New South Wales Nurses' Association v Sydney Local Health District

Decision at first instance 19After summarising the evidence and the parties' respective submissions, Boland J considered whether the representations were, in fact, made to the seven nurses. His Honour found, in respect of Ms Manguzha, that representations were made to her by Ms Dealy to the effect that, "she would not be required to work night shift in the MAU". In relation to the five staff seconded to the MAU, his Honour found that they accepted their secondments, "based on representations made to them that they would not be required to work night shift whilst at the MAU". This finding was based partly on the advertisement which sought expressions of interest to work in the MAU and included the notation that registered and enrolled nurses would be required to work "am and pm" shifts which, his Honour said, "was understood by the five nurses to indicate that the position did not involve a requirement to work on night shift". 20With regard to Ms Rai, his Honour commented that the evidence of representations being made to her was, "not as strong as it is in the case of the other six nurses". Nevertheless, his Honour accepted the evidence of Ms Dealy as the basis for finding that a representation was also made to Ms Rai. Ms Dealy's evidence was that she told Ms Rai, "the pattern of work offered at MAU was for morning and afternoon shifts only over seven days rostering". 21His Honour also made a global finding to the effect that representations were made to the seven nurses: I find that, in respect of the seven nurses, Ms Manning and/or Ms Dealy made representations to them to the effect that they would not be required to work night shift in the MAU. 22Boland J next considered the question whether the representations made to the seven nurses (that they would not be required to work night shift) were intended by the parties to be contractually binding. In addressing this issue, his Honour adopted the principles stated in Goldman Sachs JB Were Services Pty Ltd v Nikolich [2007] FCAFC 120; (2007) 163 FCR 62 per Black CJ at [23]: ... It is well established that if a reasonable person in the position of a promisee would conclude that a promisor intended to be contractually bound by a particular statement, then the promisor will be so bound. This objective theory of contract has been repeatedly affirmed as representing Australian law by the High Court. Thus, in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, 179, the Court said: "It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction." 23His Honour's approach to the issue was set out at [47] of the decision: As the applicant submitted, the question is whether a reasonable person in the position of the employees who are subject of these proceedings would have concluded that the hospital intended to be bound by the representations made as to the shifts to be worked in the MAU. If so, the hospital will be so bound. 24The respondent's contentions before his Honour on the question were essentially twofold. First, if the representations were, in fact, made they could not be contractually binding because those who made the representations had no (delegated) authority to bind the employees. Secondly, if the representations were made, the parties did not intend that the limitation would form part of the contracts of employment of the employees. The appellant's contentions focussed on the formation of a contractual relationship between the respondent and six of the nurses, with the exception of Ms Rai. The appellant contended that the "transaction" between the parties constituted an offer by the employer to change an aspect of the nurses' working conditions (namely, no requirement to work night shift) and an acceptance of that offer by the six nurses. The position of Ms Rai was dealt with by his Honour in the following way: ... it seems that what is put is that Ms Rai was employed on the basis of a preparedness to work a rotating roster (including night shift), but, as permitted by her contract of employment, it was specified she would not be required to work night shift in the MAU. 25In developing its contentions that the representations lacked binding contractual force, the respondent acknowledged that the relevant terms of employment of the seven nurses may be determined partly by statute and partly by contract, as well as by industrial instruments. The operation of the Health Services Act 1997 ('the HSA') and its relevance to the employment of the seven nurses was explained by the respondent and accepted as correct by his Honour. That explanation was reproduced in his Honour's decision and is extracted below: The NSW Health Service consists of those persons who are "employed" under Part 1 of Chapter 9 of the Health Services Act. The "employer" functions are to be exercised by the Director-General (see s 116(3) of the Health Services Act) with some limitations (see s 116(3) of the Health Services Act). Each of the employees covered by the declaration were employed within the SLHD under Ch 9 of the Health Services Act. Under s 116(2) of the Act employment of staff in the New South Wales Health Service, including the exercise of employer functions in relation to that staff, is subject to the requirements of the Health Service Act or any other Act relating to that staff. Under 116(3) the Director-General, subject to sub-section 2, is to exercise on behalf of the Government of New South Wales the employer function to the Government in relation to the staff employed in the New South Wales Health Service. Under s 116A(1) the Director-General may fix salary, wages and conditions of employment of staff employed under Pt 9 insofar as they are not fixed by or under any other law. Under 116A(3) the Director-General may enter into an agreement with any association or organisation representing a group or class of members of the New South Wales Health Service with respect to the conditions of employment, including salaries, wages or remuneration of that group or class. 26It was the respondent's submission in the Court below, by reference to those provisions of the HSA, that there was no contractual term as alleged by the appellant, since such a term did not comply with s 116 and s 116A of the Act. This was said to be because conditions of employment cannot be set other than in accordance with s 116 and s 116A and there was no evidence that the Director-General (the employer) had reached any agreement with the employees to limit their rostering arrangements contrary to the award or authorised any person on his (or her) behalf to do so. 27There was no evidence before Boland J of any authority (written or oral) indicating that the Director-General had delegated his authority to Ms Harris, Ms Manning or Ms Dealy to negotiate and agree to a contractually binding term of employment that the seven nurses would not be required to work night shift while working in the MAU. In recognition of this the appellant sought to rely on the presumption of regularity. 28The appellant's submissions on this issue were that Ms Manning and Ms Harris, "habitually undertook the task of approving the appointment of nurses and preparing and signing documentation which set out the conditions of employment". The evidence relied upon by the appellant to establish this proposition included the letters of appointment of Mr Ozurumba and Ms Rai signed by Ms Manning which attached the terms and conditions of the appointments and, a letter of offer of employment to Ms Raniga signed by Ms Manning, "for Dr Diana Horvath, Chief Executive Officer of the Central Sydney Area Health Service". It also included a position description for Ms Manguzha approved by Ms Harris, as well as various statements made by Ms Manning during the course of her evidence. The appellant also placed reliance on a 'Delegations Manual'. It was the appellant's submission that the 'Delegations Manual' conferred authority upon the Director of Nursing to approve the appointment of staff and, in the context of the evidence of the practices of the hospital, this must be taken to include the capacity to negotiate terms and conditions of employment, subject to any "fixation" by the Director-General. 29In seeking to rebut the presumption, the respondent also relied upon the Delegations Manual and upon the evidence of Ms Manning and Ms Harris that they had not received any relevant delegation authorising them to set terms and conditions of employment. In particular, the respondent placed reliance on Pt 7.1 of the Manual (concerning human resources and payroll matters). Under the sub-heading "Regrading of positions at any level" appears the following notation: Under no circumstances are public health organisations to create positions and/or determine conditions of employment that are not in accordance with: (i) Department of Health approval and policy (ii) An award or determination. 30Boland J also touched briefly on the relevant provisions of the award, and concluded, "As far as I have been able to ascertain, nothing in the award would give the employer the right to unilaterally dispense with or overrule the variation of the employment contract". 31After summarising the parties' submissions on whether the representations constituted a term of the contracts of employment, his Honour found (at [74]): But for the delegation issue, which I shall address shortly, I would have come to the view that in respect of each of the seven nurses that are the subject of these proceedings it was a term of their contract of employment not be rostered to work night shift without their consent whilst working in the Medical Assessment Unit (MAU) at Canterbury Hospital. 32His Honour then turned to the issue of delegation. His Honour's observations and findings on this issue included the following: 1. The Director-General is for relevant purposes the employer: s 116(3) of the HSA. 2. Under s 116A, the Director-General may fix the salary, wages and conditions of employment of staff employed under Pt 1 Ch 9 of the HSA. 3. Section 21 of the Health Administration Act enables the Director-General to delegate his or her functions under the HSA. 4. Under s 49(5) of the Interpretation Act 1987 a delegated function that purports to have been exercised by a delegate shall, until the contrary is proved, to be taken to have been exercised by the delegate. Thus any presumption of regularity is rebuttable. 5. There was no instrument of delegation in evidence from the Director-General authorising Ms Manning, Ms Harris and Ms Dealy to set terms and conditions of employment and the evidence of those three persons was that they had received no such delegation. 6. To alter a contract of employment to provide for no requirement to work night shift without the nurses' consent is to set or fix a condition of employment. 7. The evidence of Ms Manning, Ms Harris and Ms Dealy that they had received no delegation from the Director-General authorising them to set terms and conditions of employment weighs against the presumption of regularity applying. 8. As to whether the Court was entitled to infer that Ms Manning and Ms Harris were so authorised because they habitually undertook the task of approving the appointment of nurses and preparing and signing documentation which set out the conditions of employment the documents and other evidence relied upon did not support the inference that they had the requisite authority to fix conditions of employment. 9. As there is no evidence that Ms Manning, Ms Harris or Ms Dealy had the authority to fix conditions of employment or did so as a matter of course in their dealings with nursing staff, it cannot follow that in the "ordinary course of human affairs" it is to be presumed these individuals had the authority to fix employment conditions by entering into binding contracts of employment with individual nurses. 10. The notion of Directors of Nursing or Nursing Unit Managers having a general authority to negotiate contracts or variations to contracts fixing employment conditions for individual nurses is inconsistent with the scheme of the HSA. It is the Director-General who may, subject to s 116A(1), fix the salary, wage and conditions of employment of staff, subject to that function, or part of it, being delegated in accordance with s 21 of the Health Administration Act. A purpose of such a scheme must be to ensure a high measure of consistency in a large and diverse public sector organisation.

Appeal grounds 33On appeal, the appellant relied on the following grounds: (1)His Honour erred in concluding that the making of a contract of employment with an individual employee constituted the "fixation" of salary, wages or conditions of employment of staff employed in the NSW Health Service for the purposes of s 116A(1) of the Health Services Act 1997 (NSW). (2)... (3)His Honour erred in failing to find that the Directors of Nurses, Ms Manning and Ms Harris, had authority to offer positions to the individual nurses on the basis that the nurses were not required to work night shift whilst working in the Medical Assessment Unit. (4)His Honour erred in giving weight to the subjective opinions of Ms Manning and Ms Harris as to the extent of their delegated authority, rather than determining the question on the basis of the objective intention of the parties assessed in light of the documentation and surrounding circumstances. (5)His Honour erred in failing to find that the Local Health District was bound by the terms of the offers of employment made by the individual nurses by Ms Manning and Ms Harris on the basis of the operation of the presumption of regularity. (6)His Honour erred in failing to find that the Local Health District was bound by the terms of the offers of employment made by the individual nurses by Ms Manning and Ms Harris on the basis that Ms Manning and Ms Harris had ostensible authority to offer employment. 34The appellant's primary contentions on the appeal may be broadly characterised in the following way: (1) Section 116A of the HSA has no application to conditions of employment negotiated on an individual basis between the employer and the seven nurses employed to work in the MAU; (2) There were other alternative sources of power, both statutory and non-statutory, by which conditions of employment were determined; (3) Ms Manning, Ms Harris and Ms Dealy had the requisite authority, either actual or apparent, to determine the conditions of employment in accordance with, or pursuant to, those alternative sources of power.

The Notice of Contention 35The respondent filed a Notice of Contention in the appeal contending that the decision at first instance should be affirmed, and additionally, on the following ground: Boland J found [at 74] that, but for the delegation issue, he would have come to the view that in respect of each of the seven nurses that were the subject of the proceedings it was a term of their contract of employment not to be rostered to work night shift without their consent whilst working in the Medical Assessment Unit (MAU) at Canterbury Hospital. Boland J should have found that: (a) irrespective of the delegation issue, representations made to the seven nurses who were the subject of the proceedings: to the effect that they would not be required to work night shift in the MAU (Representations); did not constitute a term of the nurses' contracts of employment. (b) the Representations were statements about the roster which was being implemented and/or in place at the MAU at the relevant time and did not affect or otherwise limit the operation of clauses 4, 8 and 46 of the Public Health System Nurses and Midwives (State) Award 2011.

Whether s 116A of the HSA applied 36The appellant contended in the Court below and on appeal that the representation (which may be characterised as "no rostering to work night shift without the employees' consent") constituted a term or a condition of the contracts of employment of the seven nurses. Boland J's conclusion on this issue was, but for the issue of delegation, the representation was a term of the nurses' contracts of employment. However, his Honour also found that the only source of power open to the respondent's employees (Ms Manning, Ms Harris and Ms Dealy) to make or agree to a condition of employment was that found in s 116A(1) of the HSA, and since those employees lacked the requisite authority to fix conditions of employment under the provision, the representation was not contractually binding upon the employer. 37According to the appellant, s 116A(1) is not concerned with the negotiation of individual contracts of employment and, therefore, it was unnecessary for there to be a delegation of the power conferred by the provision. Rather, s 116A(1) on its proper construction refers to the "fixation" of salary, wages and conditions of employment collectively. The appellant was not able to direct the Full Court to any authorities in support of its submission. It sought support from the statutory scheme of s 116A, in particular, sub-sections (1), (2) and (3). Those sub-sections provide: (1) The Director-General may fix the salary, wages and conditions of employment of staff employed under this Part in so far as they are not fixed by or under any other law. (2) The Director-General may give directions to a public health organisation requiring the payment by the organisation, on behalf of the Government of New South Wales, of the salary, wages and other employment-related costs (such as superannuation, workers compensation, public liability insurance and vicarious tortious liability) of those members of the NSW Health Service who are employed under this Part to enable the public health organisation to exercise its functions. (3) The Director-General may enter into an agreement with any association or organisation representing a group or class of members of the NSW Health Service with respect to the conditions of employment (including salaries, wages or remuneration) of that group or class. Any such agreement may (subject to Part 2) extend to conditions in respect of the employment of persons convicted of, or charged with, serious sex or violence offences. 38It was the appellant's submission that ss 116A(1), (2) and (3) provide alternative mechanisms by which the salary, wages and conditions of employment of staff may be determined collectively, that is, through direct fixation by the Director-General, by directions to a public health organisation or, by agreement with an industrial organisation. The appellant also called in aid the historical context within which s 116A operates. In this regard, the appellant set out a brief history of some of the relevant legislative provisions. Its submissions on this matter are extracted below: ... the (HSA) Act was amended on 17 March 2006, by the Public Sector Employment Legislation Amendment Act 2006. Prior to 17 March 2006, Area Health Services directly employed staff pursuant to what was s 33 of the Act which provided: 33 Staff of area health services (1) An area health service may appoint and employ such employees as may be necessary for the purpose of exercising its functions. ... The Public Sector Employment Legislation Amendment Act was replaced what was s 115 of the Act with s 116A. Section 115(2) of the Act previously conferred a power upon the Director-General to "determine" the "conditions of employment (including salaries, wages or remuneration) of the employees in the NSW Health Service". That is, the power of the Director-General to "fix" or "determine" conditions of employment existed at a time when staff were employed directly by Area Health Services rather than by the Government of New South Wales. The Public Sector Employment Legislation Amendment Act ("the Amendment Act") was not intended to alter the nature of the employment of employees in the Health Service or the mechanisms by which their terms and conditions of employment were determined. ... In the second reading speech to the Amendment Act, the Minister made clear that the purpose of the legislation was to avoid public sector employees being covered by the Work Choices legislation. ... The power to "fix" or "determine" conditions of employment was necessarily distinct from the negotiation of contracts with individual employees because employees were not, prior to March 2006, employed by the Director-General, but by Area Health Services directly. The power which the Director-General has always possessed must necessarily be understood as operating at a different level. 39There are cases decided in this jurisdiction which touch upon the function of s 116A and its predecessor provisions. In South Eastern Sydney and Illawarra Area Health Service v Health Services Union (on behalf of Peisley) [2007] NSWIRComm 157; (2007) 165 IR 43 at [7], a Full Bench, when referring to common ground between the parties that an ancillary fire safety allowance was provided for and defined in a Department of Health Circular, commented that the Circular constituted a determination made under s 40BA of the then Public Hospitals Act 1929 and s 26 of the Area Health Services Act 1986 (both predecessor provisions to s 116A). In Crown in Right of the State of New South Wales (Director-General NSW Department of Health) in respect of Sydney West Area Health Service v New South Wales Nurses' Association [2011] NSWIRComm 111, a decision of the Full Bench, Boland J, in a separate judgment, considered whether a policy directive had legally binding force pursuant to s 116A(1) (at [40]-[48]). At [38] of the judgment, Boland J referred to cases where employment under the HSA working within an Area Health Service has been found to be contractual in nature. One such case was Gillies v Health Administration Corporation [2003] NSWIRComm 243, a decision of Schmidt J. Gillies dealt with an application under s 106 of the Industrial Relations Act 1996 (the unfair contract provisions). During the course of consideration, Schmidt J considered s 115(2) of the HSA. Section 116A(1) replaced s 115(2) on 17 March 2006 following the amendments to the HSA. Section 115(2) provided: (2) Conditions of employment Except in so far as provision is otherwise made by law, the conditions of employment (including salaries, wages or remuneration) of the employees in the NSW Health Service are to be as may be determined from time to time by the Health Administration Corporation. 40Schmidt J considered whether a policy had resulted from a "determination" by the Health Administration Corporation ('the HAC') pursuant to s 115(2). In the course of her consideration, Schmidt J adverted to the employment of health services staff pursuant to contracts of employment and the obligation on the Area Health Service as part of its function to enter into contracts of employment with staff to have regard to conditions of employment determined by the HAC. At [173] and [174], her Honour said: [173] There was no suggestion in these proceedings that s115 detracts from common law notions that those whom the respondents employ, are employed pursuant to a contract of employment. To the contrary, s33 of the Health Services Act 1997 empowers Area Health Services to appoint and employ employees such as the applicants. Section 37 empowers them to enter into contracts or agreements with any person for the performance of services. In doing so, an Area Health Service is undoubtedly obliged to have regard to conditions of employment determined by the HAC for its employees from time to time to, as well as agreements HAC has entered into with a union (see s115 (7)). Nothing in s115, however, suggests that the fairness of any contract which is entered into with an employee may not arise for consideration under s106 of the Act. (See s404 of the Act.) This is what is sought to be addressed in these proceedings - the alleged unfairness of each applicants' contract of employment. [174] The HAC is empowered to 'determine' the conditions of employment of employees such as the applicants (s115(2)). The evidence did not show that the 1998 policy had resulted from any HAC determination. Even if it had, such conditions may be fixed 'except in so far as provision is otherwise made by law'. It follows that a determination could not be made inconsistently with the various requirements of the Act, or of an order or award made by the Commission under the Act, or of an order made by the Court, in proceedings such as this. 41The cases recognise that departmental Policies and Circulars, which are documents of general application, have been generated under s 116A(1) and its predecessor provisions. This, in turn, tends to lend support to the appellant's construction that s 116A(1) is concerned with collective or group relationships between the employer and employees. It is unnecessary, however, for us to resolve this point. 42There was no issue between the parties in these proceedings that the staff of the respondent are employed pursuant to contracts of employment. At first instance, Boland J noted (at [49]): The respondent acknowledged that the relevant terms of employment of the seven nurses may be determined partly by statute and partly by contract as well as by industrial instruments: see Gillies v Health Administration Corporation [2003] NSWIRComm 243 and, on appeal, Health Administration Corporation v Crocker [2004] NSWIRComm 163; (2004) 138 IR 147 at [32] and Downe v Sydney West Area Health Service (No 2) [2008] NSWSC 159; (2008) 71 NSWLR 633. 43Documentation relied upon by the appellant and tendered, without objection, on the appeal discloses that the Director-General had not delegated any of his functions under s 116A(1), a fact readily conceded by the respondent. It was not suggested (and could not have been) that the Director-General personally enters into individual contracts of employment with staff. If the functions under s 116A have not been delegated, then the source of power to enter into contracts of employment and negotiate terms and conditions of employment must reside elsewhere. This brings us to the appellant's second set of contentions on the appeal.

Alternative source of power to negotiate conditions of employment 44According to the appellant, s 116A(1) was not the only source of authority to enter into contracts or agree to terms or a condition of employment. One non-statutory source of power identified by the appellant as applicable was considered by the Full Federal Court in Commonwealth of Australia and Another v Rian Financial Services and Developments Pty Limited (1992) 36 FCR 101. The appellant placed particular reliance on a passage extracted in the judgment by Davies and Neaves JJ from New South Wales v Bardolph (1934) 52 CLR 455, where Dixon J said: No statutory power to make a contract in the ordinary course of administering a recognised part of the government of the State appears to me to be necessary in order that, if made by the appropriate servant of the Crown, it should become the contract of the Crown, and subject to the provision of funds to answer it, binding upon the Crown. 45In essence, the appellant contended that Ms Manning, Ms Harris and Ms Dealy were "appropriate servants of the Crown" and, as such, could make contracts (or agree to conditions of contracts) binding upon the Crown. 46We perceive a number of difficulties with this particular contention. Davies and Neaves JJ, in Rian, at 105 observed: A power which is to be exercised personally by a person designated may not be exercised by another unless the designated person is granted or holds an appropriate power of delegation. If the person designated has a power to delegate and there has been a delegation, the delegate may exercise this power conferred upon the designated person. 47According to the respondent, the "designated person" in these proceedings is the Director-General and there is no evidence that the Director-General delegated the function of setting terms and conditions of employment to Ms Manning, Ms Harris or Ms Dealy. In particular, there is nothing in Pt 7 of the 'Delegations Manual' that enables those three persons to determine as a condition of employment that persons not work night shift. 48In our view, Ms Manning and Ms Harris, both Directors of Nursing, and Ms Dealy, a Nurse Unit Manager, could not, by virtue of their position, be described as "appropriate servants of the Crown" capable of making representations which bind the Crown, unless they possessed the appropriate authority. According to the respondent, the relevant employment functions, which are set out in s 116 and s 116A, are conferred upon the Director-General. There was no issue that the Director-General had not delegated his or her function under s 116A. This leaves s 116, the other provision of the HSA which deals with the employment of the seven nurses employed to work in the MAU. 49Section 116 of the HSA is extracted in full below: Employment of staff generally (1) The Government of New South Wales may employ staff under this Part: (a) to enable local health districts and statutory health corporations, and the public hospitals that they control, to exercise their functions, and (b) to enable declared affiliated health organisations to exercise their functions in relation to their recognised establishments and recognised services, and (c) to enable the Director-General to exercise his or her functions under Chapter 5A in relation to ambulance services, and (d) to enable the Director-General to exercise his or her functions under Part 1A of Chapter 10 in relation to the provision of services to public health organisations and the public hospitals that they control, and (e) to enable the Health Administration Corporation to exercise its functions under this or any other Act. (2) The employment of staff in the NSW Health Service, including the exercise of employer functions in relation to that staff, is subject to the requirements of this or any other Act relating to that staff. (3) The Director-General may, subject to subsection (2), exercise on behalf of the Government of New South Wales, the employer functions of the Government in relation to the staff employed in the NSW Health Service. Note. The Director-General's functions under this or any other Act may, under section 21 of the Health Administration Act 1982, be delegated to any person. (4) The Director-General may create divisions (however described) of staff in the NSW Health Service. (5) This section does not limit the purposes for which, or the manner in which, staff may be employed in the NSW Health Service.

Whether Ms Manning, Ms Harris, Ms Dealy had the requisite authority 50According to the appellant, s 116 was an alternative source of power which enabled Ms Manning, Ms Harris and Ms Dealy to make representations concerning matters of employment of staff which were contractually binding upon the respondent. This was because there was at the relevant time a delegation of the functions under s 116(1)(a) to, at least, Ms Manning as the Director of Nursing. 51In order to demonstrate this the appellant tendered, without objection, on the appeal, an affidavit of Joanne Moffitt, an industrial officer in the employ of the appellant. The affidavit annexes instruments of delegation and explanatory material. None of this material was before Boland J. 52The material discloses that on 5 April 2006, the Director-General, pursuant to s 21 of the Health Administration Act 1982, delegated authority to the Chief Executive, Area Health Service, to exercise the functions of employer of staff of the NSW Health Service, other than the Health Executive Service, and except for the functions of fixing salary, wages and conditions of employment under s 116A of the HSA. 53It was the respondent's contention that this function could not have been, and was not, sub-delegated to Ms Manning or Ms Harris as Directors of Nursing or to Ms Dealy as a Nurse Unit Manager by the Chief Executive Area Health Service, to authorise them to negotiate terms and conditions of employment. The appellant's contention was that there was a sub-delegation of that function to the Directors of Nursing at least. This sub-delegation was said to be found in the 'Delegations Manual'. 54Boland J considered the appellant's submission that the manual conferred authority upon Ms Manning as the Director of Nursing to fix employment conditions by the negotiation of contracts of employment with the individual nursing personnel. Boland J commented that the manual purportedly conferred authority upon the Director of Nursing to sign off on the appointment of staff (at [69]). Later in the judgment he concluded that the manual would not be regarded as an instrument of delegation made under s 21 of the Health Administration Act 1982 because it purports to be an exercise of power under the Public Hospitals Act 1929 (repealed). His Honour also concluded that, "the Manual appears to be merely a statement of policy without statutory force related to a condition of subsidy" (at [93]). His Honour added (at [94]): If the Manual was a valid instrument of delegation delegating the Director-General's authority to the Chief Executive and in turn the Chief Executive's authority to specified persons it would show conclusively that Ms Manning as a Director of Nursing at Canterbury Hospital had no delegated authority to fix conditions of employment. Nowhere in the Manual does it permit a Director of Nursing (categorised in the Manual as a "Service Manager - Facility Based") to fix employment conditions by the negotiation of contracts of employment with individual nursing personnel. 55Boland J then considered whether the function "Signing of Confirmation of Appointment Letters" for "Other Positions" by "Service Managers" enabled Ms Manning to make an agreement with the nurses to vary the contracts of employment to provide that they would not be required to work night shift without their consent. His Honour found (at [95]): [95] ... It does not follow that such a function encompasses the fixing of conditions of employment under an employment contract and in my opinion, in the absence of evidence to the contrary, signing confirmation of appointment letters does not amount to fixing employment conditions. 56His Honour found, in short, that neither Ms Manning, nor Ms Harris, as Directors of Nursing, nor Ms Dealy, who made the representations on the basis of Ms Manning's instructions, had delegated authority to negotiate the terms of employment contracts or to enter into binding contractual arrangements with individual nurses. 57We agree with his Honour's findings on the issue of delegation. If we proceed upon the assumption that the representation was contractual there is ample evidence in our view to support a conclusion which is contrary to the appellant's contentions that there was an actual delegation of authority. 58The 'Delegations Manual' which, according to the appellant, contains the sub-delegations from the Chief Executive of the Sydney South West Area Health Service, set out in its stated purpose at Pt 1.4: The purpose of this Delegations Manual (The Manual) is to detail: a) the authority of the Chief Executive. b) the authority delegated by the Chief Executive to specified staff positions and various committees; and c) the authority delegated by the Chief Executive to incur expenditure to specified staff positions and various committees. The underlying intention in establishing such delegations is to facilitate the effective and efficient operation of SSWAHS within the precepts and sanctions set by NSW Health and the Chief Executive. 59Under Pt 2.3 of the manual, a delegation to a person is not transferable by the delegate. The delegations concerning human resources and payroll matters as found in Pt 7. In Pt 7.1, under the sub-heading "Regrading of position at any level" appears the following: Under no circumstances are public health organisations to create positions and/or determine conditions of employment that are not in accordance with: (i) Department of Health approval and policy. (ii) An award or determination. 60The appellant relied upon Pt 7.1 of the manual under the sub-heading "Signing of Confirmation of Appointment Letters for the following positions:". The last position, entitled "Other positions", nominates the "Service Manager" responsible as one of the authorised delegates to sign off on appointment letters. The manual under Pt 4:1 defines "Service Managers - Facility Based (Hospital Tier 2 Positions)" as including the position of Director of Nursing. The appellant contended that in the context of the evidence of the practises at Canterbury Hospital the authority delegated to a Director of Nursing (Ms Manning) to sign off on letters of appointment must be taken to include the capacity to negotiate the terms and conditions of employment of employees subject to any "fixation of terms and conditions by the Director-General". The same submission was advanced in the Court below and rejected by Boland J in the passage we have extracted earlier. 61We agree with his Honour's conclusion on the issue. If the function of signing off on appointment letters constituted or encompassed the function of negotiating terms and conditions of employment, there would be no need for the manual to delegate additional functions specifically concerned with terms and conditions of employment, such as the regrading of positions at any level, to which reference has already been made, and the delegated functions in Pt 7.1 of determining the commencing salary rate, salary progressions, and changes of title. It was not suggested by the appellant that any of those functions were delegated under the manual to the Director of Nursing. In any event, on any reasonable construction, it must be concluded that "signing off on" letters of appointment cannot amount to, or include, a determination of the contents of such letters vis-a-vis conditions of employment. Moreover, in oral evidence, Ms Manning stated that she had not received a delegation of authority to set terms and conditions of employment from either the Director-General, the Chief Executive Area Health Service or the General Manager of Canterbury Hospital. Ms Harris' oral evidence was to the same effect. Ms Dealy's evidence was that she did not sign off on letters of appointment and she had no capacity and no delegated authority to set terms and conditions of employment for nurses.

Whether apparent or ostensible authority 62In the absence of any express authorisation in the 'Delegations Manual', by any person, of delegation to Ms Manning, Ms Harris and Ms Dealy (to determine conditions of employment), the appellant submitted, in the alternative, that the Director of Nursing had apparent or ostensible authority to act on behalf of the Director-General to employ nursing staff. The submission was developed by resort to the presumption of regularity. The same submission was advanced and rejected in the Court below. 63On appeal, the appellant contended that Boland J had considered the matter too narrowly by limiting his consideration of the presumption to whether it could be presumed that Ms Manning, Ms Harris and Ms Dealy had actual authority to enter into binding contracts. Instead, it was contended, consideration should have been given to whether it could be presumed in the circumstances that someone with relevant authority approved arrangements being put in place such that nurses engaged in the MAU would not be required to work night shifts. It was contended further by the appellant that there are ample grounds upon which it may be inferred that Ms Manning and Ms Dealy, "were not on a frolic of their own" when representing to the individual nurses that the staff in the MAU were not required to work night shifts. In support of this submission, the appellant pointed to the advertisement for clinical staff positions on the basis that only morning and afternoon shifts were required, as well as the fact that the advertisement was issued internally through Nursing Administration, and that the hours of work determined by Ms Manning were in accordance with the Operations Manual for the MAU which was prepared by the respondent centrally. 64We are unable to accept those submissions. Any consistency of expression between what Ms Manning and Ms Dealy told the nurses employed to work in the MAU and what appears in the advertisement provides no sound basis for an inference that Ms Manning (and Ms Dealy), or someone, had ostensible authority to act for the Director-General when making the representations. Further, we agree with the respondent's submissions on this matter to the effect that the "advertisement" was an internally generated document more akin to seeking expressions of interest. The document expressly stated, for example, that interested staff should forward "your expression of interest ... to ... nursing administration ...". Moreover, although the document refers to nursing administration, there was no evidence that it was issued through nursing administration. Ms Manning, in oral evidence, could not recall whether she drafted it, and, the Operations Manual does not specify the hours of work of nurses or any stipulation that nurses may never have to work night shift. 65The appellant also relied upon, as applicable to its contentions concerning apparent or ostensible authority, an aspect of the presumption of regularity, referred to as the "indoor management rule". According to the appellant, the rule is reflective of the fact that a person dealing in good faith with a company is entitled to presume that its officers and agents have authority to enter into transactions with the person. According to the appellant, the rule is capable of application with respect to third parties dealing in good faith with government or government agencies. Support for this latter proposition was said to be found in Robertson v Minister for Pensions [1949] 1 KB 227 where Denning LJ said (at 232): ... if a government department in its dealings with a subject takes it upon itself to assume authority upon a matter with which he is concerned, he is entitled to rely upon it having the authority which it assumes. He does not know, and cannot be expected to know, the limits of its authority. The department itself is clearly bound, and as it is but an agent for the Crown, it binds the Crown also; and as the Crown is bound, so are the other departments, for they also are but agents of the Crown. 66The appellant contended that the requirements which need to be satisfied for a person to have apparent or ostensible authority are that an agent is held out as having authority to act on behalf of the principal, the third party relies upon the agent's apparent authority and the principal is competent to enter into the transaction. Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 was relied upon by the appellant for the proposition that a person is commonly "held out" to have authority to act on behalf of the principal by reason of occupying and being permitted to act in a position ordinarily expected to have such authority in a particular respect. Reliance was placed on a passage from the judgment where Brennan J said (at 178): To found an estoppel as to the authority of an officer or agent who is engaged in a transaction for the purposes of the company's business or otherwise for the company's benefit and who is purporting to exercise an authority which an officer or agent in that position would ordinarily be expected to have, the mere carrying on of the company's business with officers and agents performing particular functions on its behalf and in its interest is a sufficient representation by the company. Although such representations by the company seem a slender foundation on which to build an estoppel, the indoor management rule treats them as sufficient unless the party relying on the rule is put on notice to inquire into the authority of the officers or agents to do what they did in the transaction. 67The appellant sought to adopt from the above passage the principle that it is sufficient to establish an estoppel that officers or agents were acting for the benefit of the principal and purporting to exercise an authority which the officer or agent in that position would ordinarily be expected to have: see also Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [36]. In the present circumstances, the respondent was said to be bound by representations made by Ms Manning and/or Ms Dealy as they were both clearly held out to have authority to offer employment to the individual nurses and to make representations as to the conditions of employment to apply upon acceptance. The following matters were relied upon to support this contention with regard to Ms Manning: (a) The Director of Nursing commonly prepared and signed off on letters of appointment setting out the conditions of employment to apply. (b) The position description for the Director of Nursing included responsibility to "recruit suitable qualified nurses within available resources" and to "establish and monitor ... the nurse staffing requirements for each unit". (c) Ms Manning made decisions with respect to the staffing profile for the MAU and the hours of work required of staff employed in the unit which were communicated to interested staff members. (d) Ms Manning prepared or had prepared the advertisement for the positions in the MAU which indicated that only morning and afternoon shifts were required to be worked. (e) Ms Manning undertook a process of meeting with interested members of staff to explain the nature of the work in the MAU and the conditions of employment to apply. (f) The letters of secondment with respect to employees who commenced work in the MAU in February/March 2008 were signed by or on behalf of Ms Manning. 68It was said of Ms Dealy that she was held out to be capable of making representations as to the conditions of employment because the letter of secondment to the nurses who commenced working in the MAU in February/March 2008 indicated that rosters and specific work requests were to be negotiated with Ms Dealy, and Ms Dealy was the convenor of the interview panel which interviewed Ms Rai and Ms Manguzha. In addition, each of the individual nurses employed to work in the MAU relied upon the representations made to them. 69For reasons which follow, we do not accept the appellant's submissions that Ms Manning and Ms Dealy had ostensible authority to make the representations said to bind the employer. 70The operation of the indoor management rule, which had its genesis in company law, was explained by Brennan J in Northside Developments (at 176 to 177): The indoor management rule is really a presumption of regularity. To use the Latin maxim, omnia praesumuntur rite esse acta: Morris v Kanssen, at 475. The presumption is no more than a presumption of fact. Whence does it arise? It arises from the likelihood that a company has given to its officers and agents the authority needed to carry on its business and to act for its benefit within the limits of the authority which officers and agents in their respective positions would ordinarily possess. The presumption might reasonably be made when the officers or agents of a company engage in a transaction for the purpose of a company's business or otherwise for the benefit of the company and the transaction is one that officers or agents in their respective positions would ordinarily be expected to have the company's authority to undertake. In that situation, a party dealing with the company in good faith is entitled to presume that the officers and agents had that authority: cf. Uxbridge Permanent Benefit Building Society v Pickard, at 258. Being a presumption of fact, the indoor management rule is displaced when the circumstances put on inquiry the party seeking to rely on the rule. 71In Pacific Carriers, the High Court considered the general principles which apply where an officer is held out by a company as having authority to act on its behalf. At [36] of the judgment, the High Court said: ... Where an officer is held out by a company as having authority, and the third party relies on that apparent authority, and there is nothing in the company's constitution to the contrary, the company is bound by its representation of authority. "The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract." It is not enough that the representation should come from the officer alone. Whether the representation is general, or related specifically to the particular transaction, it must come from the principal, the company. That does not mean that the conduct of the officer is irrelevant to the representation, but the company's conduct must be the source of the representation. In many cases the representational conduct commonly takes the form of the setting up of an organisational structure consistent with the company's constitution. That structure presents to outsiders a complex of appearances as to authority. The assurance with which outsiders deal with a company is more often than not based, not upon inquiry, or positive statement, but upon an assumption that company officers have the authority that people in their respective positions would ordinarily be expected to have. In the ordinary case, however, it is necessary, in order to decide whether there has been a holding out by a principal, to consider the principal's conduct as a whole. 72These principles extracted from Northside Developments and Pacific Carriers are difficult to apply to circumstances where representations are made to nurses whose conditions of employment are governed partly by contract and partly by statute (which we note includes coverage under the relevant award) and where the majority of the nurses to whom the representations were made are not third parties or "outsiders" but persons who were in the employ of the respondent at the time the representations were made. Nevertheless, in attempting to adapt the principles from the two authorities to the matters relied upon by the appellant to show that the respondent, in effect, "held out" Ms Manning and Ms Dealy as having the requisite authority to offer employment to the nurses and to make representations, we are not persuaded Ms Manning or Ms Dealy had ostensible authority to act for the respondent when making the representations. 73At the time Ms Manning made the representations she had actual authority under sub-delegation to sign off on letters of appointment. However, that authority was limited and could not be said to extend to the setting of conditions of employment, regardless of whether Ms Manning had actual or apparent authority. The delegation was simply limited to signing letters of appointment, not to negotiating and deciding upon the contents of those letters vis-a-vis conditions of employment. Moreover, it is unlikely, in our view, that Ms Manning, by virtue of her position as a Director of Nursing, could ordinarily be expected to have had the authority to make binding representations concerning conditions of employment on behalf of her employer. Such matters, where they have been delegated, are reserved in the 'Delegation Manual' to persons occupying positions of higher seniority within Health Services. Matters relied upon by the appellant such as recruitment, staff profiles, hours of work, preparation of advertisements, convening of meetings and signing off on letters of secondment, are largely administrative matters in order to facilitate the setting up of the MAU. Of themselves, they do not constitute or amount to determinations or the negotiation of terms and conditions of employment of those nurses employed to work in the MAU. Ms Dealy's actions in convening interview panels and negotiating the roster could not, on any reasonable construction, be said to constitute a "holding out" by the respondent that she had authority to act on its behalf in negotiating and determining terms and conditions of employment. 74The appellant also contended that Boland J erred in placing undue reliance upon the subjective understandings of Ms Manning and Ms Harris as to the extent of their authority. The source of the error was said to lie in the repeated observations by his Honour that Ms Manning and Ms Harris stated they had no delegation from the Director-General to set terms and conditions of employment. We see no basis which might have provided some support for the contention. Boland J set out the test. His Honour recognised that the extent of any authority held by Ms Manning or Ms Harris was to be ascertained by an objective assessment of the relevant documentation and the surrounding circumstances. There is no reason to suggest that his Honour did not apply that approach to the issue of delegation. The objective evidence was that neither Ms Manning nor Ms Harris possessed the requisite authority to set terms and conditions of employment. The fact that his Honour referred to the evidence of Ms Manning and Ms Harris, in our view, reflects part of the surrounding circumstances which his Honour was entitled to take into consideration.

Conclusions on appeal 75In light of the foregoing remarks we would not disturb Boland J's ultimate conclusion in refusing to grant declaratory relief. However, we do not agree with his Honour's finding that it was a term of the contracts of employment of the seven nurses that they not be rostered to work night shift without their consent while working in the MAU. This finding, in effect, constituted the underlying premise, or the first plank, upon which his Honour made his subsequent findings. It is our view that the representations which were made were not contractual in nature, they were aspirational. This is the subject of the respondent's Notice of Contention to which we now turn.

The Notice of Contention 76According to the respondent, the representations made to the seven nurses did not constitute a term of the nurses' contracts of employment. No issue was taken by the respondent with the test set out by Boland J to determine whether the representations were promissory, but issue was taken with the application of that test. The respondent relied upon the following matters to demonstrate its contention that the representations were not contractual in nature, that is, they were not: (a) (The) subject of any undertaking by the employee or the respondent one to the other, to abide by or comply with this representation; (b) Framed in language that could be regarded as promissory; and (c) Expressly incorporated into employees' employment contracts. 77The respondent also relied upon the following matters: (a) Mere explanations as to how the MAU would work is not a sufficient basis upon which to find that a reasonable person in the position of the seven nurses would conclude that the respondent was not going to rely upon the award in the future, especially when the reasonable person would be aware of the nature of rotating shiftwork at the respondent's hospitals; (b) Reliance of Boland J on Ms Dealy's evidence (that the pattern of work was for morning and afternoon shifts only) is consistent with a statement of the then roster pattern in accordance with the award and is not a limitation as to future rosters. It is also consistent with other evidence with regard to the five secondees. There was always to be a night shift in the MAU; (c) It cannot be seriously suggested that all of the terms of the advertisement had contractual effect for the initial employees. The advertisement referred to the number of beds, the work of MAU, when patients were accepted and the level of staff, in addition to the reference to "am and pm" times; (d) Ms Manguzha's evidence, at its highest, as found by Boland J, was that she had worked earlier in the MAU and not been required to work night shift, she spoke to other employees and was told there was no night shift; and, she was informed during her interview (with Ms Dealy and Mr Ozurumba) that she was not required to work night shift; (e) The only evidence found by his Honour with regard to Ms Rai was that one member of the interview panel (Ms Dealy) advised her that the "pattern of work ... was for morning and afternoon shifts only"; (f) Viewed objectively, there is no proper basis in respect of Ms Manguzha and Ms Rai for a reasonable person to believe it was the respondent's intention to agree to a term that the nurses not be rostered to work night shift; (g) The MAU's working practises at the time of the secondments had not been established; (h) The engagements were temporary; (i) There was no evidence that any of the seven nurses were told the award would not apply or that they would not have to work night shift; (j) The terms of the secondment provided that the "roster and any specific work requests are to be negotiated with Ms Sandy Dealy". 78The appellant relied upon the following matters in response to the respondent's Notice of Contention: (a) The positions in the MAU were advertised in February/March 2008 on the basis that only "am and pm" shifts were required to be worked. This fact is significant. A reasonable person reading the advertisement setting out significant conditions of employment would conclude that the employer intended to be bound to afford the conditions promised. As to other information in the advertisement which may not have been intended to be contractual, job advertisements commonly contain a range of information about the employer and the position. Where an advertisement also sets out the rate of pay for a job, no-one would doubt the employer intended to be bound to pay the rate advertised; (b) The representations were unequivocal; (c) Boland J was correct in concluding that the parties intended (judged objectively) that the representations made were to be contractually binding having regard to the following: (i) Hours of work are self-evidently important conditions of employment; (ii) The seven nurses viewed the representations as significant considerations in putting forward expressions of interest; (iii) The hospital was experiencing difficulties in attracting nurses to work in the MAU when it commenced operation. The promise (no requirement to work night shifts) was intended as a specific inducement to attract staff; (d) This is not a case where a comprehensive written agreement prevented the conclusion that oral representations were contended to be binding. The letters of secondment were brief and included the statement: "Your roster and any specific work requests are to be negotiated with Ms Sandy Dealy ..."; (e) In accordance with the correspondence it was open to Ms Dealy to negotiate specific conditions and rostering arrangements; (f) Ms Manguzha was unequivocally informed in her interview that there would not be any night shifts. The same representation was made to Ms Rai during her interview; (g) The respondent's reliance on the award, that the representations did not affect or otherwise the operation of cl 4, cl 8 and cl 46 is misconceived, and Boland J correctly dismissed such reliance. 79We commence our consideration of the respondent's Notice of Contention by reiterating the appropriate test to be applied when assessing whether the representations made to the seven nurses employed in the MAU were intended by the parties to be contractually binding. The relevant question is whether a reasonable person in the position of the seven nurses would have concluded that the respondent intended to be contractually bound by the representations. If so, the respondent would be bound. The question is to be addressed here by reference to the evidence which includes all the surrounding circumstances known to the parties, as well as the purpose and object of the representations: see Goldman Sachs at [23] per Clark CJ. 80The advertisement, as we have noted, was an internal document which called for expressions of interest to work in the Medical Acute Care Unit (MACU) which later became known as the MAU. Its opening words were: "Are you looking for a change and opportunity to work with a new, emerging model of care". The advertisement then refers to the aims of the MACU and informs that MACU staffing will include "1 RN and 1 EN (am and pm)". It concludes with the words "any staff interested in being involved in the project please forward your expression of interest to Catherine Auprince in Nursing Administration by Friday, 14th March 2008". 81As a preliminary observation, it seems to us that a reasonable person would view the words "a new emerging model of care" as indicating that the MAU was, at that stage, in the process of finalising its working practices. Further, the fact that it referred to "expressions of interest" tends to belie a contention that it was intended to incorporate binding terms and conditions of employment. The reference to the hours of work in the advertisement, without more, cannot give rise to a reasonable inference that the hours of work were intended to constitute a binding condition of employment. An advertisement for positions of employment represents a preliminary stage in the process leading up to employment. That is not to say that representations made in an advertisement can never become binding contractual terms. Whether or not they do depends upon an assessment of the surrounding circumstances. The five staff who answered the advertisement and later accepted employment in the MAU accepted their positions on the understanding that they were temporary placements. The letters of secondment advised that all secondments were for a minimum six month period. Importantly, the letters provided that rosters and any specified work requests were to be negotiated with Ms Dealy. The latter statement suggests that rostering arrangements, at that stage, had yet to be finalised and were open to negotiation. The five seconded nurses were internal appointments. They would have been aware that the prevailing rostering system at the hospital under the award was a rotating roster which comprised three shifts: morning, afternoon and night. 82The appellant's reliance on advertised rates of pay as constituting, without more, binding contractual terms (because no-one would doubt the employer's intention to be bound) is misplaced. The terms of the advertisement, together with the surrounding circumstances, such as the facts surrounding the interview and appointment, must necessarily be considered. In Richards v Kuring-gai Shire Council (1926) 8 LGR (NSW) 18, an advertisement for the position of ground keeper set out that the wage, "would be £2 per week but the fees and charges would together make up the living wage". The plaintiff applied and was accepted for the position. The wage, fees and charges did not make up the living wage. The plaintiff later sued to recover the difference. It was held by Curlewis D.C.J. that the plaintiff could not recover. One basis for the finding was that the advertisement did not amount to a guarantee, but was a mere statement as to what the wages and fees, "would probably amount to". 83The appellant contended that the representations made to the seven nurses were unequivocal. Even if we accept this as a correct characterisation, the surrounding circumstances must still be considered. In addition to those matters we have already mentioned, the seven nurses would have been aware that there was a night shift at the MAU which, at the time of the secondments, was undertaken by staff from the Banksia ward. Moreover, in our view, the conditions of employment of the seven nurses, with regard to their rostering arrangements, were governed by the award. In this regard, we agree with the respondent's contentions that the representations made to the seven nurses, that they would not be required to work night shifts without their consent, would not, viewed objectively by reference to the surrounding circumstances (including the fact that the working practices in the MAU had not been finalised) have been intended to preclude future reliance on the provisions of the award. The award provides for shift work (see cl 4 and cl 8). It does not necessarily follow that employees have to work night shifts, but the award does allow or permit persons to be rostered on night shift. Under the terms of the award, persons such as Ms Manning, Ms Harris and Ms Dealy had the capacity by virtue of their positions to roster employees. Ms Dealy was expressly nominated in the secondment letters as the person with whom rosters and any specific work requests were to be negotiated. 84For these reasons, we have concluded that the representations made, when viewed objectively, were not intended to be contractual. Instead, they were merely aspirational. No contract was entered and framed between the subject nurses and the respondent in terms proposed in the declaration sought by the appellant. We consider that, upon that basis, the application for declaratory relief should have been dismissed. 85We agree, therefore, with Boland J's ultimate conclusion, but we have determined to resolve the appeal on a different basis. Accordingly, we would grant leave to appeal and dismiss the appeal.

Orders 86We make the following orders: (1) Leave to appeal is granted. (2) The appeal is dismissed.

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. Decision last updated: 18 April 2013