parties on this issue. NSW Health was endeavouring to treat the Award provision as being unrelated to the 2002 agreement in order to avoid its clear obligations which were recorded in the correspondence and which underpinned the Award clause. The only alternatives facing ASMOF were prosecution for breach of the Award or an application for a declaration as to the true meaning of the current provision. Neither course permitted a speedy resolution of the dispute and it was submitted that was preferable that the position be put beyond doubt.
53 It was submitted that there could be little doubt, when ascertaining the intent behind the making of the clause, that the construction advanced by ASMOF was correct. NSW Health only faintly disagreed and appeared to take the view that it could unilaterally repudiate its earlier agreement on the grounds that it has had "a change of heart".
54 The scope of the clause in question, as understood in the context of its adoption, was clear. The proper meaning of the clause was to be ascertained by an examination of the words used, the structure of the clause and the context in which it was adopted. Reliance was placed on Sydney Tower Restaurants Pty Ltd v Zhang & Anor [2004] NSWIRComm 250 (at para.17), which in turn noted the observations of Vice President Walton in Fox v GIO Australia Ltd (2002) 120 IR 401 (at 46).
55 Attention was also drawn to the distinction observed by the High Court between the "expressed intention" and whatever might have been the "actual intention" as per re Brack; ex parte Operative Painters and Decorators Union of Australia (1984) 51 ALR 731 at 732; Finance Sector Union of Australia v Commonwealth Bank of Australia [2004] FCA 187. It was submitted that the Commission would ensure that the actual intention is expressed in the Award even where an initially drafted clause turns out, on later examination, not to have carried that intention into effect.
56 Where appropriate, antecedent documents which led to the adoption of a clause would be relevant. In this regard see Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 per Mason J [at 352-353].
57 It was submitted that it was beyond argument that the correspondence set out in the attachments to Mr Mead's affidavit provided the rationale for the clause.
58 The conduct of NSW Health had been "unconscionable". The Commission was charged with acting with equity and good conscience and would therefore view that conduct as wholly "unmeritorious". NSW Health had conducted itself at all times in a manner which was consistent with its acceptance of the position put by ASMOF until its 2007 correspondence which marked a radical change of position by the Department.
59 It was also submitted that it was not open to NSW Health to assert, as it did, that the Award clause had not operated, and was not intended to operate, in the manner as suggested by ASMOF and as clearly set out in the correspondence. Further NSW Health should be estopped from making such assertion. The applicability of estoppel in an appropriate case was dealt with by the Full Bench in Payne v Howison (unreported) (Cahill V-P, Hill, Marks JJ) (26 September 1997). The Full Bench discussed the relevance of the High Court decisions in Waltons Stores (Interstate) Ltd v Maher (1987-1988) 164 CLR 387 and Commonwealth of Australia v Verwayen (1990) 170 CLR 394
60 Mr Nolan submitted, paraphrasing Deane J in Verwayen, that whether such a departure would be unconscionable related to the conduct of the allegedly estopped party in all the circumstances. That party must have played such a part in the adoption of, or persistence in, an agreed state of affairs, the assumption would be that it would be guilty of unjust and oppressive conduct if it were now to depart from it.
61 In this matter ASMOF had entered into an agreement with NSW Health on the basis outlined in the material and NSW Health knew that ASMOF acted under that assumption and refrained from correcting it when it was its 'duty in conscience' to do so. The way in which that could have been approached was when the next round of award discussions occurred (and they were commencing at the moment). The Department could have come to ASMOF and indicated that it considered that the benefit that ASMOF had under the agreement was inappropriate and they wanted to alter that arrangement and get involved in the bargaining process in the next round of Award discussions. Instead ASMOF was presented with a fait accompli whereby the Department unilaterally decided this new benefit could not be given under the terms of the earlier agreement because ideally it would be equitable to have parity with the two schemes.
62 If that was the basis upon which a decision could be made to repudiate a previous agreement, it established a wonderful precedent. If ASMOF had sought to say that industrial arrangements that were in place as a result of a specific and express agreement for many years no longer suited and they were not going to do it, then NSW Health would be complaining long and loudly about ASMOF reneging on an agreement. They would be asking the Commission to intervene and make sure this terrible injustice was undone because industrial parties, when they entered into these agreements, were expected to abide by them.
63 ASMOF expected no more than that, and it was simply not good enough for the Department to suddenly decide to repudiate an agreement that it had entered into.
64 It was submitted that in exercising its discretion, the Commission should give effect to the agreement that was made by the parties. To the extent that there was any room for argument that the Award clause as expressed did not give effect to that intention (a position which was rejected by ASMOF) then the position should be put beyond doubt by the making of the variation as sought by ASMOF.
65 The Commission had the power to vary an award pursuant to s.17 of the Act
and the circumstances in which such a variation may be made were many and varied see: Elura Mine Enterprise (Consent) Award 2001 [2003] NSWIRComm 218; Crown Employees (New South Wales Fisheries Salaries and Conditions of Employment) Award 2004 [2003] NSWIRComm 405 and Iron and Steel Works Employees (Australian Iron and Steel Limited - Port Kembla) and other awards (1945) 44 AR 64.
66 The material submitted by ASMOF spoke for itself. The dispute between the parties had been brought about by the unilateral change of position by NSW Health and that change of position represented nothing less than a reneging on the 2002 agreement. That conduct was unconscionable and represented an egregious departure by NSW Health from an agreed state of affairs that had been relied upon by ASMOF. The Award was negotiated against the background (inter alia) of the agreement. The additional benefit extended by the correspondence of February 2006 was positive confirmation of that 2002 agreement.
67 It was contended in the strongest possible terms that it would be inequitable if NSW Health were to be permitted to renege on an agreement which it made with ASMOF when it had been unable to point to any compelling reason which would permit it to be released from its agreement. The variation as sought should be made in order to hold NSW Health to its agreement.
68 Mr Kimber for the Department, during the course of his submissions, took the Commission in some detail through the chronology of events and the relevant documentation contained in the Affidavit of Mr Craft (Exhibit 3), but from the perspective of the Department.
69 That chronology of events has been traversed in detail in the Background and Chronology above.
70 Mr Kimber also expanded in some detail on the written contentions filed on behalf of the Department (Exhibit 4).
71 The filed contentions usefully summarise the position of the Department as follows:
a) The MOU entered into by the parties in 1998 about salary sacrificing did not deal with the issue of sharing of income tax savings on FBT exempt items. There was no basis for suggesting that this issue was the subject of negotiations leading up to the MOU such that it could be said that it was considered but rejected. It was also significant that ASMOF did not seek to suggest that.
b) The salary sacrificing provisions that were inserted into the Award, by consent, in 1999 did not deal with the issue of sharing of income tax savings at all, only sharing of FBT savings. This is evidence of the absence of any active consideration let alone agreement on this issue.
c) Contrary to ASMOF's contentions nothing in the award prohibits the Department from offering new FBT exempt benefits (such as the meal entertainment allowance benefit) on the basis that such new benefit can only be accessed if staff specialists agree to share associated income tax savings. There was also nothing in any "antecedent documents" supporting ASMOF's construction of clause 7 of the award. ASMOF relies solely on documentation generated more than two years after the relevant clause was added to the Award.
d) ASMOF was not firm in its view that there had been a breach of the award otherwise a prosecution for such breach would have been the quickest and most appropriate way of bringing this issue to a head rather than lodging firstly, a dispute notification, and then, this Award variation application.
e) As there was no evidence whatsoever that the issue of income tax savings (whether on FBT exempt items or otherwise) was the subject of any discussion, negotiation and agreement prior to the Award variation in 1999, it would be impossible for the Commission to conclude that a prohibition on the sharing of any such income tax savings is somehow an implied feature/term of the Award and thus provide the foundation either for the asserted breach of Award by the Department or for the proposed variation, which ASMOF says is to make explicit what is already implicit.
f) From the limited material available it appears this issue only arose for the consideration for the first time when the "General" salary packaging scheme for other NSW Health employees was being put together in 2001 (operative 1 January 2002). It appears by then that more comprehensive advice was provided, from its then advisers (McMillan Shakespeare), to the effect that it made more sense to focus on the sharing of income tax savings arising from salary sacrificing arrangements (whether full FBT/FBT exempt, either completely/partially). Hence the 50/50 sharing of income tax savings became one of the "cornerstones" of the General Scheme as did the provision of 11 more benefit items than were currently available under the SMP's Scheme.
g) The subsequent agreement between the Department and the other health unions concerning the 'general' Salary Sacrificing Scheme resulted in approximately 97000 health employees being covered by the General Scheme, and salary sacrificing certain benefits on the basis that there was a 50/50 sharing of the income tax savings associated with those arrangements. That agreement was then incorporated by consent award variations into a number of public sector health awards. The Staff Specialists (approximately 3000) were able to salary sacrifice on a more beneficial basis namely that they only had to share the FBT savings associated with salary sacrificing under the SMP scheme.
h) It was significant that other than repeatedly stating that the Department "agreed" to treat staff specialists more favourably vis a vis salary sacrificing arrangements, ASMOF has not asserted, (either in evidence or contentions), that there was any proper industrial basis for such more favourable treatment. That is there was:-
i. No suggestion that there was an industrial negotiation involving some trade-off to secure the benefit of avoiding sharing income-tax savings.
ii. No suggestion that the more favourable salary sacrificing arrangement arose out of settlement of an industrial dispute or a claim for wages and conditions so that this issue was part of an overall industrial "package" that could not/should not now be "unpackaged".
iii. No suggestion that there was any "consideration" and by ASMOF/Staff Specialists in exchange for participation in the scheme without having to share income-tax savings arising from that participation.
iv. No suggestion that either ASMOF and/or any of its members have acted to their "detriment" as a consequence of their "reliance" on the existence of the said agreement.
i) ASMOF simply asserted that they were lucky enough to have "got in first" and before sharing of income tax savings arose for consideration and that on this basis alone the more beneficial treatment they gained in 1999 should be retained in perpetuity, even though there was no objectively defensible reason for Staff Specialists to be treated more favourably than all other NSW Health employees. Proper industrial principles of "equity and parity" undoubtedly favoured Department's position rather than ASMOF's position on this issue.
j) ASMOF relied on the exchange of correspondence in 2002 as demonstrating that the Department agreed to allow the difference between the two salary sacrificing respective schemes to continue and such a view of the correspondence cannot be refuted. The Department denied and refuted the notion that such agreement (regardless of its status) could never thereafter be varied or terminated at all, let alone with a view to ensuring equity and parity between all NSW health employees.
72 Mr Kimber sought to make submissions on the issue of whether there had been any intention to either create legal relations or a legally enforceable agreement ever came into effect. This issue was also canvassed in the contentions as filed and the various relevant cases cited.
73 Mr Nolan acknowledged on behalf of ASMOF, that for its part, it only sought to characterise that "there's been an agreement made sufficient for the ordinary, usual understanding of industrial agreements and arrangements in this context. We don't need to take that next step it's an industrial arrangement and it's been admitted as such.....".
74 Given that concession by ASMOF I do not consider it necessary to traverse the submissions/contentions made on behalf of the Department concerning whether or not there was in existence a legally enforceable and binding contract.