Downe v Sydney West Area Health Service

i.The defendants' direction to Dr Downe to perform work at Westmead Hospital in a manner inconsistent with the fulfilment by Dr Downe of her duties as Director of the Neonatal Intensive Care Unit at Nepean Hospital is unlawful as a breach of the contract of employment between Dr Downe and the defendants; ii. The defendants' purported continued suspension of Dr Downe from the performance of duties as the Director of the Neonatal Intensive Care Unit at Nepean Hospital is unlawful as a breach of the contract of employment between Dr Downe and the defendants; iii. During the subsistence of the current contract of employment between the plaintiff and the defendants, the defendants, and each of them, their servants or agents, shall refrain from directing the plaintiff to perform or not to perform any work or act, which direction is inconsistent with the performance by Dr Downe of her functions as Director, Neonatal Intensive Care Unit, Nepean Hospital; DECISION : iv. The defendants and each of them shall refrain from treating as valid, lawful or binding its or their direction to the plaintiff to work as a Staff Specialist at Westmead Hospital; v. Each party has liberty to file and serve, within 14 days from the date hereof, a written submission on costs and each party may, within a further 7 days, respond in writing to any such submission; vi. The parties have liberty within 35 days to approach the Court for any further or consequential order, including any order for damages, for the purpose of giving effect to or clarifying these reasons for judgment or ameliorating any administrative inconvenience arising from these orders; vii. Order iii above shall be stayed for a period of 14 days from the date hereof; viii. Otherwise the proceedings are dismissed.

CATCHWORDS : EMPLOYMENT - contract of employment - right to direct not to work - incorporation of disciplinary procedure - "suspension" - implied duties - good faith - relationship with award and statutory rights - injunction - personal service - INDUSTRIAL LAW - unfair contracts for performance of work - contract or arrangement - excludes award and statutory obligations - "remuneration cap" excludes payment under award and liability under statute - TRADE PRACTICES - employment not in "trade or commerce" - not unconscionable - CROWN PRIVILEGE - operation of s 47 of the Interpretation Act - right to suspend or remove - specific overrides general - public employment distinguished from officers with statutory powers or discretions

Area Health Services Act 1986 Health Services Act 1997 Industrial Arbitration Act 1940 Industrial Relations Act 1996 Interpretation Act 1987 LEGISLATION CITED : Police Service Act 1990 Protected Disclosures Act 1994 Public Schools (Scotland) Teachers Act 1882 (UK) State Authorities Non-Contributory Superannuation Act 1987 State Authorities Superannuation Act 1987 Trade Practices Act 1974 (Cth)

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20188/2006: Lynette Downe (Plaintiff) Sydney West Area Health Service (Defendant)

PARTIES : 30025/5006: Lynette Downe (Plaintiff) Sydney West Area Health Service (First Defendant) State of New South Wales (Second Defendant) Director-General of the New South Wales Health Service (Third Defendant)

COUNSEL : J L Trew QC / A E Maroya (Plaintiff) P M Kite SC / A B Gotting (Defendants)

SOLICITORS : Holman Webb Lawyers (Plaintiff) Crown Solicitor's Office (Defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20188/06 Lynette Downe v Sydney West Area Health Service

30025/06 Lynette Downe v Sydney West Area Health Service & 2 Ors

JUDGMENT 1 HIS HONOUR: Dr Lynette Downe challenges her "suspension" by the defendants from her performance of duty as the Director, Neonatal Intensive Care Unit ("the Unit") at Nepean Hospital ("the Hospital") in Penrith. Dr Downe also challenges a direction by the defendants to perform work at Westmead Hospital ("Westmead") as a Staff Specialist. 2 The defendants acknowledge that Dr Downe has exceptional clinical capacity. That capacity caused the defendants to act in a way, which, according to all of the parties, did not terminate or repudiate Dr Downe's employment. The defendants seem to want to retain her highly desirable skills. They do not want her to act as Director of the Unit. 3 Dr Downe made application to the Industrial Relations Commission (the Commission) of NSW under s 106 of the Industrial Relations Act 1996 for an order declaring void and/or varying her contract of employment the effect of which, if successful, would be to prevent and/or overcome the suspension and the direction to work at Westmead. She has also applied to the Federal Court of Australia alleging unconscionable conduct in contravention of s 51AA of the Trade Practices Act 1974 (Cth). By cross-vesting orders, both of these proceedings were removed into this Court to be joined with an action, previously commenced by Dr Downe, for breach of contract. 4 There are three defendants: the Sydney West Area Health Service, the State of New South Wales and the Director-General of the New South Wales Health Service. The defendants do not differentiate between their interests or liability and invite the Court to treat them as one. The invitation is accepted; and they will hereinafter be referred to as "the Health Service", which, except where discrimination between them is necessary or appropriate, will include the predecessors in title thereto. 5 The Health Service defends the proceedings on a number of bases, which raise the following issues:

(A) The circumstances of the appointment of Dr Downe and her employment history with the Health Service: see [6];

(B) The formal complaints made against Dr Downe: see [34];

(C) The Terms of Reference for the inquiry by the Honourable Russell Peterson QC ("the Peterson Inquiry"): see [41];

(D) The decision to suspend for the duration of the investigation: see [49];

(E) The report of the Honourable Russell Peterson QC ("the Peterson Report") as arbitrator: see [56];

(F) The Oral Evidence and Objective Facts of the Matters Raised in the Complaints: see [77];

(G) The decision to suspend indefinitely: see [215];

(H) The application of s 51AA of the Trade Practices Act to this employment contract: see [227];

(I) Whether, given Dr Downe's remuneration, s 106 of the Industrial Relations Act has application to her employment arrangement: see [239];

(J) Whether the Interpretation Act 1987 (in combination with the Area Health Services Act 1986) permits the Health Service's conduct: see [283];

(K) Whether the terms of appointment and employment of Dr Downe include either or both a duty to act in good faith, and/or a duty not to act in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between Dr Downe and the Health Service: see [320];

(L) Whether the Health Service's Disciplinary Procedure is incorporated into the terms and conditions of appointment and employment of Dr Downe and, if so, whether it permits the suspension by the Health Service: see [329];

(M) Whether the Peterson Report bound the Health Service and, if so, whether continuation of the suspension thereafter was a breach of the contract or any other duty/requirement: see [356];

(N) Whether the effect of the variation to the Staff Specialists (State) Award ("the Award") made on 28 April 2006 was to vary the contract of employment: see [360];

(O) Whether the variation to the Award had an effect on the capacity to enforce the contract: see [360];

(P) Whether Dr Downe acquiesced in her suspension and has either agreed to a variation of the contract to that extent or is otherwise estopped from challenging the suspension: see [384];

(Q) Whether, if s 106 of the Industrial Relations Act be applicable, the arrangement between Dr Downe and the Health Service includes the variation to the Award and whether s 106 may be used to void or vary an arrangement inconsistently with the variation to the Award: see [401];

(R) Whether the contract or arrangement, to the extent that it permits the Health Service's treatment of Dr Downe, is unfair within the meaning of s 106 of the Industrial Relations Act : see [404];

(S) Whether the Health Service is, pursuant to the contract, required to provide work to Dr Downe or, more accurately, required not to prevent Dr Downe from performing duties: see [410];

(T) Whether the suspension breached the contract of employment: see [410];

(U) Whether, if s 51AA of the Trade Practices Act be applicable, the conduct of the Health Service is unconscionable and therefore in contravention of that provision: see [432];

(V) Whether, if the combined effect of the Interpretation Act and the Area Health Services Act were to permit the challenged suspension, the act of suspending is an abuse of power and/or effected for an improper purpose and therefore void: see [432];

(W) If there be an actionable breach of contract, has damage been suffered: see [439];

(X) If there be an actionable breach of contract, whether orders may be made enforcing the contract, which is a contract for personal service: see [441]; and

(Y) Whether, if there be a successful cause of action for which remediable orders can be made, as a matter of discretion, orders should be made: see [441]. (A) Dr Downe's History and Appointment 6 As earlier stated, Dr Downe's skill, as a specialist neonatologist, is renowned. She undertook her paediatric training in Victoria and developed her subspecialty in both Australia and Canada. She practised in each and built up a remarkable reputation. 7 Neonatology, originally a sub-speciality of paediatrics, as the name suggests is concerned with the care of the high-risk newborn infant, but also concerned with the high-risk foetus. In the case of the newborn, the infant is always either seriously ill or significantly premature, or both. Neonatology is now a specialty recognised by the Royal Australasian College of Physicians. A Neonatal Intensive Care Unit, as may be obvious, is a unit that offers intensive care for those most seriously at risk. A Neonatal Intensive Care Unit may operate at different levels: levels 3 and 4 being the highest; and the difference between level 4 and level 3 is that a level 4 unit, although a term not often used, offers paediatric cardio surgery. Level 2 care may be offered by paediatricians, without persons who are recognised as having specialty neonatal qualifications, in a nursery other than an Intensive Care Unit. 8 In early 1990, Nepean Hospital offered Level 2 care and the Health Service determined that the level of care should be upgraded and that the Unit should be created. 9 As part of that process, Dr Downe was "headhunted" from Canada, where she was a Neonatal Fellow at McMaster University Medical Centre. Dr Downe had previously been a Neonatal Fellow at Monash Medical Centre Melbourne. An advertisement was published. Its terms relevantly included: " STAFF SPECIALIST - NEONATOLOGIST

The Nepean Hospital is a 350 bed acute general hospital and is an affiliated teaching hospital of the University of Sydney. The Hospital is undergoing expansion in both service provision and bed numbers.

By December 1994, The Nepean Hospital will be a 600 bed tertiary referral hospital and a full teaching hospital of the University of Sydney, with its own clinical school training 90 medical undergraduates.

A new Level III Neonatal Intensive Care Unit has been funded. Initially, provision has been made for three beds with a fourth to be added in the next financial year. There will possibly be expansion over subsequent years to an eight bed unit.

There is a well-established 26 bed Level II Nursery in operation. The successful applicant will be the Director of the Unit.

There are already five general Paediatricians attached to the Hospital, with resident medical officer and registrar cover…." (Emphasis in the original). The above advertisement was published, at least, on 15 March 1990 and, in late March or early April 1990, senior medical personnel associated with the Health Service contacted Dr Downe. Applications for the position closed on 30 April 1990. 10 At the time of the advertisement, the Nepean Hospital was under the control of the Wentworth Area Health Service ("WAHS"), which was not, in law, the Crown. Enquiries were directed to Dr Burrows, who was the Director of Medical Services and applications for employment were to be sent to the Chief Executive Officer of WAHS. 11 It seems that Dr Levy, then Head of Department, Paediatrics, spoke with and wrote to Dr Downe and sent to Dr Downe an application form for the position. It seems through the communication with Dr Levy, or through the advertisement, or both, all of the recited information in the advertisement was conveyed to Dr Downe, who contacted Dr Burrows. 12 In the telephone conversation, Dr Burrows informed Dr Downe, on inquiry, that apart from the Unit proposed at Nepean, there were two other nursery units in the WAHS and that these two Level 2 Nurseries at Hawkesbury and Blue Mountains Hospitals were not likely to become Neonatal Intensive Care Units. 13 The last exchange (relating to the two other Nurseries in the WAHS area) was a reference, it seems, to issues raised by the terms of the Application Form for the position. The Application Form, once completed, made reference to Position N380, as had the advertisement. Dr Downe initially completed it in part, with passages subsequently completed by the Health Service (or its predecessors in title). That part of the form that was completed by Dr Downe concludes with a declaration in the following terms: "I hereby certify that the information set out above is, to the best of my knowledge and belief, true and accurate in every detail. Further, I agree to the following:

1. To undergo a medical examination, if required, to assess my capability for employment;

2. I have read and understood the document entitled "Conditions of Employment";

3. I understand that I may be required to work in any facility under the jurisdiction of the Board of the Wentworth Area Health Service." It was signed by Dr Downe and dated 18 April 1990. 14 There were further discussions of no current relevance and Dr Downe attended an interview in June 1990. The interview obviously went well, but, it seems, there were no discussions concerning terms and conditions of employment. 15 It had become obvious from those conversations, I infer, that Dr Downe was the preferred candidate (if there were others). In order to be readily available for the position and better prepared, Dr Downe returned to Australia and filled two locum positions in Victoria. On 6 August 1990, Dr Downe wrote to Mr Hamilton, then CEO of WAHS, referring to a recent telephone conversation with Dr Levy. This letter is consistent with the understanding, partly conveyed in the advertisement, that Dr Downe would, if she were to fill the position, be the Director of the Unit and her initial task would be its establishment. 16 The abovementioned communication of 6 August predominantly related to the necessary equipment and services for a successful Level 3 Unit. It dealt with: support staff, including an additional neonatologist; registrar cover and administrative staff; alternative consultant cover to allow a minimum roster of 1 in 4 and preferably 1 in 5; return of patients to general paediatric care to be in the discretion of the Unit; 24 hour ancillary medical support, e.g. radiology, haematology and biochemical support; 24 hour bacteriology support; and like support that one would expect. The list was divided into "essential", "highly desirable", and "desirable, if possible" categories. 17 The covering letter for the above list mentioned that it had been compiled on the basis that Dr Downe "would be setting up the unit as Director". In the letter Dr Downe went on to record: "My feeling over recent weeks is that with the amount of time and commitment that it would entail to set up such a unit, [I] would prefer to be appointed as Director, rather than as the second neonatologist with the possibility of having a Director appointed at an indefinite time in the future who may well be someone with whom [I] would find it difficult to work." 18 The possibility of appointment to a position other than Director seems to have been a matter discussed. Such an appointment would be inconsistent with the advertisement and, inferentially, the position description for Position No. N380 for which Dr Downe applied. For reasons associated with the actual appointment and its terms, it matters not. The only other conditions discussed were matters mentioned in earlier communication that needed clarification and related to the associated academic position and to annual leave entitlements. 19 On 15 August 1990, Mr Hamilton, CEO of WAHS, replied and formally confirmed approval by the Board of WAHS for Dr Downe's appointment. It relevantly included the following: "I confirm the approval of this Board for your appointment as Staff Neonatologist in the capacity of Director, Neonatal Intensive Care Unit." 20 The letter agreed to the requirements of Dr Downe in her list and required her, once the Director's position were taken up, to review the proposed utilisation of those additional resources. The 15 August 1990 letter answered the annual leave enquiry and informed Dr Downe of the liaison with the University of Sydney as to the academic position. Mr Hamilton enclosed a report on the construction of the Level 3 Nursery and set out the applicable salary under the relevant award (on some assumptions, which proved ex post facto to be correct). That salary included an "Administrative Allowance in respect to Director" of $2,593 in a total salary of $104,620. The last paragraph of Mr Hamilton's letter was in the following terms: "I would appreciate your advice as to your acceptance of appointment as Director, Neonatal Intensive Care Unit, Nepean Hospital in accordance with the above conditions. Your advice as to the date on which you could take up duty in that position would also be appreciated." 21 On 26 August 1990, Dr Downe replied. The letter, in part, states: "In reply to your letter of 15.08.90 I am writing to confirm that I accept the appointment as Director, NICU, Nepean Hospital, as offered. I will be available to take up the position at the beginning of November." It then discusses temporary accommodation and the desire to purchase a home. 22 On 25 September 1990, Mr Hamilton confirmed the foregoing. He wrote: "Thank you for your letter of 26 August 1990 regarding your acceptance of the post of Director, NICU, Nepean Hospital.

I look forward to your commencing duty with Nepean Hospital and your organisation of Neonatal Intensive Care services offered through the hospital." The omitted part of the letter above discussed the accommodation issue and requested contact with Dr Burrows in relation to that matter and the finalisation of a specific commencement date. 23 Prior to accepting the position of Director, (i.e. sometime between June 1990 and 26 August 1990, and most probably just before 15 August 1990) Dr Downe clarified the term of the appointment as Director. In Victoria, where Dr Downe was by that time working, such appointments were for a fixed term: three to five years. Mr Hamilton told Dr Downe that "in New South Wales, these positions are permanent positions; that is, until you retire or choose to relinquish the position." 24 Mr Hamilton is now, and was at the time of the hearing, deceased. Notwithstanding the lack of corroboration for this conversation, I accept that it occurred in the terms recited or substantially to that effect. Dr Downe was a very impressive witness, whose evidence I accept. She was cross-examined thoroughly and at length. The cross-examination commenced on Day 2 of the hearing and concluded on Day 6. Dr Downe displayed, as one would expect, intelligence and clarity of thought and expression. She was careful, in the evidence she gave, to be accurate and precise. Her demeanour, her willingness to answer directly, without argument, and her willingness to answer in seeming disregard to whether the answer helped or hindered her case leads me to accept her evidence. I add that her evidence was consistent with the view I take of the independent evidence available. 25 From the above circumstances and evidence otherwise adduced, these conclusions must follow:

(a) Dr Downe has exceptionally good clinical and medical skills;

(b) Dr Downe was a desirable appointee to the position;

(c) The position advertised was a Staff Specialist, Position No. N380, being the Director of the proposed Neonatal Intensive Care Unit at Nepean Hospital;

(d) The position offered and accepted was as Director, Neonatal Intensive Care Unit, Nepean Hospital, which position was a particular position within the broader group "Staff Specialist";

(e) The position was deliberately not a "Neonatologist" simpliciter , i.e. other than Director;

(f) It was a requirement of the position that duties be performed as Director and that Dr Downe live in close proximity to the Hospital; and

(g) The requirement that the duties of the Director be performed was an essential feature of the contract and a requirement upon which both the Health Service and Dr Downe insisted and relied, and which was to each of their benefit. 26 Dr Downe commenced duties in November 1990 and was, until late 1991, the sole neonatologist at Nepean. She established the Unit, including overseeing purchasing and systems establishment, and oversaw its operations as well as performing the clinical work involved. In late 1991, Dr Coughtrey, another neonatologist, was appointed. I will refer to Dr Coughtrey later in discussing the complaints made against Dr Downe. By June 2004, there were four neonatologists working in the Unit and Dr Downe supervised the other three. 27 The evidence discloses that, notwithstanding Dr Downe's lack of personnel management experience, the Health Service provided to her little or no training in that area. 28 Further, there was no suggestion that at any stage Dr Downe did not satisfy any Key Performance Indicators (KPIs) set for her. Indeed, it seems the Unit was extremely successful in saving lives and rendering them more useful. From the evidence in these proceedings, it does not seem that any KPIs were set dealing with management of personnel, but, if they were, it seems that they were met, as evidence to the contrary would have been available to the Health Service and highly relevant to the issues of discretion with which the Health Service asked the Court to deal. 29 While it was later revealed that, during Dr Downe's period of employment prior to 1 July 2004, there were disciplinary issues discussed by staff relating to her, there had been no formal steps taken in relation to her employment as at that date. 30 On 1 July 2004, Dr Downe took long service leave to which she was entitled. She had obtained the consent of the Health Service (as is required by law and is otherwise appropriate). At the time that she went on leave, she was expecting (and no doubt looking forward to) a well-earned break, to return refreshed thereafter. The long service leave was scheduled for two months ending 6 September 2004. 31 Prior to proceeding on long service leave, Dr Downe had undergone a performance appraisal, during which no issues, which were subsequently raised, were ventilated. This was part of a process agreed between the Health Service and the industrial organisation representing Dr Downe (and other staff specialists), The Australian Salaried Medical Officers' Association (ASMOF). 32 On Thursday 2 September 2004 (during the second last working day of her leave), Dr Downe was notified by telephone that she was to be suspended from her duties, pending an investigation into allegations concerning "bullying and intimidation" of Hospital staff. Despite her request, she was informed of no details of either the content of the allegations or their source. Dr Downe protested that she had not been at the Hospital for two months. 33 On 3 September 2004, the Health Service wrote to Dr Downe confirming the suspension. The letter, over the signature of Mr Graham Jenkins (Deputy Administrator, WAHS) was succinct. It was in the following terms: " Re: Suspension from Duty

Following the receipt of a report concerning alleged inappropriate behaviour by yourself, it has been decided that you are to be suspended from duty on full pay effective from 3 September 2004, pending an investigation. Access arrangements for security and computer network have also been suspended at this time. It would be appreciated if you would return your keys to Security.

As indicated a formal investigation will be undertaken in relation to this matter and dependent on the outcome a disciplinary interview may be held.

It is emphasised that the decision to suspend you from duty does not mean that any decision about the allegations against you has been made, or that they have in any way been prejudged.

You will be advised in due course as to whether we will be proceeding to a disciplinary interview.

Confidentiality should be maintained regarding this matter, which should not be discussed with any persons (including employees of this Area Health Service) except your professional association.

You should not make any public comment in accordance with the Area's Code of Conduct, which I have attached for your information. Staff have been advised only that you will be continuing on annual leave at this stage.

The Area Health Service will meet the reasonable costs associated with an independent professional counselling service. Alternatively the Area provides a counselling service through the Staff Counsellors, Ms Margot Gook and Ms Beth Wilding who can be contacted on [a telephone number that is not repeated in this judgment]." (B) The Formal Complaints Against Dr Downe 34 While Dr Downe was absent on long service leave, Dr Mark Tracy was appointed Acting Director of the Unit. Dr Tracy acted in that position from 1 July 2004. He was continuing in that position at the time of the hearing. On and after 17 August 2004, a series of letters were written making formal complaint about Dr Downe and her alleged conduct. The letters, except the letter from Dr Pardey, were written purportedly as "Protected Disclosures". They were sent by Dr John Pardey (Obstetrician & Gynaecologist, Clinical Director of Women's and Children's Health at the Hospital) (17 August 2004), Dr Heather Coughtrey (Neonatologist at the Unit) (19 August 2004), Dr Mark Tracy (Acting Director of the Unit and Neonatologist) (23 August 2004) and Associate Professor Ralph Nanan (Director of Paediatrics) (25 and 26 August 2004). There was also a letter from Dr Tracy, dated 24 August 2004, extolling the virtues of the Unit and the change in attitude therein, since his elevation to the Acting Director's position. 35 The timing of the letters is beyond coincidence. Common sense dictates that there was discussion between the complainants (or some of them) prior to the complaints being lodged. (I will come to the evidence of the complainants and other witnesses later in these reasons.) This conclusion is reinforced by the existence of an email chain in which Mr Mark Cormack, the then Chief Executive of the Hospital, sent to Mr Geoff Murphy, Workplace Relations Manager of SWAHS, a copy of one of the letters of complaint, being that of Dr Coughtrey. The email chain concludes at 10.14pm on 16 August 2004 (i.e. three days before the date on the letter). It is a necessary inference that Mr Cormack was advising one or more complainants prior to their complaint being formally lodged with him. That advice may not have been as to the content of the complaint. But it included the form of the complaint and it included a request to reduce oral complaints to writing. 36 It is unnecessary to summarise each of the letters of complaint as, following discussions between the Health Service and ASMOF, there was agreement on the terms of the allegations. The terms of that agreement gave rise to part of the Terms of Reference for the Peterson Inquiry. The other aspect of the Terms of Reference related to an issue raised by Dr Downe that, in summary, she believed that she was "the subject of a systematic campaign with the ultimate end being coercing me to resign my position" with the Health Service (letter 28 June 2004, Dr Downe to Mr Mark Cormack, Exhibit P2, page 47). 37 The complaint by Dr Downe of a systematic campaign against her was particularised by the recitation of three allegedly unfounded complaints against her in circumstances where at least one of those complaints had not been brought to her attention. The three allegedly unfounded complaints will be dealt with more fully later in this judgment, but involved a complaint, in each case, of an alleged statement by Dr Downe. The first of them related to a statement the effect of which was that paediatricians were killing babies; the second was the use of the word "slough" in a derogatory sense of paediatricians; and the third was an allegedly offensive remark about a visiting medical officer who was an obstetrician. 38 The letter of complaint of Dr Downe of 28 June 2004 was the catalyst for a matter raised by ASMOF on 6 October 2004. The letter raised a series of matters that were said to give rise to a pattern of victimisation of Dr Downe as a result of her raising genuine concerns about matters of patient safety and medico-legal issues. 39 The subject matter of the complaints about Dr Downe expressed in the letters of complaint by Drs Pardey, Coughtrey and Tracy were, as earlier stated, summarised and formed Part A of the Terms of Reference of the Peterson Inquiry. The complaints of Dr Downe as expressed by ASMOF formed Part B of the Terms of Reference of the Peterson Inquiry. 40 The terms of reference, as one would expect, were the subject of draft and redraft. It should be noted, it seems, that the Honourable Russell Peterson QC had an earlier draft of the Terms of Reference until some time late in the course of the interviews with the persons directly involved. It is an irresistible inference that the Honourable Russell Peterson QC was given that earlier draft by the Health Service. This was corrected during the interview with Dr Downe. (C) Terms of Reference

As submitted, the Terms of Reference were as follows:

" Terms of Reference for investigation by the Honourable Mr Russell Peterson QC of allegations made in August 2004 concerning Dr Lyn Downe, as well as matters raised by ASMOF on behalf of Dr Downe in correspondence dated 6 October 2004.

Terms of Reference incorporate variations agreed to between the parties at the meeting held on 21 October, 2004.

1. Investigate the allegations against Dr Lyn Downe set out in section A of the table below and advise whether they are established.

2. Investigate the matters raised by ASMOF on behalf of Dr Downe set out in section B of the table below and advise whether the allegations contained within those matters are established.

Ref Allegation In connection with the employment of a 4th staff specialist neonatologist in the NICU in early 2004, it is alleged that the stated intention was to create a 1 in 4 on call roster for all staff neonatologists. This intention was stated in a job advertisement prepared by you and released on 8 may 2004, in the following terms: "

The new appointee would join the current staff of 3 Neonatologists to create a 1 in 4 on-call to the NICU..." In fact the roster was constructed by you in such a way that your on call load diminished to 1 in 7 or 8 whilst the on call load of the others remained little changed at 1 in 3 ½. 1. It is further alleged that you have abused your power as director in relation to the neonatologists' on call roster by representing that you had the authority of the Women's & Children's Health Executive Committee to determine the on call roster for all neonatologists at your absolute discretion and that you said to the other three neonatologists words to the following effect: "Area Executive have said that I have permission to do less on-call."

It is further alleged that in fact, the authority to determine the on call roster was subject to the agreement of all neonatologists. 2. It is alleged that when dissatisfaction about the 2004 on call roster following the appointment of the 4th staff neonatologist was raised with you by Dr Coughtrey at a meeting of consultants in or around May 2004, you stated to Dr Coughtrey after that meeting in the tutorial room in the NICU that the manager of the Women's & Children's Health Division (Maya Drum) had stated that if Dr Coughtrey was not happy with the on calf roster, she could leave. It is alleged that you initiated the 2004 Neonate Review to discredit Dr Coughtrey and misled her to believe that the review concerned the role of paediatricians in the NICU.

In particular it is alleged that in early 2004 at a consultants meeting at which Drs Klimek and Tracy were present, but Dr Coughtrey was not, you stated that you believed that Dr Coughtrey was "impaired" such as to cause serious adverse outcomes for patients, without giving any examples. 3. At a subsequent consultants meeting on 8 June 2004, you advised the consultants that the purpose of the Review was to examine the role of Paediatricians in the NICU and that you didn't know why the Review was happening and that it was "another waste of money.

However, the terms of reference of the Review, prepared by you, included "... concerns relating to practitioners to be documented for actioning" It is alleged that about 7 years ago, you misinformed Dr Coughtrey about her eligibility for senior staff specialist status. In particular, it is alleged that when Dr Coughtrey enquired of you; about the criteria for eligibility for senior staff specialist status, you replied to her in words to the following effect: "It is only for managers".

4. It is further alleged that approximately 4 years ago you gave similar advice to Dr Tracy by telling him that senior staff specialist status was "for directors only". It is further alleged that on 3 October 2003, at a meeting between yourself, Dr Tracy and Mr Sim Mead of ASMOF, Mr Mead said to Dr Tracy words to the following effect: "... you are entitled if you fulfil the criteria ... unless you have done something major wrong."

It is alleged that you then said words to the following effect: "There is no way that I would allow DR Coughtrey to get this recognition. I work much harder than anyone else. This was recompense for that extra work." When Dr Tracy applied for senior staff specialist status a number of weeks later (which recognition he was granted... as was DR Coughtrey when she applied some weeks ago), it is alleged that you said to Dr Tracy words to the following effect: "Don't tell Heather Coughtrey about this." It is alleged that you discouraged Dr Tracy from involving Dr Coughtrey in research he was conducting, thereby disadvantaging her professionally and detracting from the worth of the research. In particular, it is alleged that on numerous occasions you have, in the presence-of Dr Tracy, referred to Dr Coughtrey as being "lazy", "stupid" and "a fucking lazy bitch". When Dr Tracy discussed with you earlier this year his plan to conduct a research project into ventilators used in the NICU on neonates, it is alleged that you said words to the following effect: "If you want Heather in then I'm out. You and your research won't get my support." 5. As a consequence of your alleged response to Dr Tracy, it is further alleged that this research project has not commenced, thus disadvantaging Drs Tracy and Coughtrey professionally, as well as future patients of the NICU. 6. It is alleged that you have spoken of Dr Coughtrey in derogatory and dismissive terms to 3rd parties. In addition to the matters referred to in 5 above, it is alleged that you have referred to Dr Coughtrey in similar terms in recent years, and continue to do so, in the presence of Drs Tracy and Klimek as well as Irene Wong and Jennifer Dawson. It is alleged that you have, without foundation, sought to solicit from Dr Tracy, statements adverse to Dr Coughtrey, to the effect that she is impaired. This is alleged to have occurred on many occasions over a number of years. On one such occasion, which is referred to in item 3 above, when Dr Coughtrey was on leave, it is alleged that at a consultants meeting at which yourself and Drs Klimek and Tracy were present, you said that you were concerned that Dr Coughtrey was impaired such as to lead serious adverse outcomes, although you gave no examples. 7. Despite protestations by Drs Klimek and Tracy to the effect that they were both unaware of any instances of impaired clinical judgement on the part of Dr Coughtrey, it is alleged that you continued to place pressure on Dr Tracy to acknowledge that an occasional factual error by Dr Coughtrey had occurred during consultant handover. 8. It is alleged that when Dr Tracy fell ill with Ross River Virus in 2001, you were unsupportive and gave him poor advice. In this regard it is alleged that, despite Dr Tracy's illness, you took no steps to find a locum to replace him and pressured him to work on a part-time basis, which was not in the interests of Dr Tracy or the patients of the NICU. It is alleged that you (inappropriately) promoted the use of an inhaled steroid (fluticasone) in the NICU, despite the fact that this drug is not used in any other neonatal unit as it is more potent than budesonide and has more potential for systemic effects. 9. It is further alleged that you have refused to have any discussion with Dr Tracy about this issue despite his concerns based on advice from Dr Peter Cooper, Respiratory Physician at Westmead Children's Hospital, to use an alternative. It is alleged that you have abused your power in relation to rostering of duty and leave for neonatologists by rostering them on call both at the beginning and end of periods of leave. For example, you rostered Dr Tracy on-call from 6-12 January, 2003, before he proceeded on leave from 13-31 January, and again, after he returned from leave, he was rostered on-call from 3-9 February, 2003. 10. It is further alleged that you ensure that you do not roster yourself on-call in the period before you proceed on, or return from, leave. It is alleged that you actively oppose collaboration between the NICU and the-Paediatric department. For example, this year it is alleged that you have resisted the commencement of a research study proposed by Mr James Marceau, a senior neonatal nurse, into the use of sucrose to settle drug-withdrawing babies. Mr Marceau's study was to be part of his Masters-Degree, which Professor Nanan is supervising. 11. It is alleged that you stated to Dr Tracy: "These are our patients... not his (meaning Professor Nanan)". 12. It is alleged that you have unjustly berated the head of the paediatric department (Professor Nanan) to Dr Tracy, by saying to Dr Tracy over the past six months things such as: "He (Professor Nanan) is a bastard". 13. It is alleged that when Dr Pardey commenced as Head of Women's & Children's Health, you refused to meet with him without union presence. It is further alleged that you refused 3-4 requests made by Dr Pardey through your secretary to meet with him. 14. It is alleged that you stated to a group of staff in a public place that a named VMO obstetrician was "the worst obstetrician in the west of Sydney".

Ref Allegation 1. The apparent failure to undertake an investigation of the incident where a Root Cause Analysis (RCA) was recommended. 2. The failure by the Area to resolve the issue of the involvement of paediatricians in the NICU despite three independent reviews. 3. The failure by the Area to assess whether the two complaints (March/April 2004 and July/August 2004) against Dr Downe were vexatious, particularly in the light of point 2 above, as required under Circular 99/45. 4. The apparent breach of confidentiality in relation to Dr Coughtrey and the relationship of any breach to Allegation 3. 5. The pressure from Dr Pardey on Dr Downe to provide services to the private hospital and the failure of the Area to address this issue. 6. The reasons for the failure of the Area to investigate complaints against Dr Pardey by Dr Downe and Dr Tracy in 1999. 7. The insistence by the Area that Dr Pardey (or Dr Nanan) be involved in Dr Downe's performance assessment in June 2004. 8. Whether the above matters amount to unfair or unreasonable treatment and/or victimisation of Dr Downe by the Area or its employees/contractors."

41 The process of investigation was agreed at a meeting at which were present representatives of the Health Service, ASMOF, Dr Downe, counsel for the parties and the Honourable Russell Peterson QC. The Honourable Russell Peterson QC then interviewed a number of persons, other than Dr Downe, identified in advance as being relevant to the allegations referred. The notes of those interviews were then made available to ASMOF and Dr Downe to enable Dr Downe then to be interviewed, to respond to matters raised in the earlier interviews and otherwise to put the position that she wished. 42 Even though there were complaints by both ASMOF and Dr Downe that there were insufficient particulars of the allegations, the process adopted was agreed on the basis that the notes of the interview would, necessarily, provide the particulars otherwise desired. 43 The Honourable Russell Peterson QC described the investigation as "not designed to be a wide-ranging inquiry seeking any evidence of fault; it was confined to an ascertainment of the facts concerned strictly with the allegations as they were framed, and a commentary upon those facts as found." (Paragraph 3 of the Peterson Report) 44 Consistent with the attitude of the Heath Service in these proceedings, it was stressed by the Health Service in the Peterson Inquiry: "none of the questions which arise about Dr Downe's performance concern her clinical skills and their application". The Peterson Report (paragraph 5) records the Honourable Russell Peterson QC as saying: "Everything I have heard in that [relating to clinical skill] respect, not recorded in the notes because of strict irrelevance to the issues but nevertheless a repeated feature of the commentary received from the interviewees, supports the view that Dr Downe is an excellent clinician with a devotion to her patients and their parents. The issues are confined to the area of her relationship with other staff, including particularly the neonatologists under her supervision in the NICU." 45 Paragraph 1 of the Peterson Report comments on the capacity of the NICU (the term used for the Unit) to function if Dr Downe were reinstated into an active position as Director of the Unit. As can be seen from the Terms of Reference set out above, such a finding, recommendation or conclusion is plainly outside the Terms of Reference. Nevertheless, and despite the agreement as to the precise terms to be referred, that comment formed a significant factor in the conduct of the Health Service in continuing the suspension of Dr Downe. 46 The Honourable Russell Peterson QC said: "I was asked to undertake the task that would otherwise be performed by management, namely to ascertain whether there was any substance to the allegations. However, while the allegations were found to be only partially substantiated, the investigation revealed that the working relationships of staff within the NICU have been imbued, for many years, with a high degree of conflict and animosity. While this involved not only the Director of the NICU, it seems clear that the staff there were not provided with the managerial leadership that one would expect of a Director. The Director's relationships with others outside the NICU were often affected by similar conflict. These situations, in my view have caused the interviews with persons other than Dr. Downe to frequently involve the expression of personal opinions and allegations of a kind which seem to me to mean, when taken together with the fact of her absence now for some months, that there is no possibility of her returning to the NICU in any capacity. In particular, I am quite unable to see how the three remaining neonatologists would be able to work satisfactorily with, let alone under, Dr. Downe given their participation in the making of the original allegations and their forthrightness in interviews with me. However one might view the particular allegations the subject of this investigation, there remains in some staff a deep-seated animosity towards the Director which I consider is irremovable and, in the event of her return, likely to be destructive of the ability of the NICU to function. I consider the matter is one appropriate for the parties to resolve by finding an agreed solution." 47 I will deal later in this judgment with the appropriateness of that conclusion and the inconsistency between the procedures, which mandated the Inquiry itself, and a finding that action should occur, of a disciplinary nature, absent allegations of a particular kind. I should add that given the precise and express allegations with which the Inquiry was concerned, Dr Downe and/or ASMOF had no opportunity to address that finding with the Honourable Russell Peterson QC. 48 Moreover, and somewhat more importantly given the task of the Court, the Peterson Inquiry did not seek to test the truthfulness of the allegations or to conduct a full and complete inquiry into all of the circumstances that gave rise to the allegations. For example, there was no cross-examination of any interviewee. Nor was there an investigation of documentation, nor otherwise of the circumstances surrounding the allegations made. (D) The Decision to Suspend for the Duration of the Investigation 49 As earlier stated, on 1 July 2004, Dr Downe commenced a period of long service leave anticipated to be for a period of two months. Between 17 August 2004 and 23 August 2004, complaints were received, which related to the new roster for neonatologists and the method of its design and implementation (an allegation purportedly relating to abuse of power); an allegation that Dr Downe told Dr Coughtrey that if she did not like the roster she could leave; an allegation that the independent neonatal review by Dr Reynolds (the "Reynolds Inquiry") was initiated to discredit Dr Coughtrey; an allegation that "seven" years previously, misinformation had been given to Dr Coughtrey about eligibility for senior staff specialist status; an allegation that there was discouragement of Dr Tracy's attempts to involve Dr Coughtrey in research; an allegation that Dr Downe spoke derogatorily and dismissively of Dr Coughtrey to other persons; an allegation that attempts were made to solicit adverse comments of Dr Coughtrey from Dr Tracy; an allegation of lack of supportiveness of a staff member; an allegation about the over-use of inhaled steroid; another detailed complaint relating to rostering immediately prior to and immediately after periods of leave; lack of collaboration with the paediatric department; unjustifiable berating of the head of the paediatric department; the refusal to meet with Dr Pardey for a period (which was by then a past date); and a statement of a derogatory nature made in relation to an obstetrician. 50 None of the allegations were emergent. Most of them had some significant history. None of them seemed to preclude the performance of work during the course of an investigation. In one case, at least, the decision makers within the Health Service knew that the allegation was false. I will detail the basis of these conclusions in the course of discussing the merits or otherwise of the allegations. It is sufficient, for the present purpose, to note that none of the allegations, including in context the allegation concerning inhaled steroid, directly impacted upon the capacity of the Unit to continue to operate or threatened the life or health of any patient were Dr Downe to continue to perform duties. 51 Nevertheless, the Health Service determined that, pending the investigation of these complaints, Dr Downe ought not perform work in the Unit and purported to "suspend" her, as earlier outlined. 52 Before detailing the findings of the inquiry, it is appropriate to point out that the circumstances leading to the suspension involved a letter to Dr Downe from the Health Service dated 3 September 2004 (see [33] above), which letter required Dr Downe to maintain confidentiality and not discuss the matter with any persons, including fellow employees, which, necessarily, included persons, if any, who would support her version of events. 53 Further, Dr Downe was prohibited from making any public comment and was assured that members of staff "have been advised only that you will be continuing on annual leave at this stage". 54 The last of those statements is plainly wrong, misleading and possibly deliberately so. In the unlikely event that the statement was intended to refer to past advice, no such advice had been given. If the far more probable construction of the letter, being that it relates to any advice to be given, were adopted, then the description in the first sentence of this paragraph is even more apposite. The staff were informed by "Confidential Memorandum" in the following terms: " CONFIDENTIAL MEMORANDUM - TO ALL NICU STAFF

SUBJECT: Dr Lyn Downe _______________________________________________________________

Please be advised that Dr Lyn Downe will not be required to attend for duty until further notice pending an investigation.

This is a fact-finding investigation with regards to some complaints by staff. The complaints do not relate to Dr Lyn Downe's clinical standards. The purpose of the investigation is to ascertain facts in regards to the complaints that have been made. It is not a disciplinary process and any further action will depend on the findings of the investigation.

All staff are to maintain the normal standard of professionalism and confidentiality and not to speculate or gossip; to do so may be prejudicial to the process and not in the best interest of NICU or the Hospital.

Mark Cormack" 55 It is plain that members of staff were not informed that Dr Downe was continuing on annual leave. They were informed that complaints had been made. They were not informed of the nature of the complaints, other than that they did not relate to Dr Downe's clinical standards. They were informed of an investigation into the complaints and that Dr Downe was not required to attend for duty until further notice pending that investigation. (E) The Peterson Report 56 The Honourable Russell Peterson QC set out his findings on the specific matters referred to him. As previously noted, not in any way as a criticism, the Report did not seek to resolve a number of areas of conflict in versions. The process undertaken by the Honourable Russell Peterson QC did not allow for the resolution of those. Nevertheless, it is clear from the Report that, even without finally resolving conflicts in evidence, the Honourable Russell Peterson QC found that most of the allegations were not substantiated and those areas that were substantiated were minor or inconsequential. 57 In relation to Allegations A1 and A2 (beyond call roster), the allegation related to what the Peterson Report referred to as "misperceptions … that the term 1 in 4 meant only 1 week on call in any 4 weeks." The Honourable Russell Peterson QC went on to remark that he accepted that "4 persons are incapable over time of covering a seven-day 24 hour roster by a commitment limited to 1 week in 4", and "that aspect of the allegation cannot be substantiated." 58 As to the allegation relating to Dr Downe saying to Dr Coughtrey that Ms Drum had stated that if she (Dr Coughtrey) was not happy with the on call roster, she could leave (Allegation A3), the Honourable Russell Peterson QC could not resolve what he considered to be a conflict in the evidence between Dr Downe and Ms Drum. However, the Report notes that Dr Downe "had achieved a not unreasonable outcome by a process strictly inconsistent with the instruction given to her", assuming that Ms Drum's version of the conversation was accurate. In those circumstances, the Honourable Russell Peterson QC considered "this allegation is not made out". 59 In relation to the initiation of the 2004 neonate review (the Reynolds Inquiry), it was alleged against Dr Downe that she initiated the 2004 review and misled Dr Coughtrey to believe that the review concerned the role of paediatricians in the Unit. The Peterson Report holds that "the main parts of this allegation cannot be substantiated". It also notes: "it is established beyond question that Mr Cormack decided to have the Review and that he and Ms Drum, not Dr Downe, wrote the Terms of Reference." 60 Allegation A4 deals with advice allegedly given by Dr Downe to Dr Coughtrey in 1994 (described as 7 years earlier) that Dr Coughtrey was not eligible for an award classification of senior staff specialist. There is no suggestion that, if the advice were given, it was knowingly wrong. The other aspect of this allegation is the reaction by Dr Downe to information, provided by ASMOF, some 9 ½ years later than the earlier advice, that there was such an entitlement by senior staff, in this instance Dr Tracy. Dr Downe, it was alleged, opposed Dr Coughtrey getting this recognition and asked Dr Tracy not to tell her. (The full allegation is set out in Item A4 of the Terms of Reference above). 61 With respect to the Honourable Russell Peterson QC, I agree with his statement of fairly obvious problems with this allegation. First, the Report notes that there is no direct conflict between the competing versions, because Dr Downe has no recollection of it. Secondly, the Report notes that a failure of Dr Downe to recollect it does not mean that Dr Downe must have made the observation. Thirdly, the Report notes that the issue concerns an award right and that Dr Coughtrey could easily have checked with her union and the Report questions "why one would so readily accept the word of another one disliked or despised". Notwithstanding the lack of recollection of Dr Downe, the obvious questions that arise from this allegation caused the Honourable Russell Peterson QC to note that it was "difficult to take a positive view against Dr Downe on this issue at this stage". 62 As to the balance of allegation A4, namely the allegation of unfair treatment of Dr Coughtrey, the Report notes and implicitly accepts that the entitlement is an entitlement under the award and Dr Downe has no role to play in selecting or approving staff for senior status. No comment is made as to whether the comments, if made, reflected adversely upon Dr Downe's role as Director of the Unit. 63 Allegation A5, as noted above, dealt with the discouragement by Dr Downe of Dr Tracy seeking to involve Dr Coughtrey in research. The consequence, it is said, of that discouragement is that the research project has not commenced and thereby Drs Tracy and Coughtrey have been disadvantaged professionally, as have future patients. The Honourable Russell Peterson QC reported that it was "difficult to precisely find against Dr Downe" on that issue. He noted that an investigation was required of the volume of research done, by whom and with whom, the protocol and ethics development and the success or likelihood of it. Those aspects were, in the view of the Honourable Russel Peterson QC, not reasonable for present investigation and might resolve themselves one way or the other. 64 Allegations A5, A6 and A12 are summarised by the Honourable Russell Peterson QC as the use of derogatory language. This allegation is one that has support, according to the finding of the Report. The Report recites the denial by Dr Downe of the use of the "F" word but otherwise acceptance by her that derogatory language occurs from time to time in the Unit. It also notes that derogatory language occurred in the absence of Dr Downe and occurred during 2000 when Dr Downe was on study leave. The Report notes, accurately, that "it will be a matter of the weight to be given to any such finding" and the necessary inference from the Report is that while derogatory language was used, it was not considered to be particularly problematic, was not confined to Dr Downe or reactions to her, and would not, of itself, reasonably involve the imposition of disciplinary action. 65 Allegation A7 relates to the soliciting of members of staff of adverse statements relating to Dr Coughtrey. The Report holds that "this allegation has not been shown to have any support". The Report notes that the Director's role would necessarily involve, from time to time, unavoidable inquiries into the performance of others. According to the Report, there is no support for a view that any inquiry of that kind reflected a concern that was contrived or was other than bona fide. 66 Allegation A8 involves the lack of support for Dr Tracy when he was ill. The Report concludes: "this aspect is without foundation". Moreover, after noting that the allegation is somewhat uncertain in its terms, the Report seems to suggest that the allegation itself is contrived. 67 Allegation A9 deals with the overuse of inhaled steroids. This is a clinical issue, to which I will return. Nevertheless the Report notes the supply by Dr Downe of records refuting this allegation and considered "that the answer supplied by Dr Downe is overwhelming. The records seem to speak for themselves in that respect." 68 Allegation A10 involved the rostering of other neonatologists immediately before and after leave periods and the Report notes that "far from abusing her position to her advantage, Dr Downe in fact accepts a burden at least equal to that for the other neonatologists". 69 Allegation A11 dealt with collaboration with Paediatrics. The Report considered that Dr Downe effectively answered this allegation. The Report noted that this was an aspect of what seemed to be "an on-going 'turf war' over the management of babies" in the Unit. 70 The Report notes that there had been three independent reviews relating to the management of babies in the Unit and Dr Downe's actions are in pursuit of those recommendations and as such are prone to be misconstrued as a resistance to collaboration. The Report notes, the unarguable proposition, that "there is no possibility of suggesting that her [Dr Downe's] aims are not in the interests of the babies, as that is the basis of the recommendations". It further notes what implicitly is a criticism of senior management that "it is difficult to understand why, if the reviews have recommended a particular course of action, now since 1995, there has been a failure to implement the recommendations". 71 Further the Report notes that there was no evidence brought forward which could demonstrate an actual refusal or failure by Dr Downe to collaborate with Paediatrics and certainly none with any detrimental effects on babies. The Report found nothing of substance in the allegation. 72 Allegation A13 is divided into two parts: the refusal to meet with Dr Pardey; and the allegation that Dr Downe made reference to "the worst obstetrician in the west" (a reference that was not alleged to be about Dr Pardey, but of another). As to the first part, the Report notes that it depends upon competing oral evidence, which cannot be resolved by the Inquiry. Dr Downe denied refusal to attend any such meetings. The allegation however, as summarised, involves Dr Downe's secretary, who made arrangements for all such meetings, and whose "evidence" before the Peterson Inquiry was very clearly that no attempt was ever made with her to arrange a meeting of the two persons. That allegation (or that part of the allegation) was held to be unsubstantiated with very little possibility of the issue being held against Dr Downe. 73 The second part of Allegation A13 dealing with the statement about "the worst obstetrician in the west" resulted in a finding that there was no evidence produced which could support this allegation. Dr Downe denied the allegation and no other material, apart from the bald assertion, was available. 74 Lastly, having considered all of the factual matters and allegations against Dr Downe, the Peterson Report did not detail findings in relation to Part B of the Terms of Inquiry, the Honourable Russell Peterson QC deciding "that it would be to go beyond what is necessary to investigate further the facts surrounding the allegations made by Dr Downe". Notwithstanding that approach, the Report notes that the Honourable Russell Peterson QC has "not been persuaded that there is any substance in allegations B1 and B4". The other allegations, the Report notes, raise matters that are potentially lengthy and involve serious questions and possible offences and the view of the Honourable Russell Peterson QC was that "it is preferable that the parties apply themselves to the task of seeking an amicable solution to the overall problem disclosed in this matter, with the knowledge, however, that these issues remain extant." 75 It is plain, from the foregoing, that the allegations made against Dr Downe were largely unsubstantiated. Those allegations that could be "substantiated" either involved a clinical assessment of the appropriateness of a greater role of paediatricians in the Unit, contrary to independent reviews, or involved the use of colourful language in which Dr Downe was one of many involved in that practice. 76 Overall it is fair to summarise the effect of the Report as one that holds that no serious complaint against Dr Downe is substantiated. Further, with the possible exception of three of the allegations made by Dr Downe, no investigation was finalised into the matters raised by her. Allegation B2, the Report, by necessary inference, held was substantiated (see [69], [70] and [71] above). In relation to Allegations B1 and B4, the Honourable Russell Peterson QC was not persuaded that there was any substance to the allegations. (F) The Oral Evidence and Objective Facts of the Matters Raised in the Complaints 77 In dealing with the objective facts surrounding the matters that gave rise to the Peterson Inquiry and therefore the initial (and eventual) suspension, it is necessary to deal briefly with the credit and demeanour of each of the witnesses and then the allegations. 78 I have already commented on the credit and demeanour of Dr Downe in relation to the conversation with Mr Hamilton in or about September 1990 (see [24] above). I reiterate that Dr Downe was a person whose evidence I accept for the reasons set out already and that conclusion applies to all of her evidence and the conflicts that arise in the evidence. I will not, in these general comments, deal with each and every witness, but will deal with the major and/or contentious witnesses. Dr John Pardey 79 I deal firstly with Dr Pardey. He was an obstetrician and gynaecologist and was the Clinical Director, Women's and Children's Health at Nepean Hospital. Ultimately, after cross-examination, there was not a great deal contentious about the evidence of Dr Pardey. The fundamental issue of concern to Dr Pardey involved an issue of competing clinical assessment that did not depend upon the credit of any particular witness. In one aspect only was there a significant, relevant contention of fact and that related to the assertion that Dr Downe refused to meet with Dr Pardey on a number of occasions. 80 To the extent that there is a difference (and I doubt that there is) between the evidence of Dr Pardey and the evidence of Dr Downe on this aspect, I prefer the evidence of Dr Downe. There are two reasons for this. First, Dr Pardey made the assertion in his Affidavit that he had a conversation with Dr Downe. The text of that conversation is given at paragraph 15 of his Affidavit. In cross-examination, in relation to this relatively damning accusation of a refusal by Dr Downe to meet with someone with whom she was working (and may at least in part be answerable), it became clear that not only did Dr Pardey not remember the precise words that were used (which is not unusual and would be understandable), but he agreed that it was possible that the conversation did not occur at all. 81 In cross-examination Dr Pardey concedes that the attempt to arrange the meetings may have or probably would have occurred as between Dr Pardey's secretary and Dr Downe's secretary and not by a direct conversation between the two medical practitioners. 82 The willingness to swear to the conversation in precise terms, even though when tested, it was conceded that the conversation, as such, probably never occurred, is consistent with the general demeanour of Dr Pardey. Dr Pardey gave the impression that he considered that giving evidence in the witness box was a performance. He was prepared to reconstruct where there was no memory and embellish answers in a way that gave the impression that he was seeking to defend his own position rather than give evidence of facts that he recalls. The embellishment of his answers was effected in a manner, which sought to make the answers esoteric and it seemed that he did so for the purpose of making his evidence more believable and less open to challenge. 83 Dr Pardey gave evidence that, if Dr Downe were once more to be performing work as the Director of the Unit, he would "put a line through the past". It would, he said, be difficult to move forward with trust, but he would seek to do that over time. 84 The lack of trust of Dr Downe by Dr Pardey is said to have been on the basis of her criticism of his performance of a caesarean operation in 1999. The obvious difficulty with that issue preventing Dr Pardey working with Dr Downe is that Dr Pardey worked with Dr Downe between 1999 and 2004. 85 There were a number of issues between Dr Pardey and Dr Downe, which the Health Service seeks to use as a reason why, were I otherwise minded to make an order, an order would not be made. Those issues are part of the details of what are said to be personality conflicts that would prevent Dr Downe from working as the Director of the Unit. 86 There are two matters upon which, in relation to Dr Pardey, Dr Downe's conflicts arise. One of the matters is the complaint made by Dr Pardey relating to the refusal of Dr Downe to allow neonatologists to work in the private hospital, which was in grounds adjacent to Nepean Hospital. The concerns in relation to neonatologists working in the private hospital were concerns expressed by Dr Downe because of the lack of insurance cover for neonatologists when working outside the public hospital system. This is a legitimate concern of Dr Downe and, somewhat ironically, is a concern for the protection of the neonatologists working in the Unit, at least two of whom raised complaints about Dr Downe's lack of support for other neonatologists in the Unit. 87 The other aspect of contention between the two was in relation to a conversation concerning the provision of an equipment list. 88 To the extent that it is necessary to deal with this issue (and its relevance, if any, is extremely marginal), I accept the version of events given by Dr Downe. I accept that Dr Downe did not refuse to do a list and stated as much. I accept that Dr Downe agreed at an executive meeting to provide an equipment list in the timeframe required by Mr Graham Jenkins and I accept that Dr Pardey insisted upon a more stringent timeline in words that were threatening of Dr Downe's position to which Dr Downe responded: "You seem to be suggesting that my position is conditional upon doing this list. I feel intimidated by that implication." 89 I do not consider that Dr Downe acted in any way unreasonably in that exchange or in a manner that would suggest any difficulty in personal relations. Professor Jane Gordon 90 Professor Gordon's role in the events leading up to the suspension of Dr Downe and thereafter is minimal, in any contentious sense. Professor Gordon is the Director of Clinical Operations, Western Cluster, of the Sydney Western Area Health Service and has occupied that position since January 2005. That position includes responsibility for Nepean Hospital and other hospitals in the area. She is a most senior administrator whose background was Area Director of Nursing and Health Service Evaluation. She has been employed at the Health Service since 1997. 91 Professor Gordon took over responsibility for the issues relating to Dr Downe from Mr Cormack and did so in January 2005. She made clear that the direction to work at Westmead, to which earlier reference has been made, is and was a direction inconsistent with Dr Downe working at Nepean at all or as Director. Professor Gordon was not directly responsible for the Unit between 2001 and 2004 but did receive a telephone call from Mr Cormack in early September 2004 to the effect that Dr Downe was to be suspended. 92 When Professor Gordon started with the Health Service in 1997, Dr Spurrett was the Clinical Director of Women's and Children's Health and was Dr Downe's immediate supervisor for administrative purposes. From 1998, Professor Gordon became her immediate supervisor. 93 Professor Gordon gave evidence as to complaints by Dr Downe about other practitioners, and in particular Dr John Smyth. At the meeting to deal with that complaint, Dr Smyth complained about Dr Downe. 94 When Professor Gordon came back to take on responsibility for Nepean Hospital in January 2005, she took over management responsibility for Dr Downe from Mr Cormack. 95 In cross-examination, Professor Gordon expressed the view that the Peterson Report was not in favour of Dr Downe. She was taken to a number of the findings, but took the view that her opinion as to the effect of the Peterson Report was based upon the entire Report and not the substantiation of any, or all, individual complaints. This is a reference to the comments, in paragraph 1 of the Report, which have been extracted above. 96 It should be made clear that, even if one were to accept the capacity of the Report to enter into the matters expressed in paragraph 1 (and I do not), and accept that the findings therein were open on the material before the Inquiry, there is no apportionment of responsibility for the breakdown in personal relationships. 97 Therefore, Professor Gordon's attitude is to sheet home to Dr Downe responsibility for the personal relationship breakdown to which the Report refers. In doing so, Professor Gordon disadvantages Dr Downe. Yet, there had been no investigation of the merits of that issue and, as will become clearer in the assessment of the facts in this judgment, a very significant part of the personal relationship breakdown has been caused directly by management action, or the lack of action, which, at best, can be described as "inappropriate". That above-described action or inaction occurred at a management level far more senior than that exercised by Dr Downe and was occurring, in some respects, despite the protestations of Dr Downe. 98 I should, at this point, make clear that the foregoing statement is not a criticism of anything that Professor Gordon has or has not done. The issues with which I will deal later are matters that occurred well before January 2005. Mr Geoffrey Murphy 99 Mr Murphy is the Workplace Relations Manager and is the human resources specialist who advised and/or was consulted during the course of the issues with and surrounding the suspension of Dr Downe in 2004/2005. His background is in workplace relations and human resources. His involvement in matters of contentiousness was minimal. 100 He was involved, in or about 1997, in a meeting with Mr Daley and Drs Spurrett, Downe, Tracy and Coughtrey from which an agreed resolution of the parties was obtained. That agreement called for: staff meetings every two months between Dr Downe and individual staff specialists; performance appraisals each 12 months (with a 6 monthly review) conducted by Drs Spurrett and Downe; open communications between parties and communication which followed organisational lines of responsibility; a commitment to follow the grievance procedures that were in existence; the following of normal daily courtesy protocols; and research issues being discussed between Drs Spurrett and Downe. This issue was agitated following the review by Ms Agnes McMillan in early 1997 (see D1 tabs 9 and 10). 101 Mr Murphy received the complaints that gave rise to the commissioning of the Peterson Report. The Peterson Report was received by him on 10 February 2005 and sent to ASMOF on 16 February 2005. He testified that he formed the view, from the Report, that there had been a breakdown in the working relationship in the Unit (see paragraph 31 of his Affidavit). He was responsible for and did in fact send letters to Drs Pardey, Tracy and Coughtrey relating to the Report and its findings. 102 He accepted that the grievance procedure (P3 tab 4) and the disciplinary procedure (P1 tab 6) were applicable in relation to any complaint against Dr Downe. He accepted that he received Dr Coughtrey's complaint from Mr Cormack on 16 August 2004 notwithstanding that the formal letter was dated 19 August 2004 and, it seems, was received again on or about that date. 103 He accepted that the findings of the Peterson Report were overwhelmingly in favour of Dr Downe on the specific complaints against her and that he probably expressed that view to Professor Gordon but was unsure as to whether he told Ms Drum of that view. He accepted that he did not tell Professor Nanan, or Drs Pardey, Tracy or Coughtrey of that view. 104 No other communication occurred in relation to the complaints or arising out of the initial memorandum to staff relating to the suspension of Dr Downe and Mr Murphy accepted that the failure to notify staff of his view was a failure to comply with the requirements of the guidelines relating to Protected Disclosures. 105 His view as to the breakdown in the working relationship in the Unit was informed by the view expressed by Mr Cormack that the other, or some of the other, neonatologists would leave if Dr Downe returned to work. This view was his impression of the effect of a statement by Mr Cormack in a meeting in late August 2004 during which Mr Cormack made clear that in light of the recent serious complaints about Dr Downe he could not have her back in the Unit. 106 Mr Cormack also expressed the view, unaided by advice, that he wanted Dr Downe to be suspended, otherwise, if the tensions were not resolved, the Hospital would lose some of the neonatologists and the whole Neonatal Intensive Care Unit service would be at risk. 107 Mr Graham Jenkins, the relevant Regional Manager of HealthSupport, NSW Health, corroborates the conversation at the meeting in late August 2004. Mr Jenkin's signature appeared on the letter of suspension of 3 September 2004, but Mr Murphy gave the letter to him to sign, which he did. 108 Mr Murphy, in turn, attests to the fact that the letter represented his understanding of the outcome of the meeting in late August 2004. Ms Irene Wong 109 Ms Wong was the nursing manager in the Unit and had known Dr Downe for some 15 years. She was an impressive witness who displayed objectivity and reliability and whose demeanour was consistent with those traits. 110 Her affidavit attests to some of the working arrangements within the team that worked in the Unit. There was a handover on each Monday morning from one neonatologist on service to the neonatologist that was to be on service for the ensuing week. Ms Wong noticed "over a period of time" that the relationship between the medical consultants (neonatologists) became disjointed. 111 In particular, Ms Wong gave evidence that there were times, at handover, where there was a radical change in patient management and up to 80% of the management of a particular patient may have been altered. This kind of alteration created stress for the nursing staff because it was necessary to explain the change in treatment to the parents of the patient. 112 It seems that the alterations to patient management were not confined to Dr Downe. Ms Wong commented that the Neonatal Intensive Care Unit was an "inherently stressful environment and disagreements are inevitable" (paragraph [12] of her Affidavit) but that it was necessary, to the extent possible, to seek to work in a team to resolve differences as had occurred in other teams in which Ms Wong had worked. It is not clear whether those other teams were neonatal intensive care units. 113 Ms Wong gave evidence relating to disagreements by Dr Downe with recommendations of other specialists in meetings of the Policy and Procedure Committee (e.g. the delay in the Jaundice Report). Following the Henderson-Smart Report, handover occurred to doctors only, which lessened the tension in the Unit. 114 The reference in the immediately preceding paragraph to the Jaundice Report delay is a reference to a conversation between Dr Downe and Dr Coughtrey in the following terms: "Dr Downe: Heather, it has taken you such a long time for the jaundice policy!

Dr Coughtrey: I have been trying to find references for the charts." 115 Following that conversation, Dr Coughtrey said to Ms Wong that she felt "awful the way Lyn spoke to me in front of everyone". I generally accept the evidence of Ms Wong. She was a truthful and reliable witness. However, I conclude that the above reaction by Dr Coughtrey displays a wholly unreasonable level of sensitivity to a comment made in a management committee, even if the comment by Dr Downe were said critically or angrily. 116 Ms Wong testifies that she "got along well with Dr Downe and the other Staff Specialists." Ms Wong would expect to continue to do so in the event of Dr Downe's return, as she has worked closely with her in the past and she has "the highest regard for her [Dr Downe's] clinical expertise." Ms Wong notes that, in the absence of Dr Downe, there is more harmony amongst the Staff Specialists in the ward environment, which has reduced her levels of anxiety and stress. Prior to Dr Downe's absence as Director, Ms Wong often felt stressed and anxious in anticipation of the Monday morning handover. 117 The comment by Ms Wong as to her regard for Dr Downe's clinical expertise, made in the context of a comment regarding all of the neonatologists, is significant. The same or similar opinion is not expressed about the other neonatologists. Professor Ralph Nanan 118 Professor Ralph Nanan is the Professor of Paediatrics at Nepean Clinical School, University of Sydney and is currently employed by the University but, between 2002 and 2005, was the Director of Paediatrics at the Hospital and employed by the Health Service. 119 During that time, Professor Nanan had equal standing (peer status) to Dr Downe. His Affidavit attests to an initial friendly relationship, a collegial relationship that lasted for several months. He too attests to the clinical capacity of Dr Downe, describing it as "clinically solid", making "reasonable clinical decisions based on best evidence". 120 Differences between Professor Nanan and Dr Downe arose from Dr Downe's insistence that paediatricians should not staff neonatal intensive care units. These differences were a difference in clinical opinion as between Professor Nanan and Dr Downe. I find that Dr Downe's clinical opinion was consistent with independent reports commissioned by the Health Service and with the practice that existed in other such units. 121 Professor Nanan describes Dr Downe's concerns as being essentially about paediatricians and her own staff at the Unit and were mostly in relation to patient care. Notwithstanding his differences with Dr Downe he commented that she "always emphasised the safety and quality aspects of the" Unit. 122 Issues were sought to be created between Professor Nanan and Dr Downe because it was said that Dr Downe suggested that ISAM babies were being "sloughed" onto neonatologists by paediatrics. (ISAM refers to Infants of Substance Abuse Mothers.) The use of the term "slough", which was the kernel of the reference to the Peterson Inquiry, was not an issue of any concern to Professor Nanan. His complaint continued to be the role of paediatricians in the Unit and not the alleged statement. 123 The only other matter upon which Professor Nanan and Dr Downe disagreed related to research to be performed by Mr Marceau. This is a matter that is irrelevant to any issue before the Court. It is clear from the evidence that Mr Marceau was to have made a presentation to the staff specialists in the Unit, in order to obtain permission to undertake his research. Eventually he did so and was granted permission. The presence or absence of Dr Downe at any stage of that occurrence, on the evidence before the Court, was wholly irrelevant. Ms Maya Drum 124 Ms Drum is the Nurse Manager of Women's and Children's Health at the SWAHS. She had been in that position for over five years. Initially Dr Downe did not report to her, but that altered after approximately 12 months when Professor Peek moved to the University of Sydney. Her dealings with Dr Downe were on budgeting, operational and funding issues for resources and specific projects for the Unit. 125 Approximately 6 months after Ms Drum commenced the role that included the supervision of Dr Downe, a conversation occurred between Ms Drum and Dr Downe. The conversation occurred after a meeting at which Dr Downe had become very upset and had started to gesticulate and cry. Ms Drum said: "You need to control how you react". And Ms Drum continued: "As the Director you need to set the standard and lead the team but you also need to include the team in the decision making process". 126 Ms Drum, from an early time in the relevant employment, noticed issues between Dr Downe and her team relating to rosters and the like. She advised Dr Downe that Dr Downe should raise matters at the consultants' meeting where all of them were present and if that were not to provide a satisfactory result, Dr Downe could bring the consultants in and talk to them one to one. 127 Most of the matters raised in the evidence of Ms Drum are dealt with later in the judgment in analysing the objective facts of the allegations raised in the Terms of Reference. However, one issue is not in that category. It is not absolutely clear how the defendants suggest that this issue is relevant. It seems, together with other like material, that the defendants submit that this issue, together with others, should be used by the Court to refuse to make orders, to which Dr Downe would otherwise be entitled, in an exercise of discretion. 128 The issue relates to an allegation that Dr Downe said, in early March 2004, "she [Dr Downe] had to stop paediatricians killing babies on L4". Leaving aside the obvious inconsistency with the use of the third person pronoun and the proposition that these were the precise words of Dr Downe, the allegation was made by a member of staff who reported the words to Professor Nanan. He confronted Dr Downe. It seems that Dr Downe thought this was somewhat bemusing because of the lack of context and circumstances in which the matter was raised. 129 When it became obvious to Dr Downe that the matter had been raised seriously, she dealt with it accordingly. She denied stridently that she said these words, or anything to that effect. Notwithstanding that denial, the note of Ms Drum recorded that she and Professor Nanan supported the person making the allegation. The note records that "as there were no witnesses willing to take a stand we have reached an impasse". However, before this Court, the situation is far clearer. A member of staff alleged that Dr Downe made a statement to the effect described above. There was an independent witness who, contrary to the note, was "willing to take a stand" and denied that Dr Downe had made that statement. Further, Dr Downe denied having made the statement. 130 The defendants have made no attempt in these proceedings to prove that Dr Downe made such a statement. They did not call the person who made the original allegation. They did not cross-examine Dr Downe on these issues to suggest that the statement was made. The defendants had closed off their own internal investigation. Yet the defendants in that knowledge referred the matter to the Peterson Inquiry and, following the Report's rejection of the allegation, they still submit that the Court should have regard to this allegation, together with others of which there may or may not be evidence, in determining not to make orders. I consider this approach quite inappropriate. 131 Ms Drum testified that she was unaware that the Peterson Report found, either wholly or substantially, in favour of Dr Downe. She also remarks that there was no discussion, amongst senior management, of the Peterson Report or its conclusions. She acknowledges that, in the absence of Dr Downe, there is still occasional tension between neonatal consultants. There is also tension between the neonatologists and the registrars, and between the medical staff and nursing staff. I consider that Ms Drum is a generally honest witness who in some significant respects was not informed of all that was happening and was not advised of the proper process to be followed. Dr Jan Klimek 132 Dr Jan Klimek is also a neonatologist who is working in the Unit. He gives evidence of the development of neonatology and that it "is significantly different to general paediatrics. Neonatology", he says, "is a form of intensive care and as such requires dedicated staff and facilities for the provision of such a service." 133 Dr Klimek experienced no difficulties with either Dr Downe or Dr Coughtrey. Both were helpful to him. He describes the registrars as very anxious with high stress levels. He repeats a conversation by Dr Downe in which she said at a meeting: "Heather [Dr Coughtrey] is lazy, incompetent and inefficient". All other neonatologists (except Dr Coughtrey) were in attendance at the meeting. No one disagreed with her. 134 It was Dr Klimek's appointment that gave rise to the issue concerning rosters. His affidavit is to the following effect: "[22] I believe that the change in respect of the on-call roster was one-sided. It was never formally discussed at a consultants meeting. I questioned Doctors Tracy and Coughtrey on this matter. Dr Tracy did not appear to be very concerned. Dr Coughtrey felt it was unfair and took the matter further to Maya Drum. Dr Coughtrey provided me with feedback and said words to the effect of:

'Maya Drum was supportive of Dr Downe's stance on this issue. She entrusted Dr Downe with this issue as it was part of Dr Downe's position as clinical director to sort out any on-call roster disputes.'

[23] As a consequence of Dr Coughtrey's feedback referred to in paragraph 22 above, I did not confront Dr Downe on this matter. Dr Downe however came into my office when I was alone and said words to the effect of:

'Do you mind if I did a one in 3.5 on-call roster as opposed to a one in four roster?'

I said: 'I would not mind'." 135 As will be seen when the issues of the objective facts in this roster dispute are discussed, the irrationality of this complaint is manifest. Likewise, the questions raised by Dr Downe about Dr Coughtrey will be discussed later in this judgment. I consider Dr Klimek to be generally truthful and a generally reliable witness. Dr Mark Tracy 136 Dr Tracy is the Acting Director of the Neonatal Intensive Care Unit at Nepean Hospital. He was relatively friendly with Dr Downe during the time that she was performing work as the Director of the Unit. Dr Tracy gives evidence essentially to the same effect as Dr Klimek in relation to the conversation regarding Dr Coughtrey recited in [134] above. To the extent of any inconsistency, I accept Dr Klimek in preference to Dr Tracy. 137 Dr Tracy's evidence in cross-examination was obfuscatory and his recollection convenient. While able to remember, purportedly precisely, the terms of conversations that were, in themselves, not particularly significant from many years earlier, he was unable to remember issues of tension that had occurred in the very recent past and meetings that occurred in relation to such issues. At Transcript p 645, line 30, Dr Tracy said: "Question: In 2004 after Dr Downe was suspended, Mr Peterson investigated allegations made against her by you? Answer: The investigation was organised by the hospital. Question: Are you able to answer my question? Answer: I am not sure exactly why the hospital organised it, I couldn't answer it." At p 647, line 10 of the Transcript, the following exchange occurs:

"Question: Did you understand that the inquiry that was called was an inquiry which would effect investigation of a complaint by staff? Answer: Yes. Question: And did you understand that you were one of the staff who made the complaints? Answer: Yes. Question: And did you understand that it was that fact-finding investigation that led to [or] caused the suspension of Dr Downe? Answer: Yes." The inconsistency in the above two series of questions reflected the general demeanour of Dr Tracy.

Dr Heather Coughtrey 138 As is already obvious, Dr Coughtrey was and is a neonatologist at the Unit. She was the second neonatologist employed in the Unit and has been working there since 1991. She asserts that she is "clinically … on an equal footing" to Dr Downe. However, the evidence establishes that she is responsible to the Director and no job description has been tendered to suggest otherwise. Indeed, her job description (Annexure A to her affidavit) recites that she is "responsible to Director Neonatal Intensive Care Unit through to the Network Director". 139 Her affidavit deals with an issue in November 1991 in which Dr Downe intervened and took control of the care of a patient while Dr Coughtrey was assessing the situation (a time of between 30 and 60 seconds). Dr Coughtrey did not complain about that conduct at that time. However, seemingly for the first time, she raises it in her affidavit in these proceedings as inappropriate behaviour on the part of Dr Downe. 140 Further, she asserts that only a few weeks after the incident described as occurring in November 1991, Dr Downe sought to override her clinical decision as to whether to administer fresh frozen plasma (FFP) or saline. There was a conversation, seemingly innocuous, in which Dr Coughtrey insisted, contrary to the wishes of Dr Downe, on administering saline. Dr Downe became upset, burst into tears and ran out of the nursery, which made Dr Coughtrey feel uncomfortable as it was, in the view of Dr Coughtrey, unnecessary. I assume that the Court is supposed to regard this as evidence affecting its discretion to make orders in favour of Dr Downe, if she were otherwise entitled to them. 141 Dr Coughtrey blames Dr Downe's approach, and conflicts in clinical decision-making during handover, for Dr Coughtrey over-analysing her own decisions and, for example, ordering extra tests on several babies, which she considered unnecessary, but in the absence of which she felt she would be criticised by Dr Downe. On the other hand, if Dr Coughtrey considered that her approach was a better regime for the patient, and she felt it strongly, she would say so and there would be conflict with Dr Downe. (I assume in circumstances where Dr Downe did not agree with that regime.) 142 There was some irony in some of the criticisms made by Dr Coughtrey (and others) of Dr Downe. Dr Coughtrey complains about the failure of Dr Downe to make eye contact, about Dr Downe sighing and rolling her eyes. During her evidence, Dr Coughtrey sighed in exasperation, rolled her eyes, did not make eye contact and crossed her arms. She continually shrugged her shoulders and smirked (otherwise than from nerves). Her demeanour was arrogant in the extreme, her memory at best convenient and she gave the impression that she was reluctant to give evidence and very careful to ensure that the minimum information was given, to the point of being obfuscatory. She was, at times, disparaging and dismissive of other staff in the answers that she gave in the courtroom. 143 Dr Coughtrey was able to recall conversations that occurred in 1991 (the conflicts recited above) and 1994 concerning her entitlement to senior staff specialist allowance in circumstances where there were no notes of any such conversation. Yet Dr Coughtrey was unable to recall criticisms made of her and her attitude to other staff six months earlier than giving evidence, i.e. in 2006. However, when it became clear that there were notes of a meeting relating to those criticisms, her memory returned. Unless otherwise accepted by another believable witness, or subject to independent documentary corroboration, I do not accept Dr Coughtrey's evidence. Mr Mark Cormack 144 Mr Cormack was employed as the Executive Director of the Health Service, relevantly, from 2 April 2003 to 27 January 2005. Dr Downe, during that time, reported to Ms Maya Drum who, in turn, reported to Mr Cormack. His Affidavit attests to a conversation with Professor Peek, which first raised issues about Dr Downe's ability to "get on with" others. Professor Peek, who was at the time of the hearing still employed by the Health Service, was not called. 145 Following the protected disclosures, Mr Cormack says that he was concerned that the Unit could not function if two neonatologists were to have resigned. There is no evidence that as at July/August 2004 any neonatologist had threatened to leave. None of the neonatologists in the Unit, all of whom have been called to give evidence, expressed a view that as at 2004 they were inclined to leave the Unit, or inclined to leave in 2004 if Dr Downe were to return to the Unit. None of the neonatologists gave evidence to the effect that in 2004 they had told or intimated to Mr Cormack that, if Dr Downe were to return, he or she would leave. This perceived threat to the working of the Unit seems to have been the basis upon which Mr Cormack convinced Mr Murphy that a suspension was appropriate and Mr Jenkins that it was necessary. Further, there is an assertion of the possibility of reprisals by Dr Downe (Cormack Affidavit [17]) for these complaints. There is no basis for this assertion in any fear expressed by any other neonatologist or any past action of Dr Downe and the Health Service does not, in these proceedings, seek to justify the assertion. It is an allegation by Mr Cormack, without basis, of alleged mala fides of Dr Downe, if not her criminal behaviour. Yet it was contained in an affidavit settled by the Health Service. 146 It should be noted that shortly after the suspension of Dr Downe from duties, there was a period when one neonatologist (with assistance from locum consultants and registrars) operated the Unit. 147 Mr Cormack was a difficult witness. He seemingly deliberately gave evidence that was ambiguous or misleadingly short. For example, at page 342 of the transcript the following exchange occurs: "Question: Do you remember saying to her, when she expressed these concerns, something to this effect, 'What do you think is at the bottom of that?'? Answer: I don't recall saying that. Question: But do you remember saying something to that effect? Answer: Yes." The two questions and answers are directly inconsistent and display the kind of obfuscation that marked Mr Cormack's evidence. There are similar instances relating to the evidence of health concerns and the alleged breach of confidentiality. But by far the most important issue was the calling of the inquiry by Professor Reynolds. The evidence of Mr Cormack, in this regard, is most unsatisfactory. The clinical review commissioned by Mr Cormack was clearly the catalyst for the complaints and brought the personal relationships to a climax. 148 Again, in this regard, the evidence of Mr Cormack is instructive. At p 393, line 4 of the Transcript, the following exchange occurs: "Question: And the first issue of course deals with the neonatal review doesn't it? Answer: Yes. Question: And when you read Dr Tracy's letter you concluded that the most important of the issues raised by him was the first one, didn't you? Answer: Yeah." [Lest it not be clear from the tense of the word "concluded", the word "read" was pronounced in the past tense.]

At Transcript p 393, line 56, there is the following exchange:

"Question: Mr Cormack, in relation to the first issue I am suggesting to you that it appeared on reading this document that this by far was the most serious matter that Dr Tracy was raising with you, do you agree? Answer: No. Question: What do you think was the most serious issue that he was raising with you? Answer: I didn't form a view about which was the most serious issue. He says a number of issues under protected disclosure and I referred them off for independent investigation. I didn't form a view as to which was the most important. I didn't rank them. I consider them to be issues of importance to Dr Tracy and I referred them off for investigation as I was required to do so." 149 These questions and answers are directly inconsistent. The only alteration that could have rationally occurred in the eight or nine intervening questions was that Mr Cormack came to realise that the first answer, given in an unguarded manner, was significantly unhelpful to the cause he supported. 150 Mr Cormack's actions are at the heart of the dispute between the parties. A proper analysis of the acceptable evidence attributes to Mr Cormack the responsibility for the breakdown in personal relationships to the degree that occurred. That analysis becomes obvious from a recitation of the objective facts on each of the major allegations against Dr Downe that gave rise to the Peterson Inquiry. The Roster/Leave Complaint 151 Allegations A1, A2 and A10 relate to issues of rostering and leave and are necessarily related. The detail of each allegation is recited above and the short summary of the evidence adduced through the major witnesses is sufficient to understand the nature of that which was referred to the Peterson Inquiry. 152 Essentially, Dr Downe devised a roster that required neonatologists (other than Dr Downe) to be on-service more than 1 week in 4 and on-call more often than 1 week in 4. Associated with that issue is the allegation that Dr Downe had misled Dr Coughtrey by telling her that senior management (Ms Maya Drum) had stated that if Dr Coughtrey was not happy with the on-call roster, she could leave. An even more subsidiary issue relating to the roster related to the rostering of duty and leave for neonatologists in a manner that rostered them on-call immediately prior to and after periods of annual leave. The first two matters I will deal with together after I briefly deal with the third. 153 There is no evidence to suggest that Dr Downe singled out any person for different treatment in relation to the rostering on-call immediately prior to and after periods of leave. Dr Downe's on-call roster reflected the same incidence of on-call rostering before and after leave as did every other neonatologist. 154 There is absolutely no substance to this complaint, as a complaint. In other words, it is true that neonatologists from time to time were rostered on-call at the beginning and end of periods of leave, but largely that has been shown to be the exception rather than the rule and does not single out any one of the neonatologists (including Dr Downe) for better or worse treatment. On the evidence before the Court, the availability and the necessity for an equitable share of the load conditioned the roster in relation to on-call duties, rather than some punishment or harsh treatment directed at one or other of the neonatologists. 155 To be fair to the defendants, in the running of these proceedings, they did not seek to justify the complaint or suggest that the complaint had any merit whatsoever. 156 I turn then to the more substantial aspects of the rostering issue. As is obvious from any analysis of the availability of personnel, and as is made clear in the Peterson Report, it is impossible for four staff to satisfy a yearly roster by working no more than 1 week in every 4, unless the staff were prepared to work during what would otherwise be annual leave. Assuming 4 weeks annual leave for each member of staff (and that is an assumption that is not necessarily valid in relation to health care professionals who work or are on-call sometimes on a 24-hour basis), there would be 16 weeks of annual leave that would not be covered by a 1 week in 4 week working roster. Again assuming only 4 weeks annual leave, a simple arithmetic process would derive that there would be, with four staff, 192 working weeks, which would require a roster of 1 week in 3.68 weeks to cover all of the 52.14 weeks in the year. The roster devised by Dr Downe was a 1 week in 3.5 week roster. 157 The evidence before the Court, which evidence is uncontradicted and uncontroverted, is that the roster devised by Dr Downe provided Dr Downe 3 days per year for administrative work and required other neonatologists to work an extra 1 day per year compared to an arithmetically equal distribution to each, including Dr Downe. 158 The evidence before the Court is also that the roster devised by Dr Downe was consistent with the rosters devised in other neonatal intensive care units throughout the State. Again, the evidence in that regard is uncontroverted and unchallenged. 159 The evidence is that Dr Downe met with each of the neonatologists to ask their attitude to the 1 in 3.5 roster and none, other than Dr Coughtrey, objected to its implementation. While there are some minor inconsistencies in the evidence, it is clear (see [23] of Dr Tracy's Affidavit which on this matter I accept) that Dr Downe raised the issue of the rosters in a meeting with all of the other neonatologists in attendance and also raised it with each of the neonatologists individually. Did Dr Downe Misrepresent Ms Drum's Position and her Authority to Deal with the Roster? 160 Ms Drum gave Dr Downe authority to deal with the roster. Of that there can be little doubt. Ms Drum's file note is illuminating, although the provenance of it is unusual. All other file notes of Ms Drum are computer generated. It also seems that this file note is computer generated. The original was not provided. Annexed to the Affidavit of Ms Drum is a copy, which is hand dated April 2004 and signed by Ms Drum. If the document were computer generated, the date of its creation could be obtained from the computer. Unlike all other file notes of Ms Drum, the file note does not bear a time or a date and is clearly written after the events had occurred. Nevertheless, assuming it is a note that is more contemporaneous than the affidavits and evidence given in these proceedings, and therefore, all other things being equal, more reliable, it is informative. Because it is written after the event, it bears the hallmarks of the recounting of the impression of events rather than a description of the events themselves, but, with that qualification, it is an appropriate commencement point. 161 The advertisement for Dr Klimek's position referred to a roster of 1 in 4, which, at some point, was raised as an issue in the determination of the roster. It is not an issue in these proceedings. Dr Klimek does not complain, even in these proceedings, of the failure of the Health Service, through Dr Downe, to implement the advertised roster. Dr Klimek was unaware of the details of that reference to the roster in the advertisement at the time that these discussions occurred. 162 It is also clear from the file note (and the evidence of Ms Drum) to which I have referred that Ms Drum gave Dr Downe authority to devise the roster on two conditions: first, that the roster would be discussed with the consultants; and secondly, that the roster satisfied benchmarking criteria, i.e. that Dr Downe was not providing for herself a benefit that other Directors of neonatal intensive care units in the State were not enjoying. 163 Both conditions were met. Dr Downe "benchmarked" the roster. The evidence before this Court, as already outlined, is that the roster meets comparable standards in other neonatal units. Secondly, again as has already been recited, Dr Downe discussed the issue at a meeting with all of the other consultants present and with each of the consultants individually. 164 In those circumstances, i.e. having satisfied the only two conditions imposed by Ms Drum, the authority to implement the roster was unconditional (see transcript page 539 to 542). 165 It is also clear that Dr Coughtrey registered a complaint about the effect of the roster even though the two conditions had been satisfied. I do not criticise the raising of the complaint by Dr Coughtrey: that was her right. As earlier stated, the effect on Dr Downe was that she obtained the "benefit" of 3 days per year in order to facilitate her administrative work and each of the other neonatologists were required to work 1 extra day per year than would have been the case if Dr Downe were to have been given no accommodation. In other words, Dr Coughtrey's complaint was that she was required to work 1 day per year extra than the alternative that she was proposing. 166 The proposal was reasonable (as this clearly was), benchmarked and discussed with the staff. Ms Drum's attitude to the complaint about the proposal was that she does not recall ever saying (and denies saying) in relation to Dr Coughtrey's attitude: "if she doesn't like it, she can leave". However, Ms Drum does generally promote, and on the balance of probabilities would have promoted on this occasion (given the satisfaction of her own pre-conditions), "that if people are dissatisfied with their own work environment, we all make choices". That must be a reference to the proposition that, if these reasonable, benchmarked and discussed roster propositions are unsatisfactory or intolerable, people can leave. 167 If the sentiment promoted by Ms Drum [i.e. if the implementation of a reasonable (which this is), benchmarked (which this is) condition were opposed, it required people to make choices] were conveyed to Dr Coughtrey, it is both understandable and reasonable that Dr Coughtrey would understand that expression to mean that if Dr Coughtrey was not prepared to abide by the roster, she could leave. I understand it that way. It is the Court's conclusion of fact that the roster was discussed (as previously outlined), the roster was benchmarked (as previously discussed) and the roster was reasonable. It is further my finding that Ms Drum promoted to Dr Downe the proposition that in those circumstances, if members of staff (including Dr Coughtrey) were not prepared to abide by the roster, or were otherwise dissatisfied with their own work environment, that is their choice to make. 168 I further find that Dr Downe reiterated those sentiments to Dr Coughtrey who, both understandably and reasonably, understood that to mean that, in the circumstances before her, she could either abide by the roster or leave. I reiterate that the defendants do not seek to suggest that the roster proposed by Dr Downe was unreasonable or was not benchmarked. There is some issue as to the degree of discussion of the proposals, but the difference (especially given the tutoring by Ms Drum referred to in paragraph [125] and [126] above) is insignificant. In any event, the Court reiterates that the issue was discussed at a meeting of consultants, most probably twice (one meeting with Dr Coughtrey and one without, when she was on leave), and with each consultant individually. The Initiation of the 2004 Neonatal Review 169 It is to the discredit of senior management of the Health Service that this matter was even the subject of a serious investigation. Nevertheless, it was and, given the role of Mr Cormack, it is understandable that it was. 170 The evidence discloses that in or about July 2003, the Client Liaison Officer, Ms Felicity Lindfield disclosed to Ms Drum a pattern of complaints against Dr Coughtrey from parents of patients in the Unit. Ms Drum requested her to get some information. On 4 March 2004, Dr Downe approached Ms Lindfield to request the information, if any, that had been obtained in that regard. On 5 March 2004, Dr Downe attended a meeting with Ms Drum and Mr Cormack in which Dr Downe expressed concern as to some of the behaviour of Dr Coughtrey, which behaviour raised concerns with Dr Downe as to Dr Coughtey's ability to safely perform as a clinician in the future. This was an issue that Dr Downe explained, and I accept, was related to Dr Downe's concern that Dr Coughtrey's diabetic condition was affecting her behaviour and, more importantly, her capacity to operate as a clinician in the high-stress environment of the Intensive Care Unit. However, the meeting did not resolve or discuss, at any length, those issues. 171 At the meeting of 5 March 2004 Mr Cormack proposed an external clinical review of the Unit cases, which review would include: "(a) a review of all deaths of neonates in the Hospital of gestational age of 30 weeks or less in the two years to December 2003; and

(b) a review of any reported incidents, pattern of morbidity, cases identified in correspondence and letters that may not have resulted in the death of neonates, but may have contributed to adverse health outcomes or less optimal health outcomes." At that suggestion, the file note (annexure E to the Affidavit of Ms Drum) of 10am 5 March 2004 records the following:

"Dr Downe advised that she was comfortable with an external independent clinical review, however, she did express her concerns about how this might be perceived by her colleagues and peers and that it may be seen as a Camden/Campbelltown type response that was out to identify and 'get at clinicians who have stuffed up'. Mr Cormack responded that the purpose of the review was not to focus on the allegations of competency or incompetency on the part of individual clinicians, rather, it would focus on a whole range of system issues, practice issues and situational factors that may have contributed to unacceptable patterns of morbidity or mortality in the [Unit].

This may identify issues relating to competency of practitioners, however, M (sic) Cormack pointed out that it is well known that the majority of errors in the provision of health care are not related to the competency or incompetency of individual practitioners, but rather to a combination of system issues and situational factors." After that exchange the meeting proceeded to deal with the concerns of Dr Downe relating to Dr Coughtrey. They fell in to two broad categories: the first being performance management; the second being health related and fitness for work issues. 172 The meeting agreed that the performance management issues would be incorporated into the recently announced performance review process. The fitness for work and health related issues were discussed and the general responsibility of an employer, to ensure there should be no unreasonable risks to patients, public and staff, was noted. It was acknowledged that the issue was a sensitive one and Dr Downe was referred to the policy dealing with "impaired clinicians" and that Dr Downe would put together a summary of health and fitness for work concerns and present those to Ms Drum for further action through the normal processes. 173 An important aspect of the meeting was that the meeting would be regarded as "confidential". I accept the accuracy of the file note as a general summary of that which occurred at the meeting. It therefore follows that the raising of the complaints about Dr Coughtrey were to be dealt with by separate and quite distinct processes than the general issues otherwise in the clinical review suggested by Mr Cormack. It also follows that the issues raised by Dr Downe were essentially performance related and derived from a concern as to health issues. This is the evidence of Dr Downe. It is also the evidence of Ms Drum. With some qualifications, it is the evidence of Mr Cormack. I find, in accordance with the evidence of Dr Downe and Ms Drum, and contrary to the evidence of Mr Cormack, that Dr Downe particularised her concern as relating to the effect of Dr Coughtrey's diabetes. 174 That which also flows from the file note is that Dr Downe raised, in relation to the calling of such a review, a concern that it would be seen to be targeted at an individual neonatologist (and ought not be) and that it may be seen as an investigation of the misconduct of clinicians who have hidden or not reported their misconduct (the reference to Camden/Campbelltown). 175 Contrary to the proposition that the calling of the review was an attempt by Dr Downe to target Dr Coughtrey, it was Dr Downe's reservation at the meeting that ensured that there was agreement that the review would not target any individual clinician. Mr Cormack and Ms Drum must have known that at the time they received the complaint from Dr Coughtrey. 176 Dr Downe explained to the other neonatologists that a review would be conducted, the purpose of which would be to look at concerns involving the presence of paediatricians in the nursery. This occurred in or about July 2004 (see the Affidavit of Dr Coughtrey [35]). Given that Dr Downe went on leave on 1 July 2004, it is most likely that the reference to July by Dr Coughtrey was a mistaken reference and should have been a reference to June. After Dr Downe went on leave, in or about July 2004, the three neonatologists were given the Terms of Reference. The Terms of Reference, as finalised, were not available prior to Dr Downe commencing leave. 177 The separate issues raised by Dr Downe concerning the effect of Dr Coughtrey's diabetes on her performance and capacity were the subject of correspondence the effect of which was that Dr Downe was to complete the report for lodging on her return from leave in September 2004. This would still have been within the timeframe of the Reynolds Inquiry/Report. Dr Downe never returned from leave. 178 In or about July 2004, Mr Cormack convened a meeting with Ms Drum and Drs Tracy and Coughtrey. In that meeting, Mr Cormack told the doctors, notwithstanding the agreement as to confidentiality, that Dr Downe had enquired of the Complaints Department (Felicity Lindfield) about parent complaints and had raised concerns about management within the Unit because of which the clinical review by Dr Reynolds had been commissioned. 179 Mr Cormack, in his evidence, was clear that he had informed the doctors in that meeting that he, Mr Cormack, was responsible for the calling of the Inquiry, but it is obvious, from the impact of the meeting and the understanding evidenced in the letters of complaint, that, if such responsibility were taken, the responsibility was taken in a manner that was formulaic and still gave the impression that it was Dr Downe that was the cause of the Inquiry and that it was Dr Downe's complaints about Dr Coughtrey that were to be investigated. 180 The letters of complaint, particularly those of Drs Coughtrey and Tracy, make clear that their view was that the Reynolds Inquiry was established because of the complaints by Dr Downe about Dr Coughtrey. Even if, contrary to the facts as I have found them, Mr Cormack genuinely sought to convey his responsibility for the calling of the Reynolds Inquiry, on receipt of the letters of complaint, he must have known his attempts had been unsuccessful and that Drs Coughtrey and Tracy were under a misapprehension as to the nature and purpose of that Inquiry. 181 Mr Cormack advised Drs Coughtrey and Tracy to lodge written complaints reflecting their problems and to do so as protected disclosures. 182 At the time of the initial suspension of Dr Downe, and at all times thereafter, Mr Cormack was aware that the most important issue (and the catalyst) for the letters of complaint was the misapprehension by Drs Coughtrey and Tracy that the Inquiry had been sought by Dr Downe and was aimed at resolving complaints by Dr Downe about the conduct and capacity of Dr Coughtrey and that Dr Downe had misled them on these issues. 183 At all relevant times, Mr Cormack knew that this was a misunderstanding. At no time did Mr Cormack appropriately seek to disabuse Drs Tracy and Coughtrey of that misunderstanding and at no time after the receipt of the letters of complaint did he seek, whether appropriately or otherwise, to disabuse them of that misunderstanding. Indeed, the calling of the Peterson Inquiry and the reference to it of a Term of Reference requiring investigation of this complaint, known by the Health Service to be untrue and misapprehended, encouraged and/or condoned the misapprehension. 184 Mr Cormack misrepresented the purpose of the Reynolds Inquiry (or made representations with that effect), drafted or finalised Terms of Reference of the Reynolds Inquiry that were ambiguous on this issue, planted those misapprehensions in the minds of Drs Coughtrey and Tracy, and then encouraged them to complain about it. Mr Cormack then used that complaint as a reason for the calling of the Peterson Inquiry and the threat of the loss of neonatologists, arising from those complaints, as the reason for the suspension of Dr Downe. I will return to the motive, or possible motive, for such conduct. 185 Further, Drs Coughtrey and Tracy apportioned blame to Dr Downe for not telling them of the Terms of Reference. At the time that Dr Downe commenced leave she was unaware of the final Terms of Reference. Moreover, she was bound, by the confidentiality requirement of the meeting of 5 March 2004, not to advise her fellow clinicians of the discussions that occurred at that meeting. Mr Cormack, without informing or obtaining the consent of the other participants, breached that confidentiality and breached it in a manner which misrepresented, or had the effect of causing a misunderstanding, of the events that led to the Reynolds Inquiry. Moreover, at no stage did Mr Cormack advise the neonatologists with whom he was meeting (which excluded Dr Downe) that it was Dr Downe that insisted, at the meeting on 5 March 2004, that the Inquiry should not be directed at any individual clinician. Relationships with the Paediatric Department 186 There is absolutely no substance to the complaint, nor is there any attempt to defend the complaint, regarding lack of cooperation, at a personal level, between paediatricians and the Unit. The issues involving paediatrics involve a significant clinical difference between the views of Professor Nanan and those of Dr Downe. 187 Dr Downe took the view that general paediatricians should not work in the Unit and should not determine, without the involvement of a neonatologist, entry to, or release from, the Unit. Professor Nanan had a different view. 188 There has been no attempt by the Health Service to suggest that Dr Downe's view was unreasonable. Indeed, there has been no attempt by the Health Service to submit or adduce evidence that would prove that Dr Downe's view was wrong. 189 On the evidence that is before the Court, Dr Downe's view was supported by a number of independent inquiries that were commissioned by the Health Service and was consistent with the practice in other neonatal intensive care units. Senior management at the Hospital had refused to finalise this issue. The failure to finalise this matter, and determine it in accordance with the independent reviews and/or the views of Dr Downe, created a situation where, quite reasonably, the issue continued to be agitated. It caused friction between Professor Nanan and Dr Downe and between the paediatrics department and the Unit. 190 When Dr Downe went on leave and Dr Tracy took on the position of Acting Director, Dr Tracy, at the request of Ms Drum, changed the clinical practice of Dr Downe and allowed, inconsistently with the findings of the independent reviews and inconsistently with the practice in other neonatal intensive care units in NSW, general paediatricians to work in the Neonatal Intensive Care Unit. This was done prior to the finalisation of the Peterson Inquiry and prior to the finalisation of the Reynolds Report. Ms Drum, in making that request, was implementing the direction imposed by Mr Cormack (D2, Tab 150, Transcript p 405). 191 Necessarily, once the Acting Director implements a different practice, the Hospital would need to advise the Director, on her return, that her clinical opinion had been overridden by persons, none of whom were neonatologists and inconsistently with the views of other neonatologists in the State. 192 There is some evidence as to what may have motivated this request. Dr Tracy testifies that Ms Drum directed him to resolve the problems with paediatrics because the Hospital did not want to lose Professor Nanan. I infer that this reason motivated the failure by the Hospital to finalise the issue in a manner consistent with Dr Downe's clinical opinion and consistent with the independent reviews that had been undertaken at a much earlier time. 193 The Health Service in these proceedings have, as has been noted on a number of occasions, emphasised the clinical expertise of Dr Downe and have expressly submitted that her clinical decisions are not in question. As a consequence of that attitude, the Court must take the view that the clinical decision of Dr Downe, namely, that neonatologists ought be responsible for the operation of the Unit and that general paediatricians ought not be involved in its working, was correct. 194 The conclusion that the relationship with the paediatrics department involved a clinical decision on which Dr Downe could not be criticised necessarily resolves any complaint based upon that issue. Other Complaints Referred 195 The detailed complaints contained in allegations A11, A12, A13 and A14 have been shown to have either no significance or no substance. In that regard, I simply adopt the findings of the Honourable Russell Peterson QC. 196 In all other respects as to the individual complaints made against Dr Downe and referred to the Honourable Russell Peterson QC, I accept, with unfeigned respect, his findings. In that regard, where there is a difference in the evidence between the parties, I prefer the evidence of Dr Downe. 197 In particular, I do not accept that it is a legitimate complaint that Dr Downe misinformed Dr Coughtrey in or about 1994 of her eligibility for senior staff specialist status. First, the allegation referred to in the Peterson Inquiry, referred to an allegation "7 years ago" when, at that stage, it is an allegation of a conversation that occurred 10 years prior to the Inquiry. If that were not enough to disclose the pettiness of such an issue, it should be remarked that Dr Downe had no responsibility for the remuneration of Dr Coughtrey. There was an entire Human Resources Department at Nepean Hospital and otherwise an even larger one at the relevant Health Service. Dr Coughtrey had a union, ASMOF, who was involved in advice to its members (and non-member doctors) as to their entitlement to pay and allowances, and Dr Coughtrey had been appointed and was remunerated, to her knowledge, as a "Salaried Senior Medical Practitioner" under the Salaried Senior Medical Practitioners' (State) Award. Further, it is not suggested by anyone that Dr Downe deliberately misinformed Dr Coughtrey in 1994. 198 As to the allegation relating to research (Allegation A5) raised by Dr Tracy, I find that Dr Downe was involved in the research from an early stage. I find that Dr Tracy raised with Dr Downe the involvement of Dr Coughtrey and that Dr Downe's reply was in or to the effect that it was Dr Tracy's research and he should involve whom he wanted. I find that Dr Downe did not stop Dr Tracy from involving Dr Coughtrey nor threaten to undermine support for the research project. 199 Allegations A6, A7, A8, A12 and A14 were dealt with adequately, with respect, by the Peterson Inquiry. The evidence before this Court does not affect the correctness of those findings. 200 Allegation A13 has been dealt with in the discussion on the evidence of Dr Pardey, as has the issue in Allegation A11 relating to the research of Mr Marceau. 201 Allegation A9 is a wholly clinical issue relating to the use of fluticasone as distinct from budesonide. The earlier comments relating to clinical skills are apposite. To the extent that the issue requires determination, on the evidence before the Court, the clinical view of Dr Downe, which has not been challenged, must be preferred. 202 It is also apparent from the analysis already provided that Allegations B2, B3 and B4 were valid. My difference in outcome on these matters to the Peterson Report arises, with respect, from the nature of the process adopted by the Honourable Russell Peterson QC as distinct from these proceedings, which has involved the adducing of significantly more material than was before the Peterson Inquiry and has also allowed for the testing of the views of participants as against independent or contemporaneous material and by cross-examination. Mr Cormack's Possible Motive 203 The Court has previously noted that Mr Cormack had organised the Peterson Inquiry and the information to staff at a number of levels. First, it was Mr Cormack who suggested the Reynolds Inquiry. Secondly, it was Mr Cormack who drafted and finalised the Terms of Reference of that Inquiry. Thirdly, it was Mr Cormack who met with the neonatologists, other than Dr Downe, and informed them of the complaints by Dr Downe of Dr Coughtrey, which complaints, he accepted, were the catalyst for the Inquiry. Fourthly, Mr Cormack did not inform the neonatologists that Dr Downe was the person at the meeting on 5 March 2004 that insisted that the Inquiry not target an individual clinician. Next, Dr Cormack, having sewn the seeds of what, on any view, would be seen by the other clinicians as a serious breach of trust by Dr Downe (see Transcript at p 398, lines 24 -32), advised the clinicians to complain in writing and to do so by protected disclosure. 204 Mr Cormack then called a meeting with his line manager and a human resources specialist to advise them (without, at that time, any indication from the clinicians of the fact) that at least two of the neonatologists would leave, if Dr Downe were to return, and/or to advise them of the possibility of reprisals (of which possibility there was and is no evidence). As a consequence of that advice, Dr Downe is suspended. Mr Cormack, who is aware of the letter to Dr Downe and its terms, then drafts a memorandum to all staff that is fundamentally inconsistent with the terms of the letter to Dr Downe and in particular as to what information will be provided to staff as to the reason for Dr Downe's non-attendance at work. The effect of that memorandum must have been to undermine the possibility Dr Downe returning to work at the Unit. 205 Further, it is Mr Cormack who briefs the Honourable Russell Peterson QC who, without being referred the issues, comes to a view as to the "breakdown of personal relationships", to which reference has been made. 206 There is no doubt, as attested by each of the witnesses with relevant experience, that work in a neonatal intensive care unit is highly stressful. It would be contrary to common sense if that were not so. The Unit is dealing with babies who, by definition, are in life-threatening situations and for whom decisions as to their medical management will have critical impact. Such an environment, almost by definition, will create stress. Each of the witnesses attests to that fact. The evidence before the Court is that during Dr Downe's suspension, issues of that kind arose as between specialists and other medical staff, between the specialists inter se, if not otherwise included between specialists and registrars, between registrars and nurses and between specialists and nurses. In that regard, there are issues, albeit of lesser moment, of that kind in almost every hospital department. In an intensive care department, dealing especially with premature babies less than 30 weeks of age, those stress factors are raised exponentially. 207 The evidence also discloses that Dr Downe did not, at all times, deal with stress situations optimally. There were personal differences between the neonatologists. In particular, there were personal differences between Dr Downe and Dr Coughtrey. The primary cause of that is not clear from the evidence. It may be that the rather loose reporting lines implemented by management are a factor. Dr Coughtrey took the view that she was a "clinician of equal standing" to Dr Downe and that, in that capacity, she was entitled to argue with Dr Downe as to the clinical treatment to be implemented. Dr Downe, on the other hand, as Director of the Unit, took the view that she was ultimately responsible for the clinical management of all patients in the Unit. The evidence does not disclose any steps taken by senior management to resolve that fundamental issue. Failure to resolve that issue would necessarily create conflict. 208 A number of the "personality issues" that were raised during the course of the evidence were said to be relevant to the discretion of the Court to make orders, if the Court were otherwise minded so to do. The personality issues sought to dredge up conflicts that had occurred since 1991 between Dr Coughtrey and Dr Downe and otherwise between members of the staff. This was done without seeking to adduce evidence as to the truth or merits, or otherwise, of claims and counterclaims. 209 The Health Service submits that the Court should take the view that the mere existence of these issues, whatever may be their merits, is sufficient to prevent the making, on the basis of discretion, of the orders. There are difficulties with this approach. First, it seems that it is an attempt to adduce "tendency evidence" without meeting any of the criteria necessary for its admission. Secondly, a large number of these issues related to the attitude not only of Dr Downe but also of other staff who are still employed at the Unit. 210 Further, the occasion for these personality issues within and amongst the Unit was predominantly at the handover on Monday mornings and related to a dramatic alteration in the clinical management of one or more patients. Given the comments already made on the attitude of the Health Service to the clinical judgment and skills of Dr Downe (the evidence that otherwise supports that attitude and the absence of any evidence that challenges the appropriateness of these medical decisions), it would be quite inappropriate for me to assess any change that she implemented in the clinical management of a patient as otherwise than justifiable. 211 As is clear from some of the evidence summarised in this judgment, Dr Downe was exacting and had extremely high standards in the treatment of patients. The evidence of Dr Coughtrey on the necessity, in her mind, to do tests that she would otherwise not have done, simply to satisfy Dr Downe's standards, is an example. 212 From the perspective of a senior manager in the position of Mr Cormack, those exacting standards and the conflict created by their implementation, together with the insistence upon clinical standards that detracted from the desired role of Professor Nanan and the Paediatrics Department, would have been a constant thorn in his side. Because Mr Cormack is not a doctor, his attitude to these matters was one borne out of administrative requirements. His priority (and I do not suggest inappropriate priority from his standpoint) would have been the attainment of peace, which may not have drawn a distinction between the clinical views of one neonatologist to another, or indeed a distinction between the clinical views of a neonatologist compared with the views of a general paediatric specialist. 213 In those circumstances, relieving the Unit of Dr Downe in her role as Director was a desirable outcome, regardless of the merits or otherwise of the issues in dispute or the matters of complaint. 214 Given the knowledge of Mr Cormack as to the inability to substantiate a number of the complaints that were referred to the Peterson Inquiry and the circumstances that gave rise to the calling of the Reynolds Inquiry (which matter was also referred to the Peterson Inquiry), there may be an inference available that the calling of the Peterson Inquiry, and the reference to it of a number of the complaints, was designed not to ascertain the truth or otherwise of those complaints (which was in large measure already known to Mr Cormack), but rather to establish the circumstances that would allow Mr Cormack and/or the Health Service, at his request, to suspend and/or otherwise deal with Dr Downe and release her from her responsibilities as Director of the Unit. Ultimately, it is unnecessary for the Court to draw that inference. (G) The Decisions to Suspend Indefinitely 215 On 10 February 2005, the Peterson Report was published. Mr Murphy, the Health Service's Human Resources and Workplace Relations Specialist, had a view as to its findings. His view was that the Peterson Report found the allegations made against Dr Downe to be wholly or substantially unproven. He describes the findings as overwhelmingly in favour of Dr Downe on the specific complaints against her (Transcript p 479). Mr Murphy recalls that he probably told Professor Gordon that view and may or may not have told Ms Drum. He certainly did not tell Professor Nanan or Dr Pardey. 216 To the extent that it accepted Mr Murphy's view, the Health Service had come to the view that the Peterson Report was overwhelmingly in favour of Dr Downe. As a consequence, it had failed to comply with the requirements of the guidelines in relation to protected disclosures. It had also failed to comply with the disciplinary policy that it had promulgated and on which it, and Dr Downe, had relied for the establishment of a fair process. Dr Downe agreed to the process for the Peterson Inquiry, and thereby acted to her prejudice, in the understanding that any Report arising from the Inquiry would be confined to the specific allegations referred to it and that any such Report findings would be binding on the Health Service, and reported to staff. 217 Ms Drum maintains that she was unaware that the Peterson Report found, overwhelmingly or otherwise, in Dr Downe's favour. There was, she says, no discussion between senior management as to the effect, if any, of the Peterson Report. 218 Professor Gordon came to the view that the Peterson Report was not in favour of Dr Downe. She did so because that was her impression of the entire Report and not because of a finding in relation to any or all of the individual complaints. 219 It is an inescapable conclusion that the Health Service acted upon the comments, recited above, in paragraph 1 of the Peterson Report and formed the view that the expressions of personal opinions and allegations (whether or not correct), together with the fact of Dr Downe's suspension, meant that there was no capacity for Dr Downe to return to the Unit in any capacity. The Health Service, as a consequence, continued the suspension and sought to resolve the issues by finding an agreed solution. 220 There is not, and could not be, evidence before me as to whether the attempts at resolution by either the Health Service or Dr Downe were reasonable or otherwise. It is the fact that the parties were unable to resolve the matters by an agreed solution. 221 As a consequence of the attitude of the Health Service, it is a necessary inference that any agreed solution could not involve a return by Dr Downe to the Unit. The Health Service continued the "suspension", which continues to this date. At least after the Peterson Report, Dr Downe did not accept the capacity of the Health Service to direct her not to perform work. Nor did Dr Downe accept any variation to her contract of employment in that regard. Dr Downe participated in the attempts to resolve the matter by agreement. Her or her representative's request that the Health Service do nothing precipitous was not an agreement to the suspension but an exhortation not to dismiss or transfer without adequate notice, so that steps could be taken to protect her position. This is exactly what happened when the direction to work at Westmead issued. 222 Any discussion that occurred in order to resolve the matters simply recognised the reality that it would be impossible for Dr Downe to obtain forced entry (or unwelcome entry) into the Unit and to perform work contrary to the express directions of the Health Service. 223 Dr Downe, in that regard, behaved reasonably and appropriately. She and/or her representatives sought initially to resolve the matter by agreement and, when that agreement was not forthcoming, instituted proceedings in this Court, in the Federal Court of Australia and in the Industrial Relations Commission of New South Wales. It is sufficient, for present purposes, to note that no new facts, other than the finalisation of the Reynolds Report and the Peterson Report, were relied upon for the continuing "suspension". Certainly no further allegations or disciplinary issues were raised. 224 The Reynolds Report has some relevance. First, other than an initial meeting for the purpose of supplying documentation, Professor Reynolds did not meet with Dr Downe. Second, the Report makes clear that the Unit was, as measured by objective standards of morbidity rates etc, performing at least satisfactorily. Thirdly, the Report noted some unique and positive practices relating to peer review and the "standardisation" of nursing notes at handover by the use of a detailed stamp that required completion. While making some negative comments about the chair and agenda at the peer review (presumably directed at Dr Downe), Professor Reynolds suggested that the Unit be congratulated on the development. Lastly, it made some negative comments on the personal issues and leadership style at the Unit. 225 The Reynolds Report was delivered on 20 December 2004. By that time Dr Downe had not worked at the Unit for almost 6 months. It is not clear whether all of such comments were confined to the period during Dr Downe's work. If they were, the Report arrived at those conclusions without the benefit of Dr Downe's views and without according her procedural fairness. There had never been a disciplinary process relating to these matters raised with Dr Downe either in accordance with the Health Service's policy or at all. Nor were these issues raised with her after the event. 226 On the facts, Dr Downe did not acquiesce in the continued suspension. Nor did she agree that the Health Service had the capacity or right to suspend her from duties. Further, she continued to maintain that, if there were such a right, it was inappropriate that it be exercised. I will deal with these issues more fully later in this judgment. (H) Section 51AA of the Trade Practices Act: Jurisdiction 227 Dr Downe raised, as a cause of action originally commenced in the Federal Court of Australia, a contravention of s 51AA of the Trade Practices Act. The relevant terms of s 51AA of the Trade Practices Act are: "(1) A corporation must not, in trade or commerce, engage in conduct that is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories. 228 As earlier recited, under the cross-vesting provisions, the matter is now before this Court and to be dealt with in these proceedings. The defendants submit that the conduct of the Health Service in suspending Dr Downe, or otherwise in its treatment of Dr Downe, is not conduct in trade or commerce. 229 In the context of the application of s 52 of the Trade Practices Act (misleading or deceptive conduct), the High Court of Australia had occasion to consider whether employment is within the description "in trade or commerce": see Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA 17; (1990) 169 CLR 594. At pages 603 to 604 the High Court (per Mason CJ, Deane, Dawson and Gaudron JJ) said: "[7] The phrase 'in trade or commerce' in s.52 has a restrictive operation. It qualifies the prohibition against engaging in conduct of the specified kind. As a matter of language, a prohibition against engaging in conduct 'in trade or commerce' can be construed as encompassing conduct in the course of the myriad of activities which are not, of their nature, of a trading or commercial character but which are undertaken in the course of, or as incidental to, the carrying on of an overall trading or commercial business. If the words 'in trade or commerce' in s.52 are construed in that sense, the provisions of the section would extend, for example, to a case where the misleading or deceptive conduct was a failure by a driver to give the correct handsignal when driving a truck in the course of a corporation's haulage business. It would also extend to a case, such as the present, where the alleged misleading or deceptive conduct consisted of the giving of inaccurate information by one employee to another in the course of carrying on the building activities of a commercial builder. Alternatively, the reference to conduct 'in trade or commerce' in s.52 can be construed as referring only to conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character. So construed, to borrow and adapt words used by Dixon J. in a different context in Bank of N.S.W. v. The Commonwealth [1948] HCA 7; (1948) 76 CLR 1, at p 381, the words 'in trade or commerce' refer to 'the central conception' of trade or commerce and not to the 'immense field of activities' in which corporations may engage in the course of, or for the purposes of, carrying on some overall trading or commercial business.

[8] As a matter of mere language, the arguments favouring and militating against these alternative constructions of s.52 are fairly evenly balanced. The scope of the prohibition imposed by s.52 is, however, governed not only by 'the terms in which it is created' but by 'the context in which it is found' (see Yorke v. Lucas [1985] HCA 65; (1985) 158 CLR 661, at p 668; and, generally, Bank of N.S.W. v. The Commonwealth , at p 285). In that regard, it is of particular significance that the words 'trade' and 'commerce' have 'about them a chameleon-like hue, readily adapting themselves to their surroundings' ( O'Brien v. Smolonogov (1983) 53 ALR 107, at p 113, quoting Federal Commissioner of Taxation v. Whitfords Beach Pty. Ltd. [1982] HCA 8; (1982) 150 CLR 355, at pp 378-379). Section 52(2) precludes limiting the scope of s.52(1) by implication drawn from the contents of other provisions of Pt V. Nonetheless, when the section is read in the context provided by other features of the Act, which is 'An Act relating to certain Trade Practices', the narrower (i.e. the second) of the alternative constructions of the requirement 'in trade or commerce' is the preferable one. Indeed, in the context of Pt V of the Act with its heading 'Consumer Protection', it is plain that s.52 was not intended to extend to all conduct, regardless of its nature, in which a corporation might engage in the course of, or for the purposes of, its overall trading or commercial business. Put differently, the section was not intended to impose, by a side-wind, an overlay of Commonwealth law upon every field of legislative control into which a corporation might stray for the purposes of, or in connection with, carrying on its trading or commercial activities. What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character. Such conduct includes, of course, promotional activities in relation to, or for the purposes of, the supply of goods or services to actual or potential consumers, be they identified persons or merely an unidentifiable section of the public. In some areas, the dividing line between what is and what is not conduct 'in trade or commerce' may be less clear and may require the identification of what imports a trading or commercial character to an activity which is not, without more, of that character. The point can be illustrated by reference to the examples mentioned above. The driving of a truck for the delivery of goods to a consumer and the construction of a building for another pursuant to a building contract are, no doubt, trade or commerce in so far as the relationship between supplier and actual or potential customer or between builder and building owner is concerned. That being so, to drive a truck with a competitor's name upon it in order to mislead the customer or to conceal a defect in a building for the purpose of deceiving the building owner may well constitute misleading or deceptive conduct 'in trade or commerce' for the purposes of s.52. On the other hand, the mere driving of a truck or construction of a building is not, without more, trade or commerce and to engage in conduct in the course of those activities which is divorced from any relevant actual or potential trading or commercial relationship or dealing will not, of itself, constitute conduct 'in trade or commerce' for the purposes of that section. That being so, the giving of a misleading handsignal by the driver of one of its trucks is not, in the relevant sense, conduct by a corporation 'in trade or commerce'. Nor, without more, is a misleading statement by one of a building company's own employees to another employee in the course of their ordinary activities. The position might well be different if the misleading statement was made in the course of, or for the purposes of, some trading or commercial dealing between the corporation and the particular employee." 230 This issue was the subject of an application by the defendants for summary dismissal of this cause of action. In the interlocutory judgment relating thereto, I made clear that in order for s 51AA of the Trade Practices Act to apply to the conduct in question, Dr Downe must show that the unconscionable conduct "must not be divorced from any relevant actual or potential trading or commercial relationship or dealing. Employment relations, and conduct affecting them, are not, on the authorities as they stand, without more, conduct in trade or commerce. In order for unconscionable conduct toward an employee (or by an employee toward her or his employer) to be actionable under the Trade Practices Act , there must be circumstances that take the conduct beyond a relationship confined to employer and employee." 231 The above does not mean that the provisions of s 51AA of the Trade Practices Act never apply to employment situations. A statement made during the course of negotiations to a potential employee may well be conduct in trade or commerce: see Patrick v Steele Mains Pty Ltd (1987) 77 ALR 133. It was submitted that the conduct of a corporation toward its employees is conduct usually associated with trade and commerce, assuming, in that analysis, that the corporation is otherwise engaged in trade or commerce. It may well be that Concrete Constructions v Nelson requires reconsideration, if the view of the High Court of Australia, relating to the internal regulation of corporations under the trading and/or financial corporations power, were to be applied to the definition of trade or commerce: see New South Wales v Commonwealth [2006] HCA 52; 81 ALJR 34; 231 ALR 1. The decision in New South Wales v Commonwealth, supra, however, does not directly impact upon the authority in Concrete Constructions v Nelson, supra. (See, however, the judgment of the Full Court of the Federal Court in Hearne v O'Rourke [2003] FCAFC 78; (2003) 129 FCR 64 and the refusal of special leave on the basis that it was an interlocutory judgment: O'Rourke v Hearne [2004] HCATrans 248.) 232 While it is arguable that the removal of the Director of a Unit, providing services to the public, which Director was providing those services, may be an act in trade or commerce, on current authority, the act in trade or commerce is the impact upon the public, not the treatment of the employee. In the present situation, the relationship between the Health Service and Dr Downe was that of employer and employee. Dr Downe has failed to prove that there were trade or commercial dealings, as explained in Concrete Constructions v Nelson, supra, between her and the Health Service in any relevant sense. Section 51AA of the Trade Practices Act does not apply to the conduct of the Health Service in relation to Dr Downe. Unconscionability 233 Dr Downe, in claiming that the conduct is unconscionable within the meaning of the unwritten law (which meaning is quite different from the meaning it has been given in the past by the Commission, or, I infer, the Industrial Court of NSW currently, under s 105 of the Industrial Relations Act), relies for her cause of action not only on the provisions of s 51AA of the Trade Practices Act, but also upon equitable principles. 234 There is little doubt that, in her inability (other than perhaps by proceedings of this kind) to oppose the conduct of the Health Service, Dr Downe was at a disadvantage. The nature and history of employment generally imports a submission by employees and a subordination of the employee: see Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney & Anor [2007] NSWSC 104; (2007) 69 NSWLR 198 at [91], [92]. See also AIME v CSOA (1912) 6 CAR 95 at 100-101, per Higgins J. 235 However, as has been made clear in a number of authoritative statements on unconscionability, that which is required is not disadvantage simpliciter, but "special disadvantage": "I qualified the word 'disadvantage' by the adjective 'special' in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasise that the disabling condition or circumstances is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests…" (Per Mason J in Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447) 236 The principle applicable to a remedy for unconscionable conduct was, with respect, aptly adumbrated by Deane J in Amadio: "Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so. The adverse circumstances which may constitute a special disability for the purposes of the principles relating to relief against unconscionable dealing may take a wide variety of forms and are not susceptible to being comprehensively catalogued." ( Amadio , supra, at 474) (See also Blomley v Ryan [1954] HCA 79; (1956) 99 CLR 362). 237 In the current proceedings, Dr Downe does not point to any special disability that prevented her from exercising her own mind and making a judgement as to her own best interests. It is unnecessary, despite the request so to do, in those circumstances, and because of the earlier conclusion as to the applicability of the Trade Practices Act, to discuss whether s 51AA of the Trade Practices Act is confined to the equitable remedy for unconscionable conduct or provides a broader remedy, provided by the Trade Practices Act, where unconscionable conduct exists and in which equity would grant some relief, e.g. estoppel: see GPG (Australia Trading) Pty Ltd v GIO Australia [2001] FCA 1761; (2001) 117 FCR 23 at [113] - [126], per Gyles J and the cases therein cited. 238 I conclude that, as the term is used in obtaining equitable relief, the conduct of the Health Service in "suspending" Dr Downe was not unconscionable and does not give rise to a cause of action. I reserve until later, to the extent necessary, any consideration of the "unconscionability" of subsidiary conduct that may have been undertaken, e.g. the breach of confidentiality, failure to adhere to the findings of the Peterson Inquiry on the allegations referred or failure to adhere to its promulgated policy of dealing with "Protected Disclosures" and/or the Disciplinary Procedures, including any consideration of what, if any, remedies would flow therefrom. (I) The Availability of the Unfair Contracts Jurisdiction 239 The Health Service submits that Dr Downe is ineligible to make application for, and obtain relief under, s 106 of the Industrial Relations Act. The submission depends upon a proper construction of s 108A of that Act. Section 108A imposes a limit, by reference to remuneration package, on the persons who may gain access to orders under s 106 of the Act. The relevant statutory provisions for the purpose of this submission are sections 105, 106 and 108A of the Industrial Relations Act. They are relevantly in the following terms: "105 'contract' means any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument. …

106 (1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract. (2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason. … 108A (1) An application cannot be made for an order under this Division if the application relates to a contract of employment under which: (a) a remuneration package that exceeds the remuneration cap is paid or received (or is payable or receivable) during the period of 12 months immediately before the application is made (or, if the application concerned relates to a contract that has been terminated, immediately before the termination), or (b) a remuneration package is paid or received (or is payable or receivable) during a period of less than 12 months immediately before the application is made (or, if the application concerned relates to a contract that has been terminated, immediately before the termination) that would, if the remuneration package had been paid or received (or been payable or receivable) for a period of 12 months, have exceeded the remuneration cap. …

(3) In this section: 'contract of employment' means any contract or arrangement under which work is done by a person in the capacity of an employee, and includes a related condition or collateral arrangement with respect to such a contract. 'employment benefit' means a benefit provided to an employee at the cost of his or her employer (being a benefit of a private nature) and, without limitation, includes: (a) contributions payable to a superannuation scheme by an employer in respect of the employee, including any liability of that employer to make any such contributions or to pay costs associated with that scheme, or (b) the provision by an employer of a motor vehicle for private use by the employee, or (c) any other benefit prescribed by the regulations for the purposes of this definition. 'monetary remuneration' includes any performance-related bonus or incentive payment. 'remuneration cap' means: (a) $200,000, except as provided by paragraph (b), or (b) any greater amount prescribed by the regulations (being a regulation that increases the amount by reference to increases in the amount referred to in section 83 (1) (b)). 'remuneration package' means the total value of monetary remuneration and employment benefits payable or receivable under a contract of employment." 240 The factual basis for the submission of the Health Service is that Dr Downe is paid an award salary (including Director's allowance) of $193,765.91 per annum (see Affidavit of Mr Bellman [7], [8], [27] and Exhibit PB1, pages 42-85). Over and above that amount, there is a liability to contribute to the benefit of Dr Downe an amount of no less than $15,186.04, being the minimum superannuation contributions payable pursuant to section 33 of the State Authorities Superannuation Act 1987. It is unnecessary to investigate on whom that liability falls. 241 There is also a liability incurred under the State Authorities Non-Contributory Superannuation Act 1987, which, on the submission presented, it is unnecessary to take into account. It is unnecessary to take the last mentioned liability into account, because, if the submission of the Health Service were correct, the liability, by whomever it is incurred, is arithmetically insignificant. Further, if the submission of the Health Service were incorrect, then the liability is still arithmetically insignificant because such an amount would, in the same way as the other amounts identified, not be relevant to the operation of s 108A of the Act. 242 The combination of the amounts of salary and allowances payable pursuant to the relevant award and the liabilities to pay superannuation contributions pursuant to s 33 of the State Authorities Superannuation Act, totals (at least) $208,951.95. 243 There has been no amount prescribed for the purpose of paragraph (b) of the definition of "remuneration cap" in s 108A(3) of the Industrial Relations Act, as a consequence of which the "remuneration cap" at all relevant times has been $200,000. The Health Service submits that the remuneration package of Dr Downe exceeds the remuneration cap and the provisions of s 108A of the Industrial Relations Act preclude an application for orders under s 106 of that Act. 244 Fundamental to the construction pressed by the Health Service is that the word "under" in the definition of "remuneration package" is given a broad meaning of "in connection with", "with respect to" or "because of". No authority is given for such a broad construction. The effect of construing "under" in such a broad manner would result in the remuneration package including payments to which the employee was not entitled or amounts that were not paid by an employer. Such a result may not be wholly inappropriate, say, for example, in the case of tips to a waiter. 245 It is necessary to look at the whole of the Act and the purpose of the insertion of s 108A of the Industrial Relations Act in order to ascertain the legislative intention. Modern authority on the construction of statutory provisions (and other provisions) directs the Court to construe the instrument to give effect to harmonious goals, unless forced by express provisions or words of necessary intendment to do otherwise: Project Blue Sky v ABA [1998] HCA 28; 194 CLR 355 at [69] and [70]. 246 While section 108A of the Industrial Relations Act seeks to limit access to orders of the Commission (which term I use to encompass the Industrial Court as it is now entitled and this Court when exercising cross-vested jurisdiction), it forms part of a whole statutory scheme in which the grant of statutory power is contained in ss 105 and 106 of the Industrial Relations Act. The injunction, cited above, from Project Blue Sky to construe statutory language harmoniously also requires effect to be given to the purpose and language of the provisions. The High Court said: "[69] The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined 'by reference to the language of the instrument viewed as a whole'. In Commissioner for Railways (NSW) v Agalianos , Dixon CJ pointed out that 'the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed'. Thus, the process of construction must always begin by examining the context of the provision that is being construed.

[70] A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions will often require the court 'to determine which is the leading provision and which the subordinate provision, and which must give way to the other'. Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme.

[78] However, the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning. In Statutory Interpretation , Mr Francis Bennion points out (at 343-344):

'The distinction between literal and legal meaning lies at the heart of the problem of statutory interpretation. An enactment consists of a verbal formula. Unless defectively worded, this has a grammatical meaning in itself. The unwary reader of this formula (particularly if not a lawyer) may mistakenly conclude that the grammatical meaning is all that is of concern. If that were right, there would be little need for books on statutory interpretation. Indeed, so far as concerns law embodied in statute, there would scarcely be a need for law books of any kind. Unhappily this state of being able to rely on grammatical meaning does not prevail in the realm of statute law; nor is it likely to. In some cases the grammatical meaning, when applied to the facts of the instant case, is ambiguous. Furthermore there needs to be brought to the grammatical meaning of an enactment due consideration of the relevant matters drawn from the context (using that term in its widest sense). Consideration of the enactment in its context may raise factors that pull in different ways. For example the desirability of applying the clear literal meaning may conflict with the fact that this does not remedy the mischief that Parliament intended to deal with.'"(Per McHugh, Gummow, Kirby and Hayne JJ). 247 The commencement point of the construction of this scheme, in its entirety, is the purpose of the scheme. The statutory language points clearly to a purpose to redress unfairness in contracts or arrangements for the performance of work. 248 The term "arrangement" as used in the scheme is a term of broad import, which, ordinarily, would include a contract. Because it is used together with the word "contract", it is unnecessary to say more than it is a term that extends the reach of the orders available under s 106 of the Act beyond contracts. 249 An examination of the definition of "contract of employment" in s 108A of the Act also uses the term "contract or arrangement". An "arrangement" is a term wider than "contract" but necessarily imports "a meeting of the minds of those said to be parties to the arrangement": Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd & Ors [2000] FCA 0017; (2000) 169 ALR 344 at [75], in which the Court said: "[75] An arrangement or understanding for the purposes of s 45(2) of the TP Act is apt to describe something less than a binding contract or agreement: Top Performance Motors Pty Ltd v Ira Berk (Qld) Pty Ltd (1975) 5 ALR 465; 24 FLR 286 at 290-1 (Aust Ind Ct, FC) per Smithers J. However, in order for there to be an arrangement or understanding for the purposes of s 45(2), there must be a meeting of the minds of those said to be parties to the arrangement or understanding. There must be a consensus as to what is to be done and not merely a hope as to what might be done or happen: Trade Practices Commission v Email Ltd (1980) 43 FLR 383 at 385 (Lockhart J); Ira Berk at FLR 291 per Smithers J. Ordinarily, an arrangement or understanding involves communication between the parties arousing expectations in each that the other will act in a particular way: Email at 395. There is no necessity for an element of mutual commitment between the parties to an arrangement or understanding, although in practice such an arrangement or understanding would ordinarily involve reciprocity of obligation: Trade Practices Commission v Service Station Association Ltd (1993) 44 FCR 206 at 230-1; 116 ALR 643 per Lockhart J." 250 The provisions of s 105 and, in particular the definition of "contract", refer, in what seems to be an exclusive way, to a definition which extends the ordinary meaning of the term "contract" to an "arrangement" or a "related condition" or "collateral arrangement". Further, the definition specifically excludes "an industrial instrument". 251 The term "industrial instrument" is defined by s 8 of the Industrial Relations Act to mean "an award, an enterprise agreement, a public sector industrial agreement, a former industrial agreement, a contract determination or a contract agreement". Notwithstanding the seeming tautology of the term "contract agreement" it is a term of art defined by the Act as the equivalent of an industrial agreement for certain sub-contract arrangements relating to bailment and contracts of carriage. It has no direct impact upon any of the issues in these proceedings except to the extent that it informs a construction of the terms of s 105 and, as a consequence, the terms of s 108A of the Act. 252 Thus, properly construed, an "industrial instrument", as the term is used in s 105, includes different kinds of regulation of industrial conditions. An award, as is probably common knowledge, is an instrument made by the Commission which instrument is given statutory force under the Act and sets conditions of employment. It does not require (although as a matter of practice it may involve) an understanding or agreement of the parties or a meeting of the minds of those persons bound by it. Indeed given that all awards under the Act are "common rule" in effect, it would be impossible (except in very peculiar awards) to have an understanding between all of the participants bound by the award (see s 12 of the Industrial Relations Act). 253 An enterprise agreement is, as the name suggests, an agreement between an employer or employers and their employees or one or more industrial organisations representing those employees. 254 The terms "public sector industrial agreement" and "former industrial agreement" are also included in the definition of "industrial instrument". They do not extend the genus, or affect the interpretation otherwise available, and are particular agreements that fall within the kinds of instruments that have otherwise been described. 255 As a consequence of the aforesaid definitions, the term "industrial instrument", as utilised in the definition of "contract" in s 105 of the Industrial Relations Act, refers to instruments all of which are enforceable under the statute (or under some other statutory provisions). However, some industrial instruments may be contracts, independently of the quality of enforceability under the statute, provided that, for example, the industrial instrument is made with individual employees and there is consideration, or, alternatively, it is made by an industrial organisation as an agent for identified employees who are then ascertainable. 256 Usually, a collective agreement would not be a contract, even where it was an industrial agreement and was binding: see Ryan v Textile Clothing & Footwear Union of Australia [1996] 2 V.R. 235, per Brooking JA at 238 et seq, and per Hayne JA at 258-261 and 273. In Ryan, supra, the Full Court of the Supreme Court of Victoria held that the collective agreement was not a contract for reasons that included the absence of a true relationship of principal and agent and the absence of consideration. As a consequence of that finding, the Supreme Court of Victoria held that the collective agreement there under consideration was not an "industrial instrument" within the meaning of s 556 of the then Corporations Law. 257 However, the same analysis makes clear that a significant proportion of collective agreements, whether enforceable as contracts or otherwise, would be arrangements, either an arrangement between an employer (or employers) and an industrial organisation or an arrangement between an employer and its employees. 258 It necessarily follows from the rationale in Ryan, supra, and the cases to which the Victorian Supreme Court refers, that the term industrial instrument, as defined here to include certified agreements, would, even if they were not contracts, include arrangements, and some such agreements may be an arrangement between an employer and an employee, as part of the group of employees, who had themselves, or through their industrial organisation acting as their agent, reached such an understanding. 259 The foregoing analysis is necessary because the Health Service submits that the exclusion of the term "industrial instrument" in s 105 is a significant difference between the terminology in s 105 and in s 108A that affects the interpretation of the latter. 260 The High Court of Australia in Byrne v Australian Airlines Limited [1995] HCA 24; (1995) 185 CLR 410 distinguishes rights and liabilities under statute from rights and liabilities under a contract of employment. The distinction is one of longstanding. The High Court clarified the position (and, with respect, disabused those that had thought otherwise). In the joint judgment (Brennan CJ, Dawson and Toohey JJ) the Court said: "[8] However, we do not understand Dixon J to be saying in that passage that 'a term imported by statute into the contract of employment' loses its statutory character and becomes incorporated in the contract as one of its terms. On the contrary, he recognises the distinction between an obligation originating in a statute and an obligation arising from a contract.... And apart from statute, a term may be implied by law as an incident of a particular class of contract, but we do not understand the appellants to be submitting that any such implication arises here. They rely upon the statutory force given to the award and say that, because the relationship between the parties is contractual, the provisions of the award … become terms of the contract enforceable by the use of contractual remedies as well as the remedies provided by statute.

[9] A right to the payment of award rates is imported by statute into the employment relationship , which is contractual in origin, and, express promise apart, it is only in that sense that it can be said that award rates are imported into the contract of employment. The award regulates what would otherwise be governed by the contract. But award rates are imported as a statutory right imposing a statutory obligation to pay them. The importation of the statutory right into the employment relationship does not change the character of the right." [Emphasis added] 261 The distinction between the contract of employment and the employment relationship is one well known to the law. 262 In the judgment of McHugh and Gummow JJ in Byrne, their Honours come to a similar conclusion, expressed slightly differently. Having set out the submission that an employment contract, as a well-recognised class of contract, required, as a matter of necessity, the importation of an award provision, their Honours said: "[81] However, there is no "necessity" for such a step in the sense in which that term was applied in cases such as Irwin and Scally. The contract of employment is not, from the viewpoint of the employee, rendered nugatory if the existing provisions thereof remain, as a matter of contract, to operate concurrently with the regime established by the Award and deriving its authority from statute.

[82] There is nothing to suggest that the contracts of employment were not workable and effective before the introduction into awards of provisions such as cl 11(a). This is not a case where a provision such as cl 11(a) is necessary lest the contract be deprived of its substance, seriously undermined or drastically devalued in an important respect." ( Byrne & Frew, supra, at 452-453, per McHugh and Gummow JJ) 263 Their Honours McHugh and Gummow JJ then turned their attention to whether the award, by force of its statutory authority, had a particular impact upon the terms of the contract of employment. After discussing Automatic Fire Sprinklers Pty Ltd v Watson [1946] HCA 25; (1946) 72 CLR 435 and the particular and quite peculiar effect of the wartime regulations and the operation of an award (albeit in the context of a federal award under the then federal legislative scheme), their Honours said: "Of itself, the Award could not answer the description of a law of the Commonwealth. It is well established that the Award is made part of the law, not by its own force but by force of its adoption by the statute, which makes the directions contained in it 'binding and enforceable in law' ( Proprietors of the Daily News Limited v Australian Journalists' Association [1920] HCA 43; (1920) 27 CLR 532 at 537).

The intention of Parliament as expressed in the relevant provisions of the legislation is directed to awards at large, without distinguishing between them, and the issue becomes one of determining what is involved in the use of the term 'binding' in those provisions.

An award made under the present statute or its predecessor by the relevant arbitral body is given binding effect pursuant to the provisions we have mentioned, in respect of matters which, whilst they arise out of or are connected with the relationship of employer and employee, include much that is outside the contract of service, its incidents and the work done under i. The concept of 'industrial dispute', central to the system established by the legislation, is concerned not with the relationship of individual employer and individual employee or former employee, so much as with a more general relationship inhering in the subject-matter of the dispute, such that it can be identified as involving the collective relationship between employers and employees as such.

These matters are consistent with the proposition that, in making an award 'binding', the legislature was concerned to oblige those subjected to the award to observe its terms under the sanctions for which the statute itself provided rather than to leave it to the arbitral body dealing with the industrial dispute to make an award, breach of a term of which would render legally ineffective that which otherwise would have been an exercise of contractual power held by a party bound by the award." ( Byrne , per McHugh and Gummow JJ at 455-457) 264 While the above citation is particularly relevant to the federal legislative scheme, as it then existed, which legislative scheme has significant differences to the legislative scheme in NSW, the analysis is still, with respect, valid. An industrial instrument (each of which must be registered), i.e. an award or industrial agreement, has force by virtue of the statute, not because they are imported into or become part of a contract. A statute could never be described as a "contract or arrangement". It is the statute that renders binding and payable the amounts prescribed in an award. Further, even if the Award were enforceable in its own right as a decision of the Commission, it would not be a meeting of the minds of those bound by it and could not be an arrangement. Different considerations may apply to some agreements, but it is unnecessary to deal with that issue. However, such a possibility may explain the express exclusion in the definition of contract in s. 105 of the Act. 265 With that somewhat discursive background, I turn then to the provisions of ss 105, 106 and 108A of the Industrial Relations Act. 266 Even unaided by a Second Reading Speech, the terms of s 108A of the Act are clearly designed to exclude from the remedial provisions of s 106, those persons who are "high earners" and do not appear so readily to need the beneficial impact of this protective legislation. There are many cases that have traced the history of the current s 106 of the Industrial Relations Act. It originated from a desire to protect, inter alia, exploited labour only sub-contractors who were not covered by an award. Such persons were, for example, lorry owner-drivers, bread carters, cleaning contractors and some building workers, amongst others. Often they were directors of their own companies, which were engaged by "principals" at less total remuneration than an employee could earn under an award. 267 To construe the terms "contract or arrangement" or the more extended term "contract or arrangement or any related condition or collateral arrangement" to include a statute would be bizarre. It would have the consequence that an instrument of the Parliament would give a jurisdiction to a tribunal to determine that another instrument of the Parliament was unfair. Apart from the obvious impact on traditional notions of the rule of law, such a consequence would need, if it were ever to be valid, express terms, which render such a construction unavoidable. 268 Whether the definition of contract in s 105 of the Act applies to the use of the term in s 108A of the Act matters little. There is a definition of contract of employment in s 108A(3) which combines the effect of the definition of contract in s 105 and at least one of the jurisdictional limits for the exercise of jurisdiction in s 106(1) of the Act. Nevertheless for s 108A to exclude the right to make an application for orders under s 106 of the Act, the application must relate to a contract of employment "under" which the remuneration package exceeds the remuneration cap. 269 The salary payable to Dr Downe is payable under the Award. No agreement of the parties, whether enforceable or otherwise, prescribes the payment that must be made. Similarly the superannuation entitlement (and/or liability) is statutory. It does not depend upon any contract or arrangement or meeting of minds of Dr Downe and the Health Service. 270 The detailed provisions of definitions in s 108A(3) confirm this approach. The definition of "remuneration package" requires the total value of the monetary remuneration and employment benefits to be payable or receivable "under a contract of employment". The word "under" in the context of that definition, and usually in like context, means "pursuant to", "in accordance with" or "by": see R v Klein; ex parte Harrap [1941] VLR 200 at 201; Gilbert v Western Australia [1962] HCA 7; (1962) 107 CLR 494 at 516; R v Tkacz (2001) 25 WAR 77; Energy Resources of Aust Ltd v Commissioner of Taxation [2003] FCA 26. In the last mentioned judgment, Lindgren J commented: "[37] The word 'under' appears in subs 28(1) and s 29. It is necessary to have regard to the context in order to identify the meaning of the word intended in a particular case. Dictionaries give the relevant definition as 'in accordance with' ( The New Shorter Oxford English Dictionary (1993), 16b ; The Macquarie Dictionary (1988), 16 ). Meanings recognised as possibilities in the cases include 'in accordance with' ( Gilbert v Western Australia [1962] HCA 7 ; (1962) 107 CLR 494 at 516), 'pursuant to' and 'by virtue of' ( R v Clyne; ex parte Harrap [1941] VLR 200 at 201 per O'Bryan J) and 'by' ( R v Tkacz (2001) 25 WAR 77 at [23]-[26] per Malcolm CJ). The word 'under' admits of degrees of precision and exactness on the one hand, and of looseness and inexactness on the other. Since the many provisions of Subdivision B which follow subs 28(1) address the very matter of the manner of ascertainment of value of trading stock, and since s 28 is the general provision requiring the difference between the value of trading stock on hand at the beginning and at the end of a year of income to be taken into account, I think it quite clear that the words 'ascertained under' in subs 28(1) mean 'ascertained in accordance with'. Accordingly, subs 28(1) required the value, ascertained in accordance with the succeeding provisions of Subdivision B, and not otherwise, of all trading stock on hand at the beginning of the year of income, and all trading stock on hand at the end of that year, to be taken into account in ascertaining whether or not the taxpayer had a taxable income." 271 The Health Service submits that the above construction subverts the purpose of the legislation. I do not accept that submission. They refer to the distinction in the wording between s 108A of the Act and s 84 of the Act. 272 Section 84 of the Industrial Relations Act deals with the rights to reinstatement and allows all employees who are engaged in the public sector or for whom conditions of employment are set by an industrial instrument to apply for a remedy under the unfair dismissal jurisdiction. Further, it allows employees not covered by an industrial instrument whose annual remuneration is not greater than a prescribed amount to make such application. The Health Service submits that the device utilised by the legislature to limit the operation of s 84 orders could have been utilised in relation to s 108A, but a different approach was taken. 273 A different approach was taken because a different purpose is being fulfilled. The Second Reading Speech for the insertion of s 108A into the Industrial Relations Act is relevantly in the following terms: "The original intention of the unfair contract provisions of the Industrial Relations Act was to protect award terms and conditions from being undermined by artificial contract arrangements. However, because of amendments to the provisions and the way in which the provisions have been interpreted, the operation of the unfair contracts jurisdiction has moved away from that original intention. In recent times the unfair contracts jurisdiction has been used by highly paid employees as a way to hit the jackpot and obtain compensation after the termination of their employment. The Industrial Relations Commission of New South Wales has awarded benefits on termination to these former highly paid executives which are much more than what an ordinary worker can expect to achieve in the unfair dismissal jurisdiction.

A number of recent cases have shown that the Commission may find unfairness in a contract notwithstanding lavish remuneration packages during employment and generous payouts on termination. The most notorious example is probably Canizales v Microsoft Corporation , in which a human resources director was awarded access to share options valued at $12 million to $14 million in a decision arising from his redundancy, even after evidence that between the ages of 21 and 31 the earnings of the applicant were more than $10 million. In that case Justice Peterson said:

'It seems to follow necessarily that a contract may be exceedingly generous in an objective sense, such that an employee may earn over ten years more than most will earn in a lifetime (or, what would take more than 66 years to earn at the rate of $150,000 per annum) yet the contract may be unfair in the statutory sense because of the manner of its termination.'

This bill will ensure that the Commission is not compelled to award such generous payouts to highly paid executives. The expansion of this jurisdiction to enable highly paid executives to achieve large compensation payments has coincided with significant increases in the number of claims being made. Almost twice as many unfair contracts applications were lodged in 2001 as compared to 2000 - that is, 956 claims in 2001 compared with 552 claims in 2000. This was after a 76 per cent increase from 1999 to 2000. One firm conclusion can be stated: The unfair contracts provisions are being regularly invoked by people who are neither being exploited nor treated ungenerously. The consequences of this situation are both negative and serious. Similar provisions existing in other Australian jurisdictions are of much narrower application than the New South Wales provisions, and overseas centres with which New South Wales is competing for business and investment have no comparable provisions. This bill will limit these extravagant and speculative claims, and bring the provisions back in line with their original intention of protecting award terms and conditions. I commend the Bill to the House." 274 There is a fundamental distinction between the manner of operation of s 84 and its consequences and the operation of s 106 and its consequences. 275 The legislature, in s 84 of the Industrial Relations Act, gives to all award employees a right to be reinstated, regardless of their earnings under the award or under a contract of employment. Thus, a newsreader or star sportsperson, covered by an award providing, say $80,000 per year in wages, may be paid more than $1,000,000 per year under her or his contract of employment. The employer has agreed to that rate of pay. As an award employee, regardless of the contractual rate of pay, such an employee has rights to redress an unfair dismissal. I add that, as I read the judgment of Peterson J, if Mr Canizales, referred to in the Second Reading Speech, were to have been covered by an award and reinstated under s. 84, he would still have received the shares of which the Minister complains. 276 Section 106 of the Industrial Relations Act, on the other hand, allows the relevant tribunal to re-write the contract of employment and increase remuneration under it. In those circumstances, an award employee who, under her or his contract of employment, earned over $1,000,000 per year would not be entitled to have either that remuneration or the other conditions of employment re-written by the Commission. 277 However, a person who is paid only that which is prescribed by award and statute would not fit the description of "high earner" or "highly paid executive", as the person would be receiving only that which had been fixed by the legislature itself (or by instrument given force by the legislature) as the appropriate minimum standard for such employees. An employee who is paid a rate of pay pursuant to or in accordance with the minimum set by an award and/or enjoys a benefit prescribed by statute does not thereby exceed the remuneration cap. 278 As to the submission of the Health Service that such a construction would render otiose the definition of "employment benefit" in s 108A(3) of the Industrial Relations Act, such a submission does not withstand scrutiny. The "high earner" to which reference has been made may receive her or his earnings by way of monetary remuneration and/or by a non-monetary benefit including superannuation, the provision of a motor vehicle, use of a credit card, travel concessions or the like. 279 An employee that earns $1,000,000 in monetary remuneration is a high earner. That employee is just as much a high earner if the earnings were $100,000 of monetary remuneration and $900,000 payable into a superannuation fund, each of which were payable under the contract of employment. The terms of the definition are not otiose and continue to apply in a manner that gives full force to the stated intention of Parliament and the clear intention of the Act and its terms. That intention reflects a capacity to void or vary contracts or arrangements in relation to persons including those whose earnings and benefits are confined to being paid the minimum established under an award and/or statute. 280 None of the monetary remuneration or superannuation benefits of Dr Downe are "payable or receivable under a contract of employment" and her remuneration package does not exceed the prescribed cap. 281 Further, and to avoid any doubt, I reiterate that which I said in the interlocutory judgment in this matter (Downe v Sydney West Area Health Service [2006] NSWSC 1416): "[35] An award may operate on the employment relationship, or even perhaps collaterally with a contract of employment, but it is not an arrangement.

[36] Nor is an award or statutory requirement a 'related condition' to the contract of employment. 'Condition' is a term well known to the law. It is generally something demanded or required as a prerequisite to the granting or performance of something else. It is commonly, i.e. not strictly, also used to mean any term in a contract, whatever its nature: Whitman Machine Tool Sales Ltd v L. Schuler AG [1972] 1 WLR 840, per Denning LJ. In contract law, it is sometimes used to mean a contractual term so fundamental that any breach of it gives rise to a right of termination of the contract: Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286 at 302." 282 For the foregoing reasons, and the reasons expressed, albeit on a preliminary basis in the aforesaid interlocutory judgment, Dr Downe has available to her the right to make application under s 106 of the Industrial Relations Act and, subject to the jurisdictional limits thereby imposed, and the exercise of discretion reposed, the right to seek and obtain orders pursuant thereto. (J) Is There a Statutory Right to Suspend? 283 The Health Service submits that the operation of s 47 of the Interpretation Act, together with the relevant provisions giving statutory authority for the employment of Dr Downe, provides a statutory authority to suspend Dr Downe, regardless of any contractual right or duty. The provisions of s 47 of the Interpretation Act are in the following relevant terms: "(1) If an Act or instrument confers a power on any person or body to appoint a person to an office: … (b) the power includes: (i) power to remove or suspend, at any time, a person so appointed, …

(2) The power to remove or suspend a person under subsection (1)(b) may be exercised even if the Act or instrument under which the person was appointed provides that a holder of the office to which the person was appointed shall hold office for a specified period of time." It should be noted that "office" is defined in the Interpretation Act (s 21) to include a "position". As to "position", see, inter alia, AMCOR Ltd v CFMEU [2005] HCA 10; (2005) 222 CLR 241; CBA v FSU [2002] FCAFC 193; (2002) 125 FCR 9, which establishes that it usually refers to an aggregation of duties in a particular business. 284 At the time that Dr Downe was first employed, the relevant statutory provisions relating to employment in an area health service (by which she was then employed) were set in the Area Health Services Act 1986. By s 25(1) of the Area Health Services Act 1986, the Area Health Service was permitted to "appoint and employ such employees as may be necessary for the purpose of exercising its functions." 285 Other relevant provisions of the Act were that, by s 26 of the Area Health Services Act 1986 there was a specific and special definition that related to the term "industrial matters" as contained in the then Industrial Arbitration Act 1940 and by s 26(2): "Except insofar as provision is otherwise made by law, the conditions of employment, including salaries, wages or remuneration, of the employees of area health services shall be as may be determined from time to time by the Health Administration Corporation." 286 Section 26 also contained provisions that allowed the Health Administration Corporation to represent area health services before competent industrial tribunals and to enter into agreements with associations or organisations representing employees in the area health services with respect to salaries, wages and/or remuneration. 287 In contradistinction, s 15 of the Area Health Services Act 1986 created the Board of an area health service which was defined as consisting of "a person appointed by the Governor as chief executive officer … and … persons … appointed by the Minister." 288 Section 18 of the Area Health Services Act 1986 provided that the Governor may, by order, "remove any member or all members of an area health board" and appoint administrators in their stead. The provisions of the Area Health Services Act 1986 draw a clear distinction between those persons appointed to (and able to be removed from) the Area Health Board and those persons whom the Area Health Service "may appoint and employ". The latter category, in which Dr Downe falls, must be employed under a contract of employment, the conditions of employment of which (subject to agreement) are determined by the Health Administration Corporation. Provisions of this kind have been held not to allow a statutory body to determine, absent agreement from the employee, the terms and conditions of employment. 289 The express and specific provisions of s 26(2) of the Area Health Services Act 1986, which require the conditions of employment (including the right or otherwise to be suspended or the conditions of suspension and/or termination) to be determined by the Health Administration Corporation, would override the general provisions contained in s 47 of the Interpretation Act. 290 Currently the employment of Dr Downe is pursuant to the terms of s 116 of the Health Services Act 1997, the terms of which prohibit an area health service from employing staff (s 22(2) of the Health Services Act). 291 The 1997 Act also allows for the appointment of a chief executive of an area health service, members of a health advisory council and a health executive service (amongst others), the members of each of which are appointed by the Director-General and/or the Minister and/or the Governor. Section 116 is the enabling provision for the employment of staff under which Dr Downe (or all other medical and non-medical staff referred to in these proceedings) is employed. The relevant provisions are in the following terms: "115(1) The NSW Health Service consists of those persons who are employed under this Part by the Government of New South Wales in the service of the Crown.

116(1) The Government of New South Wales may employ staff under this Part:

(a) to enable area health services and statutory health corporations, and the public hospitals that they control, to exercise their functions, and

(2) The employment of staff in the NSW Health Service, including the exercise of employer functions in relation to that staff, is subject to the requirements of this or any other Act relating to that staff. (3) The Director-General may, subject to subsection (2), exercise on behalf of the Government of New South Wales, the employer functions of the Government in relation to the staff employed in the NSW Health Service.

116A (1) The Director-General may fix the salary, wages and conditions of employment of staff employed under this Part in so far as they are not fixed by or under any other law. (2) The Director-General may give directions to a public health organisation requiring the payment by the organisation, on behalf of the Government of New South Wales, of the salary, wages and other employment-related costs (such as superannuation, workers compensation, public liability insurance and vicarious tortious liability) of those members of the NSW Health Service who are employed under this Part to enable the public health organisation to exercise its functions. (3) The Director-General may enter into an agreement with any association or organisation representing a group or class of members of the NSW Health Service with respect to the conditions of employment (including salaries, wages or remuneration) of that group or class. Any such agreement may (subject to Part 2) extend to conditions in respect of the employment of persons convicted of, or charged with, serious sex or violence offences. (4) An agreement under subsection (3) binds all members of staff in the group or class affected by the agreement, and no such member, whether a member of the association or organisation with which the agreement was entered into or not, has any right of appeal against the terms of the agreement." 292 The Health Services Act 1997 draws a clear distinction between the employment of staff under s 116 and the appointment of persons under other provisions of the Act. 293 Essential to the submission of the Health Service on this aspect of the proceedings is that Dr Downe has been suspended. I doubt that she has. It seems that a proper analysis of what has, in fact, occurred, is that Dr Downe has been directed not to perform work. She still holds the position of Director of the Neonatal Intensive Care Unit at Nepean Hospital. 294 The ordinary meaning of the term suspension is a "temporary abrogation, as of a law or privilege" and in the ordinary sense has a temporary character. The direction given by the Health Service to Dr Downe, at least after the Peterson Inquiry was concluded by the issue of the Report, is indefinite. Further, the direction to perform work at Westmead (albeit stayed) is not a direction suspending the holding of office, it is a direction to perform work unconnected with the position of Director of the Neonatal Intensive Care Unit, except a connection of the kind that obedience to such a direction would be inconsistent with the performance of work as the Director (see Affidavit of Professor Gordon, 5 January 2007 [25(g)] and Transcript at p. 296). 295 This has been the subject of judicial pronouncement in like circumstances. I refer to the judgment of Moore J in Moshirian v University of New South Wales [2002] FCA 179. His Honour was dealing with the purported suspension of a Professor of Finance in the School of Banking and Finance in the Faculty of Commerce and Economics at the University of New South Wales. Allegations were made against the Professor. The allegations were investigated during the course of which there was a purported suspension. His Honour said: "[63] It is appropriate to consider first the ordinary meaning of 'suspension'. The Macquarie Dictionary (3rd ed., 1997) defines 'suspension' relevantly as '3. temporary abrogation, as of a law or privilege'. The verb 'suspend' is defined as '8. to debar, usually for a time, from the exercise of an office or function or the enjoyment of a privilege'. Suspension, in the ordinary sense, thus has a temporary character.

[64] In cl 3 of the Agreement, the word appears in a list of disciplinary actions, which appears to be ordered from least to most severe: 'counselling', 'formal censure', 'demotion by one or more classification levels or increments', 'withholding of an increment', 'suspension with or without pay' and 'termination of employment'. There is nothing to suggest that the word 'suspension' is used in anything but its ordinary sense. That is, a suspension must be for a period, however that period is specified.

[65] The distinction between a suspension and a dismissal was adverted to by Allen J in Ford v Lismore City Council (1989) 28 IR 68, though in a different legal and factual context. There, a council purported to terminate the employment of a librarian. However, s 99 of the Local Government Act 1919 (NSW) required the council to first suspend an employee whose employment it proposed to terminate and allow the employee to request an inquiry. The council submitted that it had suspended the employee. Allen J rejected that submission, stating (at IR 77):

'A suspension, within the meaning of that section, is essentially different from a purported dismissal. It is not a repudiation of contract of service. It is, indeed, an affirmation that the contract of service continues - albeit that the statutory scheme contains provisions pursuant to which the servant may be dismissed at some time in the future. What [the council] did, in quite clear terms, was not to suspend the plaintiff but to declare that it regarded her contract of service with it as terminated [...]. She remained an employee, not suspended, up to that time. [The council] did not affirm the contract by suspending the plaintiff.'

[66] The suspension in the present case was expressed in the letter from the Acting Vice-Chancellor (set out in [14]) to be for a period. Nevertheless, it should be inferred from the fact that this period ended on the day the applicant's appointment ended, from the conclusive measures taken by the University to remove the applicant from his position, described in the letter from the Dean to the applicant (set out in [58]), and from the fact that an Acting Head of School was appointed for a period extending beyond 31 December 2001, that the University sought to effectively terminate the applicant's appointment as Head of School. A suspension need not, in fact, result in a restoration to former duties, such as might be the case where an employee is suspended pending the outcome of a short investigation and is then dismissed. However, it is inappropriate to characterise the action taken by the University as a 'suspension'. It is apt to be described as a termination of the applicant's appointment as Head of School." 296 In the present matter, it is unnecessary to infer an indefinite duration. I accept that the suspension during the course of the investigation (albeit that it concluded on the happening of a specific event rather than the occurrence of a particular date) was a temporary measure and, if it otherwise were a suspension, would not be precluded from that description merely because a date certain was not fixed for the conclusion of the suspension period. However, a suspension, which is indefinite, and in this case permanent, is not a suspension within s 47 of the Interpretation Act. The above analysis assumes that s 47 of the Interpretation Act applies in the manner otherwise submitted by the Health Service. 297 I doubt however that the terms of s 47 of the Interpretation Act apply in that manner. 298 In the context of the power of the Crown to dismiss its servants, it appears that the original approach (whether in relation to Crown prerogative or application of the Interpretation Act, s 47) was that the Crown or public authority had absolute discretion to dismiss an employee: see Shenton v Smith [1895] AC 229. As Dixon J said in Fletcher v Nott [1938] HCA 25; (1938) 60 CLR 55 at 77: "The general rule of the common law is that the King may refuse the services of any officer of the Crown and suspend or dismiss him from his office". [See also Holt v Protective Commissioner (1993) 31 NSWLR 227 at 237 and George v Minister for Education and Youth Affairs (Supreme Court of New South Wales, Smart J, 31 August 1989, unreported).] 299 Both of the above NSW decisions were considered by Simpson J in Jarratt v Commissioner of Police for NSW & Anor [2002] NSWSC 596; (2002) 56 NSWLR at 72. 300 The judgment of Simpson J in Jarratt, supra, was considered by the Court of Appeal, which commenced its reasoning from the principle that "Dismissal at Pleasure" applied unless it could be shown some specific legislative intention to abrogate that doctrine had been enacted. There was a subsequent appeal to the High Court: Jarratt v Commissioner of Police (NSW) [2005] HCA 50; (2005) 224 CLR 44. In the course of the judgment of the High Court, Gleeson CJ said: "The very breadth of the statutory power seems to me to be an argument for, rather than against, a conclusion that it was intended to be exercised fairly. So also is the consideration that, in practice, the power would normally be exercised for cause, even though such cause is not legally necessary." 301 There are other aspects of the judgment of the High Court in Jarratt that require repeating. However, it should be borne in mind that the issue in dispute in Jarratt was whether the rules of natural justice applied, rather than whether there was a right to suspend and/or remove. In other words, it was assumed that there was a right to remove and it was the manner of removal that was in question. It should also be recalled that the applicant in Jarratt was an executive officer appointed by the Governor and there was an express provision relating to removal of such officer in the Police Service Act 1990 by which the conduct was governed. In the course of the judgment, Gleeson CJ said: "[7] It is no longer appropriate to account for the rule in terms redolent of monarchical patronage. The rule has a distinct rationale in its application to the armed services, but in its application to the public service generally it is difficult to reconcile with modern conceptions of government employment and accountability. Perhaps it could be justified, if justification be sought, by reference to the need of the executive government to retain the overall capacity to alter the size and structure of the public service, or to respond to political exigencies, without contractual inhibition. Yet most ordinary contracts of employment cannot be made the subject of an order for specific performance, and, at common law, a wrongful dismissal is ordinarily effective to bring the employment relationship to an end, even if the employee does not accept the repudiation of the employment contract, and even though there may be a liability to pay damages to the employee.

[10] The common law rule concerning service at pleasure was established long before modern developments in the law relating to natural justice, and the approach to statutory interpretation dictated by those developments. It was also established at a time when public service was less likely to be subject to statutory and contractual regulation than at present. We are here concerned, not with the pristine common law principle, but with a statutory scheme of office-holding and employment. The Act provided the framework and context of the applicant's appointment, and determined the nature and extent of his rights. The Act is not a code. It does not exclude the common law. It is, however, one thing to say that the common law explains some features of the Act. It is a different thing to say that the Act embodies, or gives statutory effect to, common law principles without modification. Without doubt, an understanding of the common law is important for an appreciation of the statutory scheme. Nevertheless, the Act made substantial alterations to the common law." (Per Gleeson J) 302 The joint judgment (McHugh, Gummow and Hayne JJ) also contained comments relevant to the issue currently before this Court. Their Honours said: "[81] The statute with which this appeal turns does not, as did, for example, the Air Force Regulations considered in Coutts v The Commonwealth [1985] HCA 40; (1985) 157 CLR 91 at 110, state that the appointment was held 'at pleasure' and did 'not create a civil contract'. It is true that the power of removal of the applicant from his position was exercisable by the Governor in Council 'at any time' during the period of the appointment which was specified as ending on 4 February 2005. But the power of removal was not exercisable at will. The exercise of the power was conditioned upon anterior steps by other parties, the making by the Commissioner of a recommendation with the approval of the Minister.

[85] The applicant held, and was dismissed from, a statutory office, not one created under what appears to be the obsolete or at least obsolescent prerogative power recognised by s 47 of the Constitution Act. By necessary implication, the prerogative found in s 47, and which might have been employed to create the applicant's position as Deputy Commissioner as one at pleasure, was abrogated or displaced by the Act itself. Speaking in Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority [1997] HCA 36; (1997) 190 CLR 410 of the principle laid down in Attorney-General v De Keyser's Royal Hotel [1920] AC 508, McHugh J said [1997] HCA 36; (1997) 190 CLR 410 at 459:

'That principle is that, when a prerogative power of the Executive Government is directly regulated by statute, the Executive can no longer rely on the prerogative power but must act in accordance with the statutory regime laid down by the Parliament.'" ( Jarrett per McHugh, Gummow and Hayne JJ) 303 Other approaches have been taken to the broad terms of s 47 (or its previous embodiment). The Court of Appeal in Commissioner of Police v Ellis (New South Wales Court of Appeal, 2 July 1981, unreported) said: "I would not regard s 30 of the Interpretation Act , 1897 [the equivalent of s 47 of the Interpretation Act 1987] as conferring by its own force a right to remove or suspend but rather to indicate the person who may exercise the power in terms of the engagement of the appointee. In other words it does not alter the terms of the employment but only indicates the person who can remove or suspend pursuant to those terms." (Per Reynolds JA, with whom the other Judges agreed.) 304 However, it seems that Ellis was not the subject of citation with authority in the High Court in Jarratt. 305 The effect of the conflicting lines of authority seem to distinguish between the older cases that deal with Crown privilege and the modern approach which concentrates on the nature of the position being considered. 306 Accordingly, the Crown's power of dismissal should be read in the context of the specific legislation under which the individual is employed and the statutory framework surrounding that employment. In Malloch v Aberdeen Corporation [1971] 1 WLR 1578, the House of Lords considered the extent of Crown privilege in relation to the dismissal of schoolteachers. In that case, the Public Schools (Scotland) Teachers Act 1882 (UK), required that a teacher be given three weeks' notice of a meeting to consider a motion for his dismissal. Lord Reid said (at 1582): "I can see no possible reason for requiring notice to the teacher other than to give him an opportunity to prepare his defence, and it appears to me to be implicit in this requirement that the teacher shall be entitled to submit his defence to the board." Accordingly, despite no express revocation of the Crown privilege, the House of Lords held that schoolteachers could not simply be dismissed. They were entitled to have their cases heard before the Board. 307 From this, we can take the proposition that if a statutory enactment empowers the employment of an individual under certain terms (such as a contract of employment), then the general power of dismissal contained in s 47 must be read in the context of that employment, and the conditions imported either expressly by the parties or by operation of the common law: Director-General of Education v Suttling [1987] HCA 3; (1987) 162 CLR 427 at 445.5 per Brennan J. 308 The approach of Gleeson CJ in Jarratt, cited above, seems, with respect, to be an appropriate delineation between the issues as they affect a person in the position of Dr Downe and a person who is, say, the Director-General of Health. This is a distinction, as can be seen from the provisions of the Act that have been recited, that the legislature has drawn. 309 That distinction between "monarchical privilege" and "statutory power" was the approach of the Canadian Supreme Court to which Gleeson CJ referred in Jarratt: see Wells v Newfoundland [1999] 3 SCR 199. 310 The Canadian Supreme Court judgment concerned the applicant, Wells, who was appointed as a Commissioner on the Public Utilities Board. Some years later, the Board was dissolved and reconstituted under a new Act, however Wells was not reappointed. He lost his salary and was six months short of having his pension vest. He brought an action seeking compensation. The Supreme Court found in his favour and awarded damages, being his salary for 2.5 years, including pension entitlements. 311 The case, as previously noted, was cited in the Court of Appeal judgment in Commissioner of Police for NSW v Jeffrey Jarratt [2003] NSWCA 326; (2003) 59 NSWLR 87 (at [68]) where Mason P said: "The Canadian Supreme Court has … abrogated the [dismissal at pleasure] principle, holding the Crown liable under general contractual principles, except in the case of judges, Ministers of the Crown and others who fulfil 'constitutionally defined state roles' ( Wells v Newfoundland at 88 [48]) 312 As earlier remarked, Wells was cited by Gleeson CJ and in the joint judgment of McHugh, Gummow and Hayne JJ (see [5], [7] and [71]) as a useful illustration of the competing principles. 313 An examination of the statutory provisions here relevant confirms that it is an approach, at least in this statute, which the legislature has adopted. 314 The kernel of the approach adopted by the Canadian Supreme Court is whether the relationship between the individual and the Crown can be characterised as one of officer or employee. The Court distinguished between government positions of "monarchical patronage" (described as a "personal servant of the Crown" (at 209)) and the majority of government jobs, which could be better described as "public employee" - which, in substance, constitutes a contractual relationship. In the Canadian proceedings, Wells occupied a "senior public position of quasi-judicial responsibility" rather than a personal servant. The Court then remarked: "While the terms and conditions of the contract may be dictated, in whole or in part, by statute, the employment relationship remains a contract in substance and the general law of contract will apply unless specifically superseded by explicit terms in the statute or the agreement." 315 Such an approach would, with respect, reconcile the old cases relating to Crown privilege and the more modern approach to public employment. It is a distinction embodied in the difference between s 116 of the Health Services Act and other appointments under that Act and the distinction between s 25 of Area Health Services Act and the other appointment powers to which reference has been made. 316 The construction of the Acts (whether the Act in 1986 or 1987 (as amended in 2006)) discloses a distinction drawn between appointments by the Governor, Minister or the like to "executive positions" or "statutory positions" and "appointment and employment" or "employment" under terms and conditions of employment, either determined by the relevant employing authority or fixed by award and/or agreement. 317 This distinction reflects the distinction between the "monarchical privilege" and "public employee". It is not a dissimilar distinction to that between senior administrative officers, on the one hand, and ordinary employment on the other. It is a distinction also similar to the distinction between an officer appointed as such by the Crown to exercise statutory powers and discretions and employees who are employed for the purpose of providing a service of the Crown. 318 In the instant legislative provisions, the specific provisions requiring appointment pursuant to a contract of employment override the general provisions that may otherwise import a right to suspend and/or remove without regard to the express or implied terms of employment. 319 For the above reasons, I hold that s 47 of the Interpretation Act does not provide the Health Service with the right to direct Dr Downe as they have done and, if it be a suspension, does not provide the Health Service with a right to suspend Dr Downe without a provision authorising such conduct in her contract of employment. (K) Implied Terms of Good Faith and Mutual Trust and Confidence 320 Dr Downe submits that, if there be a power in the Health Service to direct Dr Downe to work at Westmead Hospital arising from other findings of the Court, it cannot be exercised to undermine or destroy the basis of her contract of employment. In so submitting, Dr Downe relies upon the "portmanteau, general obligation" not "to engage in conduct likely to undermine the trust and confidence required if the employment relationship is to continue in the manner that the employment contract explicitly envisages": see Mahmud v BCCI [1998] AC 20 at 35A, 45E-H; Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596 at 599. Further, Dr Downe relies upon a breach of the implied duty not to engage in conduct calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee, which Dr Downe says is implied into her contract of employment. Dr Downe also seeks to rely upon an implied term of good faith. 321 The Health Service submits that it is not yet clear that such implied terms form part of the law of Australia. 322 It is beyond doubt, on current authority, that such terms form part of the common law as adumbrated by the House of Lords and/or Privy Council in the United Kingdom. Industrial tribunals and a Full Court of the Industrial Relations Court of Australia (Wilcox CJ, von Doussa and Marshall JJ in Burazin v Blacktown City Guardian Pty Ltd [1996] IRCA 371; (1996) 142 ALR 144; and see also Perkins v Grace Worldwide Australia (1997) 72 IR 186 at 191) have also accepted the term as applying more generally and therefore to Australia. 323 The Full Court in Burazin (and Perkins) was exercising a jurisdiction, previously and since exercised by the Federal Court of Australia, and while the Industrial Relations Court of Australia was a statutory Court, it was established as a superior Court of record of law and equity. The contract claim, which it was then determining, was a question arising under the accrued jurisdiction of the Court (in similar terms to the accrued jurisdiction of the Federal Court) and the Full Court was expressing a view as to the common law of Australia. They said: "Turning to the implied term pressed in argument, we agree with Madgwick J that there is ample English authority for the implication of the suggested term: see Post Office v Roberts [1980] IRLR 347; Woods v WM Car Services (Peterborough) Ltd [1981] IRLR 347 (affirmed on appeal [1982] ICR 693); Bliss v South East Thames Regional Health Authority [1985] IRLR 308; United Bank v Akhtar [1989] IRLR 507; and Malik v Bank of Credit & Commerce International SA [1995] IRLR 375. Roberts , Woods and Akhtar are decisions of the United Kingdom Employment Appeals Tribunal, presided over in each case by a High Court judge. Bliss and Malik are decisions of the English Court of Appeal." 324 That passage (and the English authorities there cited) were referred to with approval by Allsop J (as he then was) in Thomson v Orica Australia Pty Ltd [2002] FCA 939; (2002) 116 IR 186 at 224 [141]. 325 Even if I were otherwise minded to depart from the statement of the Full Court in Burazin and the judgment of Allsop J in Thomson, it seems I would be precluded from so doing: "Intermediate appellate courts and trial judges in Australia should not depart from decisions in intermediate appellate courts in another jurisdiction on the interpretation of Commonwealth legislation or uniform national legislation unless they are convinced that the interpretation is plainly wrong. Since there is a common law of Australia rather than of each Australian jurisdiction, the same principle applies in relation to non-statutory law." ( Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 at 151-152 [135] per Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ) 326 I do not consider the implication of the term plainly wrong. Prior to the adumbration of the above by the High Court in Farah Constructions, I had cause to look at the issue of the implication of the implied duties and considered, for reasons set out extensively in that judgment, that the implied duty was a feature of the contract of employment in Australia: see Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney & Anor [2007] NSWSC 104; (2007) 69 NSWLR 198. I understand that the foregoing judgment is subject to appeal and/or a notice of contention relating to the implication of the duty. I had hoped that the matter could have been clarified prior to the issue of this judgment. 327 Notwithstanding that the implication of the duty has not been clarified by an appellate Court since Burazin and Perkins, the duty has been implied and/or accepted by a further judgment of the Supreme Court of New South Wales and by judgments of the Supreme Courts of Queensland and South Australia: see Morton v The Transport Appeal Board & Anor (No 1) [2007] NSWSC 1454; (2007) 168 IR 403; Taske v Occupational & Medical Innovations Ltd [2007] QSC 118; McDonald v State Of South Australia [2008] SASC 134. Each of those judgments is a judgment of the respective Supreme Court at trial level. 328 Nevertheless, by reason of the approach I am obliged to take in relation to the Full Court judgment in Burazin, and for the reasons adumbrated at length by me in Russell, I conclude that Dr Downe's contract of employment includes the said implied terms. There is nothing in the express provisions of the contract of employment to exclude them, although I also adopt the comments in Russell in relation to that issue. (L) Incorporation into the Contract of the Disciplinary Procedure 329 The Health Service submits that its disciplinary procedure became a term of Dr Downe's contract of employment. The Health Service submits that, at common law, a policy or procedure of an employer relating to general conditions of employment may, in the absence of an agreement to the contrary, become part of the employee's contract of employment by the employee becoming aware of the policy or procedure and continuing to work for the employer without objecting to the policy or procedure. They cite for authority Re Peter J Mair v JE Bartholomew; LM Anderson; JG Smith and BW Fraser [1991] FCA 541; (1991) 104 ALR 537 at 540. 330 During the course of oral submissions, the Health Service relied upon the judgment of Wilcox J in Nikolich v Goldman Sachs J B Were Services Pty Ltd [2006] FCA 784. In the circumstances of the matter before Wilcox J, his Honour took the view that the terms of an information book entitled "Working With Us" (WWU) formed part of the contract of employment with legally enforceable obligations. When reliance was placed upon the judgment of Wilcox J in Nikolich, I informed counsel that a Full Court of the Federal Court had reserved on an appeal from that judgment and indicated that I would receive submissions on the Full Court judgment when it was available or, on request, call the matter on for further hearing. 331 The Full Court judgment in Nikolich was reserved on 15 February 2007 (although it was re-listed on 5 March 2007 to hear submissions on the effect of a judgment drawn to the attention of the parties). The judgment of the Full Court (Goldman Sachs JB Were Services Pty Limited v Nikolich [2007] FCAFC 120) was issued on 7 August 2007, but no party sought the re-listing of the matter or to make further submissions in relation thereto. 332 An analysis of Nikolich must commence with an analysis of the facts therein. The policy document (WWU) in Nikolich was part of the documentation provided to the employee on or before his appointment. It dealt with items such as conflict of interest, harassment, concerns and grievances. It also had provisions in it, which, in their terms, were expressed to be terms of the contract of employment (see [221] of the judgment of Wilcox J). The employment agreement itself referred to the WWU and relevantly expressed the proposition that the employer "will expect" the employee to comply, as applicable, with presently existing and further office memoranda and instructions. His Honour referred to and cited with approval the judgment of North J as part of the Full Court of the Federal Court in Riverwood International Australia Pty Ltd v McCormick [2000] FCA 889; (2000) 177 ALR 193. 333 Relevantly, in the matter now before the Court, there is no reference in the documents that were exchanged prior to or at the commencement of the employment contract to the Disciplinary Procedure to which the Health Service refers. The application for employment, which I have considered an invitation to treat, refers to Dr Downe having "read and understood the document entitled 'Conditions of Employment'." If there were such a document at the time that the application was made, it has not been relied upon in these proceedings and is a document different in form and title to the Disciplinary Policies and Procedures upon which the Health Service relies. The latter document is dated March 2003 and promulgated, in the form before the Court, in March 2005. 334 I have already cited the relevant parts of each of the documents giving rise to the formation of the contract of employment and the circumstances and conversations leading up to it. 335 The general principles of the inclusion into the contract of employment of a later promulgated document, at least according to Wilcox J in Nikolich, are inconsistent with the proposition submitted by the Health Service that an employee can be bound by the terms of a document simply by being supplied with it and not objecting to it. In Nikolich, Wilcox J adumbrated the principles on the variation of the terms of a contract, including a contract of employment in the following terms: "[208] When persons enter into an agreement between themselves that will have the effect of limiting the rights of another person, they need to obtain the express agreement of that other person, if the limitation is to be binding on that person. It is not enough for the other person to become aware of the content of the agreement and make no objection to it.

[209] I appreciate that an agreement for a variation of a contract of employment may be made orally, and even with a minimum of formality. It may be implied from conduct. See Commonwealth of Australia v Crothall Hospital Services (Aust) Ltd (1981) 36 ALR 567 at 576. However, there must be something that expresses an intention to vary the contract, as distinct from acting pursuant to the contract. In the present case, the contract of employment was constituted by a letter of offer, setting out the terms of employment, that was issued by GSJBWS' Human Resources Services Manager in Melbourne, which letter was, at her request, signed and returned by Mr Nikolich; together, perhaps, with other documents referred to in that letter. In those circumstances, one would have expected any agreement to vary the contract of employment to have been enshrined in writing, or at least be covered by an explicit oral statement … Their knowledge of that paragraph, and the obvious expectation of the team DKN members that it would be followed in the event of a departure from the partnership, is relevant to the reasonableness of the conduct of Mr Sutherland, and other officers, when Ms Dal Bon resigned. However, GSJBWS was not contractually bound by the paragraph.

[210] Counsel … argued, the creation of the DKN business plan was something done for the benefit of GSJBWS; upon approval of that plan by the appropriate GSJBWS officer or officers, it should therefore be treated as binding on GSJBWS, in the sense of being incorporated into the contracts of employment of the team members.

[211] I appreciate the force of the argument. However, it does not affect my view that the creation and approval of the team DKN business plan was something done by the relevant people in the course of their employment, pursuant to their respective contracts of employment, and not something done by way of a variation of anyone's contract of employment." 336 The Full Court in Goldman Sachs v Nikolich, supra, allowed the appeal only as to costs, which part of the judgment is not in any way relevant to the issues in this matter. 337 In the judgment of the Full Court, Black CJ, with some nuances, adopted similar reasoning to Wilcox J below on the principles to be applied in determining whether the document, WWU, formed part of the contract of employment. There was no discussion or agitation of whether the document that was compiled after the commencement of employment was binding.

338 In his reasons for judgment, Marshall J took a broader approach on the capacity to incorporate documents or amendments to documents than Wilcox J. and, necessarily, than Black CJ. 339 The third member of the Court, Jessup J would have allowed the appeal on the issue of the inclusion of WWU in the contract of employment, taking the view that it was not a binding document. 340 It follows that there is no consistent principle or rationale on that question arising from the reasons for judgments at first instance or on appeal in Nikolich. 341 However, in some respects the reasons for judgment in Nikolich are a distraction. The circumstances surrounding the promulgation of the Disciplinary Policy are more akin, and covered by the principles adumbrated by Wilcox J in relation to, the partnership agreement in Nikolich (see citation above). Those principles are unexceptionable. The employee does not consent to a variation of a contract (leaving aside issues of consideration and whether consideration other than the continuation of work is necessary) simply by not objecting to a document promulgated by an employer. The employee must either take some positive step or decline to take an objection in circumstances where objection would be necessary or at least expected. In other words, the employee must indicate acceptance of the document as a variation to her or his contract of employment. Receipt of a document, and non-objection thereto, of itself, does not amount to consent to the variation of a contract. 342 However, it is unclear why the issue has been agitated in that way. The mere fact that a document, promulgated by an employer, does not vary the contract of employment does not mean that the document is not binding on the employer, the employee or both. The vast majority of documents, being policy and procedures documents, promulgated by employers contain, largely, unexceptionable directions as to the performance of work. An employer is entitled, subject to the express provisions of the contract, to give lawful and reasonable directions to an employee as to the manner in which the employee shall perform work. In the case of a policy document dealing with the procedures for disciplinary matters, the employer (in this case the Health Service) promulgates a document that, to the extent that it directs employees to conduct disciplinary procedures in a particular way, is a lawful and reasonable direction as to the manner in which work will be preformed. Thus, Ms Drum, Mr Cormack, Mr Murphy, Professor Gordon and Dr Downe (together with all other employees) are bound to behave in a particular way in circumstances covered by the disciplinary policy, subject to the provisions of their particular contract of employment. 343 Further, to the extent that the employer represents a state of fact in a policy document upon which an employee relies to her or his disadvantage, the employer may not be permitted to depart from the representations. Nice questions may arise as to what is a representation of fact, but authorities suggest that a representation to an employee concerning her or his current rights (for example to superannuation) and their protection in a change of position was a statement of fact: see Algar v Middlesex County Council [1945] 2 All ER 243. 344 Even those issues are not of particular relevance in these proceedings. The Health Service does not submit that it is not bound by the disciplinary policy and procedure. On the contrary, it relies upon the disciplinary policy as an express statement (they say as a term of a contract of employment) of their right to suspend. 345 It is necessary to examine the disciplinary policy. The policy commences with a statement of philosophy in the following terms: "Disciplinary action is a means of correcting unacceptable work behaviour and/or work performance with the view to improving the employee's performance and therefore retaining their services for the organisation. In some cases disciplinary action leads to termination of employment where an employee does not improve their work behaviour and/or work performance to a satisfactory level.

Disciplinary action and staff appraisal action need to be clearly distinguished . Disciplinary action is taken where unsatisfactory/unacceptable aspects have arisen in relation to an employee's work - it is a reaction to something negative, which has occurred. By contrast, staff appraisal action has a positive focus - it occurs regularly, with the objective of identifying strengths in performance together with areas for improvement and to assist defining and developing a career path. (Staff appraisals are not to be used as a disciplinary mechanism) ." (Emphasis in the original.) 346 After stating the philosophy, it sets out a number of general principles that are relevant but too lengthy to summarise fully. They require that disciplinary matters be dealt with promptly in the interests of the organisation and in fairness to the employee. The principles require breaches of discipline relating to misconduct, declining performance and inappropriate behaviour to be addressed within the context of industrial instruments, legislation and the principles of procedural fairness. 347 The process is described as "an administrative procedure, based on procedural fairness, used by the Health Service to ensure a standardised approach when addressing the behaviours or actions of an individual …". The policy at page 4, after recounting issues relating to minor breaches of discipline and some major breaches (including an accumulation of minor matters), refers to the necessity for major breaches to involve a formal disciplinary process. It then says: "Where the Chief Executive Officer believes that the breach of discipline alleged against a staff member is of a very serious nature he/she can, as a risk management strategy, consider the options of temporary transfer or suspension from duty, pending the outcome of an investigation." (Emphasis in the original.) 348 The foregoing, if it allowed a suspension not otherwise allowed under a contract of employment, would allow a suspension limited only to the period between the institution of an investigation and its outcome. In other words, applying it to the current circumstances, such a provision would have allowed (again assuming no inconsistency with the contract of employment) a suspension that could not go beyond 10 February 2005. I reiterate the discussion on the temporary nature of "suspension" for the purpose of s 47 of the Interpretation Act, as also relevant in this context. 349 The policy refers to a "Code of Conduct" that was issued to all staff and to the requirements in the conduct of the investigation. Those requirements reiterate the need for procedural fairness, and the experience of the officer undertaking the investigation, if any. No criticism could be made of the choice of the person conducting this inquiry and none was made. 350 The policy then deals with the recommendation/decision about disciplinary action. It says: "If at the conclusion of the investigation the matters are considered serious and there is appropriate evidence to support the allegations, a recommendation may be made to commence disciplinary action. A separate decision maker is to make the final decision." 351 By necessary inference, no disciplinary action can be taken if there is not appropriate evidence to support the allegations (or if they are not considered serious). There is then a requirement on the Health Service to communicate the findings and to take further action. The disciplinary policy requires, once the investigation phase has been completed, that the staff member who has been the subject of the alleged breach of discipline must be advised in writing of any findings that have an impact on or relate to her or him. She must be given the opportunity to respond. Further, even in the case where disciplinary action is to be taken (i.e. where the investigation concludes that the allegations are supported by appropriate evidence), the staff member must be given an opportunity to make submissions as to the appropriate penalty, if any. There are then a series of procedures and/or disciplinary steps that are listed for various kinds of breaches of discipline. In the case of disciplinary action relating to matters other than serious sex or violent offences or the ill treatment of patients or clients, there is a series of warning steps that are required. Lastly the two most serious disciplinary steps are discussed. They are in the following terms: "Suspension of an Employee

An employee may be directed not to report for duty where the circumstances of a particular issue could be prejudicial to the Area, in the interests of the employee or fellow employees. The suspension should only be for the time necessary to review or investigate the facts of the particular matter and arrive at an appropriate decision . Suspension of an employee does NOT imply guilt on the part of the employee or that the matter has been prejudged.

In the absence of a specific Award provision or provision under an Act of Parliament applicable to Area Health Service staff, a suspended employee is to be paid whilst suspended from duty." (Emphasis added.) There is then a discussion on dismissal. No party suggests that there has been a summary dismissal, a notice of termination of employment or conduct that is repudiatory of the contract of employment. I will need to return briefly to the last-mentioned aspect in these reasons. 352 Nevertheless, the reference to suspension is necessarily a reference to a suspension in circumstances where continued work would be inappropriate and is confined to the period during which the investigation is to occur. This also accords with the terms of the letter of suspension of 3 September 2004 and the memorandum of 7 September 2004 from Mr Cormack to Dr Downe relating to the desire to conclude the matter as soon as possible, maintain appropriate confidentiality and manage the risk of any potential adverse impact on Dr Downe's professional reputation. 353 At the conclusion of the investigation process, the allegations having been unsubstantiated or proved to be false, the Area Health Service was under an obligation to reinstate Dr Downe, assuming it was bound (as it says it was) by its disciplinary policy. 354 Further, as is clear from its terms, and conceded by Mr Murphy, the disciplinary procedure and the guidelines of both the Area Health Service and the Department of Health as to Protected Disclosures required, in this instance, formal advice to Dr Downe of a favourable outcome and a statement or letter of support in relation to the allegations from the Department (see p 3, tab 8, 5.5.7 and 5.5.8 and Exhibit G). 355 The Protected Disclosures Policy arises under the Protected Disclosures Act 1994 and was promulgated to protect "whistleblowers" and thereby to facilitate the disclosure, in the public interest, of corrupt conduct and maladministration. The directions as to the proper conduct of officers of the Area Health Service or Health Department would be binding on them and Mr Murphy and others were required, pursuant to the policies, to inform Dr Downe that the allegations against her were unsubstantiated (to the extent that was the case) and to inform those persons who made the allegations that the allegations were unsubstantiated and no action was to be taken as a result of the allegations. None of that occurred. (M) Was the Peterson Report Binding? 356 I have, in the preceeding paragraphs, discussed the disciplinary policy of the Health Service and, in general, the requirements on them in relation to the Protected Disclosures. The Peterson Inquiry was called and conducted pursuant to the disciplinary policy. Dr Downe cooperated with it and, to the extent that she did so, she acted otherwise than to enforce her rights, if any, in law. 357 As earlier explained, pursuant to that disciplinary policy, disciplinary action (or further disciplinary action) could be taken only if the allegations that were the subject of investigation were substantiated. In this instance they were not. 358 As a consequence of the disciplinary policy, and in accordance with it, the Health Service was bound, at the conclusion of the Inquiry, to reinstate Dr Downe to the situation in which she was entitled to act in accordance with her contract of employment and perform work as she had contracted to do. Some of these aspects need further clarification. 359 However, for the purpose of the question as to whether the findings of the Peterson Inquiry were binding, to the extent that they were findings on allegations referred to the Peterson Inquiry, they were. In other words, the Peterson Report is binding to the extent that it deals with each of the allegations referred but its comments on "personal relationships" outside of the individual allegations were not binding. Further, the findings on "interpersonal relations" were findings made inconsistent with the disciplinary policy and the procedure thereby promulgated. (N) & (O) The Effect of the Variation to the Award 360 On 16 March 2006 the second defendant became, and the first defendant ceased to be, the employer of the plaintiff. This is an agreed matter between the parties, pleaded in the Amended Consolidated Statement of Claim and admitted in the Defence. It arises out of the operation of the amendments to the Health Services Act promulgated in 2006, some of the provisions of which have been discussed in the course of the issue relating to Crown privilege and/or the operation of s 47 of the Interpretation Act. 361 On 28 April 2006, the Commission made an Award being the Staff Specialist (State) Award, which rescinded and replaced the 1996 Award by the same name. That award applies to all Staff Specialists, which means a Specialist, Senior Specialist and Post-Graduate Fellow employed on either a full-time or part-time basis unless specifically excluded. There is no issue that the Award applies to the employment of Dr Downe and it prescribes managerial allowances for the management of a unit. 362 The Award introduced for the first time a clause relating to work location, clause 14, which was in the following terms: " 14. WORK LOCATION

(a) Subject to the provisions of this clause, a Staff Specialist may be required by the Employer to work at any of the hospitals, institutions or other health services conducted by the relevant public health organisation.

(b) Before a requirement under subclause (a) above is made, the Employer will ensure that:

(i) the Staff Specialist is consulted in regard to the proposal to require work at another location;

(ii) the duties are consistent with the Staff Specialist's area of specialty, expertise and seniority and the Labour Flexibility clause of this Award;

(iii) the travel requirements are reasonable having regard to:

(2) the frequency of attendance at each work location

(3) the distance of those work locations from the Staff Specialist's place of residence at the time the Staff Specialist accepted his/her offer of appointment as a Staff Specialist and

(4) the travelling time normally involved in attending the place of work at the time of making this award

(iv) while it is generally expected that Staff Specialists will not be required to provide services at more than two locations, in particular specialties, geographic circumstances or networking arrangements, Staff Specialists may be required to provide services at more than two locations;

(v) a Staff Specialist required to work at another location will have access to the same parking arrangements as those provided to other Staff Specialists at that location and shall be reimbursed by the Employer for any additional parking fees or road tolls paid as a consequence of working at more than one location;

(vi) where on call duties are rostered, the Staff Specialist is capable of returning to the workplace within a reasonable timeframe for an emergency call back (a change of the Staff Specialist's place of residence does not exempt the Staff Specialist from the on call obligations established at the time of his or her appointment or the obligations in place at the time of the making of this Award);

(vii) wherever practicable, on-call obligations are aligned to the Staff Specialist's normal duties. There shall be no additional on call obligations placed upon a Staff Specialist by reason of any requirement arising from this clause. In determining on-call rosters, consideration should be given to the level of on-call participation of other Staff Specialists on the same on-call roster;

(viii) the letter of appointment and/or the performance agreement will specify the locations where the Staff Specialist will be required to provide services. Where the Employer requires a Staff Specialist to commence work at an additional location not specified in the letter of appointment/annual performance agreement, the Employer will give 3 months notice;

(ix) regard is given to any family, carer or other personal responsibilities identified by the Staff Specialist so as to minimise any potential adverse impacts on those responsibilities;

(x) a Staff Specialist required to work at another location will not be financially disadvantaged in regard to drawings, accounting fees for partnerships and reimbursement of medical indemnity payments made from the No.1 Account, as a result of any such requirement;

(xi) the relevant factors for determining financial disadvantage will be:

(1) Drawings - percentage of maximum drawings paid to the Staff Specialist averaged over the last three full financial years (or for Staff Specialists where three years comparison is not available, such lesser periods as may be available by way of comparison) prior to the date on which the requirement to work at another location came into effect;

(2) Accounting fees for partnerships - the accounting fees for partnerships reimbursement received by or paid on behalf of the Staff Specialist, relative to her/his partnership share, averaged over the last three full financial years (or for Staff Specialists where three years comparison is not available, such lesser periods as may be available by way of comparison) prior to the date on which the requirement to work at another location came into effect; and

(3) Medical indemnity payments - percentage of indemnity reimbursement received by or paid on behalf of the staff specialist relative to the amount claimed where any differential is as a result of insufficient funds available in the No.1 Account, averaged over the last three full financial years (or for Staff Specialists where three years comparison is not available, such lesser periods as may be available by way of comparison) prior to the date on which the requirement to work at another location came into effect.

Where financial disadvantage occurs in relation to drawings, accounting fees for partnerships and medical indemnity reimbursement in accordance with these comparators, the Employer will provide supplementary funding to fully alleviate the financial disadvantage.

The supplementary funding, when provided, will be for an initial period of five years. At the conclusion of the five year period, the supplementary funding may be continued by approval of the Director-General of the NSW Department of Health.

(xii) adequate resources are made available to the Staff Specialist at the additional work location;

(xiii) the next annual performance review process will be the means of determining whether non-clinical time should be changed as a result of the requirement to work at another location;

(xiv) reporting lines are clearly specified for each location at which the Staff Specialist is required to work;

(xv) the requirement for a staff specialist to work at another location will not impose an unreasonable workload on the staff specialists remaining at the primary work location.

(c) In the event that a Staff Specialist is required to work at an additional location and the Staff Specialist contends that the requirement is unreasonable and/or would have a harsh or unfair impact, the Staff Specialist may invoke the Issue Resolution clause of this Award.

(d) These arrangements in no way proscribe the Employer's capacity to direct a Staff Specialist to temporarily work at a location other than the Staff Specialist's primary work location or locations where there is an emergency situation, subject to the Employer considering any personal circumstances that may be raised by the Staff Specialist." 363 In the context of construing the provisions of s 108A of the Industrial Relations Act, I have already referred to the parallel but different obligations imposed by an award and a contract. An award does not vary a contract. Nor does an award vary the obligations imposed by contract. The obligations (and rights) imposed by an award are separate from the obligations and rights required under the contract of employment. I do not repeat the analysis. To the extent that further authority is required for the proposition, I refer to True v Amalgamated Collieries of W.A. Ltd [1940] AC 537; (1940) 62 CLR 451. 364 The issue that arises is whether the Award creates a statutory right, notwithstanding the terms of the contract of employment, to direct Dr Downe to work at a location other than Nepean Hospital. A related, and almost identical question, is posed by the reliance by the Health Service on the declaration in the application for employment, paragraph 3 of which deals with the requirement to work in any facility under the jurisdiction of the Wentworth Area Health Service (see [13] above). 365 I will deal with the declaration issue first. In the construction that I take of the contract of employment, it was a contractual term that Dr Downe could be required to work in any facility under the jurisdiction of the Wentworth Area Health Service. However, that contractual term was a term that presupposed that Dr Downe was appointed as the Director, the Nepean Hospital, Neonatal Intensive Care Unit. In other words, as part of the functions of the Director of the Neonatal Intensive Care Unit, Dr Downe could, from time to time, be required to work in any facility under the jurisdiction of her employer. 366 It is unnecessary for me to determine whether the contractual term was limited to what was then the Wentworth Area Health Service or extends to what is now the Sydney West Area Health Service. Assuming and accepting for the purpose of this analysis, that the area would include Westmead Hospital, it would mean that, as Director of the Unit, Dr Downe could be required to attend a meeting of Directors of various neonatal intensive care units, or consult at Blue Mountains Hospital, Hawkesbury etc. At all times, such a requirement to work would be a requirement to work consistent with the fulfilment of her duties in the position for which she applied and into which she was ultimately employed. 367 In other words, as part of her functions as the Director of the Unit, Dr Downe could be required from time to time to work at other units or in other places. Such a declaration does not allow and would not allow the Health Service to change the nature of Dr Downe's employment from Director of the Unit to some other position. 368 I turn then to the issue of clause 14 of the Award. The effect of clause 14 is, properly construed, no different from the effect of the proper application of clause 3 of the declaration to which I refer above. 369 An award is not a system of conscription. "No doubt in some circumstances a law (federal or State) can validly place persons in a role inconsistent with the status of a free person. But these circumstances must be very limited. Examples are infancy, unsoundness of mind, administration of the ordinary criminal law and quarantine." (Per Murphy J, Seamen's Union of Australia v Utah Development Co [1978] HCA 46; (1978) 144 CLR 120 at 157.) 370 While Gibbs CJ declined to express a view on the issue in the immediately preceding paragraph, it is beyond doubt that if the legislature (or the commission with the force of the legislature) is to impose such a restriction on the common law rights of an individual, it would need to be done in express language. 371 The principle was, with respect, succinctly summarised by his Honour Gleeson CJ, in Electrolux Home Products Pty Ltd v Australian Workers' Union [2004] HCA 40; (2005) 221 CLR 309 in which his Honour said: "[19] Reliance was placed in argument upon what was said to be a general principle of construction that, where a statute takes away or interferes with common law rights, then it should be given, if possible, a narrow interpretation. (See, for example, Melbourne Corporation v Barry [1922] HCA 56; (1922) 31 CLR 174 at 206.) The generality of that assertion of principle requires some qualification. It is true that courts do not impute to the legislature an intention to abrogate or curtail fundamental rights or freedoms unless such an intention is clearly manifested by unmistakable and unambiguous language. ( Coco v The Queen [1994] HCA 15 ; (1994) 179 CLR 427 at 437; Plaintiff S157/2002 v Commonwealth [2003] HCA 2; (2003) 211 CLR 476 at 492.) It is also true that there is a presumption, relevant for example to the construction of privative clauses, that the legislature does not intend to deprive the citizen of access to the courts, other than to the extent expressly stated or necessarily to be implied. ( Public Service Association (SA) v Federated Clerks' Union [1991] HCA 33 ; (1991) 173 CLR 132 at 160; Plaintiff S157/2002 v Commonwealth [2003] HCA 2 ; (2003) 211 CLR 476 at 492-493.) However, as McHugh J pointed out in Gifford v Strang Patrick Stevedoring Pty Ltd [2003] HCA 33; (2003) 214 CLR 269 at 284, modern legislatures regularly enact laws that take away or modify common law rights. The assistance to be gained from a presumption will vary with the context in which it is applied. For example, in George Wimpey & Co Ltd v British Overseas Airways Corporation [1955] AC 169 at 191, Lord Reid said that in a case where the language of a statute is capable of applying to a situation that was unforeseen, and the arguments are fairly evenly balanced, 'it is ... right to hold that ... that interpretation should be chosen which involves the least alteration of the existing law'. That was a highly qualified statement and, if it reflects a presumption, then the presumption is weak and operates only in limited circumstances.

[20] In Coco v The Queen [1994] HCA 15; (1994) 179 CLR 427 at 437, Mason CJ, Brennan, Gaudron and McHugh JJ said:

'The insistence on express authorization of an abrogation or curtailment of a fundamental right, freedom or immunity must be understood as a requirement for some manifestation or indication that the legislature has not only directed its attention to the question of the abrogation or curtailment of such basic rights, freedoms or immunities but has also determined upon abrogation or curtailment of them. The courts should not impute to the legislature an intention to interfere with fundamental rights. Such an intention must be clearly manifested by unmistakable and unambiguous language. General words will rarely be sufficient for that purpose if they do not specifically deal with the question because, in the context in which they appear, they will often be ambiguous on the aspect of interference with fundamental rights.' (footnote omitted)

[21] The joint judgment in Coco went on to identify as the rationale for the presumption against modification or abrogation of fundamental rights an assumption that it is highly improbable that Parliament would 'overthrow fundamental principles, infringe rights, or depart from the general system of law' without expressing its intention with 'irresistible clearness'. In R v Home Secretary; Ex parte Pierson [1997] UKHL 37; [1998] AC 539 at 587, 589, Lord Steyn described the presumption as an aspect of the principle of legality which governs the relations between Parliament, the executive and the courts. The presumption is not merely a common sense guide to what a Parliament in a liberal democracy is likely to have intended; it is a working hypothesis, the existence of which is known both to Parliament and the courts, upon which statutory language will be interpreted. The hypothesis is an aspect of the rule of law." 372 As is obvious, every award interferes, to some degree, with common law rights. For example, an award may provide that a minimum amount of wages will be paid in circumstances where otherwise there would be a common law right to employ on less wages. Likewise an award may impose, as no doubt this award does, an ability on an employer to direct an employee to perform different work or work at different locations. There was a period of time in which all awards of the Federal jurisdiction, and most of the awards of every State jurisdiction, contained a clause relating to flexibility in employment. Under such a clause an employer could require employees to undertake work that was within the work of the classification to which they were appointed and within their competence and capacity. Such provisions are, on the preferred view, a clarification of what are otherwise common law rights and duties. 373 If any employee is appointed to a position as a Staff Specialist for the Sydney West Area Health Service, that employee can be employed within the employee's level of competence and at any location within the Sydney West Area Health Service. The fact that the employee is first appointed to Nepean or Westmead does not mean that the employee can insist upon remaining at the Hospital to which she or he was first appointed. 374 Neonatology is a sub-specialty of paediatrics. It is a recognised sub-specialty. The specialists in the field are neonatologists. Notwithstanding that every neonatologist is a trained paediatrician, an award clause (even one which provided for the employer to be able to direct an employee to work within areas of competence) would not allow the employer to direct a staff specialist appointed as a neonatologist to perform work as a general paediatrician (even assuming competence in that area). 375 Clause 14 can be given full effect in relation to all neonatologists and all staff specialists without it entitling a health service to direct an employee to work at a location in a manner inconsistent with the specific provision of their contract of employment. I should add that the 2006 Award, with which we are concerned, has a Labour Flexibility provision, which is clause 26 of the Award. 376 The direction of the Health Service purportedly given on 25 August 2006, is not a direction permitted by the terms of clause 14 because:

(a) it is a direction which would require a new contract of employment for a position other than Director of the Neonatal Intensive Care Unit at Nepean Hospital;

(b) the position at Westmead Hospital was not "another location", it was the only location and was being substituted for the location to which the particular contract related; and

(c) because the letter of appointment did not specify Westmead (to which the direction related) and the location at Westmead was not "additional" to the location at which work was to be performed. 377 To the extent that authority is required for the operation of an award in similar, but not identical circumstances, reference is made to Truth and Sportsman Ltd v Molesworth [1956] A.R. 924 at 933-935 and particularly to the citation with approval of O'Connor v The Argus and Australasian [1957] V.R. 374 at 387. See also McCarthy v Windeyer (1925) 26 SR(NSW) 29 at 32 (the factual circumstances), 33.5-34.2 and 35.8 (per Street CJ with whom Ferguson and Campbell JJ concurred). 378 In the alternative, the Health Service submits that, if the direction to work at Westmead (which direction is inconsistent with continuing to work at Nepean at all or as Director [see evidence of Professor Gordon to which earlier reference has been made]) were characterised as removing the plaintiff from the position as Director, the direction is valid under the combined operation of s 33 of the Health Services Act and s 47 of the Interpretation Act. 379 I have already dealt with the right to suspend under those provisions. This is the only submission that there may have been, at some stage, a removal. Otherwise the parties have submitted and insist upon the proposition that nothing has been done by the Health Service to terminate the employment of Dr Downe or to repudiate the contract of employment. 380 If, the alternative submission were intended to distinguish between removal from the position as Director and dismissal or termination of employment, there is no distinction. If Dr Downe is removed from the position as Director of the Neonatal Intensive Care Unit, there is no contract of employment and there is no employment. 381 In any event, if such removal has occurred, and no one suggests that there has been a termination of employment, there would be damages for the termination, which would be required to be, at least, reasonable notice. 382 If the Health Service were relying upon the power to remove from office contained in s 47 of the Interpretation Act, then reasonable notice would be required which would be significantly more than 3 months in an employment position of this kind. A removal power, if one exists, under statute is still subject to the issues of natural justice and the contractual rights that the officer may have: see Jarratt, supra, in the High Court. Otherwise I refer to the analysis of the distinction between officers exercising a statutory power or discretion and public employees. 383 In conclusion on this issue, the Health Service did not have the capacity, pursuant to the provisions of Clause 14 of the 2006 Award to direct Dr Downe in a manner that was inconsistent with the fulfilment of duties by her as the Director of the Unit. The direction to work at Westmead in a less senior position is a breach of Dr Downe's contract of employment. (P) Acquiescence in the Suspension 384 The Health Service submits that Dr Downe, by her conduct (directly or through her representatives), is estopped from relying on the suspension as a breach of the Award or has waived her rights in relation thereto. It is also put that, on the basis of the conduct of Dr Downe, there has been a variation to the contract of employment to allow suspension. As to the last of those contentions, it seems little different from the argument as to the inclusion of the disciplinary policy as a term of a contract of employment. 385 The initial suspension on 3 September 2004 was purportedly pursuant to the disciplinary policy. Dr Downe was not given an alternative or an option. She was sent correspondence that contained a direction not to attend for work and to give in her security clearance and computer access, pending the investigation. The Health Service neither sought nor obtained consent to that course of conduct. The fact that submissions were put as to the proper process for the investigation and an interview conducted during the course of that investigation does not alter the fundamental fact that there was no choice available to Dr Downe but to comply with the direction. 386 For reasons that will become obvious when I deal with the contract of employment, I will not deal at this point with the suspension during the period of investigation. On 10 February 2005, the Peterson Report was published to the Health Service. At that point, or within a reasonable time thereafter, the allegations referred to in the Report had been found in favour of Dr Downe and the investigation period had ceased. Subject to the rights that the Health Service may have had under its contract of employment, thereafter there was a duty to reinstate Dr Downe into the performance of work. 387 On 16 February 2005, Mr Murphy, on behalf of the Health Service, sent the Peterson Report to ASMOF. There was a telephone conversation between the representatives of ASMOF and Mr Murphy in relation to the findings. It is not clear whether, during the course of that discussion, ASMOF was representing Dr Downe or the other neonatologists or both. ASMOF, during the course of the Inquiry, had represented all of the neonatologists. Nevertheless, assuming, without deciding, that ASMOF was representing Dr Downe, it is clear from the terms of an email dated 16 February 2005 from ASMOF to Mr Murphy that the Health Service had represented, consistent with its approach in these proceedings, that it would not have Dr Downe return as the Director of the Unit. ASMOF confirmed that the best way forward was to negotiate a severance package (D2, tab 177) and sought an assurance that the Health Service would do nothing precipitous in the meantime. That assurance was given. 388 As earlier stated, Dr Downe, or her representatives, had little alternative. 389 As I understand the submission, it is that Dr Downe cannot recover damages, or cannot obtain relief, in relation to what would otherwise be a breach of the contract of employment because she acquiesced in the breach by not attending work. The submission, which conflates, broadly, issues of waiver and estoppel, and invokes principles of estoppel by acquiescence and waiver by election or estoppel, can be answered in a number of ways. 390 First, the submission assumes that Dr Downe had a choice in which she acquiesced. Adopting the approach that equity looks to substance and not to form, it is questionable whether she had such a choice. If an employee has been suspended on full pay, pending an investigation into a complaint, it is hardly open to the employee to ignore the suspension and attend work. Likewise, having been suspended and not reinstated following the Peterson Report, Dr Downe, as a matter of substance not form, had no choice. It was not open to Dr Downe to ignore the suspension and attend work. That would constitute a trespass to land. 391 Similarly, Dr Downe could hardly be expected to challenge immediately the suspension in Court. In relation to the investigation proceedings, that would border on the vexatious. It was reasonable for her to cooperate and wait until the investigation was concluded. If, as is submitted by the Health Service, the Health Service was proposing to resolve the matter finally, likewise it was reasonable for her to cooperate with that process and allow the negotiation to continue before seeking to enforce her rights. It was not open to her to attend at work. It would have been open to her to immediately commence proceedings to enforce her rights. But again, if the Health Service were seeking to resolve the matter by agreement, that too would have bordered on the vexatious. 392 Secondly, when considering waiver by election, the Court must look to the words and conduct of the promisee in waiving the right: Craine v Colonial Mutual Fire Insurance Co Ltd [1920] HCA 64; (1920) 28 CLR 305 at 323. However, it is difficult to define Dr Downe's "conduct" in waiving her rights under the contract. If her conduct were the attendance by her or her representatives at negotiations, that is not a waiver of legal right. If, on the other hand, her conduct were the instance that nothing precipitous be done without proper notice, that too is not a waiver of rights. Otherwise her only conduct was not attending work in accordance with the direction given to her by her employer. Once more, this does not amount to a representation that she has waived her legal rights. 393 Acquiescence involves a standing by, so as to induce the other party to believe that the wrong is assented to: Goldsworthy v Brickell [1987] Ch 378 at 410. It applies similar principles to promissory estoppel: Handley et al, Estoppel by Conduct and Election, (2006) The Law Book Co. at pp 195-196. An employee is not estopped from asserting contractual rights merely by doing nothing to assert them. 394 Thirdly, and in the alternative, in assessing waiver by estoppel, the Court must look to some aspect that would make it unconscionable for Dr Downe to insist upon her rights under the contract. Usually this relates to identifying a change in position or detriment that has been suffered by the promisee: Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641, per Dixon J at 647. The Health Service can point to no such change in position. 395 If it were accepted that there was a waiver or acquiescence of some kind, what then has been waived? By cooperating with her unlawful suspension and allowing her contract to continue afoot, Dr Downe may have waived the right to terminate the contract for this particular breach, but this does not amount to a waiver of the right to recover damages caused by the breach. These are two distinct rights as illustrated by Jordan CJ in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR(NSW) 632, where his Honour said (at 641): "If it is a condition that is broken, i.e. an essential promise, the innocent party, when he becomes aware of the breach, has ordinarily the right at his option either to recover damages for loss of the contract, or else to keep the contract on foot and recover damages for the particular breach." 396 A recent application of this distinction is in the judgment in Ali v Hartley Poynton Ltd [2002] VSC 113; 20 ACLC 1006, where the plaintiff engaged a stockbroker to speculate on the share market on certain conditions. The broker repeatedly breached the contract and purchased shares contrary to those conditions but the plaintiff did not terminate the retainer. The defendant argued, unsuccessfully, that because the plaintiff continued to use his services and did not complain, even after repeated breaches, he effectively waived any rights to recover damage. Smith J said (at [445]): "But, if I understand the defendants argument correctly, it goes further and argues that by accepting the non-compliance with instructions and not terminating the retainer, the plaintiff should be denied relief for any breach of contract. This does not follow. If the defendant's arguments be accepted, the legal consequence was loss of the right to terminate the retainer not loss of the right to sue for damages for breach. The contract having been affirmed, the rights and obligations, including the right to damages, continued ( Tramways Advertising v Luna Park , supra; Russell Frasier Henderson v Amadio (1995) 62 FCR 1.)" 397 Further, waiver in the context of inconsistent rights involves an election and not an estoppel: Craine, supra. It arises where a person takes up two inconsistent positions and seeks to obtain the benefit that would not otherwise be available. Waiver is to deny that person an election to the contrary: Estoppel by Conduct and Election, supra, pp 232-233. Waiver has no relevance to Dr Downe. She obtained no advantage as a result of any conduct by her or anyone else. Further, as earlier stated, the Health Service has not acted to its prejudice as a result of any such representation or acquiescence. 398 If I be incorrect in the application and conclusion as to the facts, and there were a promissory estoppel, it is subject to the qualification that Dr Downe is entitled to resile from the position on the giving of reasonable notice, unless, by her conduct, the Health Service had acted in a manner from which it could not recover, or, alternatively that it could not resume its position: Estoppel by Conduct and Election, supra, pp 211-212. 399 Dr Downe has challenged her suspension consistently, but at least since 16 September 2004 when ASMOF commenced dispute notification proceedings in the Commission. There were subsequent dispute notification proceedings on 23 September 2004 and conciliation proceedings, which did not resolve the issues. The Peterson Inquiry caused the adjournment of those proceedings, which were recommenced and further conciliation conferences occurred on and after 10 August 2005. 400 Those proceedings were predicated on the proposition that the rights of the parties (including the right to be reinstated) would be resolved by agreement in the conciliation proceedings. At the very least, on 2 December 2005, when Dr Downe commenced proceedings in the Industrial Relations Commission of New South Wales under s 106 of the Industrial Relations Act, Dr Downe was asserting her rights and the Health Service, at least at that stage, was acting unlawfully and in breach of the contract of employment in continuing Dr Downe's suspension and preventing her from performing her duties as Director of the Unit. (Q) Can Section 106 be used to void an Arrangement Inconsistently with the Variation to the Award? 401 As is obvious from the analysis already given, this issue arises only if s 106 of the Industrial Relations Act applies to the contract or arrangement under which Dr Downe worked and it was lawful for the Health Service to direct Dr Downe to work at Westmead inconsistently with the fulfilment of her duties as Director of the Neonatal Intensive Care Unit at Nepean. 402 I have determined that it is not lawful for the Health Service to direct Dr Downe in that manner. If I were incorrect in that assessment, my analysis of the jurisdiction of s 106 of the Industrial Relations Act, previously adumbrated, would preclude an order of the Commission that was inconsistent with the award. 403 However, the jurisdiction conferred by s 106 of the Industrial Relations Act does allow the variation of a contract or arrangement. If the fulfilment of duties as Director of the Neonatal Intensive Care Unit and the terms of Dr Downe's contract or arrangement for the performance of that work did not preclude the operation of clause 14, but a specific provision in a contract of employment or arrangement could, then s 106 orders could vary the contract or arrangement to provide for a clause that expressly limited the locations at which Dr Downe could perform her work as a Director. (R) Is the Contract or Arrangement Unfair? 404 As can be seen from the foregoing, subject to the operation of the contract of employment itself, and any common law right, if there be one, to direct an employee not to perform work, the Court has formed the view that the direction to perform work at Westmead was unlawful, in that it was a breach of her contract of employment, being a contract to perform work as the Director of the Unit. 405 The jurisdiction in relation to unfair contracts for the performance of work does not extend to remedying a breach of contract or award. Its function is to create or vary rights, not enforce them. The mere fact that the Health Service has acted unlawfully would not allow the Court to exercise jurisdiction under s 106 of the Industrial Relations Act. 406 On the other hand, a contract or arrangement may be unfair because it fails to clarify or make express a right that otherwise exists. To that extent, a variation of the contract could be made. Given that, as a result of this judgment, declarations will issue, it is unnecessary to vary the award for clarification purposes only. 407 If the contract or arrangement were such as to allow the Health Service to ignore the specific functions for which Dr Downe had contracted and appoint Dr Downe to what, in substance, was a fundamentally different position, the contract or arrangement would be unfair and orders would be made to vary the contract accordingly. 408 Further, to the extent that the contract or arrangement permitted the Health Service to direct Dr Downe not to perform work for an indefinite period, the contract or arrangement would be unfair. This is an extremely senior position which involves the continued development of clinical and management skills. Employees are, as a matter of fairness, entitled to "job satisfaction". If the decision of the Health Service were to the effect that Dr Downe ought not ever perform duties as Director of the Unit, which is the submission, put to this Court, in fairness, Dr Downe is entitled to have them elect either to dismiss her or to reinstate her. 409 I consider that, to the extent that the contract or arrangement allows the Health Service to direct Dr Downe not to perform work for an indefinite period and for her not to resume duties as Director, the contract is unfair, harsh or unconscionable. I would make orders varying the contract to prohibit it, but only if that precondition were met. (S) & (T) The Right to Perform Work 410 The orders that I would make under s 106 of the Industrial Relations Act varying the contract of employment to prohibit an indefinite direction not to perform work are conditional on the existence of a right otherwise to give such a direction. Is there, in the circumstances relating to Dr Downe, a right to direct her not to perform work? 411 I have concluded that imported as an implied term in a contract of employment and as a necessary incident of a contract of employment is a duty not to conduct oneself in a manner calculated or likely to destroy or seriously damage the relationship of mutual trust and confidence between employer and employee. I have also concluded that, subject to an express exclusion of the term, there is a duty imported into this contract of employment that the employee and the employer will act in good faith towards the other. To some extent the duties overlap. 412 As I sought to explain in Russell, supra, the duties are not fiduciary. They do not require the subornation of a party's rights under a contract to the interests of another. The duty does require a party, when acting in her, his or its interests, to have regard to the effect of the action on the other party. It also requires each party to bear in mind the purpose of the contract and its fulfilment, and ensure that it does not act capriciously in insisting upon its entitlements. 413 The duty to act in good faith (and to a lesser extent the duty of mutual trust) requires that where a serious allegation is made against an employee, the employer ought (assuming the complaint is not manifestly vexatious) investigate the complaint. It is unnecessary to discuss issues as to whether procedural fairness is required. In circumstances where an employer, bona fide, takes a view that during the course of such an investigation, the continued performance of duty by an employee is inconsistent with its interests, it is entitled, under the terms of the contract of employment, to direct the employee not to perform work. Not surprisingly, such a right is not dissimilar to the disciplinary policy promulgated by the Health Service. Nothing in the disciplinary policy is unreasonable in its general application. 414 As a consequence of the foregoing, I conclude that it is a concomitant of one or other of the aforesaid implied duties that an employer has the right to direct not to perform work for a closed period during the course of an investigation into allegations of misconduct. Assuming that the duty is exercised in good faith, such a direction not to perform work is not a breach of a contract of employment. It is unnecessary and unwise to express a view as to other circumstances in which such a direction may be appropriate. 415 However, it is necessary to deal with a direction not to perform work, or the continuation of a direction not to perform work, in circumstances where the period of investigation has concluded or where the direction operates indefinitely and seemingly forever. 416 The Health Service submits that a direction that an employee not attend to perform work is a lawful and reasonable direction. I doubt that a direction not to perform work on an indefinite basis is reasonable. But it is more complicated. 417 The Health Service relies on the "lore" as it has developed following the judgment in Collier v Sunday Referee Publishing Company [1940] 2 KB 647 at 650. The passage in the judgment of Asquith J has been taken well beyond its intended and appropriate use. His Honour said: "Provided I pay my cook her wages regularly she cannot complain if I choose to take any or all of my meals out." 418 With great respect to Callinan and Heydon JJ, I accept the persuasiveness of their comment on this "principle": "It is accordingly unnecessary to consider whether the categories of cases in which at common law actual work must be provided for an unlawfully terminated employee or contractor, are closed, although one might question the current relevance of judicial pronouncements made more than 60 years ago in the United Kingdom as to the extent to which an employer might be obliged to dine at home in order to provide work for his cook. It may be that in modern times, a desire for what has been called 'job satisfaction', and a need for employees of various kinds, to keep and to be seen to have kept their hands in by actual work have a role to play in determining whether work in fact should be provided." ( Blackadder v Ramsey Butchering Services Pty Ltd [2005] HCA 22; (2005) 221 CLR 539 at 566-567 [80].) 419 Notwithstanding the "lore" that has developed around the statement in Collier, the judgment does not stand for the principle that an employee can be directed not to perform work on an indefinite basis. Indeed, I do not understand that any authority exists for such a proposition. 420 First, in Collier, the order of the Court was inconsistent with the proposition that one can direct an employee not to work. Secondly, there is a significant and crucial distinction between a duty to provide work and a direction not to perform work that is otherwise available. The employment of a cook would not prevent the employer from dining out. When the employer dines out (or indeed chooses to cook himself or herself) there is, in fact, no work for the cook to perform. 421 There is no suggestion in the circumstances in this case that there is no work for a Director of the Neonatal Intensive Care Unit. On the contrary, the Health Service has appointed an Acting Director. The issue of whether, in the circumstances of an employment situation, an employer is entitled to direct an employee not to perform work will always depend upon the circumstances of the direction, the work that is not to be performed and the terms of the contract of employment. 422 Where one is dealing with a position that is both senior and highly skilled, it is less likely that the terms of the contract of employment import a term that the employer can, indefinitely, require the employee not to perform work. 423 In the current situation there is no express term allowing the employer to give such a direction. While not put in these terms, the submission of the Health Service necessarily involves, therefore, the implication of a contractual term. It seems that the contractual term upon which they rely is a contractual term allowing the employer to give reasonable and lawful directions. But such an implied term is always constrained by the terms of the contract itself. Thus, it would be impermissible for the Health Service to direct Dr Downe to perform duties that were otherwise than in accordance with the contract of employment e.g. as a carpenter or in an unskilled capacity. The question that must arise is whether a direction not to perform work at all for an indefinite period is a reasonable direction and can be implied. In the submission of the Health Service, a direction to perform cleaning work would be prohibited, but a direction to perform no work indefinitely is a reasonable direction. 424 Such a direction does not, in the case of a senior employee, seem reasonable and equitable. It is certainly not necessary for business efficacy, nor obvious, nor capable of clear expression: see Renard Constructions v Minister for Public Works (1992) 26 NSWLR 234 at 256, citing BP Refinery (Westernport) v Hastings Shire Council (1977) 180 CLR 266; Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596; Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337; and Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41. 425 The Court of Appeal in England had occasion to examine a direction not to perform work confined, in those circumstances, to the period of notice given by the employer on termination: William Hill v Tucker [1999] ICR 291. In the course of that judgment Morritt LJ said: "Given that the question must be resolved by construing the particular contract of employment in the light if its surrounding circumstances, previous cases decided on their own wording and circumstances are of limited value. But in this field the cases do illustrate certain categories and trends which are of assistance. Thus in the case of theatrical engagements, the courts have been ready to find an obligation on the part of the employer to afford the opportunity to the employee to perform the part for which he was engaged. Similarly, engagement for a specific project such as employment on a specific voyage, or in a specific and unique post such as the chief sub-editor of a newspaper, or as the manager of an overseas business, have been treated by the courts as giving rise to an obligation on the part of the employer not to do anything which puts the promised employment out of his power. And where the promised remuneration depends on the employer providing the opportunity to earn it then an obligation to afford the employee so to do is readily implied.

In the case of employees engaged for an indefinite term and a fixed wage or salary the courts have been much more reluctant so to construe the contract as to cast on the employer an obligation over and above the payment of the promised remuneration. Thus the claim for such an obligation was rejected in the cases of a representative salesman and, by implication, of domestic servants.

But as social conditions have changed the courts have increasingly recognised the importance to the employee of the work, not just the pay. Thus … Lord Denning M.R. considered that it was open to a welder to argue that: 'a man has, by reason of an implication in the contract, a right to work. That is, he has a right to have the opportunity of doing his work when it is there to be done.'" (At 298-299, authorities omitted.) (Robert Walker LJ and Stewart Smith LJ concurred in the judgment.) 426 The judgment on which the Health Service implicitly relies, i.e. Collier, supra, was a case in which the Court ordered that the chief sub-editor of a newspaper was a specific and unique post and required the employer to provide work and disentitled the employer from giving a direction that work not be performed. 427 In this case, the terms of the contract entered into between Dr Downe and the Health Service (or its predecessors) clearly contemplated the performance of work. Part of the consideration on the part of Dr Downe was, manifestly, that she would have the opportunity to establish and run the Neonatal Intensive Care Unit. She moved from Canada in preparation for occupying the position that she was granted and she was the sole neonatologist working in the Unit until such time as the Unit expanded (implicitly through her efforts). An indication of the importance of performing work can be gleaned from the discussion as to whether or not Dr Downe would accept a position other than Director. It is unarguable that the performance of work and the occupancy of a senior position such as Director were fundamental to the conduct of Dr Downe in applying for, and accepting, the position on offer. 428 In those circumstances, like in the circumstances in Collier, supra, and William Hill, supra, it is implicit in Dr Downe's contract of employment that she would have the opportunity to exercise her skill as a clinician (and continue to develop those skills and to exercise her duties as a Director). 429 In those circumstances, this contract of employment, does not give rise to an implied right to give a direction that Dr Downe not perform work on other than a basis consistent with the investigation of a complaint. It is unnecessary and inappropriate, in these proceedings, to distinguish those cases that refer to a right to direct an employee not to perform work. Such authority has, as can be seen from the above, always recognised that particular contracts may envisage, implicitly, a right to perform such work as is available. This contract is such a contract. 430 The only additional comment that is necessary in relation to this aspect is that the Health Service did not, in fact, direct Dr Downe not to perform work after 10 February 2005. However, that is a concentration on form rather than substance. The Health Service gave a direction that Dr Downe not perform work for the duration of the investigation. It was incumbent upon the Health Service to inform Dr Downe when she could return to her duties and the conduct of the Health Service expressly or implicitly continued the direction not to perform work beyond the period of investigation. 431 As a consequence I conclude that the "suspension" (being the continued suspension beyond the period necessary to give effect to the investigation) was a breach of the contract of employment and, in that regard, unlawful. (U) & (V) Remaining Items Other Than the Exercise of Discretion and Damages 432 At [5] above, I set out the issues that the parties submitted were necessary to be decided in order to conclude the matter. 433 The Health Service has undertaken, as part of its role as the model litigant, that, it will abide by (and implement) any declaration made by the Court. Without any criticism, the terms of that undertaking are a little uncertain. The circumstances for its pronouncement were emergent. 434 Nevertheless, as is clear from the foregoing, issues described in sub-paragraphs (u) and (v) do not arise. 435 The parties also requested the Court to determine (and said it was relevant to the issues before the Court) whether Dr Downe's contract of employment was permanent. By that, the question that was asked, I assume, was whether Dr Downe had tenure. This is a question that arises from the conversation during the period prior to the offer and acceptance of employment between Dr Downe and Mr Hamilton recited at [23] above. 436 It is submitted that the representation of Mr Hamilton, made on behalf of the Health Service (or its predecessors), is binding and forms part of the contract of employment. 437 It is unclear to me how it is said this matter is relevant to any issue that it is necessary for the Court to determine. No party suggests that there has been a termination of employment. No party suggests that any conduct by any other party is repudiatory of the contract of employment. In those circumstances, whether or not the employment is "permanent" (whatever that may mean) is irrelevant. It seems to seek an advisory opinion from the Court and ought not be answered. 438 I should add that none of the cases involving a contract of employment preclude an employer (or an employee) from terminating the contract of employment. Even "permanent" contracts of employment can be terminated. The termination may be in breach of the contract. The termination may give rise to remedies under s 84 of the Industrial Relations Act. The termination may give rise to damages. But none of those are matters before the Court in these proceedings. (W) Damages 439 The manner in which the matter has been raised and the multitude of issues that have been agitated occasioned the submission that the Court should make minimum orders necessary to give effect to its judgment and thereafter give leave to the parties to approach the Court for any further orders. That seemed to be the approach of each party. No substantial argument occurred on the question of damages and, if any, the assessment thereof. Issues arise as to the application of Addis v Gramophone Co Ltd [1909] AC 488 and whether damages are limited to the loss of wages. Ultimately this turns on issues associated with what the parties contemplated or was reasonably foreseeable by both parties as the probable consequence of the breach. Much has been said, both in academic writings and in judgments, on the operation of the rule in Hadley v Baxendale (1854) 9 Exch. 341 to the contract of employment and its interpretation in Addis. Of course, this case does not concern a termination. 440 In accordance with the request of the parties, I shall grant leave for one or more of the parties to approach the Court in relation to the issue of damages, if any, that may arise as a result of these findings or that a party may wish to pursue. Notification of the desire to make any such application will be required to be made within a short period. (X) & (Y) Discretion 441 There are two quite distinct aspects of the Health Service submissions that seek to persuade the Court that, as a matter of discretion, the Court ought not make orders. 442 The first is the traditional argument that orders will not be made requiring personal service or having that effect. Traditionally, courts exercising equitable jurisdiction, or granting equitable relief (or orders in the nature thereof) declined to grant specific performance of a contract of service. Historically, it was said that the courts would not assume the burden of constant supervision that inheres in such an order. 443 This involves the two-fold aspect that because supervision would be impractical, equity will not act to make orders that are inherently futile or act in vain: Co-op Insurance Society Ltd v Argyll Stores [1998] AC 1. 444 Further, an order granting specific performance of personal services encourages, perhaps requires, rather than discourages, repeated application to the court because it will be necessary to determine particular orders for compliance, or, rather, determine precisely what compliance means. 445 The general rule was stated in J C Williamson Ltd v Lukey & Mulholland [1931] HCA 15; (1931) 45 CLR 282, in which it was said: "… no Court of equity would have enforced, specifically or by way of injunction, the right of the respondents to sell sweets in the theatre. Nor would any such Court have enforced the right of the appellant to supervise and control the right of selling sweets in the theatre. The enforcement of either right would have required a continued and effective superintendence of acts and services which would be impossible for any Court." (Per Starke J at 293.) At p 292-293, Dixon J said:

"Courts of equity have, no doubt, exercised jurisdiction to enforce contracts specifically and to restrain the breach of contracts which such a Court would specifically enforce and to restrain the breach of negative stipulations in contracts whether in the particular case the Court would or would not specifically enforce the whole contract. But over and over again it is asserted in the books that a Court of equity will not compel one party to perform his part of a contract unless justice can be done as regards the other party. Nor will it as a rule enforce contracts of personal service or any other contract the execution whereof would require continued superintendence by the Court." 446 Mr Lukey was a sweets vendor who had been granted an exclusive selling agreement by the theatre for so long as he conducted the adjacent shop. The theatre purported to terminate and, as can be seen from the above extracts, the High Court refused relief the effect of which would have been to require the parties to maintain a personal relationship that one of them did not want. 447 Earlier in these reasons for judgment, I remarked that the effect of an award, would not ordinarily be to create a different contract than the one to which the parties had agreed. Whatever be the lawfulness or otherwise of conduct, equity too will not force on unwilling parties (or an unwilling party) a personal relationship of this type: De Francesco v Barnum (1890) 45 Ch 430 at 438. 448 The issue is always one of discretion. However, the balance weighs not only the interests of the parties, but society at large: "The inconvenience and mischief to the defendants, to say nothing of the interest of society at large, would be greater if the court should interfere than anything that could possibly happen to the plaintiffs by declining to interfere." ( Johnson v Shrewsbury and Birmingham Railway (1853) De G.M. & G. 914 at 930. 449 The authorities make clear that while the general rule that personal service will not be enforced by specific performance is a matter of discretion, it is nevertheless a matter of very great weight: see Spry, Equitable Remedies, 7th ed (2007) Lawbook Co. 450 Further, an injunction, the effect of which would be the same as specific performance, will involve the same or similar considerations. However, there is no absolute rule and, once the balance is considered (including the general undesirability from the public policy perspective), it is an exercise of discretion. "But I do not think that it should be assumed that as soon as any element of personal service or continuous services can be discovered in a contract the court will, without more, refuse specific performance. Of course, a requirement for the continuous performance of services has the disadvantage that repeated breaches may engender repeated applications to the court for enforcement. But so may many injunctions; and the prospects of repetition, although an important consideration, ought not to be allowed to negative a right. As is so often the case in equity, the matter is one of balance of advantage and disadvantage in relation to the particular obligations in question; and the fact that the balance will usually lie on one side does not turn this probability into a rule." ( C. H. Giles & Co. Ltd. v. Morris [1972] 1 W.L.R. 307 at pp. 318-319 per Megarry J.) 451 This question was recently discussed by Barrett J in Tradition Australia Pty Ltd v Gunson [2006] NSWSC 298, where his Honour went through the authorities on this point from [13]-[25]. I adopt, with respect, that analysis. 452 His Honour noted that the theoretical possibility of granting an order for personal service in the context of employment was discused by the Full Federal Court in Gregory v Phillip Morris Ltd (1988) 80 ALR 455. Their Honours declined to make such an order in that case, but did say (at 482): "We would not wish to give any endorsement to the view that there may never be an order in the nature of specific performance of a contract of employment. But the making of such an order is a matter within the discretion of the court. Where such an order is sought, careful consideration must always be given to the likely consequences of the order. The evidence in the present case suggests that industrial difficulties would occur if Gregory were now to be re-employed. Each of the traditional reasons for denial of specific performance - a loss of confidence between the parties and the problem of supervision of the relationship - applies in this case. In the exercise of the court's discretion, an order for specific performance ought to be refused." 453 Consequently, the Court must take into account the ramifications of such an order and look to some "special circumstances" to justify making an order of personal service (see also Francis v Municipal Councillors of Kuala Lumpur [1962] 1 WLR 1411 at 1417-8 per Lord Morris of Borth-y-Gest). Thus for instance, in Hill v C A Parsons & Co Ltd [1972] 1 Ch 305, the applicant sought an injunction, restraining his employer from implementing a notice of termination. The Court of Appeal, in granting the application, noted that exceptional circumstances were present: namely, there was a personal relationship of trust and confidence between employer and employee that remained intact; and the injunctive relief was directed towards nullifying the effect of the termination notice (therefore not falling within the usual case of specific performance). 454 Barrett J, in Gunson supra, went through a number of other authorities on this subject where personal service was refused, which need not be mentioned here. Suffice to say, the cases where personal service has been refused can be distinguished against the circumstances of this case: firstly and most importantly, just as in Francis, there does not seem to be any loss of trust or willingness to work together between Dr Downe and the Health Service; second, this is not a case where the employer has terminated the contract and the employee seeks to overcome that termination; third, in this case, the effect of an order of personal service would be to nullify Dr Downe's "suspension" and bring the contract back into working order. 455 Moreover, this is not specific performance at all. It is a restraint on a particular direction or two of them. Accordingly, the facts make this case fall within the "exceptional circumstances" to justify making an order of personal service. 456 In the instant case, all the parties contended that there is in existence a contract binding on them and defining their relationship. The difference between them is whether certain directions may be given lawfully. 457 It may well be that the alternative to the Health Service, to the capacity to give those directions, would be that the Health Service not employs Dr Downe, be that then would be a matter for it. Nothing in the orders I am asked to make restrains the Health Service from dismissing. 458 If the Health Service has entered into a contract that does not allow dismissal that is not an issue arising from these orders. If it dismisses regardless, the dismissal is effective and the remedy is damages. It is at that point that equity would not order specific performance to force upon unwilling parties an undesired relationship. 459 If the negative stipulations in this contract could not be enforced by injunction, there would be no means of enforcement. Further the issuing of injunctive relief confined to the directions does not require any supervision. 460 The Health Service is a large public employer with an express disciplinary procedure. Dr Downe is entitled, under her contract, to work and continue to develop her skills. Each of these factors, and the matters otherwise addressed in these reasons, inform the exercise of discretion: see generally Irani v Southampton Health Authority [1985] I.C.R. 590 at 590-591 (Facts), 599, 603; Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30; (1998) 195 CLR 1 at [78]-[82]; Powell v Brent LBC [1988] I.C.R. 176 at 196, 200; Murrell v South East Area Health Service [2006] NSWSC 313 at [40]-[42]. 461 The second aspect of the Health Service submission relates to the general discretionary elements associated with the requirement to have Dr Downe work again as Director of the Unit. 462 Such a discretionary aspect occurs regularly in industrial tribunals. The principle, which is largely common sense, has been expressed thus: "The issue to be decided is whether, following the experience of the dismissals, and the disputation that has followed, it is reasonable to expect that future co-operation to perform work is impossible. It is essential to distinguish between the relationship required to achieve the performance of work at the required standard and a relationship which involves mutual affection and friendship. In making this determination it is necessary to look at the total scene and to consider the various aspects of the potential relationship in perspective, whatever may be thought about its desirability.

It is certainly not essential to achieve a single unit of happy persons in a work force welded together by a bond of personal friendship where all of the management staff and other employees in the particular plant think alike, agree on everything and create mutual admiration for one another with never a harsh or unkind word being spoken.

The real issue is whether contracts of employment, if entered into, can, in the circumstances of this particular case, bring about a situation where it will be possible to achieve a sufficient level of co-operation to achieve a proper working relationship with the resultant successful enterprise. In my view the achievement of such a situation is not only possible but is likely to be achieved if reinstatement is effected." ( PKIU v Vista Paper Products [1991] IRCommA 1307 (13 December 1991); [1991] 12 CAR 167 at 199-200. 463 The courts ought take a similar, although perhaps slightly less robust view. The courts will certainly scrutinise the submission on work relationships most carefully, even sceptically: Warren v Mendy [1989] 1 W.L.R. 853 at 860, 867-868. 464 In this instance, these employees worked together for up to 13 years. There were tensions. I accept that some of those tensions were caused by Dr Downe's style and exacting standards. Each of the medical staff has displayed intelligence and an ultimate goal that is the care of their patients. Because of that, and despite the risk of aggravating tensions, I consider that the problems are not insurmountable. If they were to prove to be, then the Health Service may be required to take other steps. It cannot, however, "suspend" indefinitely. Conclusion 465 For all of the above reasons, the Court shall make orders limited at this stage to declarations and injunctive relief. The injunctions shall restrain only the two directions given by the Health Service, which directions I have found were unlawful. No other order is immediately necessary. And the Court shall grant liberty to apply. 466 The Court makes the following orders and declarations: i. The defendants' direction to Dr Downe to perform work at Westmead Hospital in a manner inconsistent with the fulfilment by Dr Downe of her duties as Director of the Neonatal Intensive Care Unit at Nepean Hospital is unlawful as a breach of the contract of employment between Dr Downe and the defendants; ii. The defendants' purported continued suspension of Dr Downe from the performance of duties as the Director of the Neonatal Intensive Care Unit at Nepean Hospital is unlawful as a breach of the contract of employment between Dr Downe and the defendants; iii. During the subsistence of the current contract of employment between the plaintiff and the defendants, the defendants, and each of them, their servants or agents, shall refrain from directing the plaintiff to perform or not to perform any work or act, which direction is inconsistent with the performance by Dr Downe of her functions as Director, Neonatal Intensive Care Unit, Nepean Hospital; iv. The defendants and each of them shall refrain from treating as valid, lawful or binding its or their direction to the plaintiff to work as a Staff Specialist at Westmead Hospital; v. Each party has liberty to file and serve, within 14 days from the date hereof, a written submission on costs and each party may, within a further 7 days, respond in writing to any such submission; vi. The parties have liberty within 35 days to approach the Court for any further or consequential order, including any order for damages, for the purpose of giving effect to or clarifying these reasons for judgment or ameliorating any administrative inconvenience arising from these orders; vii. Order iii above shall be stayed for a period of 14 days from the date hereof; viii. Otherwise the proceedings are dismissed.

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