McGowan v ABC

Industrial Relations Commission (NSW)|2000-08-31|Before: Peterson J, Hungerford J

For the reasons given, I am of the view that it is appropriate, indeed it is a requirement of s.109, for the whole of this matter to proceed to conciliation first in order to see if it may be resolved. 14 It may be seen that the facts in Younan-Sedrak were very different to those arising in the Metrocall case before Schmidt J. The objection to jurisdiction in the former case was confined to only parts of the matter and it followed that conciliation was necessarily to occur in relation to those matters to which objection was not taken. In those circumstances, there is no lack of logic in the proposition that the matter should first proceed to conciliation. I do not understand Hungerford J to have been expressing, nor indeed the Full Bench to have adopted, the view that s.109 imposes a duty to conciliate all matters which come before the Commission purporting to be matters raised under the unfair contract provisions of the Act. It would, in my view, be quite illogical to construe s.109 as though it were intended to operate in relation to all matters whether they are within the Commission's jurisdiction or outside it. The phrase "settle a matter under this Division" in s.109(3) must be taken to refer to claims properly arising under the Division. While, as Hungerford J said in Younan-Sedrak, matters are not to be assumed to be beyond power, once a jurisdictional objection is taken there is equally no warrant to assume power in the face of the objection. Another well-recognised principle then operates: a court has an duty, particularly where an issue is raised, to satisfy itself that its proceedings do involve a proper exercise of jurisdiction. This is not to preclude the possibility that conciliation may be accepted, even in the presence of a jurisdiction point, to be the most efficient and least expensive way to resolve a claim, whether within or without power. However, there can be no proper purpose in the Court seeking to bring to settlement parties who are not properly before it. It goes without saying that a respondent who objects on a strong basis to the jurisdiction of the Commission to deal with a claim brought under s106 is likely to be an unwilling party to conciliation and obviously is under no obligation to conciliate as an act of generosity. 15 Therefore, I conclude that s.109 does not compel conciliation of a matter which is contended to be beyond the Commission's jurisdiction. This means that whether a matter goes to conciliation or not first will be a matter for the Court at first instance to determine in the exercise of its judicial discretion, on the facts of the particular case. 16 That course will not visit upon applicants under s.106 a necessarily unfair procedural regime. If the objection to jurisdiction is taken first and found to be without substance, the matter will proceed to conciliation with the applicant in the substantive proceedings presumably having the benefit of an order for costs of the motion. If, on the other hand, the objection to jurisdiction is valid and complete, then it is in the interests of justice that finality be attained at the earliest opportunity. 17 I propose to treat the question of the suitability of the timing not as an obstacle to the hearing of the motion as a threshold question but as an issue of substance in the motion itself. In so doing, I am satisfied the Court has before it sufficient by way of evidence to permit the determination of the motion at this stage. 18 The evidence before the Commission consists of three affidavits by Helen McKenzie, a solicitor, acting on behalf of the ABC, three of which annexe material relevant to the relationship between Mr. McGowan and the ABC; the nature of the ABC, being a statutory corporation constituted under the ABC Act; a copy of an agreement certified by the Australian Industrial Relations Commission under s.170MC of the Workplace Relations Act 1996 (Cth) (known as the ABC's Senior Executives (Point 5-19) Agreement) which the ABC contends applied to Mr. McGowan; and a copy of a determination made pursuant to ss.32(2) and 10(3) of the ABC Act. 19 In addition, the material filed on behalf of Mr. McGowan is, in the usual way, to be treated as evidence to be taken at its highest in Mr. McGowan's interest. The following facts are taken thus from the summons of facts and law in the summons for relief. The Facts 20 Mr McGowan was first employed by the ABC on or about 6 September 1995, in the position of Network Programmer. His duties included responsibility for the purchase of television shows from suppliers for presentation on the network, although all acquisitions were approved by either a person with authority to do so or the Contract Review Committee or the Board of the ABC. 21 In about February 2000 Mr McGowan became ill and although under medical care the cause of his illness was not diagnosed until early May 2000 when he was discovered to have shingles. The condition had caused him to suffer significant, continuing and consistent pain. 22 On or about 17 March 2000 Mr Jonathon Shier was appointed Managing Director of the ABC. At an 8.30am meeting on or about Tuesday, 11 April 2000 Mr Shier offered the position of Director of Television to Mr McGowan, who was given 48 hours to consider the offer. This was a new position in the Reviewed Management Structure of the ABC. 23 Mr McGowan telephoned Mr Shier within 24 hours and accepted the position. He was then informed that he would be required to take a psychologist's analyst's test. Mr McGowan was not informed that his appointment to the position of Director of Television was conditional upon satisfactory performance in the test or any part of it. 24 On 20 April 2000 Mr McGowan undertook the test, one segment of which was mathematically oriented. It appears that he failed the mathematical component of the test and, on Friday, 28 April 2000 Mr Shier informed Mr McGowan that he did not have the position of Director of Television because of that failure. 25 The test undertaken by Mr McGowan bore no resemblance to the skills and abilities utilised by Mr McGowan in the performance of his duties or those required, in Mr McGowan's experience, in the broadcasting industry generally. 26 During Mr McGowan's employment and before February 2000, recommendations were made within the ABC that, when negotiating the purchase of product for the network, Mr McGowan ought to be accompanied by another employee of the ABC. This, in particular, included Mr McGowan's attendance at the Cannes Television Markets. These initiatives and recommendations were strongly opposed by Mr McGowan who was of the view that the recommendations questioned his level of integrity, honesty and independence. 27 On 28 April 2000 Mr McGowan was also informed by Mr Shier that he would be accompanied by another employee of the ABC during his negotiations for product including his attendance at the Cannes TV Markets MIP & MIPCOM. The reason advanced was to avoid corruption or the appearance of it. 28 The new duties purportedly given to Mr McGowan amounted to a substantial variation of duties made without consultation and without consent. Mr McGowan did not accept the ABC's attempt to unilaterally vary his duties. 29 On Friday, 28 April 2000 Mr McGowan telephoned Mr Shier and resigned from his position as Network Programmer giving four weeks' notice. At this time he was deeply shocked and upset at the treatment he had received at the hands of Mr Shier including the aspersion cast upon his character, honesty and integrity. 30 Mr McGowan contends that his resignation was in consequence of the ABC's repudiatory conduct, such that the resignation was, in law, a constructive dismissal. The ABC 31 The Australian Broadcasting Corporation is a body corporate in existence by virtue of s.30 of the Broadcasting and Television Act 1942 and continued in existence by s.5 of the ABC Act. 32 Section 6 of the ABC Act provides for its charter which describes its functions and duties in wide terms. The general powers of the ABC are set out in s.5 of the ABC Act. Provision is also made in the Act for the establishment of a Board and the description of its duties and powers (ss.7 and 8) and the appointment of a Managing Director (s.9). The duties of the position are set out in s.10 which provides as follows: 10 Duties of the Managing Director

(1) The affairs of the Corporation shall, subject to subsection (2), be managed by the Managing Director.

(2) The Managing Director shall, in managing any of the affairs of the Corporation and in exercising any powers conferred on him or her by this Act, act in accordance with any policies determined, and any directions given to him or her, by the Board.

(3) All acts and things done in the name of, or on behalf of, the Corporation by the Managing Director shall be taken to have been done by the Corporation. 33 Part V, Employees, of the ABC Act provides by cl.32, Staff of Corporation: (1) The Corporation may engage such employees as are necessary for the performance of its functions and exercise of its powers.

(2) The terms and conditions of employment shall be determined by the Corporation. 34 The reference in s.32 to terms and conditions of employment being "determined" by the ABC is significant for present purposes. The evidence advanced on behalf of the ABC included the terms of a document recognisable as a formal determination. Its terms were as follows: I, David Hill, Managing Director of the Australian Broadcasting Corporation, hereby make the following determination on behalf of the Corporation pursuant to sub-sections 32(2) and 10(3) of the Australian Broadcasting Corporation Act 1983 ("the ABC Act"):

All Staff Rules, General Orders, Managing Director's determinations and other terms and conditions of employment made under the sections of the Act repealed by the commencement of section 8 of the Broadcasting Legislation Amendment Act 1988, and in force immediately before the date of commencement shall continue in force for the purposes of Part V of the ABC Act as if they had been made under sub-section 32(2) of Part V of the ABC Act. 35 It will be noted that the preamble to that determination refers to the statutory foundations in ss.32(2) and 10(3) of the ABC Act. 36 I mention that s.33 requires the ABC to "endeavour to achieve and maintain high standards as an employer in relation to terms and conditions of employment . . .". Although this section was referred to in argument it does appear to me to have only limited effect for present purposes. 37 It was also suggested in the ABC's submissions that an industrial instrument constituting a determination of the kind empowered by s.32 was the ABC Senior Executives (Point 5-19) Agreement. This proposition was not disputed by Mr. McGowan. 38 In addition, Mr. McGowan had written contracts of employment applicable to his service at all relevant times. The question in the present arises whether the written contracts of employment entered into by Mr McGowan with the ABC, those contracts being formally signed by the Managing Director, constitute determinations pursuant to those statutory provisions. 39 An example of such contracts of employment in evidence is the correspondence directed to Mr. McGowan dated 21 September 1995 setting out the terms of his engagement in the position of Network Programmer at the level of Senior Executive Point 14 which was said to be: "based in Sydney on terms equivalent to those set out in the ABC Senior Executives (Point 5 - 19) Agreement 1995 and the ABC Staff Rules except as varied by this agreement"

The engagement was to be for three years subject to the application of Part 5 of the Senior Executives Agreement concerning resignation by reason of inefficiency, misconduct and non-renewal benefit, the terms of which were to apply except where inconsistent with the agreement itself. 40 The agreement conferred on the ABC an option to extend the engagement for a further fixed period of three years. The agreement also provided for salary and salary additions described as "a market rate salary loading" and "an additional salary loading". These salary loadings appear to have been outside the scope of the Senior Executives Agreement. Clause 3 dealt with the duties to be performed and Mr. McGowan's responsibility in the performance of those duties to the Head of ABC Television. It also provided in cl.3(c) that Mr. McGowan accepted transfer to another position within the ABC should the Managing Director determine that Mr. McGowan's services should be so employed in the best interests of the ABC. The agreement also contained a confidentiality undertaking and a term requiring that Mr. McGowan's services be exclusive to the ABC during the term of the agreement. Clause 13 of the agreement provided: This agreement will be read and construed in accordance with the laws of New South Wales and the parties agree to submit to the jurisdiction of the Courts of New South Wales. 41 The agreement was signed by Mr. McGowan under the note "Engagement accepted on above terms". 42 On 20 May 1998 pursuant to the option provision of the 1995 Agreement the ABC wrote to Mr. McGowan in these terms: This is to advise that, in accordance with clause 1(b) of the employment agreement between the ABC and yourself dated 21 September 1995, the ABC hereby exercises its option on your services for a further fixed period of three (3) years, that is until 5 September 2001. 43 On 20 May 1998 a further written agreement was executed between Mr. McGowan and the ABC in like terms to that executed on 25 September 1995 with the only variations appearing to relate to increased money allowance. 44 On 21 April 1999 the ABC again wrote to Mr. McGowan in terms analogous to those contained in the September 1995 agreement with updated matters such as salary and loadings. Clause 13 remained in the same form and on 1 May 1999 engagement was again accepted on those terms by Mr. McGowan. 45 Accordingly, it was submitted by the ABC that the terms and conditions of employment determined for Mr. McGowan were those contained in the three written agreements made between the parties on 25 September 1995, 20 May 1998 and 1 May 1999, as they were affected by the terms of the Agreement certified by the Australian Industrial Relations Commission on 27 June 1995 and 3 May 1997. Conclusions 46 The forms of relief sought, if granted, clearly would interfere with the contract between the parties by varying its terms to include those set out in Schedule A to the summons for relief. Also sought are declarations relating to the ABC's repudiation of the contract of employment as Network Programmer and that the contract was brought to an end by Mr. McGowan as the result of that repudiation with effect from 26 May 2000. The money orders sought also impinge obviously upon the operation of that contractual arrangement. 47 Having regard to the way in which the parties have approached the substantive issues on the motion, there is an acceptance that a direct conflict with any determination made pursuant to the federal Act may raise a constitutional conflict, but, on the other hand, there remains for determination the questions whether there is evidence of such a determination and whether peripheral matters not dealt with expressly by the contract and compensatory issues relating to any unfairness found in connection therewith, may be justiciable under s.106 of the Act. 48 Issues of this kind have arisen frequently in this Commission and its predecessor bodies. In Hudson v Qantas Airways Limited (1985) 10 IR 331 the Industrial Commission in Court Session (Cahill, Watson and Glynn JJ) were concerned in appeal proceedings with the jurisdiction to deal with claims for monetary compensation in relation to issues such as salary and travelling allowances which were the subject matter of a federal award which applied to the applicant's employment. After referring to the judgment of Dixon J in Victoria v the Commonwealth (1937) 58 CLR 618 at 630 and the observations of Mason, Brennan and Deane JJ in The Employment Protection Case (1983) 4 IR 284 at 293, concerning the scope of the relevant conflicting state and federal laws, the Commission in Court Session said: In the context of this case, however, the order which is sought under s88F(2), to the extent that it relates to restitution of salary lost during the period of leave without pay, is based on what is prescribed by the award, not some contracted amount. On that basis, an order under s.88F(2) would, in effect, impose an obligation to pay the award salary in respect of a period during which, because of the particular circumstances of the case, there was no obligation under the award to pay such salary. Furthermore, such an order could be said to involve the prescription of an additional and distinct mode of recovery beyond the Conciliation and Arbitration Act.

The exclusivity of the award, read with s.65 of the Conciliation and Arbitration Act, is more apparent with respect to travelling allowances than it is in regard to salary. Nevertheless, having regard to what we have said, we think that that exclusivity can also be said to extend to the salary matter, and that it excludes any scope for an order under s88F(2) which purports to deal, in effect, with the same matter. Both aspects relate to the very type of situation which, in our view, s109 of the Constitution is directed. 49 On the matter of superannuation the Commission in Court Session took a different view: So far as superannuation is concerned, different considerations arise. This is part of the contractual relationship between the respondent and the appellant which cannot be said to be the subject of regulation by the relevant federal award or otherwise be capable of giving rise to inconsistency on the material before us.

The same difficulties as can be said to arise concerning salary and travelling allowances accordingly do not, in our view, affect the power of the Commission to proceed with so much of the application under s88F as relates to superannuation. 50 That judgment is a useful analogy to the extent that the claim in the present matter might be said to conflict with the provisions of a federal award or enterprise agreement. However, a significant aspect of this case concerns the effect, as an obstacle to jurisdiction, of conditions of employment determined by the ABC pursuant to the express statutory power contained in s32 of the ABC Act. A case of similarity in that context is Robert Alan Dawson v Telstra Corporation Limited (Unreported 29 May 1998 - IRC96/5521). In that matter the applicant sought relief under s106 in the form of orders bearing upon a contract of employment entered into by him with Telstra. In essence the relief sought was a review in salary to ensue its conformity with market rates. The relevant statute for present purposes was the Australian Telecommunications Corporation Act 1989 (Cth), s85 of which provided: (1) Telecom may engage such employees as are necessary for the performance of its functions.

(2) The terms and conditions of employment shall be as determined by Telecom. 51 The similarity between s.85(2) there and s.32(2) of the ABC Act is patent. An additional factor of relevance in Dawson was the applicability to the applicant of a salary referable to a classification, Administrative Officer 5, within the terms of a structure determined by Telstra In that matter, after concluding that the motion against the existence of jurisdiction should be upheld, I said: The first, but less significant, basis is that the rates of pay or salary applicable to persons in the position of the applicant in the employ of Telstra are prescribed either by award or by a determination made under the relevant Commonwealth statute. It is certainly the fact that some conditions of employment will continue to be extended to the applicant at the relevant time whether or not his salary was that prescribed by the award or increased by determination. The history of award and/or determination coverage shows that the awarding of increases including national wage increases by determination has been effected quickly, it is said ahead of the pace of the award response, but the terms of the consent awards made provide for the primacy of the award over the determination to the extent of any inconsistency.

In my view in this context it must follow that were the Commission to purport to make an order under s.106 varying a contract of employment to alter salary and to make a consequential order in favour of the applicant for the payment of money, there would be a direct conflict between the order and the imposition of a rate by award or determination under the Commonwealth legislation.

However, as I have said, Mr West's argument is that the primary conflict in this matter occurs as between the plenary power conveyed by s.85 and the effects of any order made under s.106 of the state Act.

I feel compelled to find that there is no area left for an order under s.106 in these proceedings to operate viz a viz the terms of employment of an employee of Telstra. 52 Support was also gained in Dawson from the judgment of the High Court in Australian Broadcasting Commission v The Industrial Court of South Australia and Anor (1977-78) 138 CLR 399. That matter concerned the question of conflict arising between a state law with respect to reinstatement in employment after an unfair termination and a federal law which permitted the ABC to determine the terms and conditions of employment of officers and temporary employees, with the approval of the Public Service Board. Stephen J referred to that statutory power this way: Sub-section (6) is a common form provision found in many Commonwealth Acts establishing statutory authorities possessing their own staffs. I would regard it as contemplating no particular act of determination of some standard terms and conditions for the employment of temporary employees of the Commission. On the contrary its effect, when read together with sub-section (2), is, I think, rather to invest the Commission with unfettered powers to engage such temporary employees as it thinks necessary, engaging them upon such terms and conditions as (subject to Public Service Board approval) it thinks fit.

The terms of s.43(2) and (6) do to my mind disclose a legislative intent that the subject matter comprising the engagement of temporary employees of the Commission and their terms and conditions of employment should be exclusively within the province of the Commonwealth Act. 53 In the face of this line of authority, it is necessary to consider whether there is any element of this case which could distinguish it, or aspects of it, from the matters disposed of thereby. 54 The first issue in this context is whether there is evidence of a determination by the ABC of the terms and conditions of employment of Mr McGowan, or any relevant industrial instrument, with which an inconsistency arises. 55 The written employment agreement operating at the time of termination is in evidence. There is nothing on its face which suggests the agreement is a "determination", but s.32(2) of the ABC Act merely provides the terms and conditions of employment "shall be determined by the Corporation". While Mr Moses submitted that the evidence is not conclusive on this point, I consider that there can be no doubting the written employment agreement conforms with that requirement. Further, the agreement imports relevant features of the ABC Senior Executives (5-19) Agreement. 56 In these circumstances, the conclusion is inevitable that aspects of the relief sought would raise a direct inconsistency with the power exercised pursuant to s.32 of the ABC Act and, possibly, but less obviously to me, the Senior Executives Agreement. 57 It seems to me that the authorities are clear that an attempt to invoke the Commission's jurisdiction to vary a contract which constitutes a determination of the kind provided for by s.32 of the ABC Act directly impinges upon and is inconsistent with a law of the Commonwealth (See Dawson). Those parts of the relief sought in these proceedings which seek to amend the contractual terms and so the obligations arising under the contract of employment, I consider must be viewed as beyond jurisdiction. 58 However, there remains a question whether such a contract which may not in terms be variable at the instance of the litigant under s.106, may nevertheless be made relevantly unfair by the conduct of one party. The statutory power which gives rise to the agreement and thus the conflict appears not to be expressly concerned with the conduct of the ABC in its relations, in this case, with Mr. McGowan. It may be that s.33 of the ABC Act is satisfied by the express terms of the agreements both individual and collective applicable to Mr. McGowan. That section requires that having achieved the appropriate standard, the ABC should "maintain" it. It would appear curious if, the statutory power having been satisfied, the ABC was free to act in a way which could amount to unfair conduct of a kind that would make the contract itself unfair in accordance with the terms of s.106. Further, it would be perhaps even more curious if such unfair conduct would be beyond the reach of a New South Wales court with jurisdiction to remedy such conduct. Clause 13 of the employment agreement appears to evince an intention that any issue under it requiring the attention of a court should be the subject of the laws of New South Wales. It would not be inconsistent with either the terms of the agreement or the provisions of s.32(2) of the ABC Act that the consequences of conduct held to be unfair which did not impact upon the express terms of the employment agreement be dealt with here, providing there is a statutory power so to do provided by s.106. 59 This question involves the issue whether there is any room left for s.106 to operate not in relation to an amendment of the terms of employment but solely in relation to the alleged repudiatory conduct of the ABC and other, consequential matters such as compensation for loss of opportunity, disappointment, distress, frustration, humiliation and upset. The cases in the line of authority referred to in the paragraphs preceding par. 54 hereof were decided prior to the amendment to s.106(2) prescribing that a contract (as defined) may become unfair by conduct. In considering that subject matter, repudiatory conduct was referred to by the Full Bench in Reich v Client Server Professionals of Australia Pty Ltd. (Administrator Appointed) (2000) 99 IR 69 at p.77 as follows: We are well satisfied that the word "arrangement", including if necessary the extended words in the definition as covering "any related condition or collateral arrangement", is sufficiently wide to encompass aspects of the employment relationship which are said to offend the concept of fairness, including as alleged here the conduct of the respondent in repudiating the contract of employment.

It follows that, should the evidence establish repudiation, as it appears to do on its face in this uncontested evidentiary stage, the case would arguably come within the scope of what I might call 'conduct unfairness'. 60 However, as I understand s.106, there remains an obstacle which must defeat the summons. That is, by s.106(5), the power to make an order for the payment of money depends upon an underpinning order which affects "any contract declared wholly or partly void, or varied . . .". If the Court is unable, as the result of the constitutional protection afforded to a determination of the ABC, to make an order voiding in whole or in part or varying the contract, no order for a money payment can be made (See Reich at 83.1). Accordingly, conduct unfairness can, in a case such as this, give rise to no remedy.

61 The onus on the ABC in these interlocutory proceedings is to establish that the substantive proceedings are such that no order could be made within jurisdiction. For the reasons I have given, this is such a case; it must be dismissed on the motion. I so order.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

Workplace Relations Act 1996(Cth)

Broadcasting and Television Act 1942(Cth)

Telecommunications Corporation Act 1989(Cth)

. . . The discretion of a court to determine a case at an early stage, when appropriate, has been repeatedly asserted (see Young v Rank [1950] 2 KB 510; Ramsden v Ramsden [1954] 2 All ER 623 at 624; Union Bank of Australia Limited v Puddy [1949] VLR 242; Sampson v Edwards [1949] VLR 6)."

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