Metropolitan Health Service Board v Australian Nursing Federation [2000] FCA 784 | Case summary

Judgment (8 paragraphs)

[1]

Introduction 31 This is an appeal from a decision of a stipendiary magistrate sitting in the Western Australian Industrial Magistrates Court, made on 27 January 1999, whereby his Worship decided that the appellant had breached the Western Australian Public Sector Award 1994 ("the Award") in relation to two complaints made against it pursuant to the Workplace Relations Act 1996 (Cth) ("the Act"). The appeal was heard by a Full Court, following the decision of Lee J in Metropolitan Health Services Board v Australian Nursing Federation (1999) 94 FCR 132 to the effect that the matter was one which was required to be heard by a Full Court.

[2]

Factual Background 32 The appellant is the statutory successor to the rights and liabilities of a hospital board which at all material times employed certain dental nurses at the Perth Dental Hospital ("the Hospital"). The Hospital is a public hospital but, at the beginning of the events described below, its nurses were not employed by the State. There were other dental nurses in the public health system in Western Australia who were employed in the Dental Services Branch of the Health Department. 33 In 1991, the appellant's predecessor reached an agreement ("the Agreement") with the respondent concerning the salary increments to be paid to nurses employed at the Hospital. The Hospital was about to amalgamate its administration with the Dental Services Branch of the Health Department. This, so it was thought by the parties at the time, would mean that nurses at the Hospital would become liable to be transferred, as required, to other metropolitan locations. However, under the terms of the Agreement nurses employed at the Hospital were entitled to retain their positions provided they were willing to "defer" (which, as argued before us, was taken to mean "forego") increments above what was known as the Fourth Year Level or Service rate. 34 The respondent is a union which at all material times represented the complainants both in negotiating the terms of the Agreement in 1991 and before the Industrial Magistrate when the complaints were heard. The complainants were two nurses employed at the Hospital at the time the Agreement was made. They had elected to defer any incremental advance beyond the Fourth Year Level or Service rate in accordance with the Agreement, provided they were permitted to retain their positions at the Hospital. As events transpired, the complainants never became legally liable to be transferred from the Hospital to another part of the public health system. They were not paid the increments which, according to the terms of the Agreement, they had given up in return for not being made liable to such transfer. 35 Under the Award both nurses qualified for the seven year service incremental rate. The complaints made by the respondent (on behalf of two dental nurses) against the appellant were as follows: · between 20 May 1995 and 2 June 1995 the appellant failed to pay its employee, Yolanda Vyner, who was at all relevant times employed at the Hospital, at the correct increment pursuant to clause 34 subclause (b) of the Dental Nurses (ANF - WA Public Sector) Award 1994, and thereby underpaid her for the pay period ending 2 June (amount due being $77.94); and · an identical complaint save that the dates were stated as being between 3 June 1995 and 16 June 1995 in relation to the second employee, Elizabeth Ringland, also involving an alleged underpayment of $77.94. 36 We shall, as a matter of convenience, hereafter refer to Ms Vyner and Ms Ringland as "the complainants".

I am satisfied that the Complainants accepted the agreement and elected to remain at the Perth Dental Hospital because they understood that the amalgamation was to take place and that they did not wish to be transferred to other locations throughout the Metropolitan area pursuant to that agreement. I am satisfied on the evidence that the amalgamation did not take place as was agreed between the Australian Nursing Federation and the Defendant until 1996." 47 These findings are consistent with various pieces of evidence which were before the Industrial Magistrate. In Health Department Circular 83/91 to all Registered Dental Nurses (Exhibit C - AB 145) which, in part, evidenced the Agreement, various bases for the Agreement were set out. They included the following: "1. Recognition that staff are part of Dental Services in its entirety and accordingly internal transfer within Dental Services is necessary." 48 The Agreement was varied in March 1992 after a sequence of events which included a letter dated 11 March 1992 (AB 169) from the respondent to Mr Pittendrigh (Manager of the Hospital) in which it was said that: "Concerns have been raised by ANF members at Perth Dental Hospital regarding the imminent transfer of staff." 49 This was followed by discussions between the parties on 13 March 1992 and a letter dated 16 March 1992 (Exhibit 4 - AB 170) from the Health Department of Western Australia to the respondent. That letter proposed an addendum to the Agreement and included the following observation: "The proposal will mean:-

Dental Nurses will be able to decline transfer into higher level positions in Community Dental Services by electing to defer incremental progression." 50 On 20 March 1992 the Health Department sent a further letter to the respondent (Exhibit 12 - AB 200) which included the following comment: "* Staff in accepting progression through to the maximum of the salary range are aware well in advance that they are subject to transfer. A minimum period of two weeks notice of transfer will be given, however it is expected that in the majority of cases the period of notice will be in excess of this and will be the maximum possible according to the circumstances of each case." 51 The Health Department prepared a form of election by which nurses could elect either to defer their pay increments (Option 1) or to continue to enjoy what was referred to as "incremental progression" (Option 2). The complainants each signed the election form on 31 March 1992, choosing Option 1. The second paragraph of Option 2 (i.e. the option which neither of them chose) read: "I understand that I will be transferred to a vacancy in one of the four areas which I have indicated as being my preferences within the metropolitan operations of Dental Services." 52 On 29 April 1992 the Deputy Director of Nursing sent to each of the complainants an acknowledgment of their respective written elections (Exhibits 10 and 11 - AB 198, 199) which included the following paragraphs: "At any future date you may advise in writing that you wish to change to Option 2. This will then entitle you to incremental progression to the maximum of the salary range. It will also mean that you will be available for transfer to higher level positions within the metropolitan operations of Dental Services, and at that time you will need to submit your four areas of preference for transfer." 53 In our view, it was quite clear (and the Industrial Magistrate so found) that the whole basis of the Agreement was that the complainants and their fellow nurses at the Hospital were about to become liable for transfer from the Hospital to other areas, being areas within the Public Health Department. The complainants wanted to remain at the Hospital and were prepared to "defer" salary increments under the Award rather than be so transferred. 54 It is common ground (and again the Industrial Magistrate so found) that the amalgamation which effected the transfer of staff from the Hospital to the public service did not take place until 1997 (in fact on 16 July 1997 - see paragraph 8 of the appellant's supplementary outline of submissions). 55 The appellant contended that the relevant assumption which founded the estoppel, so far as the appellant was concerned, was "the future existence of a particular state of affairs, that is, the content of future conduct by the Respondent". This was particularised as being that - "… notwithstanding the rights conferred by the Dental Nurses Award, the Respondent would not purport to exercise its right under the [Workplace Relations Act] to take any action for breach of that Award." 56 The appellant maintained that the part which the respondent played in the adoption by the appellant of that assumption and the appellant's persistence in that assumption meant that it would be unconscionable to allow the respondent to depart from it. The appellant contended that the respondent induced it to make the assumption, both by express and implied representations, in circumstances where it knew or intended or clearly ought to have known that the appellant would be induced by such representations to adopt and act on the basis of the assumption. Further, the appellant contended that the respondent had entered into contractual and other material relations with the appellant on "the conventional basis of the assumption". Finally, so it was put, the respondent knew that the appellant laboured under the assumption and refrained from correcting it when it was the respondent's duty in conscience to do so. The appellant argued that it had for a period of 5-6 years arranged its affairs, made its decisions and approached the conduct of industrial relations with the respondent, on the basis of the assumption. Had it known that the respondent would depart from the assumption, the appellant argued that it would have had the opportunity to ensure that the Agreement was given binding force at an earlier time, or to take some other step to ensure that it would not be at risk of being involved in any proceedings such as those in the court below. 57 We have looked in vain for any real evidence of detriment to the respondent, apart from the detriment which would arise out of having to pay the complainants and their fellow nurses at the Hospital their incremental entitlements during the period when they were not at risk of transfer i.e. until July 1997. It is true that the Industrial Magistrate accepted that failure to apply the doctrine of estoppel would "act to the detriment" of the appellant, but we think it is reasonably clear from his finding to that effect, that he was having regard only to the detriment of having to make such payments. 58 As Deane J observed in The Commonwealth v Verwayen (1990) 170 CLR 394 at 444, the central principle of estoppel is to prevent unconscientious departure (emphasis added) by one party from the subject matter of an assumption. See also Mason CJ at 412-413. 59 The Industrial Magistrate formed the opinion that it would be unjust and oppressive to apply the doctrine of estoppel to prevent the respondent from initiating action on behalf of the complainants. In our respectful opinion, he was quite right in that regard. His Worship had earlier found that the complainants were in a position whereby they could not have been transferred at the relevant times and yet they were not receiving what his Worship described as "their rightful entitlement". 60 It is true that an estoppel can flow from an assumption based upon the perceptions of the respective parties that a certain state of affairs exists when in fact it does not. That really is the whole point of estoppel. But in the end, the touchstone is unconscientiousness. Mr Tannin spoke in terms of a "trade-off". The reality is that, if the complainants are estopped, they will have traded off their legal entitlements for nothing in return. That is because they were never at risk of transfer and the risk of transfer was the whole basis for their giving up their rights. We do not think that it is unconscientious, in all the circumstances, to allow the complainants to enforce their rights under the Award. 61 If confirmation of the fairness of such an outcome were needed, it can be found by having regard to the strictly legal context. The Agreement purports to be made between the Health Department (that is, the Minister for Health) and the respondent. But at the time the Agreement was struck the nurses at the Hospital were employees of the Minister for Health in his capacity of being the deemed Board of the Hospital pursuant to s 7 of the Hospitals Act 1927 (W.A.). It was not until 16 July 1997 that the appellant was established as a hospital board under s 15(1) of the Hospitals Act in respect of a number of metropolitan public hospitals, including the Hospital. Notices published on 16 July 1997 effected the transfer of staff (i.e. relevantly the complainants) from the Board of the Hospital to the appellant. The complainants in this matter then became co-employees of the staff at those other hospitals. As at the date of the Agreement and until 16 July 1997, a transfer of their employment would have required the termination of their employment agreement with the Board of the Hospital, and their engagement as public servants for service in the Dental Services Branch, being a branch of the Health Department of Western Australia as established pursuant to s 21 of the now repealed Public Service Act 1978 (W.A.). If the facts of the present matter can give rise to an estoppel (which it is not necessary for us to decide) there would be a certain proportionality in the estoppel not arising until the complainants, by the various statutory and regulatory mechanisms described in the appellant's supplementary outline of submissions, became employed by the same employer who operated the other hospitals where the complainants did not want to serve. Another central element of the doctrine of estoppel is that there must be proportionality between the remedy and the detriment which is to be avoided - see Verwayen at 413. 62 As, in our view, no estoppel could have arisen in the present circumstances, it is not necessary to consider whether, as a matter of law, an award can be in effect varied or rendered ineffective by an estoppel or waiver - see Kidd v Savage River Mines (1984) 6 FCR 398 and Jackson v Monadelphous Engineering Associates Pty Ltd (unreported, Industrial Relations Court of Australia, Moore J, 17 October 1997, No 281 of 1997). 63 The appellant relied on the fairly recent decision of a Full Court of this Court in Horsman v Commissioner of Main Roads [1999] FCA 1733. In that case an employee was found to be estopped from issuing proceedings for wrongful dismissal because he had, as part of the terms of settlement of the dispute arising out of his dismissal, agreed to that dispute being referred to arbitration and, further, had agreed to accept whatever recommendations the arbitrator might make. In any event, the appellant in Horsman did not contend that, as a matter of law, there could be no estoppel. The case turned on matters of agency (the union acted for Mr Horsman in negotiating the settlement), alleged insufficient evidence of reliance, proportionality and the like. 64 Counsel for the appellant conceded in argument that if the appellant were unsuccessful on the estoppel point, that would also dispose of the waiver ground. The same applied to the ground which alleged "abuse of process". Mr Tannin said "… the abuse of process [point]does not take the matter a great deal further" and "I don't think in the end it gets us anywhere". We agree with his assessment. 65 That leaves the matter of the Industrial Magistrate's exercise of discretion. Pages 230-232 of the Appeal Book comprise a transcript of the proceedings which took place after his Worship had delivered his reasons for finding that the complaints had been proved. The appellant and the respondent were each represented by counsel. Counsel for the respondent moved for orders that $77.94 be paid to each of the complainants. There was no submission from the appellant's counsel that there should not be an order for any payment. The argument was as to whether the payment should be made direct to the complainants or to the respondent on their behalf. In those circumstances, we do not consider that the appellant is entitled to argue that the Industrial Magistrate failed to exercise his discretion or exercised it wrongly. 66 For the foregoing reasons we would dismiss the appeal. Pursuant to s 347 of the Act it would appear that no order for costs would follow but the parties may be given liberty to apply in that regard. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment of Justices Lee and Carr.

Estoppel and Waiver in the Enforcement of Industrial Awards 17 The rights conferred and the obligations imposed upon persons and organisations bound by industrial awards are statutory in origin. In the case of awards under the Industrial Relations Act 1988, as with its predecessor The Conciliation and Arbitration Act 1904 and its successor by amendment The Workplace Relations Act 1996, the awards are not themselves laws of the Commonwealth. But, once made, their provisions are given the force of laws of the Commonwealth by the terms of the Act --Ex parte McLean (1930) 43 CLR 472 at 479. It is the Act itself which renders an award made by the Commission binding on parties to the relevant industrial dispute and other organisations and persons specified in the Act (s 149 Industrial Relations Act 1988 and s 149 Workplace Relations Act 1996). 18 The nature of the relationship between awards and contracts of employment has been much agitated - de Meyrick, The Interaction of Awards and Contracts (1995) 8 AJLL 1 and the cases and articles there cited. But the present law is plain. The award is independent of contract. It is neither incorporated by statute nor by implication into the contract of employment - Byrne v Australian Airlines Ltd (1995) 185 CLR 410. Nor can those bound by an award contract out of it - Josephson v Walker (1914) 18 CLR 691 at 700 (Isaacs J) approved in Byrne at 421. That is not to say that a contract may not be made which confers benefits upon an employee over and above those conferred by the award - Byrne at 421. Nor does it prevent parties from expressly agreeing to incorporate the terms of an award into their contract of employment thus providing remedies over and above those provided by statute - True v Amalgamated Collieries of WA Ltd [1940] AC 537 adopted in Byrne at 420 and 444. 19 Up until the enactment of the Workplace Relations Act 1996, an honest and common but erroneous assumption of parties to an award as to the nature of the rights it confers and obligations it imposes has been seen to have little effect against its statutory force. Griffiths CJ in Josephson v Walker put it thus at 696: "The obligation created by [the award] does not depend upon any agreement of the parties express or implied and may arise without their knowledge. If by the award it is determined that journeymen plumbers shall receive not less than a certain rate of wages, each journeyman plumber is entitled to those wages, and although the employer and the employee have gone on for a long time the one paying and the other receiving what each honestly believes to be the proper rate of wages, nevertheless if it is afterward found that the wages paid are less than those fixed by the award, the right of the employee to receive the wages so fixed has accrued." It is possible to perceive in that passage some of the matters which might be relied upon today to found an estoppel. 20 The inability to contract out of an award by virtue of its statutory operation militates against the proposition that parties may be estopped from enforcing its provisions or may waive its benefits in a way that is legally enforceable. The effect of the statutory provisions which give awards their binding force are at least as powerful against the common law and equitable principles of estoppel and waiver as they are against the common law of contract. There is nothing novel in the general proposition that statutes which preclude contracting out of the rights and obligations they confer will defeat the application of estoppel and waiver to like effect - Beckford Nominees Pty Ltd v Shell Co of Australia Ltd (1986) 73 ALR 373 at 378 (Pincus J). 21 The application of principles of estoppel and waiver to the enforcement of statutory rights depends upon their consistency with the terms and purpose of the statute creating the rights - Spencer, Bower and Turner, The Law Relating to Estoppel by Representation 3rd Edition, Butterworths (1977) at par 142. The general principle is that the availability of contractual variations, estoppel or waiver of a statutory right depends upon whether it is a private right only, or has also a public character in the sense that the general welfare of the community, or the interests of the class of persons whom it is the object of the law to protect, require it to be upheld against those common law and equitable doctrines. That principle is reflected in the judgment in Commonwealth v Verwayen (1990) 170 CLR 394 at 456 per Dawson J, with whose analysis of the law and facts Deane J generally agreed, and at 486 per Gaudron J. Mason CJ, although dissenting in the result in that case for reasons not relevant to the present point, acknowledged that some statutory rights are capable of being extinguished by the person for whose benefit they have been conferred. Some rights however could be conferred for reasons of public policy so as to preclude contracting out or abandonment by the individual concerned (404). At 405 his Honour said: "On the footing that the right to plead the statute as a defence is a right conferred by statute, the respondent's contention that the right is capable of waiver hinges on the scope and policy of the particular statute…The issue is not whether the relevant provisions are beneficial to the public, but whether they are "dictated by public policy" and enacted "not for the benefit of any individuals or body of individuals, but for considerations of state". Although in one sense all statutes give effect to some public policy…the critical question is whether the benefit is personal or private or whether it rests upon public policy of expediency…". His Honour concluded in that case, consistently with the position taken by the other Justices, that it was possible to contract out of a statutory provision imposing a time bar or to deprive it of effect by other means such as waiver (406). Consistently with that conclusion the considerations that would preclude parties from contracting out of a statutory right would also preclude its effective barring or extinguishment by operation of estoppels based upon representations or extinguishment by waiver. 22 At least up until the amendment of the Industrial Relations Act 1988 by the Workplace Relations and Other Legislation Amendment Act 1996 (WROLA Act), there was a well established line of judicial authority in relation to industrial awards inimical to the notion of contracting out of award obligations and, a fortiori, the invocation of principles of estoppel or waiver in relation to them. The underlying philosophy goes back to the beginnings of industrial law in Australia. It is exemplified in Duncan v Ellis (1916) 21 CLR 379. That case concerned a prosecution brought under the Factories and Shops Act 1915 (Vic) against an employer who had paid his employee less than the minimum rate applicable by statutory determination in the belief induced by his employee that he was younger than the age which would have entitled him to that rate. It was not a defence that the employer reasonably believed what his employee had said. The primary object of the Act was "the benefit of the public" in the sense that it was an Act "not merely for regulating certain trade matters but, generally speaking, one of social reform - an Act for improving the condition of wage earners and others, not only for their sake but for the public betterment which will ensue from these provisions", per Barton J at 382. Isaacs J at 385 identified as the fundamental notion of the Act: "…the inability of employees to bargain effectively for themselves as to their surroundings and their remuneration, and therefore, in order to protect them as a class and carry out the professed object of the enactment, the Legislature have found themselves compelled to lay down a rigid rule, precluding inquiry as to accident, or inadvertence, or negligence, or other person's acts, except where it has expressly or by necessary intendment introduced those factors…" Although estoppel was not raised in Duncan, it was relied upon in similar circumstances in Walsh v Commercial Travellers Association of Victoria (1940) VLR 259. An adult who had obtained employment by fraudulently misrepresenting that he was 19 and had been paid the rate of wages payable to persons of that age, sued his employer to recover the difference between such rate and the Wages Board Rate prescribed for adults. He was held by the Full Court to be entitled to succeed despite his own fraud. Neither estoppel nor a counterclaim for deceit could avail the defendant. The relationship between the inability to contract out of the obligations and the inapplicability of estoppel was made clear by Mann CJ at 263: "It would destroy in a large measure the operation of the statute to allow a plea of estoppel where the statement relied upon constituted the means employed to bring about a contract of employment although the contract itself can afford no defence." See also at 268 per Gavan Duffy J. Walsh was followed in Kidd v Savage River Mines (1984) 6 FCR 398 by Gray J dealing with an award made under the Conciliation and Arbitration Act 1904. His Honour said at 409: "It is a sound principle that statutory rights should not be defeated by estoppel, especially statutory rights created for the benefit of the public or a section of the public. The rights given by the Award in the present case are of such a nature. They have statutory force by virtue of the terms of the Act. The obligations laid down by the Award are absolute, and prevail against any contract to the contrary, as did the provisions of the statute considered by the Full Court in Walsh's case. In my view a claim under an Award cannot be defeated by estoppel." And dealing with the Industrial Relations Act 1988 in Jackson and Wilson v Monadelphous Engineering Associates Pty Ltd (unrep IRCA 17.10.97), Moore J, sitting in the Industrial Relations Court of Australia, after referring to Byrne and authorities concerning awards under State law, said that: "If an employee cannot agree to forego rights conferred by an award or Division 3, then it is unlikely an estoppel precluding their enforcement can arise from the conduct of an employee." (at 59) His Honour noted the changed statement of objects of the Industrial Relations Act 1988 introduced by the Industrial Relations Reform Act 1993, and observed: "While the principal object of the Act remained the prevention and settlement of industrial disputes, the above paragraphs [s 3(b) and (c)] disclosed maintaining wages and working conditions by the protective mechanism of awards and fair bargaining as an aspect of the purpose." He thought however that different considerations might arise in relation to the Workplace Relations Act 1996 with its greater emphasis on workplace based and individual agreements. 23 The breaches of the award alleged in the complaints all took place between June 1993 and June 1995. The right to take proceedings for penalties in respect of all of these breaches had accrued pursuant to s 178 of the Industrial Relations Act 1988 and prior to the passage of the WROLA Act. Although the WROLA Act provided for pre-existing awards to be of no effect in respect of anything other than "allowable matters" after an interim period of eighteen months, there is nothing which would displace the operation of s 8(d) of the Acts Interpretation Act 1901 (Cth) relating to the continuance of accrued causes of action. As I observed in Horsman v Commissioner of Main Roads (unrep 14/9/98 French J WG 111 of 1997): "There is no express intention to be found in s 44 of the Workplace Relations and Other Legislation Amendment Act 1996 (Cth) that the new penalty for a breach of s 178 should apply to offences committed before the commencement of the Workplace Relations and Other Legislation Amendment Act 1996. The relevant amending provision is simply in these terms: "Subparagraph 178(4)(a)(ii) - omit $1,000" substitute "$10,000 for a body corporate or $2,000 in other cases."" The penalty provision as it stood prior to the WROLA Act 1996 continued to apply in relation to breaches of award which occurred prior to the amendment. In my opinion therefore the proceedings were in truth brought under s 178 of the Industrial Relations Act 1988 as it stood in June 1995. The questions of estoppel and waiver raised in this case fall to be considered by reference to the state of the statute as it stood at the time the alleged breaches were committed. 24 The effect of the restatement of statutory purpose in the Workplace Relations Act 1996 on the ability of parties to contract out of awards and consequently on the application of doctrines of estoppel and waiver does not therefore arise. On the face of it though it does seem that, notwithstanding the emphasis of that Act on agreements rather than awards, awards are maintained as a "safety net" specifying minimum conditions on certain matters including rates of pay. The provisions of the Act under which they are made are likely therefore to be construed so as to continue to render ineffective attempts to contract out for lesser than minimum conditions. In any event the provisions of the Industrial Relations Act at the time of the breaches found to have occurred in the present case were of the same character as those which had preceded it and, for the reasons explained by Moore J in Monadelphous, precluded contracting out and the application of the doctrines of estoppel and waiver. Those doctrines being inapplicable, grounds 1 and 2 of the appeal must fail. 25 Nothing that I have said in relation to the question of contracting out of award provisions or the availability of the defences of estoppel or waiver in relation to their enforcement should be taken as extending to the special case of agreements to compromise or settle disputes about the application or construction of awards or like instruments. Nor can it be taken as stating any principle affecting agreements involving the selection of dispute resolution mechanisms in such cases. I say this to distinguish, as inapplicable to the present case, the decision of the Full Court in Horsman v Commissioner of Main Road [1999] FCA 1733 which was cited in argument. The appellant in that case alleged that he had been unfairly dismissed from his employment by the Commissioner of Main Roads. He was found to have agreed, in advance of an arbitration by a Commissioner of the Australian Industrial Relations Commission, to abide by the Commissioner's recommendations. He had engendered in the employer an assumption that he would abide by those recommendations and the employer had acted accordingly. That process having yielded a result which did not satisfy him, he was held estopped from bringing proceedings for unfair dismissal in the Federal Court. No question appears to have been raised about the availability of the doctrine of estoppel in the way that it has been raised in this case. In any event, the area of compromise agreements and agreed mechanisms for resolution of disputes involving awards requires specific consideration as and when cases arise in which questions of contracting out and the availability of estoppel or waiver defences are in issue.

Metropolitan Health Service Board v Australian Nursing Federation

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Judgment (8 paragraphs)

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