CONTRACT - THE "EXCESS STAFF" SECTION OF THE BLUE BOOK
55 Although Mr Perry was principally concerned with the "excess staff" section of the Blue Book he submitted that both the Yellow Book and the Blue Book contained most of the terms and conditions of his employment with the Commonwealth. They were the products of negotiations between representatives of the meat inspectors and the Commonwealth. They had been circulated prior to the letters of offers being sent to the inspectors giving them the option of joining the Commonwealth public service.
56 The letter of offer, dated 29 February 1988, which Mr Perry received, was, he said, couched in "language typical of contracts". The letter contained an "offer of appointment" to the APS which Mr Perry was free to accept or not accept. It contained the annual salary which he would be paid on appointment but very little else by way of terms of conditions which would govern his employment were he minded to accept the offer. The details of his conditions of employment on appointment were, he had been advised in the letter, to be found in the Blue Book and the Yellow Book. The contents of these books, he was told in the letter, had been supplemented by general information sessions on the transfer arrangements held in February 1988 and would be further supplemented by superannuation information sessions to be held in March 1988. Mr Perry gave uncontradicted evidence that he had attended the information sessions and been told that, were he to transfer to Commonwealth employment, his terms and conditions would be those set out in the Blue Book.
57 The letter advised Mr Perry that, if he wished to accept the offer of appointment, he should complete an attached election form and return it to Department. This he did. He originally pleaded that the contract, on which he relied, was formed upon the lodgement of this election form on 21 March 1988. He later amended his claim to assert, in the alternative, that the contract was entered in to on or about 15 April 2010, the day on which his employment with the Commonwealth came to an end.
58 Mr Perry submitted that the introductory part of the Blue Book was expressed in what he described as "promissory, contract-type language". He placed particular emphasis on the passage which read: "CONDITIONS OF SERVICE you currently enjoy in the State Service and those you will enjoy as Commonwealth employees."
59 Mr Perry also emphasised that the 1988 Arrangement between the Commonwealth and Victoria stipulated that the terms and conditions of employment of transferred inspectors were to be those contained in the Blue and Yellow Books.
60 The Commonwealth pleaded a multi-layered defence to Mr Perry's principal claim. It denied that the alleged parties intended to enter in to any enforceable contractual terms based on the Blue Book. Even if such a contract had been entered in to, the Commonwealth contended, the terms relied on by Mr Perry were not to be found in the Blue Book. In any event, its submissions continued, the alleged contract was not performed by Mr Perry and he had suffered no compensable loss.
61 The Commonwealth also submitted that it was precluded, by the provisions of s 81B of the PS Act, from entering in to such a contract, at least to the extent that it contained terms relating to superannuation or redundancy entitlements.
62 Mr Perry's statutory claims fall to be assessed in a legislative context. As he was advised in the form he signed on 21 March 1988 when he elected to be appointed to the APS, Mr Perry's transfer from the Victorian to the Commonwealth public service was to be effected pursuant to s 81B of the PS Act. Relevantly that section then provided:
81B(1) Where the Prime Minister certifies in writing that a function that has been performed otherwise than by persons appointed or employed under this Act is to be performed by persons appointed or employed under this Act, the Board may, notwithstanding any other provision of this Act, appoint to the Service, or direct the employment in the Service of, persons who have been involved in the performance of the function.
…
(5) For the purpose of facilitating a transfer of persons into the Service under this section, the Board may , notwithstanding anything in any other provision of this Act or in any other law (other than an industrial award) determine any special terms or conditions of employment that are to apply to the persons.
(Emphasis added.)
63 The reference to "the Service" in s 81B is a reference to the Australian Public Service constituted by s 10 of the PS Act: s 7(1) of the PS Act. The reference to "the Board" is to be construed as a reference to the Public Service Commissioner: see Administrative Arrangements Act 1987 (Cth) s 11(7).
64 The term "industrial award" was defined to include an award made under the former Conciliation and Arbitration Act 1904 (Cth): see s 7(1)(b) of the PS Act. One such award, which was in force in 1988, was the Australian Public Service Redeployment and Retirement (Redundancy) Award 1987 ("the RRR Award"). This award, as its title suggests, made provision for the payment of benefits to Commonwealth employees who were rendered redundant. The relevant clauses of the RRR Award were summarised in the "excess staff" section of the Blue Book. The award provided that it was to prevail over any inconsistent provisions of the PS Act or regulations made thereunder: see Clause 17(b). Senior counsel for the respondent submitted that such a clause was permissible due to s 41A of the Conciliation and Arbitration Act 1904 (Cth), which provided that the Australian Conciliation and Arbitration Commission could, in certain circumstances, make an award that was not, or might not be, in accord with a relevant law of the Commonwealth.
65 The phrase "terms or conditions" was defined, in s 81A of the PS Act, to include "terms or conditions relating to salary, pay or allowances, appointment on probation, long service leave or other leave, or tenure". The definition in s 81A further provided that the phrase "does not include terms or conditions relating to superannuation" (emphasis added).
66 Mr Perry's case was that the terms and conditions on which transferring meat inspectors would be engaged by the Commonwealth had been agreed in the course of negotiations, recorded in the Blue Book and agreed by the Commonwealth and Victoria in the 28 March 1988 Arrangement. The only role that fell to the Commissioner, following the completion of this process, was the offering of the agreed terms to the inspectors and appointing those who expressed a wish to join the APS.
67 These submissions cannot be accepted. Mr Perry was appointed to the Commonwealth public service pursuant to s 81B of the PS Act. Even if it be assumed that the requirements for the establishment of contractual relations between Mr Perry and the Commonwealth had been satisfied, any provisions, in such an agreement, which dealt with superannuation and the payment of redundancy benefits, could not be determined, by the Commissioner, to be terms of Mr Perry's engagement by the Commonwealth. Section 81B(5) had the effect that any redundancy benefits to which Mr Perry might have become entitled were those prescribed by the RRR Award and no provision could be made for superannuation benefits. The statutory definition of "terms and conditions" in s 81A of the PS Act meant that the Commissioner could not determine, pursuant to s 81B(5), terms "relating to superannuation". In my opinion, the contractual terms contended for by Mr Perry requiring a top up payment are terms "relating to superannuation" because it formed part of the sum of superannuation entitlements claimed by Mr Perry. Further, in my view, s 81B(5) also had the effect that the Commissioner could not determine any terms or conditions where the subject matter of those terms and conditions was provided for in an industrial award. Accordingly, any redundancy benefits to which Mr Perry might have become entitled were to be those prescribed by the RRR Award, or other applicable industrial award.
68 Any contractual arrangements, made between Mr Perry and the Commonwealth which preceded his appointment to the APS, and which were not consistent with the provisions of the PS Act, could not be numbered amongst the special terms or conditions of employment offered under the Act.
69 The primacy of the statutory scheme of engagement of public servants was emphasised by the High Court in Director-General of Education v Suttling (1987) 162 CLR 428 at 437-438 (Brennan J, with whom Mason ACJ and Deane J agreed). Speaking of appointments to the New South Wales Education Teaching Service under the Education Commission Act 1980 (NSW) his Honour said that:
Members of the Service are appointed pursuant to the Act and their rights must be ascertained by reference to its provisions. The relationship between a civil servant of the Crown and the Crown has often been described as contractual, though the civil servant has been appointed pursuant to statute: see, e.g., Gould v. Stuart; Carey v The Commonwealth; Lucy v The Commonwealth. However, the contractual nature of the relationship has not been universally accepted: see, e.g., Monckton v Magrath; Morgan v Geddes; The Commonwealth v Welsh; and cf Ryder v Foley. And sometimes an espousal of one view rather than the other has been avoided: see, e.g., Reilly v The King; Kodeeswaran v Attorney-General (Ceylon). If the relationship is contractual, the contract must be consistent with any statutory provision which affects the relationship. No agent of the Crown has authority to engage a servant on terms at variance with the statute. To the extent that the statute governs the relationship, it is idle to inquire whether there is a contract which embodies its provisions. The statute itself controls the terms of the service: McVicar v Commissioner of Railways (N.S.W.).
(Footnotes omitted.)
70 An alternative analysis leads to the same conclusion. That is, there was no scope for the Commonwealth to enter in to any contractual arrangement with Mr Perry prior to and independently of his appointment to the APS by the Commissioner. Any persons who, like Mr Perry, were the subject of a Prime Ministerial certification under s 81B(1), could only be appointed by the Commissioner and then, only on terms prescribed or permitted by the PS Act. No binding contract of employment could be made before the Commissioner had made an appointment under s 81B and the powers of the Commissioner (and the constraints imposed on them) could not be overridden by any pre-existing arrangements to which the appointee was a party.
71 A similar statutory scheme was considered by the ACT Supreme Court in Chapman v Commissioner, Australian Federal Police (1983) 50 ACTR 23. Mr Chapman had been a police officer in the New South Wales public service. He had been offered a job in the Australian Federal Police ("the AFP") and, because of that offer, he had resigned from the New South Wales Police Force. When his appointment with the AFP was not confirmed, he sought to enforce what he said was a contract of employment founded on an oral agreement which he said had been made between him and an AFP officer pursuant to which he would be employed in the AFP. Alternatively he said that there had been a written agreement. He relied on a letter by which he had been advised that his application to join the AFP had been successful and alleged that by that letter he had been appointed to the role, or, at least, that it had been agreed that he would be appointed. The letter had been accompanied by an "Acceptance of Offer" form which Mr Chapman was invited to sign and return. He had done so. The oral and written representations had been made by an officer of the AFP.
72 Mr Chapman's claims were rejected by Kelly J.
73 Appointment to the AFP was governed by the Australian Federal Police Act 1979 (Cth). Appointment was effected by an instrument in writing signed by the Commissioner or a delegate appointed by him. No such instrument had been issued to Mr Chapman. The officer who had communicated with Mr Chapman did not hold a relevant delegation. His Honour accepted that an offer of appointment had been made and the offer had been accepted in writing. Nonetheless he held that no lawful or enforceable contract of employment had existed. He said (at 33) that:
Since the [statutory] code, the source of the power, does not include power to appointment by contract, the Commissioner had no power … to make an agreement enforceable against him to appoint a person. This is so, even if discussions between the Commissioner and a prospective appointee are clothed with all the trappings of offer and acceptance such as would establish a contract in accordance with the ordinary rules of contact law … .
… If the duty is to appoint by an instrument in writing that duty cannot be taken away … by any contractual arrangement made by an agent of the Commissioner … .
… The relationship between the Crown and an officer of the Australian Federal Police is not the ordinary contractual relationship between master and servant … .
There was, therefore, no contract to appoint made between the plaintiff and the defendant. No such contract was possible in the circumstances.
(Citations omitted.)
74 A subsequent attempt by Mr Chapman, in this Court, to establish that the correspondence between him and the AFP officer gave rise to an "unenforceable" contract was rejected by Neaves J in Chapman v Reilly [1985] FCA 185 at pp 36-37.
75 Had it been necessary to do so I would have also rejected Mr Perry's claim that the terms of the Blue Book constituted a contract between him and the Commonwealth.
76 Mr Perry contended that the "excess staff" provisions, contained in the Blue Book, formed part of his contract of employment. He relied on the terms of the letter of offer sent to him in February 1988 which, he argued, were to be considered in the circumstances known to him and the Commonwealth at the time, including the 1987 Agreement and the 1988 Arrangement between Commonwealth and State Ministers.
77 Mr Perry directed particular attention to the language of the letter of offer which, he said, "used the language typical of contacts". It had been sent by the Commissioner who was the person who, under the PS Act, had the power to appoint Mr Perry to the APS. In sending the letter the Commissioner was said to be acting to implement the employment arrangements which had earlier been agreed by the Commonwealth in the negotiations which led to the publication of the Blue Book. The letter, in terms, referred to the "conditions of employment on appointment" that would be offered to transferring inspectors. The letter indicated that such inspectors would have an opportunity to accept the offer of appointment to the APS and Mr Perry was invited to "elect" to be so appointed.
78 As already noted, Mr Perry had received the Blue Book and the Yellow Book before he received the letter of offer dated 29 February 1988 and those books were said to contain the terms and conditions of employment that would apply were he to be appointed to the APS.
79 Mr Perry bears the onus of establishing a mutual intent to create contractual legal relations between him and the Commonwealth. It was common ground that the existence of such an intention was to be determined objectively having regard to all of the circumstances surrounding their dealings, in so far as those circumstances were known to both of them, and to the purpose and object of the transaction: cf Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462; [2004] HCA 35 at [22] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 at 177-179; [2004] HCA 52 at [35]-[40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).
80 It may be accepted that the Commissioner and Mr Perry were aware of the circumstances in which the Commissioner's offer came to be made. This background knowledge included the 1987 Agreement, the 1988 Arrangement, the negotiations, the preparation and promulgation of the Blue Book and the Yellow Book to explain the outcome of the negotiations, and the explanations which were provided in the course of the information sessions. It does not follow that the hypothetical reasonable observer would have concluded that the Commissioner (acting on behalf of the Commonwealth) and Mr Perry intended to enter in to a contract on terms supposedly found in the Blue Book.
81 The letter of offer of appointment to the APS dated 29 February 1988, which was sent to Mr Perry, invited him to elect to transfer to the APS and to accept a foreshadowed appointment. He was invited to affirm his willingness to accept appointment by completion of the attached standard form which expressly referred to any appointment being made under s 81B of the PS Act. Mr Perry argued that, upon his signing the form, a contract of service had been entered into between himself and the Commonwealth.
82 At the time the letter of offer was sent to and received by Mr Perry the legislative and administrative foundation for the transfer of inspectors to the APS had not been completed. The operation of the Meat Inspection Act 1983 (Cth) had not been extended to Victoria. The Prime Ministerial certification, provided for in s 81B(1) of the PS Act, had not been promulgated. Mr Perry had not yet been appointed to the APS under that Act. Furthermore, the regulations which were to give effect to the agreement that the former inspectors could remain contributing members of the Victorian State superannuation schemes, if they so elected, after their transfer, had not been made.
83 The object of the interactions was Mr Perry's appointment to the APS, consistently with the PS Act, and subject to any special terms or conditions of employment determined by the Commissioner under s 81B(5) and not containing any terms which the Commissioner was precluded, by the same legislation, from making applicable to Mr Perry's employment. In particular, it is inconceivable that the Commissioner, in offering employment in the APS to Mr Perry, would have intended to agree to Mr Perry being engaged on contractual terms which the PS Act prevented the Commissioner from prescribing. Any provisions relating to superannuation and redundancy were to be governed, exclusively, by provisions other than those imposed under s 81B: State or Commonwealth legislation in the case of superannuation and an industrial instrument in the case of redundancy.
84 An analysis of the Blue Book supports the Commonwealth's contention that it was an informational document and not promissory in nature. The material in the book was based, largely, on source documents. For the most part the provisions to which reference was made derived from legislation or industrial instruments. As in the case of the "excess staff" provisions a comparison was made between the provisions of the RRR Award relating to redundancy and provisions of the Public Service Act 1974 (Vic), described as the "Victorian Public Service Act" at page 51 of the Blue Book. A summary of the principal provisions of the legislation was set out and a comparison made. The "agreed position" was to adopt the Commonwealth provisions. This meant that inspectors appointed to the APS would, like other Commonwealth public servants, have their redundancy entitlements regulated by the applicable industrial award. The agreed position also recorded the superannuation benefits which would be available to inspectors upon redundancy. The benefits depended upon which scheme covered the particular inspector. Again, the summary was descriptive in nature and based on the provisions of the various schemes.
85 The section at pages 47 to 49 of the Blue Book on superannuation benefits was even less prescriptive. The agreed position dealt only with the options which were to be available to transferring inspectors depending on the particular scheme which would provide them with benefits: transferees who were members of a State superannuation scheme had the option of remaining with that scheme or becoming a member of the Commonwealth scheme, while transferees who were not members of a State superannuation scheme could choose to become members of the Commonwealth scheme if they wished. Notably, there was no reference in this section to any entitlement to top up payments and, even more importantly, no reference to an obligation to make such payments falling upon the Commonwealth.
86 Another fundamental element of Mr Perry's claim is his asserted claim for a top up payment, calculated, in part, by reference to an asserted superannuation entitlement of 3.5 times the total of his contributions under the Victorian State revised superannuation scheme. That superannuation entitlement existed, under the 1958 Act, when Mr Perry transferred to the APS. It was referred to in the Blue Book. It was not, however, available to him under the 1988 Act and was not available, in 2010, when his employment with the Commonwealth ceased. The reference to the 3.5 multiplier, it will be recalled, appeared in the "agreed position" part of the section of the Blue Book dealing with excess staff. The text said no more than that, in the event of voluntary retrenchment, one of three superannuation payment options would apply. If the transferring inspector opted (as Mr Perry did) to remain a member of a Victorian scheme he would, under the then extant arrangements, "receive payment of 3 ½ times total contributions". Had Mr Perry joined the APS and been retrenched whilst the 1958 Act remained in force he would have been entitled to a lump sum calculated on this basis. The payment would have been made from the Victorian State superannuation fund: any such entitlement would have arisen under the rules then governing that fund. The entitlement would not have arisen under anything contained in the text of the Blue Book.
87 The top up payment, to which Mr Perry claimed an entitlement, was to be the difference between the payment which he was to receive from the Victorian State superannuation fund and the amount which he would have received had he opted for one of the payments available under the equivalent Commonwealth scheme. The Blue Book provided for no such top up. In recording, in the section dealing with excess staff, that it had been agreed to adopt the Commonwealth provisions, the author was referring to the provisions of the RRR Award which had earlier been summarised. Any superannuation entitlements arising from a redundancy were dealt with separately and subsequently and depended upon the particular scheme to which the transferring inspector belonged at the time at which the redundancy occurred. There was no agreement, on the part of the Commonwealth, to pay any more than that which was required under the RRR Award.
88 The suggestion that a top up payment might be made was first mooted in the context of the industrial dispute which arose in relation to the entitlements of the ten inspectors who were made redundant in 1990. It was founded upon a mistaken assumption that the Blue Book provisions contained incorrect information relating to the calculation of amounts payable in such circumstances. The ex gratia payments were subsequently made by the Commonwealth on the basis of the same false assumption and in order to preserve industrial harmony. There was no provision of the Blue Book which constituted a contractual term which bound the Commonwealth to make any such top up payment.
89 Mr Perry has failed to establish any viable claim in contract founded on the Blue Book, the Yellow Book, or his dealings with the Commissioner in 1988.