201 Section 9 was amended by the Commonwealth Conciliation and Arbitration Act 1909 (Cth) and by the Commonwealth Conciliation and Arbitration Act 1911 (Cth) in various respects, which need not be mentioned. However, important changes were made by the Commonwealth Conciliation and Arbitration Act (No. 2) 1914 (Cth) so that s 9(1) now read:
"An employer shall not dismiss an employee, or injure him in his employment, or alter his position to his prejudice, by reason of the circumstance that the employee -
(a) is an officer or member of an organization, or of an association that has applied to be registered as an organization; or
(b) is entitled to the benefit of an industrial agreement or an award; or
(c) has appeared as a witness, or has given any evidence, in a proceeding under this Act.
Penalty: Fifty pounds."
202 For present purposes, it is necessary only to note the omission of the word "merely", adopting what had occurred in New South Wales in 1912. The early cases which considered the meaning of s 9 followed the approach taken in relation to its New South Wales counterpart. The first case is Eaton v McKenzie; Cowley v Dunn (1916) 16 Tas L R 94, a decision of the Full Court of the Supreme Court of Tasmania. The defendant had dismissed his employees, who were members of the Australian Builders' Laborers Federation, after their award was varied to give them an increase in wages. It was alleged that the dismissal was by reason of the fact that the employees were entitled to the benefit of the award. Nicholls CJ said (at 95) that it was "quite plain that the appellant dismissed the respondent for the reason that the respondent was one of those entitled to the benefit of an award which would, next day, cause his wages to be increased." Nicholls CJ noted (at 95-96) that the appellant gave no evidence of inability to pay or any other cause for dismissal besides the award. Crisp J said (at 97): "Many motives may influence employers in dismissing their employees; they may not be able to pay the wages, they may decline to pay them in any event, they may dismiss for purely political reasons, but if … the real basic reason for dismissal was the award," then the statute has been breached. Crisp J recognised that if an employer finds that he cannot pay the wages fixed by the award there is nothing to compel him to do so or to punish him if he decides to go out of business. In that circumstance the employer has not dismissed his employee because of the award but because he could not pay. Ewing J, the remaining member of the court, said (at 98) that he was satisfied "that the real and only reason for the dismissal of the complainants was that they were entitled to the benefit of the award."
203 To the same effect is the decision of the Commonwealth Industrial Court in Klanjscek v Silver (1961) 4 FLR 182. The defendant manufactured shirts. Because of a decline in the retail price of shirts, the defendant took steps to reduce his costs of production. He requested his piece-workers to accept a reduction in their rates. At the time, they were being paid in excess of the award rates. The piece-workers refused to accept any reduction, so they were dismissed. The defendant was charged with unlawfully dismissing his employees by reason that they were entitled to the benefit of an award, contrary to s 5 of the Conciliation and Arbitration Act (s 9 had by then been renumbered as s 5 by the Conciliation and Arbitration Act 1947 (Cth)). The Commonwealth Industrial Court, constituted by Spicer CJ and Joske and Eggleston JJ, observed that, under the corresponding section in New South Wales, it had been held that the section was not intended to take away an employer's right to reorganise his business or reduce his staff when an award increases his expenses, referring to Grayndler v Broun and Connington v Kogarah. In relation to s 5, the court said (at 187) that the provision "should not be considered as intending to penalize an employer who closes down his operations because his operations have become unprofitable, even though the minimum rate prescribed by the award is one of the facts in this result. A fortiori, where the employer is willing to continue to operate in accordance with the award, provided only that his employees will consent to reduce the existing piece-work rates to a lower rate which is still above the minimum, the employer commits no offence. In such a case, he is not actuated by the reason that the employees are entitled to the benefit of the award, but by the reason that his operations have become unprofitable."
204 Thus, there has been an unbroken line of State and Federal authority in favour of the proposition that, for the purpose of deciding whether there has been an unlawful dismissal for the reason that an employee is entitled to the benefit of an award or certified agreement, it is necessary to draw a distinction between the "reason" or motive behind the dismissal and what produced that motive. In this connection, reference should be made to an obiter observation by Evatt J in Grayndler v Cunich (1939) 62 CLR 573. Cunich had been charged with offences against s 9. A magistrate dismissed the informations and the informant sought to bring the matter before the High Court by notice of appeal. The appeal was struck out for being incompetent. However, Evatt J held the appeal was properly instituted and dealt with its merits. In the course of his reasons, he said (at 596) that Grayndler v Broun was wrongly decided, in so far as it laid down that an employer is entitled to dismiss an employee entitled to an award merely because his reason for doing so is that he does not wish to be saddled with the heavier burden of the award rates. Evatt J said that "[i]f this general principle were accepted, a vital provision would be completely excised from the statutory scheme".
205 I do not take Evatt J to be criticising the result in Grayndler v Broun. In that case the employees were not dismissed merely because they were entitled to an increase in wages. They were dismissed because the defendant could not afford to pay the award wages. In that circumstance it was found that the employer was not obliged to keep his employees. That is, because the burden of award rates means that it is no longer profitable to operate the business, it is not unlawful to dismiss the employees. The criticism was directed to the comment by Street J that an employee could be dismissed where award rates would have "saddled [the employer] with a heavy additional liability." It is not necessary to decide presently what Street J meant by this observation and whether it goes too far.
206 The trial judge acknowledged that if the appellant's decision to accept the Silver Circle tender were based on price alone, there would be no contravention of s 298K. He said: "Price of itself is not sufficient to constitute a prohibited reason". But the trial judge went on to explain that "in the circumstances of the case, the only significant factor going to establish that price differential was the HACC workers' entitlements under the award and agreement [and] it was likely that it was well known to all councillors that the discrepancy between the Council's and Silver Circle's industrial instruments accounted for the great part of the price disparity." For this and other reasons, which I will mention in a moment, the trial judge found that an "actual, operative and significant reason" for the appellant's action to accept the Silver Circle tender and dismiss its employees was that the employees were entitled to the benefits of the award and the agreement, although later he did say that this was "an operative, if subsidiary, reason".
207 Those findings led the trial judge to conclude that there had been a contravention of s 298K(1)(a) (dismissal for a prohibited reason) and s 298K(1)(c) (injury for a prohibited reason). In relation to the contravention of s 298K(1)(a), the trial judge said that the appellant could not be protected "against engaging in prohibited conduct merely because it declared 'redundancy' to be the reason for dismissal". He said that "the real reason for dismissal was the council's decision (made in part for a proscribed reason) to outsource the HACC services, not because of an absence of work."
208 On appeal, the appellant did not challenge this approach. First, in relation to the construction of s 298K(1)(a), the appellant did not argue that a distinction should be drawn between, on the one hand, the "real reason" for the dismissals (lack of work) and, on the other hand, the "real reason" for acceptance of the Silver Circle tender, one consequence of which was that dismissals became likely, if not inevitable. On one view, and it is a view that I prefer, s 298K(1)(a) cannot be concerned with conduct that falls into the latter category, because it does not involve a dismissal. To my mind, the true question to be determined was whether acceptance of the Silver Circle tender fell within s 298K(1)(c). This said, I do agree with the trial judge that acceptance of the Silver Circle tender altered the position of employees to their prejudice within the meaning of s 298K(1)(c). The trial judge referred to the key case Patrick Stevedores Operations No.2 Proprietary Limited v Maritime Union of Australia (1998) 195 CLR 1 where, in their joint judgment (at 18), Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ said of s 298K(1):
"Paragraph (a) covers termination of employment; par (b) covers injury of any compensable kind; par (c) is a broad additional category which covers not only legal injury but any adverse affection of, or deterioration in, the advantages enjoyed by the employee before the conduct in question."
That reasoning has direct application.
209 Second, the appellant did not argue that the trial judge was in error in the manner in which he approached the task of making findings of fact. This is a matter to which I must return. At this point, it is sufficient to note that the trial judge may not have drawn a sufficient distinction between the immediate reason (motive or purpose) for the dismissals or the acceptance of the tender, and the proximate reason (cause) which explained why that action was undertaken, as is required by cases such as Connington v Kogarah, Grayndler v Broun and Klanjscek v Silver. The mere fact that the appellant was aware that the Silver Circle tender was lower, because Silver Circle had the benefit of lower award rates, may say nothing about the reason for acceptance of the tender or for the ultimate dismissal of the staff.
210 Let me put the matter more directly in the context of municipal councils. Municipal councils provide many services to their ratepayers, from garbage collection to baby health care centres to meals-on-wheels for elderly citizens. Often they do not have sufficient funds to provide the services that the community requires. Every day decisions are taken on the allocation of scarce resources. The principal object of the new and mandatory competitive process provisions is to create efficiencies that will enable councils to provide more and better services. If a council, in the course of competitive tendering, accepts a tender which is lower than others because the tenderer has less onerous obligations under an industrial instrument, the mere acceptance of the tender cannot result in a contravention of s 298K. A construction of the section that produces that result would be unacceptable. That is not to deny, however, that there could be a case where the "real" reason for the acceptance of a tender is a prohibited reason. But, speaking generally, where a council is performing its statutory obligation to enter into contracts for the provision of goods and services in respect of 50 per cent of its total expenditure, and the council carries out that obligation strictly in accordance with the relevant statutory provisions (express and implied), it will not contravene s 298K.
211 On the appeal, and it seems also at trial, the appellant chose as its principal battle, a contest about the construction of the relevant statutory provisions. It argued that s 298L(1)(h) had a narrow scope. The argument was that the section is concerned only with dismissal based on the fact that an employee has some entitlement under an industrial instrument, regardless of the nature or level of that entitlement. The appellant assumes that if that is the proper construction of the provision, it will succeed on the appeal, because the trial judge said as much.
212 I have a clear view about this aspect of the operation of s 298L(1)(h). My view does not depend upon any purposive or other modern principle of statutory construction. It does not depend upon the legislative history of the provision. It depends simply upon the meaning of the words used in the provision, taking into account the context in which those words are used. Once this would have been known as the "literal rule" (J Willis, "Statute Interpretation in a Nutshell" (1938) 16 Canadian Bar Review 1), or the "plain meaning" rule (Rodriguez v United States, 480 US 522 at 525-6 (1987)). In my opinion, the language of the provision covers both a situation where the relevant conduct is motivated by the mere fact that an employee is entitled to an industrial instrument as well as a situation where that conduct is motivated by the level, degree or extent of that entitlement. Take the following two cases by way of example. The first is where an employee becomes entitled to the benefits of an award for the first time. He is then dismissed for that reason. The second example is where an employer is bound by an award which is varied to increase the benefits payable to his employee. The employer dismisses the employee because his award rates have increased. In each case the question to be asked is: "Was the employee dismissed because the employee was entitled to the benefit of an award?". In each case, the answer must be in the affirmative. In the first example, the answer is in the affirmative because it is the existence of the award that has brought about the dismissal and a person to whom the award applies "is entitled to the benefit" of it. In the second case, the answer is in the affirmative because the additional benefits have come about because the employee "is entitled to the benefit" of an award. I see no reason why it is necessary to draw a distinction between the two situations and hold that one is within, and the other outside, the section. I do not believe that this view is inconsistent with what was said by Kenny J in Australian Workers' Union v BHP Iron-Ore Pty Ltd [2001] FCA 3 at [66], where she dealt with a different subsection. It is consistent with the decisions in Connington v Council of Municipality of Kogarah, Grayndler v Broun, and Klanjscek v Silver. In any case, to hold otherwise would not be a sensible result and, as we know, statutory construction (the golden rule) is aimed at attributing to parliament a rational intention, whenever possible.
213 The trial judge found that an operative reason for the appellant's acceptance of the Silver Circle bid was that HACC staff were entitled to the benefits of an award and a certified agreement by a process of inference from other facts. The facts upon which the inference was based were stated by the trial judge to be the following: (1) the appellant was concerned about the comparative expense of its employees performing the HACC work (the comparison is between the rates of pay under the in-house tender and the rates under the Silver Circle tender); (2) the appellant knew that the entitlement of those employees was the main reason for that comparative expense; (3) the appellant believed that the main reason that the expense might be reduced was that Silver Circle's employees would be unable to access entitlements of a similar value; (4) the appellant knew that it was probable that at least some of Silver Circle's employees would come from its own ranks and perform the same work; (5) the appellant had attempted to have its employees voluntarily reduce their entitlements; (6) the decision to accept the tender was taken only after reference to the employees' decision to accept that they were, "in effect, labourers unworthy of their present hire".
214 The finding was the subject of criticism on the appeal. That criticism was largely based upon the alleged failure by the trial judge to take into account, or have proper regard to, a number of factors, including (a) the statutory obligation imposed upon the appellant to engage in compulsory competitive tendering; (b) the establishment of a panel to assess the tenders; and (c) the appellant's decision to adopt the recommendation of the panel to accept the Silver Circle tender. I am not at all convinced that all these criticisms are warranted. The operative decision was made by the councillors of the appellant. Before the decision was taken, the issue was the subject of vigorous debate. There was discussion about the panel's recommendation, the interests of the recipients of the appellant's health care services and the interests of the appellant's ratepayers generally. The trial judge had regard to those matters, as is evident from his reasons.
215 The real criticism, if any can be levied at the process of finding the inferred fact, is that the inference was not open. Whether an inference can be drawn from facts found is a question of law: Hope v Bathurst City Council (1980) 144 CLR 1, 8-9. If the inference was not open then there is an appellable error of law: Australian Broadcasting Tribunal v Bond (1990) 170 CLR 356. If the inference is one about which minds may differ, there will be no error: Tracy Village Sports & Social Club v Walker (1992) 111 FLR 32 at 37-38.
216 On the facts as found, the inference was not open. In the first place, facts (1) to (5) do not support the inference. They do support the finding, which was made, that the appellant's decision to accept the Silver Circle tender was based on price and that the appellant knew the reasons for the difference in price between the in-house tender and the Silver Circle tender, a proposition which is hardly surprising. But neither that fact, nor facts (1) to (5) taken together, justify the conclusion that what motivated the appellant's action was the very fact that its employees had superior entitlements under their award and agreement. It seems to me that the trial judge failed to distinguish between the immediate reason for the relevant act, be it the dismissals or the acceptance of the Silver Circle award, and the proximate reason for that act. I can make the point by reference to two sentences in the reasons. The trial judge said: "The major and decisive factor in the Silver Circle bid's acceptance was its price. The major and decisive factor in the difference in price was that, as everyone conceives it, Silver Circle would remunerate the workers doing HACC work under the Silver Circle award and not the Council's industrial instruments." The finding that price was a "major and decisive factor" is plainly correct. To describe the other "major and decisive factor" (that the price difference was the result of different award rates) as a motive for the decision is where the error is to be found. This "major and decisive factor" is not what motivated the decision but merely explains the difference in price. The trial judge did not give proper regard to the appellant's statutory obligation when weighing these facts. Then there is fact (6), namely that the decision to accept the Silver Circle tender was taken after the employees had refused to reduce their award rates to enable the in-house tender to be more competitive. That the appellant's decision was taken after this had occurred does not, either alone in combination with facts (1) to (5), support the inference. Indeed, on one view of the matter, asking the employees to reduce their entitlements, to make their in-house bid more competitive, tends to favour the appellant's case, rather than the contrary.
217 This is not, however, sufficient to dispose of the appeal. The trial judge based his decision on an additional ground. He said that "at the very least … it can safely without injustice be said that the [appellant] ha[d] failed to discharge its s 298V onus of proof". Section 298V relevantly provides that "if … it is alleged that [conduct] was … carried out for a particular reason or with a particular intent … it is presumed … that the conduct was, … carried out for that reason or with that intent unless [it is] prove[d] otherwise." This provision creates a presumption which requires a particular conclusion to be drawn until the contrary is proved. That is, s 298V assigns to the defendant the legal burden of proof in respect of the issue to which the provision relates. Thus, at trial, the appellant had the obligation to prove that the dismissal of its employees or the alteration of their position to their prejudice was not for a "prohibited reason". If it failed to convince the trial judge to the appropriate standard of proof, it would lose that issue.
218 But there is a limit to the operation of s 298V. It will cease to have application in a case where there is sufficient evidence to enable the trial judge to make a positive finding whether conduct has been carried out for the alleged reason or with the alleged intent. Put another way, the presumption imposed by s 298V must be drawn when there is not sufficient evidence before the court to permit the judge to determine what are the true facts, that is, true in the sense of being more probable than not. When the judge has that evidence, he cannot resort to s 298V as an alternative to finding facts.
219 Here the trial judge was satisfied that there was sufficient evidence for him to decide whether or not the relevant conduct had been engaged in for a prohibited reason. Not only was the trial judge satisfied that he had the evidence, he made a finding in that regard. It was not therefore appropriate for the trial judge to place any reliance on s 298V, even as a "fall-back".
220 However, because, in my opinion, the trial judge was not entitled to find by inference from the proven facts that the appellant had dismissed its staff or accepted the Silver Circle bid for a prohibited reason, it still leaves open the question whether there is other evidence which permits that finding to be made, or whether such a finding must be made because of s 298V.
221 No argument was addressed to this court on any of these matters. To answer the questions would require a close examination of the whole of the evidence, including a detailed assessment of the evidence given by Councillor Melham, which the trial judge described, without explanation, as "not helpful" to the appellant's case. Although I incline to the view that the evidence was sufficient to discharge the onus imposed by s 298V, it is neither appropriate not possible for this court to decide the matter for itself. Not only would it be necessary to sift through the whole of the evidence and form views without the aid of any submissions, it might also be necessary to make judgments about the evidence of Councillor Melham without the advantage of having seen him give it. Regrettably the matter should be remitted to the trial judge for his reconsideration. This course is necessary because of the manner in which the appeal has been argued.
222 In view of this conclusion, it is not necessary to consider the other ground of appeal. But because it was the subject of considerable argument, I should express my views. The appellant says that s 298K and s 298L are invalid to the extent that they operate to limit the ability of the State of Victoria (of which, it is said, the appellant is an agent) to determine the number and identity of those whom it wishes to dismiss on the grounds of redundancy.
223 In this connection two questions arise. The first is whether the appellant is an "emanation" or "agency" of the State and, second, whether s 298K and s 298L "unduly interfere" with the performance by the appellant of its functions.
224 The answer to the first question was given as long ago as 1904 by the High Court in the first volume of its authorised reports. In Municipal Council of Sydney v Commonwealth (1904) 1 CLR 208 the question was whether a municipal rate could be levied on Commonwealth property. Section 114 of the Constitution provides that "a State shall not without the consent of the Parliament of the Commonwealth … impose any tax on property of any kind belonging to the Commonwealth …". The court held that s 114 prevented the municipality from levying rates on Commonwealth land. In the course of his judgment, O'Connor J referred with approval to the decision of the United States Supreme Court in Meriwether v Garrett 102 US 472, 511 (1880):
"Municipal corporations are mere instrumentalities of the State for the more convenient administration of local government. Their powers are such as the legislature may confer, and these may be enlarged, abridged, or entirely withdrawn at its pleasure. This is common learning found in all adjudications on the subject of municipal bodies, and repeated by text-writers."
225 That a municipal corporation in Victoria is a "mere instrumentality of the State" is evident from the statute pursuant to which it is established. First, it carries out functions of government. According to s 6 of the Local Government Act a principal object of a council is "to provide for the peace, order and good government of its municipal district." It carries out that function by making "local laws" under s 111. A contravention of a local law may be made an offence punishable by a fine: s 115. To fund its operations a council may raise taxes in the form of general rates and various other charges. It is given power to sell land to recover unpaid rates and charges. Second, notwithstanding these wide powers of government, a council is under the direct control of the executive. The Governor in council can revoke in whole or in part any local law: s 123. The council must report to the executive, by preparing an annual report which must be submitted to the responsible Minister: s 126. If the Minister considers it necessary, he or she may direct the municipality to prepare further financial statements and provide other information: s 127A. By s 185B the Minister may limit the income a council can raise from rates and charges. Certain investment powers can be exercised only with the approval of the Minister and the Treasurer: s 193. And so on.
226 Whether the relevant test is the so-called "functions" test (eg Mersey Docks v Cameron (1865) 11 HLC 443, 465; 11 ER 1405, 1413) or the modern "control" test (eg Superannuation Fund Investment Trust v Commissioner of Stamps (SA) (1979) 145 CLR 330; Townsville Hospital Board v Townsville City Council (1982) 149 CLR 282; Registrar of the Accident Compensation Tribunal v Federal Commissioner of Taxation (1992) 178 CLR 145) the appellant meets the requirements of an agent of State.
227 The question whether ss 298K and 298L "unduly interfere" with the functions of the appellant is a matter upon which views may differ. In Konrad v Victoria (1999) 91 FCR 95 I expressed the opinion that the provisions of the Workplace Relations Act which impose an obligation upon the State of Victoria to reinstate a police officer who had been unfairly dismissed were beyond power. However, this was a minority view. Ryan J said that it was not a necessary incident of the existence or functioning of a State to reserve to it the unfettered power to terminate the employment of a Crown servant on a whim or out of spite or otherwise without a valid reason: Konrad at 103. North J said (at 107): "To require a State to reinstate an employee who has been unjustifiably dismissed, in circumstances where it is not impracticable to reinstate the person and where it is otherwise appropriate to reinstate the person, is not an undue interference with the capacity of the State to function as a government". It is clear the views of the majority, although not directly applicable, do nevertheless require me to conclude that provisions now under consideration are not invalid as being beyond the power of the Commonwealth parliament.
228 Finally, as to the appellant's argument about the relief granted by the trial judge, I agree with Wilcox J.
229 For the foregoing reasons, I would allow the appeal, set aside the orders made by the trial judge, and remit the matter to the trial judge for further hearing.
I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.