East Coast Brokers Pty Limited v The Commonwealth of Australia [2005] NSWIRComm 371 | Case summary

East Coast Brokers Pty Limited v The Commonwealth of Australia [2005] NSWIRComm 371 | Case summary | Zoe

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(c) under the command of a commissioned officer of the Royal Australian Navy, Captain Cullen. 7 The Commanding Officer of HMAS Albatross was at all material times bound by Defence Instruction (Navy) ADMIN 30-3 ("DI(N) ADMIN 30-3") issued pursuant to s 9 and s 9A of the Defence Act 1903 (Cth). 8 As a result of the alleged breach, Mr Anthony Kinnear, Occupational Health and Safety Officer employed by the Commonwealth, emailed Captains Tobin and Cullen (commanding officers of HMAS Creswell and Albatross respectively) on 5 February 2003 and recommended immediate termination of the applicant's services. 9 On 13 February 2003, the Commonwealth wrote a letter to Serco informing it that the Contract Management Office was invoking clause 12.6.1 of the contract, thereby requiring Serco to terminate the services of the applicant and its employees as of 14 February 2003. 10 Clause 12.6.1 of the contract provided: [T]he Contract Manager may at his or her absolute discretion and without being obliged to give any reasons object to the employment in connection with the Contract of any person employed by the Contractor or by a Subcontractor and direct that such persons be removed from further work or from specific tasks or areas in connection with the Contract. Notice of any such objection and direction shall be given in writing to the Contractor. 11 Serco wrote a letter as instructed to the applicant on 5 March 2003, informing the applicant that its right to enter either HMAS Albatross or HMAS Creswell had been revoked. 12 On 17 March 2003, the Commonwealth by its agent, Captain Cullen, notified the applicant by letter that it had endorsed the Contract Manager's recommendation to terminate the use of the applicant's services at HMAS Albatross for a period of twelve months from that date, pursuant to clause 12.6 of the contract. 13 On 24 February 2004, the applicant filed its summons for relief seeking: 1. An order declaring the contract or arrangement as defined by s 105 of the Industrial Relations Act 1996 (NSW) ("the Act") between the Applicant and the First and Second Respondents to be an unfair contract pursuant to s 106 of the Act. 2. Further, or in the alternative, an order declaring the contract or arrangement between the Applicant and the First Respondent to be an unfair contract pursuant to s 106 of the Act. 3. Further, or in the alternative, an order declaring the contract or arrangement between the Applicant and the Second Respondent to be an unfair contract pursuant to s 106 of the Act. 4. Further, an order varying from its commencement or at some later date the contract as described by order 1 and/or as described by order 2 by: (a) (in the case of the contract described in order 1) deleting clause 12.6 of the contract entitled Contract for Garrison Support Services for the Department of Defence; (b) inserting the following provisions: (i) that the Contract Manager and/or the Commonwealth could only object to a contractor, such as the Applicant providing services for good reason and upon reasonable grounds, and with giving such contractor an opportunity to state its case before excluding the contractor from working; (ii) further that the First Respondent be obliged to give 12 months notice to the Applicant of its intention to exclude the Applicant from performing work under the contract;

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(v) further, that the First Respondent pay compensation to the Applicant in the event that it breached any of the provisions of the contract (as defined). The summons for relief also sought certain money orders. Commonwealth's notice of motion 14 The Commonwealth's notice of motion sought the following orders: (a) An order pursuant to Part 12 r 82(1)(a) of the Industrial Relations Commission Rules that the Summons for Relief filed by the applicant ('the Summons') be set aside; further or alternatively (b) A declaration pursuant to Part 12 r 82(1)(g) that the Commission has no jurisdiction over the First Respondent in respect of the Summons; further, or in the alternative (c) An order pursuant to Part 12 r 82(1)(i) dismissing the Summons against the First Respondent; (d) An order that the applicant pays the costs of the First Respondent. 15 The grounds and reasons in support of the motion were in the following terms: 1. The Industrial Relations Commission is without jurisdiction to grant the relief claimed by the Applicant pursuant to s 106 of the Industrial Relations Act 1996 (NSW), such jurisdiction being excluded by the operation of s 109 of the Constitution. 2. Each of the orders sought by the Applicant requires the Commission to exercise powers under a State law that is inconsistent and/or in conflict with and/or which would impair or detract from the operation of the rights and obligations contained in Defence Instruction (Navy) ADMIN 30-3 issued pursuant to the Defence Act 1903. 3. Alternatively, the Commission is without jurisdiction to make the orders sought by the Applicant against the Commonwealth as the Industrial Relations Act 1996 (NSW) does not relevantly bind or apply to the Commonwealth either: (i) as a matter of construction; or (ii) because the Commonwealth is immune from any exercise of power in the NSW Act to declare void or to vary any contract or arrangement relating to the management of Defence establishments. 4. Alternatively, to the extent the applicant seeks orders under s 106 of the Industrial Relations Act 1996 (NSW), the exercise of a power to make such orders in relation to the Commonwealth, or the named respondent the Department of Defence, would be contrary to Chapter III of the Constitution as not involving the exercise of judicial power. 16 The Commonwealth's motion came before Staff J in April 2004. Despite attempts by his Honour to have the matter proceed expeditiously, for reasons that are not necessary to explore here the parties were unable to meet that objective and it was not until April 2005 that the filing of the parties' submissions and an agreed statement of facts was completed.

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The relevant legislation and Defence Instruction 21 It is convenient to set out the relevant legislation and DI(N) ADMIN 30-3 that are said to give rise to the relevant inconsistencies. Firstly, there is ss 105 and 106 of the IR Act: 105 Definitions In this Part: contract means any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument. unfair contract means a contract: (a) that is unfair, harsh or unconscionable, or (b) that is against the public interest, or (c) that provides a total remuneration that is less than a person performing the work would receive as an employee performing the work, or (d) that is designed to, or does, avoid the provisions of an industrial instrument. 106 Power of the Commission to declare contracts void or varied (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. (3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time. (4) In considering whether a contract is unfair because it is against the public interest, the matters to which the Commission is to have regard must include the effect that the contract, or a series of such contracts, has had, or may have, on any system of apprenticeship and other methods of providing a sufficient and trained labour force. (5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case. (6) In making an order under this section, the Commission must take into account whether or not the applicant (or person on behalf of whom the application is made) took any action to mitigate loss.

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(c) in the case of the Air Force - Defence Instructions (Air Force). (4) Where Defence Instructions (Navy), Defence Instructions (Army) Defence Instructions (Air Force) are inconsistent with Defence Instructions (General), the Defence Instructions (General) prevail and the Defence Instructions (Navy), the Defence Instructions (Army) or the Defence Instructions (Air Force), as the case may be, shall, to the extent of the inconsistency, be of no effect. (5) Evidence of Defence Instructions (General), Defence Instructions (Navy), Defence Instructions (Army) or Defence Instructions (Air Force) may be given in any proceedings in or before a Court, a service tribunal, the Defence Force Discipline Appeal Tribunal, or any other tribunal, by the production of a document purporting to be a copy thereof. (6) Defence Instructions (General), Defence Instructions (Navy), Defence Instructions (Army) or Defence Instructions (Air Force) may make provision in relation to a matter by applying, adopting or incorporating, with or without modification, any matter contained in an instrument or other writing, whether as in force at a particular time, or as amended and in force from time to time. 23 After noting in its submissions that it was an agreed fact that DI(N) ADMIN 30-3 was a Defence Instruction within the meaning of the Defence Act, the Commonwealth also noted that clauses 29-34 of the Instruction confer on the Commanding Officer (CO) of a Defence establishment, control over all matters relating to occupational health and safety on the base. Clause 90(q) also conferred on the CO control over contractors while they were within the base. 24 The relevant clauses of DI(N) ADMIN 30-3 are in the following terms: Occupational Health and Safety 29. CO have responsibility for the safety and health of all personnel within the precincts of their ships and establishments. This responsibility cannot be delegated. CO are accountable to CN (through Commander Australian Navy Systems Command (COMAUSNAVYSYSCOM) for occupational health and safety (OHS) matters. 30. The contracting out of services subsequent to the DRP processes has resulted in an increase in accident rates, and a decline in safety standards. Consequently, the Shoresafe Board has provided CO, officers in charge (OIC), and managers of shore-based activities with agreed control methods for the management of contractor OHS. 31. CO are to be aware of the policies and instructions with respect to OHS including: (a) Australian Book of Reference (ABR) 6303 - NAVSAFE Manual, Navy Safety Management ;

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(d) fitout alterations, including furniture movements, computer network cabling, and other electrical alterations; (e) maintenance tasks such as property and vehicle repairs, cleaning, and grounds maintenance; (f) tasks performed in conjunction with Defence employees; and (g) delivering goods and providing services. 34. Under the Occupational Health and Safety (OH&S) (Commonwealth Employment) Act 1991, the RAN has a duty to take all reasonably practicable steps to protect the health and safety of Defence employees, contractors, and other persons at or near Defence controlled workplaces. This policy is promulgated in SAFETYMAN, volumes 1 and 2 and ABR 6303. 25 Further, clauses 90(g) and 90(q) of Defence Instruction (Navy) ADMIN 30-3 are as follows: 90. The command function in naval establishments has been endorsed by CN and through him the Chief of the Defence Force (CDF). For CO holding major command this is: ... (g) CO retain full responsibility for OHS matters, including accident investigation, COMCARE reporting, and internal safety audits and inspections. Further guidance can be found in ABR 6303, which provides CN's direction and guidance on the implementation of safety management in the RAN. CO should expect and receive the full support of all other managers within their establishment in implementing this safety policy. CO who are unable, or have a concern about, meeting the intent of the policy, for whatever reason, are to raise the matter promptly with the COMAUSNAVYSYSCOM. Where there are a number of CO within the same establishment, the CO of the commissioned establishment is responsible for the coordination of all OHS issues. ... (q) CO have authority over Defence civilians and contractors while these people are within the establishment. This does not extend to the functional responsibility of those people but does include such matters as security and OHS. 26 It was also noted by the Commonwealth that cl 34 of DI(N) ADMIN 30-3 indicated the Navy's obligations under the Occupational Health and Safety (Commonwealth Employment) Act 1991 (Cth) ("OHS Act"). Section 16 of that Act is as follows: 16 Duties of employers in relation to their employees etc. (1) An employer must take all reasonably practicable steps to protect the health and safety at work of the employer's employees. Note: An employer who breaches subsection (1) may be subject to civil action or a criminal prosecution (see Schedule 2). (2) Without limiting the generality of subsection (1), an employer breaches that subsection if the employer fails to take all reasonably practicable steps: (a) to provide and maintain a working environment (including plant and systems of work): (i) that is safe for the employer's employees and without risk to their health; and (ii) that provides adequate facilities for their welfare at work; and (b) in relation to any workplace under the employer's control, to: (i) ensure the workplace is safe for the employees and without risk to their health; and (ii) provide and maintain a means of access to, and egress from, the workplace that is safe for the employees and without risk to their health; and (c) to ensure the safety at work of, and the absence of risks at work to the health of, the employees in connection with the use, handling, storage or transport of plant or of substances; and (d) to develop, in consultation with any involved unions in relation to the employees of the employer, and with such other persons as the employer considers appropriate, a policy, relating to occupational health and safety, that will: (i) enable effective co-operation between the employer and the employees in promoting and developing measures to ensure the employees' health, safety and welfare at work; and (ii) provide adequate mechanisms for reviewing the effectiveness of the measures; and (e) to provide to the employees, in appropriate languages, the information, instruction, training and supervision necessary to enable them to perform their work in a manner that is safe and without risk to their health. (3) A policy relating to occupational health and safety of the kind referred to in paragraph (2)(d) that is developed in consultation with involved unions must provide for the making of an agreement between the employer and such involved unions that: (a) provides appropriate mechanisms for continuing consultation, between the employer, such involved unions and the employees, on occupational health and safety matters; and (b) provides for such other matters (if any) as are agreed between the employer and such involved unions. (4) The obligations of an employer in respect of the employer's employees that are set out in subsections (1) and (2) apply also in respect of persons who are contractors of that employer but only in relation to: (a) matters over which the employer has control; or (b) matters over which the employer would have had control but for an express provision in an agreement made by the employer with such a contractor to the contrary, being matters over which the employer would, in the circumstances, usually be expected to have had control. Tests for inconsistency

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27 At the centre of the present controversy is s 109 of the Constitution, which provides: When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid. 28 The tests for inconsistency are well known and were identified in Barry v Australian Broadcasting Corporation (2002) 112 IR 33 at [20] and in Metrocall Inc v Electronic Tracking Systems Pty Ltd (2000) 52 NSWLR 1 (2000) 101 IR 66 at [39]-[40]. In Barry the Full Bench of the Commission in Court Session referred to the Victorian Court of Appeal's enunciation of the tests in Felman v Law Institute of Victoria (1997) 142 FLR 362 at 381 as drawn from High Court authorities and there is no reason to consider there has been any change to those tests since they were cited with approval in Barry. 29 Hence, a law of a State will be inconsistent with a law of the Commonwealth where: (1) it is impossible to obey both laws (e.g., R v Licensing Court of Brisbane; Ex parte Daniell (1920) 28 CLR 23); (2) the law of a State takes away or varies a right, privilege, duty, power or immunity conferred by a law of the Commonwealth or, conversely, a law of the Commonwealth takes away or varies a right, privilege, duty, power or immunity conferred by law of a State (e.g., Colvin v Bradley Brothers Pty Ltd (1943) 68 CLR 151; Australian Mutual Provident Society v Goulden (1986)160 CLR 330); or, (3) the law of a State invades a field that the law of the Commonwealth was intended to cover exhaustively (e.g., Ex parte McLean (1930) 43 CLR 472; Viskauskas v Niland (1983) 153 CLR 280). 30 Inconsistency established by the first and second tests is known as direct inconsistency. But even where there is no direct contradiction between the two enactments, where the Commonwealth law evinces an intention to 'cover the field', s 109 may still apply because of an indirect inconsistency and this is encapsulated in the third test. The Commonwealth in these proceedings relied on the second and third tests. 31 There is also the concept of "operational inconsistency" that is said to derive from Victoria v Commonwealth (1937) 58 CLR 618 and which was employed by the majority (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ) in Commonwealth of Australia v State of Western Australia (1999) 196 CLR 392. In that case the Commonwealth had acquired certain land together with surrounding land ("the perimeter area") that together were declared a defence practice area pursuant to the Defence Force Regulations made under the Defence Act. Applications for the grant of exploration licenses under the Mining Act 1978 (WA) were lodged by mining companies to explore land that fell within the defence practice area. 32 It was held that the Mining Act had no application to the relevant lands except that, unlike the practice area, a perimeter area was potentially subject to that Act. Thus, the question arose whether in relation to the perimeter area the operation of the Mining Act would be inconsistent with the Regulations made under the Defence Act. The majority rejected an argument that the Regulations covered the field and held that any inconsistency that might arise would only be operational in the sense that it would only arise if and when authority were granted pursuant to the Mining Act to enter upon or conduct mining activities on land in the perimeter area at a time specified in an authorisation under the Defence Regulations for the conduct of a defence practice. 33 Gleeson CJ and Gaudron J held at 416-417 (pars [59]-[62]): 59 It is clear that the regulations to which reference has been made constitute an exhaustive statement of the Commonwealth's rights and obligations with respect to private land in a defence practice area. However, they make limited provision as to the rights and obligations of other persons. Save to that limited extent, their rights and obligations are left to the general law. Accordingly, it cannot be said that the Defence Regulations manifest an intention to "cover the field" with respect to the rights and obligations of persons other than those acting for or on behalf of the Commonwealth in relation to the perimeter area. 60 Nor, in our view, can it be said that any provision of the Mining Act would, if valid, alter, impair or detract from the operation of the Defence Regulations or that the Act is otherwise inconsistent with the Regulations because, for example, the Act and the Regulations cannot be obeyed simultaneously or one takes away what the other confers. That is because the Mining Act does not confer rights to enter upon or use land in the perimeter area. Rather, it simply allows that authority may be granted to persons to enter or conduct mining operations on that land. 61 The Defence Regulations do not operate to prevent entry or activity on the perimeter area, except if a defence operation or practice has been authorised by a chief of staff pursuant to reg 51(1). It would seem clear that, were authority to be granted pursuant to the Mining Act to enter upon or conduct mining activities on land in the perimeter area at a time or times specified in an authorisation under reg 51(1) for the conduct of a defence operation or practice, there would be direct inconsistency between that authorisation and the authority granted under the Mining Act . That inconsistency would result from the inconsistent operation in the particular circumstances of the Mining Act and the Defence Regulations - "operational inconsistency", as it is called. 62 Section 109 of the Constitution operates to render a State law inoperative only to the extent of its inconsistency with a law of the Commonwealth and only for so long as the inconsistency remains. Although there may be "operational inconsistency" between the Mining Act and the Defence Regulations in the event and to the extent that authority is conferred pursuant to the former to enter upon or engage in activities on land in the perimeter area at a time when a defence operation or practice is authorised under reg 51(1) of the Defence Regulations, that situation has not yet arisen. Thus, at the present time, there is no inconsistency between the Mining Act and the Defence Regulations.

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34 The Commonwealth's submissions regarding direct inconsistency between the IR Act and the Defence Act may be summarised as follows: (1) Section 9A of the Defence Act authorises the making of DI(N) ADMIN 30-3. (2) Clauses 29 to 34 and 90(g) and 90(q), of DI(N) ADMIN 30-3 confer on the Commanding Officer of a Defence establishment ("the CO") control over all matters relating to occupational health and safety on the base. Clause 90(q) also confers on the CO control over contractors while they are within the base. (3) Clause 34 of DI(N) ADMIN 30-3 notes the Navy's obligations under the Occupational Health and Safety (Commonwealth Employment) Act 1991 (Cth). Section 16(4) of that Act requires the Commonwealth, in respect of matters over which it has control, to take all reasonably practicable steps to protect the health and safety at work of its contractors. (4) The Commonwealth has negotiated its contractual arrangements in order to facilitate its obligations under the OHS Act. The contract between the Commonwealth and Serco was not in its own right a piece of delegated legislation, but was a means by which the Commonwealth carries out the scheme of ensuring occupational health and safety on military bases. (5) Proposed order 4 in the applicant's summons for relief would effect two contractual variations. The first variation would be the deletion of cl.12.6 of the Serco contract. That is, it would take away the Commonwealth's right to remove persons employed by the contractor or a sub-contractor from " further work or from specific tasks or areas ". The second variation would be the insertion of five new provisions into a contract. (6) The proposed variations to the Serco contract would cancel the existing contractual power of the Contract Manager (an employee of the Department of Defence) to exclude persons, and allow a new and heavily circumscribed power to the Commonwealth. The Commonwealth, in the form of the CO of HMAS Albatross, would be obliged to comply with this contractual obligation. In these circumstances, to exercise his power under DI(N) ADMIN 30-3 would almost always produce a breach of the varied contract. (7) The contractual obligation created by the proposed order 4 would alter, impair or detract from the grant and exercise of power in DI(N) ADMIN 30-3. To paraphrase the decision of the High Court in AMP v Goulden , it would alter, impair or detract from the Commonwealth scheme of regulation established by DI(N) ADMIN 30-3. (8) The inconsistency between proposed order 4 and DI(N) ADMIN 30-3 would bring about inconsistency between s 9A of the Defence Act and s 106 of the Act. It is the operational inconsistency between these two laws that invokes s 109 of the Constitution. (9) If proposed order 4 were made, s 106 of the Act would be rendered invalid to the extent of its inconsistency with s 9A of the Defence Act , by reason of s 109. The Commission has no jurisdiction to make an invalid order: Barry at 55; Burgess v Mount Thorley Operations Pty Ltd (2003) 132 IR 400 at 453. 35 Section 109 requires for its operation a law of the Commonwealth. Plainly, s 9A of the Defence Act is such a law but there is nothing in s 9A that gives rise to an inconsistency with s 106 of the IR Act. Section 9A is concerned with the powers of the Secretary of the Department of Defence and the Chief of the Defence Force to administer the Defence Force; the substance of s 9A is no more than an allocation of responsibilities and says nothing about the displacement of State laws. On the other hand, as the Full Bench observed in Beahan v Bush Boake Allen Australia Limited (1999) 47 NSWLR 648; (1999) 93 IR 1, s 106 is: [D]irected to an impugned contract of employment, whether existing or terminated, as to the fairness of its express or implied terms. Such unfairness will depend upon the facts of each particular case by focusing attention on the contractual relationship between a particular employer and employee and where the unfairness may arise from the terms of the contract itself, the surrounding circumstances and/or the manner of performance or operation of the contract. The section, we emphasise, is not concerned with re-establishing an employment relationship which has ended nor with compensating an employee for the loss of his employment contract. In other words, the section is properly concerned with the fairness of the terms of a contract of employment in its various respects and, if relevantly found to be unfair, to provide remedial relief by avoiding or varying the terms of that contract and to order the payment of money in connection with any contract so avoided or varied as is considered just in the circumstances of the case. 36 Not only do the two statutes occupy quite separate and distinct fields but also s 9A and s 106 do not intersect in any conceivable way. We note that ss 122A and 123 of the Defence Act provide for immunities from certain State and Territory laws. Neither of those two sections provides immunity from the operation of the IR Act. 37 It could not be said that s 106 of the IR Act takes away or varies a right, privilege, duty, power or immunity conferred by s 9A of the Defence Act. Nor could it be said the orders sought by the applicant in its summons for relief have that effect. Proposed order 4 deletes cl 12.6 of the contract and inserts other provisions requiring procedural fairness in the Commonwealth's dealings with the applicant. None of the proposed orders in any way impinge on the operation of s 9A. 38 Assuming that DI(N) ADMIN 30-3 issued pursuant to s 9A(3) of the Defence Act is a law of the Commonwealth for the purpose of s 109 of the Constitution, the Commonwealth relies on clauses 29 to 34 and 90(g) and 90(q) as giving rise to an inconsistency. Clauses 29 to 34 place on Commanding Officers the responsibility for the safety and health of all personnel within the precincts of their ships and establishments. The paragraphs also draw the attention of Commanding Officers to the written policies and instructions (for example, a Navy safety manual - "NAVSAFE") relevant to occupational health and safety, what is to be achieved in implementing occupational health and safety policies and what would appear to be no more than a reminder (in cl 34) that the obligation on the RAN is to take all reasonably practicable steps to protect the health and safety of Defence employees, contractors and other persons at or near Defence controlled workplaces. As for clauses 90(g) and 90(q) of DI(N) ADMIN 30-3, they merely reiterate in a different form what is contained in clauses 29 to 34 and add nothing to the issues under consideration. 39 Thus, clauses 29 to 34 do no more than place a responsibility for safety on Commanding Officers and make reference to the policies and instructions that will direct or facilitate the implementation of that responsibility. However, none of the written policies or instructions referred to in the paragraphs would seem to us to be laws of the Commonwealth. In particular, we note that the NAVSAFE MANUAL provides in cl 3.49 that a CO may refuse entry to an establishment or performance of work by any contractor or person who refuses to accept the requirements of the establishment OHS system or the Commonwealth Occupational Health and Safety Act. 40 Whether Captain Cullen relied on cl 3.49 of the Manual in excluding the applicant from HMAS Albatross is not clear - no reference is made to the provision in any of the relevant correspondence. But apart from the fact there is no evidence that the applicant indicated a relevant refusal to comply with the necessary rules thereby providing a basis for excluding it from the performance of work, NAVSAFE could not be regarded as a law of the Commonwealth nor do we consider it is given the force of a law of the Commonwealth by paragraph 34 of the Defence Instruction. It is a manual that "describes the safety framework" through which the Navy's safety management policy is to be implemented. 41 So the question of whether there is a direct inconsistency between DI(N) ADMIN 30-3 and s 106 depends on whether the latter provision takes away or varies any right, privilege, duty, power or immunity that might be said to reside in the responsibility bestowed on Commanding Officers for the safety and health of all personnel within the precincts of their ships and establishments. Given that s 106 is concerned with the fairness of a contract and the provision of remedial relief and not with the responsibility for occupational health and safety conferred by the Defence Instruction, we fail to see how it could be said that s 106 and DI(N) ADMIN 30-3 relevantly collide. 42 Nor do we discern any inconsistency between the orders sought by the applicant and DI(N) ADMIN 30-3. Proposed order 4 seeks to delete cl 12.6 of the contract between Serco and the Commonwealth. Clause 12.6.1 gives the Contract Manager the absolute discretion, and without any obligation to give reasons, to direct that a sub-contractor such as the applicant be removed from performing further work in connection with the contract. Clause 12.6.2 requires the sub-contractor to comply with the direction. Additionally, however, proposed order 4 seeks to insert new provisions in the contract that require the Contract Manager to afford the applicant procedural fairness. The proposed orders do not prevent the Commonwealth from excluding a sub-contractor from performing work, but they do require that notice be first given to the applicant.

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48 Taking the Commonwealth's submissions at their highest, however, there could only be an operational inconsistency between s 106 and DI(N) ADMIN 30-3. That is, in the event and to the extent that orders might be made pursuant to s 106 that might detract from a Commanding Officer's responsibility for occupational health and safety, that situation has not yet arisen. The Commission in Court Session is not bound to provide the relief sought but has a wide discretion as to the form and content of any remedy or, in fact, whether it would order any relief at all, notwithstanding findings of unfairness. The existence of an operational inconsistency does not deprive this Court of jurisdiction to hear and determine the matter, although such an inconsistency may affect the nature and scope of any orders if such orders were made: See for example, CFMEU v Newcrest Mining Limited (2005) 139 IR 50 at [84]. Inconsistency with the OHS Act (Cth) 49 The Commonwealth submitted that the exclusion of a contractor from performing work on Commonwealth premises on the ground of the unsafe work practices of the contractor's employees is a step of the kind described in s 16(4) of the OHS Act. The variations to the Serco contract that would be affected by proposed order 4 would impede that exclusion and would alter, impair or detract from the operation of s 16(4). Accordingly, in the Commonwealth's submission, this Court had no power to make proposed order 4 for the same reasons previously put in relation to s 9A of the Defence Act. 50 Section 16(4) of the OHS Act, it may be noted, requires the Commonwealth to take all reasonably practicable steps to protect the health and safety at work of contractors. 51 We have already dealt with the issue of operational inconsistency and the point that what orders the Court might ultimately make cannot be anticipated at this early interlocutory stage. We do not intend to repeat what has been said on this issue except to emphasise that until orders are made, if they are made at all, no relevant inconsistency arises. But in any event, we have some difficulty discerning any inconsistency between a Commonwealth law that obliges the Commonwealth to take all reasonably practicable steps to protect the health and safety at work of contractors and orders under s 106 of the IR Act that would require the Commonwealth to follow certain procedures before taking steps to remove a contractor from performing further work. We would have thought the Commonwealth law and the orders could comfortably co-exist. 52 We note that the Commonwealth did not seek to contend that an inconsistency existed between s 106 itself and the OHS Act and understandably so. There is no contrariety between, on the one hand, a State law that is directed to an impugned contract of employment, whether existing or terminated, as to the fairness of its express or implied terms and, on the other hand, a Commonwealth law concerned with the health, safety and welfare at work of employees and contractors of the Commonwealth and of Commonwealth authorities.

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54 Even if it could be said that the relevant provisions of DI(N) ADMIN 30-3 cover the field of occupational health and safety in Naval establishments (a proposition we do not accept for reasons that will shortly be explained), we do not consider there is any indirect inconsistency. Firstly, s 106 does not operate at all in the field of occupational health and safety. Secondly, for the reasons set forth in our consideration of direct inconsistency, it could not be said that the orders sought by the applicant to vary a contract to provide for procedural fairness in the termination of the contract, invade the field of occupational health and safety or the procedures associated therewith. 55 Nevertheless, the Commonwealth relied on Australian Mutual Provident Society v Goulden (1986) 160 CLR 330 to contend that whilst the relevant federal and State statutes might occupy different fields, that did not preclude the existence of an inconsistency between the two laws. In that case it was held that s 49K(1) of the Anti-Discrimination Act 1977 (NSW), which would render unlawful any refusal to insure a person or the creation of any adverse differentiation in insurance terms on the ground of "physical impairment" of the person concerned, was inconsistent with the Life Insurance Act 1945 (Cth). Section 78 of the latter statute expressed a legislative intention to protect the interests of policy holders by allowing registered life insurance companies to classify risks and fix premiums according to their own judgment based on actuarial advice and prudent insurance practice. It was held that it would alter, impair or detract from the scheme under the Commonwealth statute if a registered life insurance company were precluded by State legislation from setting different premiums for different risks, from refusing to insure risks outside the class of insurance offered or from taking account of physical impairment in deciding whether to accept a proposal or what terms should apply to insurance cover that was granted. 56 In AMP v Goulden the High Court was there concerned with what it described at 336 as "the essence of life insurance business", namely, the classification of risks and the setting of premiums. The Court considered that the application of the relevant provisions of the Anti-Discrimination Act would negate the essential legislative scheme of the Life Insurance Act. That cannot be said to be the position in these current proceedings. The proposed orders merely require certain procedures to be followed before the Commonwealth may take steps to remove a sub-contractor from the performance of work because of concerns over occupational health and safety. AMP v Goulden is distinguishable. 57 In any event, as we foreshadowed, we do not consider DI(N) ADMIN 30-3 covers the field of occupational health and safety in Defence establishments. In Re Residential Tenancies Tribunal of New South Wales and Henderson and Anor; Ex parte The Defence Housing Authority (1997) 190 CLR 410 (Henderson's case). The Defence Housing Authority leased a home unit for the purpose of sub-leasing the premises to defence personnel. The owners of the unit sought to enter and inspect the unit pursuant to s 24 of the Residential Tenancies Act 1987 (NSW) and, upon being refused, sought orders from the Residential Tenancies Tribunal. The Authority sought prohibition against the Tribunal from proceeding, contending that the Residential Tenancies Act was constitutionally invalid or beyond the power of the New South Wales Parliament to the extent that it purported to confer jurisdiction on the Tribunal over the Authority and, therefore, that it was not bound by the Act and that the Tribunal had no jurisdiction to make orders.

[42]

58 The High Court (Brennan CJ, Dawson, Toohey, Gaudron, McHugh and Gummow JJ, Kirby J dissenting) held, relevantly, that the Defence Housing Authority Act 1987 (Cth), which established the Defence Housing Authority as a body corporate, did not constitute a comprehensive and exclusive code regulating the Authority's function of providing housing for the need of the Defence force; the Act assumed the operation of the common law as modified by statute. Accordingly, there was no inconsistency between the Commonwealth and State laws. It was further held by Brennan CJ, Dawson, Toohey and Gaudron JJ, that the principle in The Commonwealth v Cigamatic Pty Ltd (In liq) (1962) 108 CLR 372 did not preclude the valid operation of the Residential Tenancies Act in the circumstances. Further, that a State law may not validly restrict or modify the capacities of the Crown in the right of the Commonwealth but may validly regulate the activities in which the Crown chooses to engage in exercising those capacities. 59 On the inconsistency point Dawson, Toohey and Gaudron JJ stated at 432-433: The DHA submitted that the Residential Tenancies Act is inconsistent with the Defence Housing Authority Act in reliance upon the proposition that the Defence Housing Authority Act provides a comprehensive and exclusive code regulating the means by which the DHA is required to perform its function of providing adequate and suitable housing in order to meet the operational needs of the Defence Force and the requirements of Departments throughout Australia. Plainly that proposition cannot be supported. It may contain an accurate enough description of the function of the DHA but the assertion that the Defence Housing Authority Act constitutes a comprehensive and exclusive code of the means by which that function is to be performed is, in our view, incorrect. In that regard the Act is neither comprehensive nor exclusive, for in conferring the powers which it does upon the DHA it assumes an existing legal system within which and by means of which those powers might be exercised. Thus it is meaningless to speak of a power to purchase and sell land or to enter into contracts in the absence of any law governing dealings in real estate or any law of contracts. Similarly it is meaningless to speak of the power to rent out houses and land or to evict tenants and otherwise recover possession of land and houses in the absence of any law relating to landlord and tenant. Moreover, it is difficult to see how the DHA could endeavour to perform its function in a manner that is in accordance with sound commercial practice, as s 6(b) requires it to do, without reference to a pre-existing legal system. The Defence Housing Authority Act makes no provision for the creation and enforcement of those rights and obligations which are necessary for the performance of its function and it is obvious that it was intended to operate within a legal framework provided by the common law and State law and, for that matter, federal law should any federal law have a relevant application.

[43]

McHugh J agreed at 449 as did Gummow J at 462. Kirby J dissented on this point at 495-499. 60 In the joint judgment of Dawson, Toohey and Gaudron JJ at 433-434 their Honours explained the way in which the Defence Housing Authority Act was dependent for its practical operation upon State law by examining the terms of the lease, which provided it was to be construed according to the laws of the State of New South Wales. At 434 of the joint judgment it was held: No suggestion was made that the lease is not of the type contemplated by the Defence Housing Authority Act , notwithstanding that its terms demonstrate its reliance upon the common law as modified by statute in New South Wales for its effect. No doubt the terms of the lease are contractual, but they serve to demonstrate how the DHA could not achieve its purpose otherwise than in reliance upon that law. It follows that the Act does not exclude that law and, far from being inconsistent with it, is dependent upon its existence for its effective operation. That law includes the Residential Tenancies Act . 61 In the present proceedings there is no equivalent to the Defence Housing Authority Act. However, as it was submitted by the Defence Housing Authority in Henderson's case that the Defence Housing Authority Act "provided a comprehensive and exclusive code regulating the means by which the DHA is required to perform its function of providing adequate and suitable housing", the Commonwealth here submitted that the Defence Instruction evinced an intention to deal completely with the field of occupational health and safety at a Navy establishment. 62 By its own submission the Commonwealth accepted that it negotiated its contractual arrangements in order to facilitate its obligations under the Commonwealth OHS Act. The contract between the Commonwealth and Serco, it was submitted, was a means by which the Commonwealth carried out the scheme of ensuring occupational health and safety on military bases. Like the Defence Housing Authority Act, DI(N) ADMIN 30-3 makes no provision for the creation and enforcement of those rights and obligations that are necessary for the performance of its function, which relevantly here is the regulation of occupational health and safety on a Defence establishment. 63 In other words, whilst the Defence Instruction confers on a CO of a Defence establishment the responsibility for occupational health and safety and contemplates the engagement of contractors to work on such establishments, the Instruction makes no provision for the creation and enforcement of the relevant occupational health and safety rules at the establishment. That is achieved in this case by means of a contract with Serco that is to "be subject to and construed in accordance with the laws for the time being in force in the State of New South Wales ..." and which requires a contractor to comply with Defence Instructions. 64 Like Henderson's case, the Commonwealth law here does not exclude New South Wales law and far from being inconsistent with it, is dependent upon its existence for its effective operation.

[46]

66 There is no statutory authority required for the making of a contract by the Commonwealth: New South Wales v Bardolph (1934) 52 CLR 455; Taudevin v Egis Consulting Australia Pty Limited and the Commonwealth (No 2) (2001) 131 IR 124 at [47] and none is referred to in the contract between Serco and the Commonwealth. Further, the Commonwealth may enter into contracts affecting its future conduct and such contracts are enforceable against the Commonwealth: Taudevin at [48]. 67 Clause 1.5.1 of the subject contract provides as follows: 1.5.1 The Contract shall be subject to and construed in accordance with the laws for the time being in force in the State of New South Wales the (sic) Parties agree that the courts of that State shall have jurisdiction to entertain any action in respect of, or arising out of, the Contract. 68 The agreed statement of facts and the documents exhibited to that statement show that only a contractual power was being exercised by the Commonwealth and neither the Defence Act nor DI(N) ADMIN 30-3 had any relevant bearing on the applicant's claim for relief. On 13 February 2003 the Contract Manager invoked cl 12.6 of the contract directing Serco to terminate the services of the applicant. In the letter to Serco it was stated: To alleviate any further occurrences that could result in gross injury or even death to a contractor or Defence staff, after consultation with ALBATROSS Command, the Contract Management Office (CMO) is invoking Clause 12.6 of the Garrison Support Contract (Ref A). SSDS is to terminate the services of the Sub Contractor, East Coast Brokers and any of it's (sic) current employees as of 14 Feb 03. 69 On 5 March 2003 the Service Manager of Serco wrote to the applicant advising that its right to enter HMAS Albatross and HMAS Creswell had been revoked. In a letter of 17 March 2003 to the applicant, the CO of HMAS Albatross referred to cl 12.6 of the contract as the source of the right of the Contract Manager to order the removal of a sub-contractor. In his letter of 17 March, Captain Cullen stated: The terms and conditions of the 'Contact (sic) for Garrison Support Services for the Department of Defence' (Sydney West/South 00-01 of 27 March 2000) between the Commonwealth and Serco Sodexho Defence Services Pty Ltd, allow the Contract Manager to recommend the removal of any sub-contractor from ALBATROSS at his absolute discretion, with that decision binding until withdrawn in writing by the Contract Manager (at Clause 12.6). I endorse the Contract Manager's recommendation to disallow sub-contractors from East Coast Broker Pty Ltd to be utilised at ALBATROSS for a period of twelve months from the date of this correspondence. If your company is able to demonstrate strict compliance with the relevant Commonwealth and Defence OH&S requirements, it will be eligible to tender for contract work from 01 April 2004. 70 In our opinion, the decision to remove the applicant and its employees from the Defence establishment was a decision taken pursuant to the contract between Serco and the Commonwealth and was not made under the Defence Act or DI(N) ADMIN 30-3. It was submitted by the Commonwealth, however, that the contract between it and Serco was not in its own right a piece of delegated legislation but was a means by which the Commonwealth carries out the scheme of ensuring occupational health and safety on military bases. What we understood the Commonwealth to be putting was that pursuant to the CO's general responsibility for occupational health and safety under the Defence Instruction the decision was made to remove the applicant from the Defence establishment and that the contract was merely a conduit for a decision taken under DI(N) ADMIN 30-3. 71 Griffith University v Tang (2005) 79 ALJR 627; [2005] HCA 7 was an administrative law case and it is helpful in analysing whether the decision to remove the applicant was made under an enactment or under a contract. In Tang the High Court considered whether a decision to exclude Ms Tang from studying for a PhD at Griffith University was a decision made under an enactment, the Griffith University Act 1988 (Qld). Ms Tang's exclusion was based on the University's findings of academic misconduct. Having exhausted the University's appeal procedures, Ms Tang brought proceedings in the Queensland Supreme Court under the Judicial Review Act 1991 (Qld) alleging breaches of the requirements of natural justice, failures to comply with mandatory procedural requirements, improper exercises of power, and errors of law. The University applied for, but did not obtain, an order by the Supreme Court under s 48 of the Review Act dismissing the respondent's case. The University's appeal to the Queensland Court of Appeal was unsuccessful. The University then sought special leave to appeal to the High Court and succeeded in that application and the subsequent appeal. 72 At [23]-[25] Gleeson CJ held: 23 The question in the present case turns upon the characterisation of the decision in question, and of its legal force or effect. That question is answered in terms of the termination of the relationship between the appellant and the respondent. That termination occurred under the general law and under the terms and conditions on which the appellant was willing to enter a relationship with the respondent. The power to formulate those terms and conditions, to decide to enter the relationship, and to decide to end it, was conferred in general terms by the Griffith University Act , but the decision to end the relationship was not given legal force or effect by that Act. 24 There was reference, in the course of argument, to par (b) of the definition of "decision to which this Act applies" in s 4 of the Judicial Review Act . There was a suggestion that the respondent might seek to rely on that paragraph, although it was not argued in the Supreme Court of Queensland. However, as Senior Counsel for the appellant pointed out, there is no evidentiary basis for the argument and, in any event, it seems difficult to contemplate that the relevant decision could have been shown to be a decision of the kind referred to in par (b). 25 The appeal should be allowed. I agree with the orders proposed by Gummow, Callinan and Heydon JJ. 73 At [89] Gummow, Callinan and Heydon JJ ("the joint judgment") held that: The determination of whether a decision is "made ... under an enactment" involves two criteria: first, the decision must be expressly or impliedly required or authorised by the enactment; and, secondly, the decision must itself confer, alter or otherwise affect legal rights or obligations, and in that sense the decision must derive from the enactment. A decision will only be "made ... under an enactment" if both these criteria are met. It should be emphasised that this construction of the statutory definition does not require the relevant decision to affect or alter existing rights or obligations, and it will be sufficient that the enactment requires or authorises decisions from which new rights or obligations arise. Similarly, it is not necessary that the relevantly affected legal rights owe their existence to the enactment in question. Affection of rights or obligations derived from the general law or statute will suffice.

[48]

Kirby J dissented. 75 The majority concluded that while the University Act authorised the University to create and terminate relationships, the Act was not the immediate source of the power to make the decision. At [79]-[81] in the joint judgment it was stated (references omitted): 79 The decision so required or authorised must be "of an administrative character". This element of the definition casts some light on the force to be given by the phrase " under an enactment". What is it, in the course of administration, that flows from or arises out of the decision taken so as to give that significance which has merited the legislative conferral of a right of judicial review upon those aggrieved? 80 The answer in general terms is the affecting of legal rights and obligations. Do legal rights or duties owe in an immediate sense their existence to the decision, or depend upon the presence of the decision for their enforcement? To adapt what was said by Lehane J in Lewins, does the decision in question derive from the enactment the capacity to affect legal rights and obligations? Are legal rights and obligations affected not under the general law but by virtue of the statute? 81 If the decision derives its capacity to bind from contract or some other private law source, then the decision is not "made under" the enactment in question... 76 Maintaining the assumption that DI(N) ADMIN 30-3 is a law of the Commonwealth for the purpose of s 109 of the Constitution, we do not consider that the conferring of a general responsibility for occupational health and safety pursuant to a Defence Instruction is sufficient to support the proposition that the Defence Instruction is the statutory source empowering the Commonwealth or its agent to unilaterally alter or otherwise affect the legal rights of a contractor acquired under a contract that is subject to the general laws of the State. 77 Whilst it was argued that a decision to remove the applicant from the Defence establishment is authorised by the Defence Instruction, in that a CO in carrying out his responsibility for occupational health and safety may make such a decision, the source of the power to make the decision was the contract between the Commonwealth and Serco and not the Defence Instruction. That is, the legal rights and obligations of the parties were affected by the general law governing the contract (i.e., the law of the State of New South Wales) and not any Commonwealth law. If the decision to remove the applicant was made under the contract and not a law of the Commonwealth, there can be no inconsistency within the meaning of s 109 of the Constitution. Conclusion 78 We find that the Commonwealth has not made out its case that s 106 of the Industrial Relations Act 1996 has no operation in the manner claimed by the applicant. 79 The Commission has power to deal with the summons for relief filed by the applicant on 24 February 2004. Accordingly, the Commonwealth's notice of motion is dismissed and we so order. We also order the remittal of the proceedings to Staff J. 80 The Commonwealth shall pay the applicant's costs of the motion and the reference to the Full Bench in an amount as agreed or, failing agreement, as assessed.

East Coast Brokers Pty Limited v The Commonwealth of Australia

At a glance

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Judgment (49 paragraphs)

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Legislation Cited (14)

Cases Cited (21)

Cited By (2)