IW v City of Perth [1997] FCA 1288 | Case summary

Federal Court of Australia|1997-11-25|Before: Merkel J

REASONS FOR JUDGMENT INTRODUCTION The applicant ("the AEU") lodged a complaint with the first respondent ("HREOC") alleging that the second respondent ("the State of Tasmania") has discriminated against certain of its female employees in the provision of superannuation services in breach of s 22 of the Sex Discrimination Act 1984 (Cth) ("the Act"). The complaint, which was lodged by the AEU on behalf of certain of its members pursuant to s 50(1)(d) of the Act, was dismissed by the HREOC Inquiry Commissioner on the ground that if there had been any discrimination by the State of Tasmania it had not been under s 22 of the Act as alleged but was under s 14 of the Act which is not binding on and does not apply to a State or an instrumentality of a State by reason of ss 12(1) and 13(1) of the Act. The AEU has applied to the Court for an order to review the decision of the Inquiry Commissioner under the Administrative Decisions (Judicial Review) Act 1977 (Cth) on the ground of error of law. It contends that the Inquiry Commissioner erred in law in concluding that the provisions of s 22 of the Act do not apply to work-related superannuation schemes and in particular, to the superannuation scheme the subject of AEU's complaint.

BACKGROUND The relevant facts, as found by the Inquiry Commissioner, do not appear to be in dispute. They can be summarised as follows: 1. Prior to 1969 a large number of female teachers employed by the State of Tasmania were required to resign from the State teaching service as leave specifically for maternity was not granted to teachers prior to 1969. 2. At the time of their resignation from the teaching service, such teachers were repaid their contributions to the then existing superannuation scheme (less an administration fee). 3. After their resignation in order to have children, a number of the former female teachers, who had resigned, re-entered the workforce by going back into the teaching profession. 4. Subsequent to 1969 maternity leave became available to teachers so that it was possible for female teachers to leave the teaching service to have children without affecting the continuity of their teaching service. 5. Women teachers, who had resigned to have children and had returned to the State teaching service, were able to purchase, for superannuation purposes, the period of service prior to their resignation under reg 24 of the Retirement Benefits Regulations 1994 (Tas) ("the 1994 Regulations"). If they did so their superannuation entitlement was calculated back to the commencement of their employment in spite of their resignation. 6. Teachers, both male and female, who had obtained leave (for example, to study overseas) or who wished to have their periods of studentship or periods as a temporary employee included for superannuation purposes, were eligible to purchase years of service for superannuation purposes pursuant to reg 14 of the Retirement Benefits (Transitional) Regulations 1994 (Tas) ("the 1994 Transitional Regulations"). If they did so their superannuation entitlement was calculated back to the commencement of their employment in spite of any non-contributing period of service. 7. The cost to female teachers of purchasing years of service under reg 24 of the 1994 Regulations was based on "the full actuarial cost", and is considerably higher than if they had been eligible to purchase "years of service" under reg 14 of the 1994 Transitional Regulations at employee contribution cost. The reason for the difference in cost is that reg 14 only required payment based on employee contributions whilst reg 24 required payment by the employee based on employee and employer contributions. 8. The State of Tasmania has, at all material times, provided for its employees a scheme whereby they become eligible for defined benefits by way of lump sum payments or pensions upon retirement. The operation of this scheme has been governed successively by the Superannuation Act 1938, the Retirement Benefits Act 1970 and the Retirement Benefits Act 1993 (Tas)("the 1993 Act") and, principally, by the 1994 Regulations made under the 1993 Act. The parties were in agreement that the determination of the issues in the present case is primarily governed by the 1993 Act, the 1994 Regulations and the 1994 Transitional Regulations. AEU's submission to the Inquiry Commissioner was that the State of Tasmania was, at the date of the complaint, unlawfully discriminating against female teachers in relation to the provision of superannuation services on the basis of their sex in contravention of s 22 of the Act. The alleged discrimination was based on the State of Tasmania's refusal to allow female teachers, whose service prior to 1969 had become non-contributory because of their resignation in order to bear children, to purchase recognition of that service for superannuation purposes at the favourable rate prescribed by reg 14 of the 1994 Transitional Regulations. The State contended that the Crown immunity granted in respect of discriminatory conduct in relation to employment which would otherwise be unlawful under s 14 of the Act, would largely be rendered nugatory if s 22 were to be construed as covering the same field as s 14. Consequently, it was said, s 22 should be construed as not extending to acts of discrimination, such as the provision of superannuation benefits to employees, which fall within the scope of s 14. The Inquiry Commissioner accepted the submissions of the State and concluded that s 14 of the Act: · covered the field with respect to discrimination in the matter of the provision of superannuation benefits by an employer to its employees, which meant that s 22 had no application to such discrimination; · since, by virtue of s 12(1), s 14 was not binding on the Crown in right of a State, it gave the class represented by the AEU no redress against the State of Tasmania.

THE ACT Section 5 provides: "(1) For the purposes of this Act, a person (in this subsection referred to as the "discriminator") discriminates against another person (in this subsection referred to as the "aggrieved person") on the ground of the sex of the aggrieved person if, by reason of: (a) the sex of the aggrieved person; (b) a characteristic that appertains generally to persons of the sex of the aggrieved person; or (c) a characteristic that is generally imputed to persons of the sex of the aggrieved person; the discriminator treats the aggrieved person less favourably than, in circumstances that are the same or are not materially different, the discriminator treats or would treat a person of the opposite sex. (2) For the purposes of this Act, a person (the "discriminator") discriminates against another person (the "aggrieved person") on the ground of the sex of the aggrieved person if the discriminator imposes, or proposes to impose, a condition, requirement or practice that has, or is likely to have, the effect of disadvantaging persons of the same sex as the aggrieved person. (3) ........." Sections 12(1) and 13(1) provide: "12(1)This Act binds the Crown in right of the Commonwealth and of Norfolk Island but, except as otherwise expressly provided by this Act, does not bind the Crown in right of a State. ................. 13(1) Section 14 does not apply in relation to employment by an instrumentality of a State." Section 14 provides: "Discrimination in employment or in superannuation 14.(1) It is unlawful for an employer to discriminate against a person on the ground of the person's sex, marital status, pregnancy or potential pregnancy: (a) in the arrangements made for the purpose of determining who should be offered employment; (b) in determining who should be offered employment; or (c) in the terms or conditions on which employment is offered. (2) It is unlawful for an employer to discriminate against an employee on the ground of the employee's sex, marital status, pregnancy or potential pregnancy: (a) in the terms or conditions of employment that the employer affords the employee; (b) by denying the employee access, or limiting the employee's access, to opportunities for promotion, transfer or training, or to any other benefits associated with employment; (c) by dismissing the employee; or (d) by subjecting the employee to any other detriment. (3) Nothing in paragraph (1) (a) or (b) renders it unlawful for a person to discriminate against another person, on the ground of the other person's sex, in connection with employment to perform domestic duties on the premises on which the first-mentioned person resides. (3A) It is unlawful for an employer to discriminate against an employee on the ground of the employee's family responsibilities by dismissing the employee. (4) Where a person exercises a discretion in relation to the payment of a superannuation benefit to or in respect of a member of a superannuation fund, it is unlawful for the person to discriminate, in the exercise of the discretion, against the member or another person on the ground, in either case, of the sex or marital status of the member or that other person. (5) Subsection (4) does not apply if section 41B applies to that member in respect of that fund. (6) In this section: "member", in relation to a superannuation fund, includes a person who has been a member of the fund at any time." Section 14 does not bind or apply to the State of Tasmania or any of its instrumentalities. It seems to be fairly clear, as was acknowledged by counsel for the State of Tasmania, that the immunity granted under ss 12(1) and 13(1), but not many other sections of the Act, is based on the Commonwealth Parliament's view of the implied limitation on the exercise of Commonwealth legislative power which protects the States from an exercise of power that would threaten their existence or capacity to govern or would impose a particular disability or burden upon an operation or activity of a State or the execution of its constitutional powers. The limitation operates in the field of government functions carried out in the public interest, including education: see Melbourne Corporation v The Commonwealth (1947) 74 CLR 31; Re Lee; Ex parte Harper (1986) 160 CLR 430 and Re Australian Education Union and Ors; Ex parte the State of Victoria (1995) 184 CLR 188, 222-235. In particular, Mason CJ, Brennan, Deane Toohey, Gaudron and McHugh JJ in the Australian Education Union case said in their joint judgment at 232: "It seems to us that critical to that capacity of a State is the government's right to determine the number and identity of the persons whom it wishes to employ, the term of appointment of such persons and, as well, the number and identity of the persons whom it wishes to dismiss with or without notice from its employment on redundancy grounds. An impairment of a State's rights in these respects would, in our view, constitute an infringement of the implied limitation." In the light of the Australian Education Union case the immunity granted by ss 12(1) and 13(1) in relation to discrimination in employment under s 14 is wider than that which would now be regarded as required by the implied limitation. It is to be noted that s 14 only deals expressly with superannuation in the limited manner set out in sub-sections (4) (5) and (6). Section 41B excludes the operation of Division 1 (which includes s 14) and Division 2 (which includes s 22) in respect of certain conditions in a superannuation fund in existence at the commencement of the section. Finally, s 22 provides: "Goods, Services and Facilities (1) It is unlawful for a person who, whether for payment or not, provides goods or services, or makes facilities available, to discriminate against another person on the ground of the other person's sex, marital status, pregnancy or potential pregnancy: (a) by refusing to provide the other person with those goods or services or to make those facilities available to the other person; (b) in the terms or conditions on which the first-mentioned person provides the other person with those goods or services or makes those facilities available to the other person; or (c) in the manner in which the first-mentioned person provides the other person with those goods or services or makes those facilities available to the other person. (2) This section binds the Crown in right of a State." "Services" is defined in s 4 as including: "(a) services relating to banking, insurance and the provision of grants, loans, credit or finance; (b) services relating to entertainment, recreation or refreshment; (c) services relating to transport or travel; (d) services of the kind provided by the members of any profession or trade; and (e) services of the kind provided by a government, a government authority or a local government body." The definition, which is reproduced in s 4 of the Equal Opportunity Act 1984 (WA), was recently considered by the High Court in IW v City of Perth (1997) 146 ALR 696 in relation to s 66K of that Act which prohibits discrimination in the provision of services on the grounds of a person's impairment. Brennan CJ and McHugh J said at 701: "The term 'services' has a wide meaning. The Macquarie Dictionary relevantly defines it to include 'an act of helpful activity'." And at 702: "One of the objects of the Act is: to eliminate, so far as is possible, discrimination against persons on the ground of sex, marital status or pregnancy, race, religious or political conviction or impairment in the areas of work, accommodation, education, the provision of goods, facilities and services and the activities of clubs. Consequently, the provisions of the Act should as far as possible be given a construction that would eliminate discrimination on the ground of impairment. .... ... beneficial and remedial legislation, like the Act, is to be given a liberal construction. It is to be given 'a fair, large and liberal' interpretation rather than one which is 'literal or technical'. Nevertheless, the task remains one of statutory construction. Although a provision of the Act must be given a liberal and beneficial construction, a court or tribunal is not at liberty to give it a construction that is unreasonable or unnatural. But subject to that proviso, if the term 'services', read in the context of the Act and its object, is capable of applying to an activity, a court or tribunal, exercising jurisdiction under the Act, should hold that that activity is a 'service' for the purpose of the Act." (footnotes omitted) Dawson and Gaudron JJ said at 710-711: "In construing legislation designed to protect basic human rights and dignity, the courts 'have a special responsibility to take account of and give effect to [its] purpose'. For this reason, the provisions of the Act concerned with discrimination in the provision of goods or services, including s 66K(1), should be construed as widely as their terms permit. In particular, 'services', a word of complete generality, should not be given a narrow construction unless that is clearly required by definition or by context. Although s 4(1) of the Act purports to define 'services', it does so by use of the word apparently defined. And it does so by indicating what is included in the definition, not what is excluded. As the matters included in the definition are all matters which fall within the ordinary notion of 'services', the definition is to be taken as signifying everything which falls within that notion. And as neither the terms of s 66K(1) nor its context provides any contrary indication, "services" should be read in that subsection as having its ordinary and broad meaning." (footnote omitted) Kirby J said at 750: "The Act is designed to have a wide application. Repeatedly it has been emphasised that, to permit the achievement of its objectives, the Act should be given a broad and purposive construction. A narrow construction of the word 'services' would frustrate the intended operation of the Act which is not penal but educative, compensatory and ameliorative in character." (footnote omitted) Toohey J at 714-5 and Gummow J at 725-6 also accepted the width of the meaning to be attributed to "services".

THE TASMANIAN STATE SUPERANNUATION SCHEME The scheme the subject of the complaint is contained in the 1993 Act, the 1994 Regulations and the 1994 Transitional Regulations. Section 5 of the 1993 Act states: "The objects of this Act are to provide a superannuation scheme for persons employed by the State or State authorities and for the spouses and beneficiaries of those persons in certain cases and the scheme is to be known as the Retirement Benefits Fund Scheme." The 1993 Act is detailed and complex. In substance, the Act: · ensures the continued existence, but under the Act, of the Board which is to administer and manage the scheme in accordance with the 1993 Act and the 1994 Regulations for present and future members of the scheme and their beneficiaries (ss 7, 8 and 10); · ensures the continued existence, but under the Act, of the fund into which all contributions etc, payable under the scheme are to be paid (s 11); · ensures the continued existence, but under the Act, of the Investment Trust which is to invest, inter alia, the fund (ss 18, 20 and 26); and · provides for the Governor to make regulations for the purposes of the Act (s 29). The 1994 Regulations provide the framework for the administration of the scheme and for the benefits which become payable to scheme members, their spouses or their beneficiaries. These regulations contain specific, detailed and complex requirements for the administration of the scheme (Pt 2), the operation and the investment of the fund (Pt 3), membership, contributions and benefits of the contributory and non-contributory schemes, including the provision of investment accounts for contributions (Pts 4, 5 and 6), pensions (Pt 7) financial aspects (Pt 8), discretionary powers of the Board and provision for the review of its decisions (Pts 9 and 10). It is unnecessary to detail the provisions any further. It is sufficient to state that in substance the 1993 Act and the 1994 Regulations provide for the Board and the Trust to carry out the functions and activities set out in the Act and the Regulations for the benefit of contributing and non-contributing members, their spouses and their beneficiaries. These services, which involve administering the scheme, include, inter alia, collection of contributions, investment of funds, administering the fund in the manner required by the Regulations and ascertainment and payment of the benefits payable under the scheme to members, their spouses and beneficiaries with provision for review of the Board's discretionary decisions. The 1994 Transitional Regulations contain certain transitional provisions which were required, inter alia, as a result of the repeal of earlier statutory provisions relating to the fund and members' entitlements.

IS THE PROVISION OF SUPERANNUATION THE PROVISION OF A SERVICE? The Inquiry Commissioner concluded that although the term "service" in the ordinary meaning of the word is broad enough to include superannuation services he did not accept that the term "services" in s 22 related to work-related superannuation schemes. I pointed out in the course of submissions that general references to "superannuation" and "superannuation benefits" tended to conceal, rather than reveal, the important distinction between superannuation "benefits" provided by employers to employees and superannuation "benefits" provided by the trustee of a superannuation fund to members of the fund. In Re The Manufacturing Grocers Employees Federation of Australia; Ex parte The Australian Chamber of Manufactures (1986) 160 CLR 341 at 351, the High Court, in discussing claims by employees for an award under which contributions are to be made by their employers to superannuation schemes, said: "To the extent to which [the claims] relate to superannuation benefits, they are no more than claims for payments to be made by employers by way of contributions to superannuation funds answering a particular description. The right to the payments in each instance is to arise out of the employment of the employee by the employer; it is to arise during the currency of an award; and it is to arise during the currency of the mutual relations of employer and employee. The right to the superannuation benefits themselves is to arise, not under the award, but under the trust deed by which the particular superannuation fund is constituted and for the continuance of which there is no dependence upon any award." The distinction drawn by the High Court is of importance. The provision of employment by the State or any other employer to an employee upon terms and conditions which include contributions by the employer to a superannuation fund for the benefit of an employee might, in a general sense, be said to be the provision of "superannuation" but in reality the contributions form part of the remuneration paid to the employee as a reward for service. Either way payment by an employer of such contributions is not the provision of "services" for the purposes of the Act. However, the activities of the trustee of a superannuation fund in investing and administering the fund under the constituent trust deed for the benefit of members of the fund and the ultimate provision by the trustee of the benefits to which the members are entitled stand in a very different position. These activities clearly involve the provision of "services". In my view the failure of the Inquiry Commissioner to draw the important distinction between the provision of "superannuation" by an employer and the provision of "superannuation" under a scheme by the fund trustee played a significant role in his decision and caused him to fall into error. Counsel for the AEU relied on the decisions of HREOC Inquiry Commissioners in Wylie and Ors v W A Government Employees Superannuation Board [1997] EOC 92-573 and Southwell v Victorian Superannuation Board (H96/140, 31 July 1997) in which the Commissioners concluded that superannuation involves the provision of services for the purpose of s 22. He also relied upon the consideration of the same issue by Thorp J in Coburn v Human Rights Commission [1994] 3 NZLR 323 at 333-336 in the context of the Human Rights Act 1993 (NZ). At 335 Thorp J said: "Considering next the contention that the trustees are not, in terms of s 44, supplying 'goods, facilities, or services', I should have been prepared to hold that the benefits provided by the trustees under the Scheme were within the ordinary meaning of that phrase, and that the reference to s 44 in s 70(1) puts the issue beyond doubt: but again that position is made even clearer when the nature of the legislation under interpretation is brought into account." Much the same may be said of s 22 in the present case. The activities and functions of the Board and the Trust under the 1993 Act, the 1994 Regulations and the 1994 Transitional Regulations involve the provision of services within the ordinary meaning of the word as discussed in IW v City of Perth. Further, ss 41A and 41B of the Act put the matter beyond doubt as they each expressly exclude certain discriminatory conduct in relation to a superannuation fund from the operation of Division 1 or 2. The provision in Division 2 which is most likely to involve discriminatory conduct in relation to a superannuation fund is s 22. There is nothing in s 14 itself that reveals that the legislature intended that discrimination in relation to superannuation benefits or funds is to be confined to s 14 in Division 1. Indeed, as I pointed out earlier in these reasons, the express references in the section to superannuation only relate to discretionary decisions of the trustee. Accordingly, in my view the Inquiry Commissioner was in error in concluding that the provision of superannuation benefits under the 1993 Act and the 1994 Regulations was not capable of constituting the provision of services for the purposes of s 22. However that is not the end of the matter. In my view the real issue arising does not relate to whether work-related superannuation schemes involve the provision of services but rather, whether there was any inconsistency between the immunity granted under ss 12(1) and 13(1) in respect of s 14 and the express removal of that immunity under s 22.

DOES s 14 PROVIDE IMMUNITY FOR STATE DISCRIMINATION IN RELATION TO SUPERANNUATION SCHEMES? It was submitted on behalf of the State of Tasmania that: · the legislature clearly intended to grant the States immunity from liability in respect of all of the matters falling within s 14; · superannuation benefits, particularly those offered in regs 14 and 24, are within s 14(2)(a)(b) and (d); · if s 22 operated in respect of these benefits that would largely render nugatory the immunity granted to the State in respect of s 14; · the Act should be interpreted so that the specific immunity granted in s 14 should not be removed by the general provisions of s 22; · accordingly, notwithstanding the potential overlap between ss 14 and 22, s 22 should be construed as not extending to acts of discrimination alleged against the Crown in right of a State which fall within the scope of s 14. Section 14 operates primarily in respect of unlawful discrimination in offering employment and in the terms and conditions of employment. In general neither activity involves the provision of "services" within s 22. It is only when one considers the concepts of denying or limiting access to "benefits associated with employment" or "subjecting an employee to any other detriment" in s 14(1)(b) and (d) respectively that a possible overlap with s 22 might occur with the consequence that certain conduct might involve a breach of both sections. However that possibility does not render the basic immunity granted to the State by reasons of ss 12(1) and 13(1) nugatory or meaningless. Rather, in so far as the contravening conduct falls within s 14 (in respect of employment) and s 22 (in respect of services) or, to use an additional example s 23 (in respect of accommodation), the immunity under s 14 will operate but, as was Parliament's expressly stated intention, no such immunity is to operate in relation to ss 22 or 23 which each provide that "This section binds the Crown in right of a State." Further, I do not accept the primary contention of the State of Tasmania that if the same conduct falls within s 14 and s 22 it would largely render nugatory and defeat the purpose of the immunity granted in respect of s 14. As pointed out above, s 14 has a substantial sphere of operation in areas that do not touch upon or involve the provision of services. It is primarily concerned with protection of the State from federal legislation in relation to terms and conditions of employment. To render the State liable under other sections, such as s 22 or s 23, would not significantly impinge on that immunity. The present case is an example of why that is so. It would be difficult to contend that the differing benefits offered to employees under regs 14 and 24 have anything to do with the core State activities for which constitutional protection is given. The additional benefits are to be "purchased" by employees in respect of past service. That kind of benefit is quite different to an employer's contribution to a superannuation fund for the benefit of an employee by way of remuneration for the provision of service. Such a payment, if discriminatory, falls within s 14 and not s 22. In any event to the extent that s 22 impinges on the immunity under s 14, the legislature has specifically provided for that to occur. I can discern no reason in principle why an Act which provides that conduct is unlawful under two distinct statutory provisions, one only of which is not binding on the State Crown, should transform the operation of the other provision that is expressed to be binding on the Crown into a provision that it is not binding. To do so is not to construe the Act but to rewrite it. Finally, the approach I have adopted is fully supported by the liberal construction which is to be given to beneficial and remedial legislation like the Act: see IW v Perth at 720, 710-711 and 750.

ARE REGULATIONS 24 AND 14 THE PROVISION OF SERVICES? The State of Tasmania submitted that irrespective of whether the Inquiry Commissioner was in error in concluding that work related superannuation benefits do not constitute "services" for the purposes of s 22, the benefits offered under regs 14 and 24 are not "services" within the statutory definition. The submission involves two questions. The first relates to the nature of the benefit offered under the regulations. The second relates to whether that benefit, when provided by the State in the exercise of statutory powers or the execution of a statutory duty, falls outside the scope of the Act. The first question can be dealt with briefly. Regulations 14 and 24 entitle employees who pay the amounts required to enjoy increased benefits under the scheme administered by the Board and the Trust in accordance with the 1993 Act and the 1994 Regulations. The increased benefits which are acquired by the employees constitute entitlements to benefits which are additional to those they already enjoy under the scheme. Enjoyment of the additional benefits carries an entitlement to the provision of all of the "services" of the Board and the Trustee under the Scheme in relation to those benefits. Accordingly, the entitlement to additional benefits acquired under the relevant regulations gives rise to an entitlement to "services" in respect of those benefits. The second question touches on an issue raised in I W v Perth. The State of Tasmania relied upon the following passage from the judgment of Brennan CJ and McHugh J at 704: "Thus, when a council is called on as a deliberative body to exercise a statutory power or to execute a statutory duty, it may be acting directly as an arm of government rather than as a provider of services and its actions will be outside the scope of the Act. This is particularly so when councillors are acting as representatives of their constituencies in making by-laws or resolutions that will have the force of law throughout the municipality or borough. Such 'legislative' acts have to be contrasted with the acts involved in making operational decisions as to whether a particular service should be provided to certain individuals or to a section of the community." It was submitted on behalf of the State of Tasmania that the functions of the Board constitute functions of an arm of government exercising statutory powers and executing statutory duties rather than functions involving the provision of services. In my view the functions and activities of the Board and the Trust are "operative" rather than "legislative" in the sense discussed by their Honours. The functions and activities relate to the administration of the scheme and, although carried out under statutory regulation, that does not prevent them from being properly described as services. The activities in question do not fall within the range of government activities that may be fairly described as those of an "arm of government" rather than those of a "provider of services".

CONCLUSION For the foregoing reasons the AEU has succeeded on its order for review and is entitled to orders: · setting aside the decision of the Inquiry Commissioner made on 26 June 1997 to dismiss the complaint of the AEU; · remitting the complaint to the Inquiry Commissioner to be determined in accordance with the law; · that the State of Tasmania pay its costs.

I certify that this and the preceding fourteen (14) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Merkel

Associate: Dated: 25 November 1997. Counsel for the Applicant: Mr K Proctor

Solicitor for the Applicant: Murdoch Clarke Cosgrove & Drake

Solicitor for the Respondent: Solicitor General of Tasmania's Office

Sex Discrimination Act 1984(Cth)ss 5, 12(1), 13(1), 14

Retirement Benefits Act 1993(Tas)s 5

Retirement Benefits Regulations 1994(Tas)reg 24

Retirement Benefits (Transitional) Regulations 1994(Tas)reg 14

IW v City of Perth

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