Rudge v The Crown in the right of the State of New South Wales acting through the Secretary of the Department of Customer Service; Wynn v The Crown in the right of the State of New South Wales acting through the Secretary of the Department of Customer Service

Catchwords

[1977] HCA 71 Ashton v Pratt (2015) 88 NSWLR 281[2015] NSWCA 12 Attorney-General (NSW) v Quin (1990) 170 CLR 1[1982] HCA 24 Cohen v iSoft Group Pty Ltd [2012] FCA 1071 Commonwealth v Verwayen (1990) 170 CLR 394[1990] HCA 39 Director-General of Education v Suttling (1987) 162 CLR 427[2006] NSWSC 906 McLennan v Surveillance Australia Pty Ltd (2005) 142 FCR 105(2007) 165 IR 251 Saleh v Romanous (2010) 79 NSWLR 453[2010] NSWCA 274 Searle v Commonwealth of Australia (2019) 100 NSWLR 55[2019] NSWCA 127 Sidhu v Van Dyke (2014) 251 CLR 505[2014] HCA 19 Silver v Dome Resources NL [2007] NSWSC 455 Stilk v Myrick (1809) 170 ER 1168

Judgment (27 paragraphs)

[1]

Introduction

Christine Rudge and William Wynn (the plaintiffs) have each brought proceedings against the Crown (the defendant) claiming relief concerning their entitlements as employees. The proceedings were heard together. In substance, the plaintiffs claim that the defendant is bound, as long as they occupy their current positions, to provide them with certain conditions of employment which had their origin in the now-expired Motor Vehicle Repair Industry Council, Public Service Agreement 1994 (the Enterprise Agreement). The most significant of those conditions is the provision of a motor vehicle for their private use, the costs associated with which were met by the defendant. There is also a condition regarding rates of pay. It was common ground that the amount at issue with respect to the rate of pay was relatively small and that the amount could be agreed upon if the plaintiffs succeeded in establishing their claim.
Mr Chatterjee, who appeared on behalf of the plaintiffs, put their claims for relief on three bases. He submitted that the defendant is obliged, as a matter of contract, to continue to provide them with a motor vehicle. In the alternative, he contended that, if their contracts of employment do not incorporate the conditions promised in 2007, the contracts became unjust within the meaning of s 106 of the Industrial Relations Act 1996 (NSW) (the Act) when the defendant terminated the Enterprise Agreement. In the alternative, the plaintiffs alleged that the defendant is estopped from departing from the assurance it gave to them in 2007 that it would provide them with a motor vehicle as long as they stayed in their current positions.
Mr Seck, who appeared on behalf of the defendant, opposed the plaintiffs' claims for relief, maintaining that it was not contractually bound by an assurance it gave to the plaintiffs to that effect in 2007 as part of the settlement of proceedings in the Industrial Relations Commission (IRC). He contended that the plaintiffs' contracts of employment were not, and did not become, unfair. Further, Mr Seck submitted that the plaintiffs' claim on the basis of promissory estoppel was bound to fail because in New South Wales, the doctrine could be used only as a shield and not as a sword.
There is little dispute about the primary facts, which will be recounted below. All references in these reasons to legislation will be references to the Act, unless otherwise stated.

[2]

The Enterprise Agreement

On 27 September 1995 the Enterprise Agreement was registered under the Industrial Relations Act 1991 (NSW) (the 1991 Act), which was the statutory predecessor to the Act. It had an expiry date of 27 January 1997. The 1991 Act provided, by s 124(3), that unless each of the parties enters into an agreement to terminate the enterprise agreement during its nominal term or after its nominal term has expired, the enterprise agreement can be terminated only at or after the expiration of its nominal term by one of the parties giving at least 3 months' notice of intention to terminate to each other party. As no such notice was given for some years, the Enterprise Agreement continued to apply after its nominal expiry date.
Clause 12.1 of the Enterprise Agreement relevantly provided: "12. MOTOR VEHICLES 12.1 a) Officers employed as Inspectors, Executive officer and Marketing Manager will be provided with a motor vehicle. b) Vehicle type to be in the classification of a large six-cylinder sedan. c) Motor Vehicle Repair Industry Council will pay the cost of: 1. Registration 2. Compulsory Third Party insurance 3. Comprehensive insurance 4. Maintenance and repair 5. Petrol (see Sub-Clause (f)) 6. NRMA membership 7. Hiring a vehicle to permit an Inspector to complete normal duties in instances where the allocated vehicle is unavailable for 48 hours or more. d) Officers and Managers to maintain the cleanliness of the vehicle and ensure the roadworthiness by reporting faults or necessary repairs. e) Officers will be entitled to private use of the Council vehicles during flex days, public holidays, sick leave, study leave, special/short leave, recreation leave and Long Service Leave up to a maximum period of four (4) continuous weeks (see Sub-Clause [f]). f) Officer to meet petrol costs during recreation and Long Service Leave where the absence is in excess of seven calendar days. g) Inspector or Manager's nominee will have the right to use the vehicle during non-working hours. h) In return for the Council meeting Fringe Benefits Tax ("FBT") costs of the vehicle, Inspectors will no longer be eligible to claim refunds under the semiprivate telephone arrangements in place prior to the registration of this Agreement. i) The garage allowance previously payable for the care and security of Council vehicles whilst garaged by Inspectors will no longer be payable as the vehicles will now be available for private use when not being used for Council business. j) Motor vehicle accessories - the cost of Motor Vehicle Repair Industry Council standard accessories (air-conditioning, mud flaps, ABS brakes, bonnet and headlamp protectors, floor mats and weather shields) will be met by the Council on all vehicles purchased after the date of registration of this Agreement. Non-standard accessories such as cruise control, tow bar or other accessories must have the prior approval of the Chairperson. In the case of non-standard accessories, the cost will be a once-only cost to the Inspector/Manager. Subsequent vehicles will be fitted with similar accessories at no further cost to the Inspector/Manager. On termination of employment, for reasons other than misconduct, the depreciated value of the accessory is to be refunded to the Inspector/Manager."

[3]

The background facts

In January 1997, Ms Rudge was appointed as a Safety Inspector at the Motor Vehicle Repair Industry Council (the Council). The Council was established under the Motor Vehicle Repairs Act 1980 (NSW) (now repealed) as part of the then Department of Consumer Affairs. Upon her appointment, Ms Rudge became a member of the Public Service Association of NSW (the PSA), which was a registered industrial organisation under the 1991 Act. At the completion of Ms Rudge's probation period in about April 1997, she was provided with a motor vehicle in accordance with cl 12.1 of the Enterprise Agreement.
In 2002, the Council changed its name to the Motor Vehicle Repair Industry Authority (the Authority). Ms Rudge's position was transferred from the Council to the Authority.
In February 2003, Mr Wynn was employed by the Authority as a Safety Inspector. He also became a member of the PSA. In April 2003 he was provided with a motor vehicle in accordance with cl 12.1 of the Enterprise Agreement, which remained in force. In early 2005, Mr Wynn was appointed as a delegate of the PSA.
On 9 March 2005, a further restructure was announced. The Authority was to be abolished and its functions and employees transferred to the Office of Fair Trading, which was part of the Department of Commerce. The Department's existing employees were covered by the Crown Employees (Public Service Conditions of Employment) Award and the Crown Employees (Public Sector - Salaries) Award. It was envisaged by the Department that the inspectors who had been employed by the Authority would be incorporated into the Office of Fair Trading, which already had its own inspectors, who performed different functions. There was a disparity between the terms and conditions of the Authority's employees, who were covered by the Enterprise Agreement, and the employees of the Office of Fair Trading, who were covered by the awards relating to Crown employees.
The name of the Department changed over the years. It is convenient to refer to it throughout as the Department as, ultimately, no point was taken by the defendant as to succession. Thus, the voluminous evidence adduced by the defendant as to the iterations of the unit or Department by which the plaintiffs were employed became, as a result of this concession, immaterial. All references to the Department are to be taken as references to the defendant.

[4]

The genesis of the dispute

On 24 March 2005, the Department wrote to the PSA giving notice of its intention to terminate the Enterprise Agreement. At that time seven of the Authority's employees were entitled to a motor vehicle under cl 12 of the Enterprise Agreement (the affected employees). The affected employees comprised five Safety Inspectors (including the plaintiffs), the assistant manager and the manager for technical services. The affected employees were concerned that their rights to a motor vehicle would be compromised by the restructure. They approached the PSA with a view to maintaining their rights under the Enterprise Agreement and, in particular those conferred by cl 12. This led to the formation of a Consultative Reference Group which comprised members from the Department, representatives of the PSA and delegates from the Authority. As a PSA delegate, Mr Wynn attended these meetings and reported back to the affected employees. At times he became disgruntled by the lack of progress and wrote letters to the PSA complaining about the standard of its representation of the affected employees.
The PSA decided to notify the IRC of the existence of an industrial dispute pursuant to s 132 of the Act. The notification was filed on 30 May 2005. Shay Deguara, an industrial officer with the PSA, was named as the contact officer.
The matter was listed for conciliation in the IRC before Schmidt J on 1 June 2005. On that date, the matter was adjourned to 20 July 2005 to permit the parties to attempt to resolve their disputes by agreement.
On 9 July 2005, the positions of Safety Inspectors (including those occupied by Ms Rudge and Mr Wynn) were transferred from the Authority to the Department, within the Motor Vehicle Services Unit of the Office of Fair Trading. The evidence does not reveal why future inspectors were not covered by the Enterprise Agreement but it was common ground that they were not.
On 10 January 2006 the PSA filed an application in the IRC pursuant to s 11 of the Act for a new award which would cover the affected employees (the award proceedings). The Enterprise Agreement was identified as the affected instrument. The draft award in a schedule to the application replicated the terms of the Enterprise Agreement, including terms such as cl 12 which were more beneficial to the affected employees than the conditions in the Crown awards which applied to employees of the Department. Mr Deguara gave unchallenged evidence that he had suggested to the affected employees that an award would be the best way of enshrining their rights as an award amounted to "subordinate law" under the Act. He accepted in cross-examination that the PSA sought to "grandfather" certain terms and conditions for those who had worked for the Authority.

[5]

The resolution of the dispute in 2007

On 18 September 2007, the Department wrote to the PSA offering to resolve the award proceedings on terms which accommodated the concerns expressed by the PSA in its letter of 17 July 2007. The PSA emailed the offer to Mr Wynn (who was relevantly the union delegate for the inspectors) and Scott Rhodes (who was the union delegate for the clerical staff). Because of the emphasis placed by the parties on the terms of the letter, I propose to set it out in full. The Department said: "WITHOUT PREJUDICE I refer to earlier correspondence and recent discussions as part of both the proceedings in IRC Matter No 91 of 2006 and the meeting of the Motor Vehicle Repair Industry Authority (MVRIA) Consultative Reference Group on 5 June 2007. As indicated at the latter meeting, the Department is prepared to make the following without prejudice offer in full settlement of the proceedings in IRC Matter No 91 of 2006: • The Department hereby withdraws its previous correspondence indicating an intention to rescind the Motor Vehicle Repair Industry Council Enterprise Agreement 1994 • The Department provides an assurance to the below named Inspectors: Kenneth Buscombe Manager Technical Services Bernard Hopps Inspector John Kenny Inspector Christine Rudge Inspector William Wynn Inspector that the current rates of salary, adjusted for any future approved movement in general rates of salary approved by the Crown, and conditions of employment specified in the 1994 Enterprise Agreement pertaining to the following areas: • Hours of Work • Working Hours - Flexitime • Overtime • Motor Vehicles will be maintained while ever the above named officers occupy Inspector positions at grades equivalent to their current substantive positions within MVRIA or the proposed Motor Industry Branch, or its successor. As a consequence of the acceptance of this offer, the Department will maintain the application of the Motor Vehicle Repair Industry Council Enterprise Agreement 1994 for the above named staff only for the purpose of salary and the conditions of employment identified above. Any future staff employed in MVRIA, the Motor Industry Branch or its successor will be engaged under the terms of the relevant Awards applicable to staff within the Department of Commerce and/or the Office of Fair Trading commensurate with their Award classification, as determined. The application of the terms of this offer will cease on the above named Manager Technical Services, and Inspectors applying for and winning a promotion within the Motor Industry Branch or its successor which is evaluated at more than one grade or 5% higher than Administrative and Clerical salary grading Grade 5/6 for an Inspector or Administrative and Clerical salary grade 7/8 for the Manager Technical Services. The application of the terms of this offer will also cease should a named Inspector apply for and win a promotion to the position of Manager Technical Services, or its equivalent, within the Motor Industry Branch. As a consequence of either action in the above two paragraphs associated with the application for and winning of a promotion, the officer will revert to the rates of salary and conditions of employment specified for the position under the relevant Crown Employee Awards. Should this offer be accepted by the Association and its members, a condition of same is the PSA taking appropriate action to formally withdraw IRC Matter No 91 of 2006. This offer will be deemed to have been rejected unless advice is received within fourteen (14) days."

[6]

The aftermath

Each of the plaintiffs and the other remaining affected employees continued to work as inspectors and enjoy the benefit of private use of a motor vehicle in accordance with the assurance given by the Department in its settlement offer. The Enterprise Agreement, which included cl 12, remained in force. From time to time each of the plaintiffs acted in higher positions for which they were paid a higher duties allowance for the term for which they were acting. The plaintiffs sought assurances from the defendant that acting in higher positions would not affect their entitlement to a motor vehicle for personal use when they reverted to their substantive positions. Each of the plaintiffs has refrained from accepting a higher position within the Department or leaving the Department on the basis of the value to each, both in terms of convenience, time and money, of the provision of a motor vehicle for private use.
Although the descriptions of their substantive positions changed from time to time, Mr Seck conceded that the plaintiffs remained in the substantive positions they had occupied at the time its offer had been accepted in September 2007. Accordingly, the Department's evidence to the contrary may be disregarded.
Ms Rudge's unchallenged evidence was that, had she lost the personal use of a motor vehicle in 2007, she would have taken active steps to obtain other employment outside the public service. I accept her evidence that, in that event, the "next logical step" would have been to return to the car industry as an Industry Service Manager or Customer Relations Manager in a car dealership or with a manufacturer. She deposed that she considers herself to be at a distinct disadvantage in applying for such positions now as she has been in the one position in the public service for 20 years. She is now 50 years old. Her evidence was that as a female in a male-dominated occupation, she would be competing against younger people, who were mostly men, who would have much more relevant recent experience in the industry than she has now.
In 2013, the Motor Dealers and Repairers Act 2013 (NSW) was passed, which replaced the Motor Dealers Act 1974 (NSW) and the Motor Vehicle Repairs Act 1980 (NSW). This legislative change did not materially affect the role of the inspectors.
In about April 2014 the Motor Vehicle Policy for the NSW Government was amended to state: "In keeping with the Government's commitment to providing improved public services and efficient resource management, departments and agencies must implement effective motor vehicle policies and management procedures. … It is mandatory for a department or agency to observe this policy document."

[7]

The proposed changes to the arrangement affecting inspectors

On 2 March 2016, Suzanne Crowle, Executive Director of Regulatory Services in the Department, sent an email to the inspectors including the plaintiffs and said in part: "Automotive inspectors may continue to drive departmental vehicles to and from work but will make them available as pool vehicles during the day when not in use for inspections per section 3.2.2 of the motor vehicle policy."
On 6 December 2016, Ms Crowle chaired a meeting with staff of the Automotive Unit, including the plaintiffs. Ms Crowle informed inspectors who were not covered by the Enterprise Agreement that they would no longer be allocated a work vehicle for personal use from January 2017 and that they would have to make their own way to work. Up until that time, the inspectors who were not affected employees were issued with motor vehicles which could be used to go to and from work and for work purposes but could not otherwise be used for private purposes.
As far as the evidence revealed, there was no industrial action as a result of this decision. Ms Rudge deposed that it was "fairly common" in the public service for the pay and conditions of a particular group of employees to be "grandfathered". The plaintiffs' unchallenged evidence was that no other employee had complained to either of them that it was unfair that they were still entitled to private use of a motor vehicle.
At this time the Department accepted that, as the Enterprise Agreement was still in force, the plaintiffs (being, on the evidence, the only two inspectors who were still covered by the Enterprise Agreement) were entitled to the continued use of a motor vehicle for personal use. Indeed, Ms Crowle gave them an assurance to that effect. By January 2017, the plaintiffs were the only two of the affected employees who remained employed by the Department. All other inspectors used motor vehicles from a pool to perform their work duties. I note that Mr Seck expressed doubt as to whether the plaintiffs could be the only two employees who were still covered by the Enterprise Agreement, in light of the legal principles about succession. Ms Crowle's evidence was to that effect. She was called by the defendant which did not adduce evidence to the contrary or point to any provision which would have had the effect of making the Enterprise Agreement applicable to the Department's other employees who were not affected employees. In these circumstances, I accept the evidence of Ms Crowle that, by 2016, the plaintiffs were the only two persons who were still covered by the Enterprise Agreement.

[8]

The proposed changes to the plaintiffs' entitlements

In March 2018 the NSW Government released a further version of its whole of Government NSW Motor Vehicle Operating Guidelines which required pool vehicles to be used by NSW public servants to discharge necessary duties and responsibilities.
In March 2018 Mr Wynn was allocated the last of the new vehicles with which he had been provided since he commenced work as an inspector.
It was the understanding of Simon Davies, a Senior Employee Relations Adviser in the Department, that in around April 2018 the Secretary of the Department wanted to harmonise the terms and conditions of inspectors. This, in turn, led the Department to implement its decision to terminate the Enterprise Agreement in accordance with its new policy. Ms Crowle deposed that there was "nothing unique" about the plaintiffs which entitled them to the private use of a motor vehicle. She noted that the Department currently employed about 6 other inspectors plus a Senior Automotive Inspector who undertake work which involves transporting equipment to sites. None of these seven people is entitled to private use of a motor vehicle and each uses a pool motor vehicle for his or her duties.
As at March 2018, the NSW Government Motor Vehicle Operational Guidelines provided for running sheets to be kept for all journeys undertaken in agency vehicles. Each plaintiff filled in running sheets which recorded the use of the vehicles with which each had been provided. They were required to indicate whether a particular journey was for business or private use. In accordance with what the plaintiffs understood to be the convention (which was confirmed by Ms Crowle), they indicated that trips from home to work and back again were for business purposes. It was common ground that, in assessing the benefit obtained by each plaintiff from the provision of a motor vehicle for private use, it would be necessary to include trips from home to work and back again. To this extent, the calculations performed by Therese Parker, the Manager Regions, Issues Resolution and Advisory Services in the Department, need to be adjusted to include these journeys.
On 21 June 2018 the plaintiffs were invited to attend a meeting at which representatives of the PSA and the Department were present. They were provided with letters from the Department which notified them of the Department's intention to terminate the Enterprise Agreement. The letters foreshadowed that a notice of termination would be provided on 13 July 2018 and the new conditions would come into effect on 15 October 2018. The letters said: "As you are aware, the Motor Vehicle Repair Industry Council Enterprise Agreement 1994 (the EA) applies to your employment. You are one of only two people that are still under this EA. The EA is old and does not meet contemporary and future business needs. It also is a stand-alone industrial instrument which provides the majority of your conditions. The EA does refer to Acts and other instruments which do provide some conditions, but does not provide for any replacement of those. This compounds the antiquated nature of this EA. In order to achieve equity among employees in your business unit and improve working conditions, we intend to terminate the EA and move your coverage over to the Crown Employees (Administrative and Clerical Officers - Salaries) Award 2007 for your classification and grade plus the Crown Employees (Public Service Conditions of Employment) Reviewed Award 2009 for your conditions. In section 44 (3) of the Industrial Relations Act 1996, an enterprise agreement can be terminated at or after the end of its nominal term by any one of the parties giving at least 3 months' written notice of intention to terminate to each other party. The EA took effect on 27 September 1995 and the nominal term, being for 16 months, expired on 26 January 1997. We will be looking at providing you the notice of termination on 13 July 2018 so the new conditions will take effect on 15 October 2018. This letter is to inform you of our intention. This provides us with some time to consult on the changes before we provide you the formal notice of termination. Please contact Katie Matthews, Senior HR Advisor on [xxx] should you have any questions."

[9]

The commencement of these proceedings

By summons filed in this Court on 4 February 2019, each of the plaintiffs challenged the defendant's right to alter their terms of employment as set out above. Mutual undertakings were given by the parties: the Department undertook not to remove the motor vehicle benefit from the plaintiffs until the determination of the proceedings and the plaintiffs undertook that, if they were unsuccessful, they would reimburse to the defendant the value of the benefit they had received from the use of the motor vehicles since the terms were purportedly altered. Thus it was common ground that the defendant had not, if the plaintiffs succeed on the contract claim, actually breached the contract by failing to continue to provide a motor vehicle for private use to each of the plaintiffs. Rather, on this hypothesis, it had, by indicating that the plaintiffs were not entitled to a motor vehicle for private use, committed an anticipatory breach, which had not been accepted by the plaintiffs.
The claim was subsequently pleaded in a statement of claim, which was amended twice. The current versions of the pleading are the further amended statement of claim which was filed in Court on 6 October 2020 and the defence, which was filed in Court on 8 October 2020.

[10]

The value of the benefit of the provision of a motor vehicle for private use

The evidence establishes that the value of the benefit of a motor vehicle for private use is substantial. Ms Rudge deposed that the lease for a comparable vehicle would be $805.98 per fortnight (in the order of $21,000 per year) and parking costs would be $120 per fortnight (in the order of $3,000 per year). Her private kilometre usage of the motor vehicle for 2019 was 12,185km, inclusive of travel to and from work. The petrol costs associated with travel over this distance must also be included in the benefit obtained by Ms Rudge from the provision of a car since she does not contemplate incurring any additional petrol costs during leave in excess of 7 days as provided for by cl 12.1(f) of the Enterprise Agreement set out above. The uncontroverted evidence of Mariano Rossetto was that the running costs per km would be 18.76c. On the basis of Ms Rudge's private use for 2019, this would amount to a total for the year in the order of $2,300. Thus, the total annual benefit would be in the order of $26,300. Ms Rudge's present salary is in the order of $74,500. She intends to work for another five years in her current position and retire at the age of 55 years.
I accept Mr Wynn's evidence that the cost of replacing the benefit of the motor vehicle for personal use (being the value to him of that condition) was $27,600 per year.
It is not necessary, in light of my decision in this matter, to make a final determination of the value of the benefit to the plaintiffs.

[11]

The parties to the proceedings

In the course of the hearing, I drew the parties' attention to the fact that the PSA was not a party to the proceedings, although it was arguably a party to the agreement made in 2007, and therefore was a proper, and in that event, necessary, party to the proceedings. Mr Chatterjee confirmed that the plaintiffs did not contend that the PSA was a party to the relevant agreement in respect of which they sought relief. Mr Seck argued that the defendant could only respond to the claim as pleaded. He later informed me, and I understood it to be common ground, that the PSA's solicitors acted for the plaintiffs in these proceedings, and that the defendant took no point about the PSA not being a party to the proceedings. In light of these concessions, I regard the proceedings as being properly constituted.

[12]

The relevant statutory framework

Mr Chatterjee contended that the industrial statutory framework, with the exception of s 106 of the Act which formed the basis of the unfair contract claim, was largely irrelevant except by way of background. Mr Seck submitted that it was highly relevant to the determination of the dispute between the parties. The merits of these competing submissions will be addressed below. However, in order to address the defendant's submissions, it is necessary to set out in summary form the provisions which it contends are material.
The Act makes provision for a system of industrial relations which continues to apply to NSW public servants. Section 3, which sets out its objects, includes encouragement of participation by representative bodies of employees and employers (s 3(d)). Another object is to provide a framework for the conduct of industrial relations that is "fair and just" (s 3(a)).
The Act provides for the making of awards by the IRC. Awards may be varied or rescinded by the Commission or by the consent of the parties. The Commission is also obliged to review awards periodically. Individual employees or groups of employees were not entitled to apply for awards since this right is reserved to industrial organisations, such as the PSA. Employees were, however, bound by awards which applied to them in terms.
The Act also provides for enterprise agreements which are agreements between employers and their employees collectively or employers and an industrial organisation representing employees. An enterprise agreement has no legal effect unless and until it has been approved by the IRC under the Act. The Commission's approval of an enterprise agreement is dependent on its satisfaction of various matters listed in s 35, including that it does not provide a net detriment to employees compared with the applicable State award and that the employees covered by the agreement comprise a distinct geographical, operational or organisational unit. Enterprise agreements must provide for dispute resolution. Such agreements are binding not only on the parties but also on future employees who fall within the description of the category of employees in the agreement. New employees are to be given a copy of the enterprise agreement which applies to them.
An enterprise agreement may be varied in accordance with the Act by the making of a new enterprise agreement. An enterprise agreement may also be terminated by notice if notice is given to the Industrial Registrar. However, if a party resists the termination, an industrial dispute can be notified to the Commission. Individual persons cannot notify an industrial dispute or be parties to it. Generally speaking, the rights and privileges to notify disputes and participate in the collective mechanisms for which the Act provides are conferred on unions.

[13]

Consideration

The plaintiffs put their claims for relief on three bases. First, they contended that a contract was made between each of them and the defendant in September 2007 when they accepted the defendant's offer, which bound the defendant to continue to provide each with a motor vehicle as long as each continued to occupy the position of inspector with the Department. Secondly, the plaintiffs contended that, if their contracts of employment did not include a term to the effect alleged above, the contracts were unfair within the meaning of s 106 of the Act and that this Court ought vary them to include such a term. Thirdly, they contended that the defendant is estopped from depriving the plaintiffs of the benefit of the motor vehicle as it would be unconscionable for the defendant to depart from the representation made in its offer, on which the plaintiffs relied to their detriment. These bases will be addressed in turn.

[14]

The parties' submissions

Mr Chatterjee contended on behalf of the plaintiffs that the effect of the acceptance of the Department's offer in September 2007 was to pick up the benefits of the Enterprise Agreement which related to provision of a motor vehicle for private use and the salary level and incorporate them into the contracts of employment between the Department and each of the affected employees. He did not contend that this effected any variation of the Enterprise Agreement (which would be invalid in any event because it had not been approved by the IRC). Rather, he contended that the agreement gave to the plaintiffs personal, legally enforceable, contractual rights as part of their contracts of employment.
The defendant submitted that the acceptance of the offer made by the Department amounted to no more than an "industrial bargain" between the PSA and the Department which was amenable to the jurisdiction of the IRC if it was breached by either party and that the obligations undertaken by the Department were not legally enforceable. Mr Seck contended that the PSA acted throughout as the principal and that, although it consulted the five affected employees, it had the ultimate discretion as to what it would do in the IRC proceedings. Mr Seck submitted that although the State intended to be bound by its assurances to the affected employees its intention was confined to the area of "industrial honour" and did not extend to the creation of legal relations between the State and the individual employees. Mr Seck accepted that the effect of his submission was that, because the plaintiffs had no standing in the IRC, the plaintiffs had no forum in which to make their claim unless the PSA was willing to raise it in the IRC on their behalf.
Mr Seck relied heavily on the statutory framework set out above. He submitted, uncontroversially, that enterprise agreements are not intended to operate in perpetuity. He contended that such agreements are simply intended to operate until the parties, under the auspices of the IRC, arrive at a new agreement through the conciliation processes of the IRC or, in the event of unresolved disagreement, through arbitration by the IRC. He submitted that, in these circumstances, no intention to create legal relations between the Department and the affected persons ought be inferred.

[15]

Whether the agreement was within power

The defendant is capable of entering into contracts of employment with its employees. It was ultimately common ground that it was open to the Department and the affected employees to incorporate in their contracts of employment terms which were more beneficial to them than to other workers. Mr Seck accepted that any inconsistency between the contract and an industrial instrument would only make the contract inoperative if the contract was less beneficial to the worker than the industrial instrument. I note that English authorities such as George v The Ministry of Justice [2013] EWCA Civ 324 need to be viewed with some caution as there is a statutory presumption that collective agreements are not to be legally enforceable.

[16]

Whether the terms evince an intention to create legal relations

The question whether a contract has been made is to be determined objectively by reference to the conduct of the parties, including by reference to the terms and form of the Department's offer and its acceptance. The language of the Department's offer of 18 September 2007 connotes an intention to create legal relations, at least in so far as it purports to give "assurances" to the affected employees. It is couched in precise language as to what is to happen in particular events, including, if the Department is restructured (which gave rise to the words, "or its successor") or if one of the affected employees ceases to occupy the substantive position of inspector. It is, in my view, highly significant that the offer lists the affected employees by name and position and confirms that the assurances are made to each of them. Further, the letter adopts wording which is commonly used in legally binding documents to prescribe the length of time during which the assurance will be binding ("while ever the above named officers occupy Inspector positions at grades equivalent to their current substantive positions within the [Authority] or the proposed Motor Industry Branch or its successor").
The Department in its letter of offer also specified the other side of the bargain by setting out what the Department required before it would be bound by the assurances it promised: namely, that the award proceedings will be discontinued. Although the affected employees were not parties to the award proceedings as they lacked standing, it was plain that the PSA was acting on their behalf and not on behalf of its members more generally. The only outstanding issue in the IRC award proceedings at that time concerned the affected employees' entitlements.
Although the word "assurance" might, in other circumstances, amount to a representation rather than a promise, I am satisfied that, in this context, it was used to connote a promise. The Department was in a position to make good the assurances, since it was, as employer, party to the contract of employment. The word assurance implied that the recipient was entitled to rely on it and that it was a promise that the giver of the assurance would be bound to fulfil. It is important that the offer said that the Department "will maintain" certain conditions of employment for a defined period (commencing "while ever").

[17]

Whether the PSA was agent for the affected employees

The identity of the parties to whom the assurances were to be made was certain since each was named. The question of agency arises. Mr Wynn was cross-examined extensively about his belief that the PSA was acting as the agent of the affected employees. The issue of agency is not to be determined by reference to subjective belief, but by the surrounding circumstances in the present case: Codelfa at 353. The authority of an agent may be inferred from the way in which the parties have conducted themselves: Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50 at 132 (Clarke and Cripps JJA).
Each of the affected employees was a member of the PSA. They had all, collectively and individually, approached the PSA to assist them to maintain their conditions of employment in a legally enforceable way when the Authority was amalgamated into the Department. While Mr Wynn accepted that the means by which that would be sought to be done was a matter for the PSA, whose members relied on its expertise, his understanding was that the PSA was bound by the instructions of the five remaining affected employees when it came to accepting or rejecting the Department's final offer.
By September 2007, the PSA was acting only for the five affected employees. In these circumstances, I am persuaded that the PSA, when negotiating for the conditions of the five affected employees, was their agent. The facts of the present case are to be distinguished from cases such as Ryan v Textile Clothing and Footwear Union of Australia [1996] 2 VR 235 (Ryan) on which the defendant relied. In Ryan, the agreement which was negotiated by the union was a collective agreement. Although the employees had voted on the proposal, the evidence was insufficient for the inference to be drawn that they had all voted or that the vote was unanimous. The terms of the agreement were expressed in general terms which were, at times, vague. The agreement purported to apply to future employees who were, necessarily, not yet ascertainable. The requisite intention to create legal relations was not found.
In the present case, the well-defined offer which contained specific assurances as to legal rights was made to an identified list of persons and accepted by the PSA on their behalf following a unanimous vote. The plaintiffs were principals in a relationship of agency with the PSA and, hence, became parties to the contract when the offer was accepted by the PSA on their behalf or, at the latest, when the notice of discontinuance was filed by the PSA, as required by the agreement. As it would appear that these events occurred almost simultaneously, the timing is immaterial. While there may be many instances where the PSA acts as principal on behalf of its members as a whole, this is not such a case, at least in so far as the agreement made in September 2007 was concerned.

[18]

Whether the Department's promises were supported by adequate consideration

In Ajax Cooke the Court found that the employer had secured some advantage for itself (which was held to constitute consideration to support its promise) whether by way of inducing its employees to refrain from further industrial disputes or by encouraging them to continue in their present employment. Phillips J quoted Lord Hailsham's dictum in Woodhouse AC Israel Cocoa Ltd v Nigerian Produce Marketing Co Ltd [1972] AC 741 at 758 that: "Businessmen know their own business best even when they appear to grant an indulgence."
This passage was cited with approval by Santow J in Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723 at 746, who continued: "An example of avoidance of a very substantial practical disbenefit held as sufficient consideration arose in Anangel Atlas Compania Naviera SA v Ishikawajima-Harima Heavy Industries Co Ltd (No 2). There the disbenefit avoided arose through the fact that at the time of delivery of a ship, the market was very bad and the plaintiffs were the core customers of the defendants. If they took delivery of a ship (induced by a concession) then other customers were likely to follow suit. As well the plaintiffs would cease their efforts to postpone delivery of the boat."
The concept of practical benefit or the avoidance of disbenefit has been applied in cases which involve the variation of contracts of employment: Silver v Dome Resources NL [2007] NSWSC 455 (Hamilton J at [121]-[138]) and Hill v Forteng Pty Ltd [2019] FCAFC 105 (Kerr, Bromwich and Wheelahan JJ at [11]-[22]). While it was not found as a matter of fact in Cohen v iSoft Group Pty Ltd [2012] FCA 1071, Flick J, at [142]-[146], accepted the effect of the authorities referred to above. In light of such cases, it is doubtful whether Stilk v Myrick (1809) 170 ER 1168; [1809] 2 Camp 317 (which decided that a promise by sailors to perform an existing duty, to continue the voyage, did not amount to good consideration) has any application to a case such as the present. Even if it is still good law, it is distinguishable from the present case in which the agreement was made in the context of industrial proceedings which were discontinued as a consequence of the agreement.
I regard the Department's promises to the affected employees as being supported by consideration. The consideration was provided by the practical benefit (or the avoidance of "disbenefit") conferred on the Department by the five affected employees instructing and authorising the PSA to file a notice of discontinuance. This was effective to resolve the industrial dispute between the PSA and the Department, to their mutual benefit. The resolution removed, or at least ameliorated, the risk that the Department would lose five experienced safety inspectors at the crucial time of amalgamation. It also removed the risk that private motor vehicles would have to be supplied more broadly to all employees of the Department who used motor vehicles in the course of their duties, as might have been the outcome had the award proceedings been pursued. In effect, the Department purchased these risks by making promises to the affected employees in return for the filing of the notice of discontinuance. Just as the "businessmen" referred to by Lord Hailsham (in the passage extracted above from Phillips J's judgment in Ajax Cooke) can be taken to have acted in a hard-nosed fashion, the Department, too, can be taken to have acted in its own interests in making the offer it did in its letter of 18 September 2007.

[19]

Whether a term allowing variation of the contract of employment on reasonable notice ought be implied

The Department submitted, in the alternative, that if the resolution of the IRC proceedings incorporated the Department's assurances into the contracts of employment of the affected employees, the Department was still entitled to withdraw them on the giving of reasonable notice. Mr Seck contended that the plaintiffs had been given ample notice of the Department's intention to withdraw the benefits which were the subject of its assurances in 2007.
The implication of terms into a contract requires the satisfaction of the test summarised in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283: "…for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract."
The term sought to be implied by the Department does not satisfy these tests. Whether or not a term entitling the Department to remove conditions by giving reasonable notice can, in the present context, be regarded as reasonable and equitable, such a term is not necessary to give business efficacy to the contract. Further, it is not obvious and it contradicts the express terms of the contract. It is inconsistent with the assurance given, which was to last as long as the named persons occupied the substantive position of safety inspector, that the Department could withdraw the condition on reasonable notice. For these reasons, no such term can be implied into the plaintiffs' contracts of employment.
Mr Seck also sought to imply a term into the 2007 agreement that the arrangement would apply only as long as the Enterprise Agreement remained in force. Such a term would be inconsistent with the express terms of the contract as to its duration, which was expressed in terms of the time during which the affected employees occupied their substantive positions. Accordingly, no such term as alleged can be implied. Nor can the agreement be construed in that way since its terms do not allow for such a construction.

[20]

Conclusion

I am satisfied that there was an agreement between each of the five affected employees on the one hand and the Department on the other that, if the PSA withdrew the award proceedings, the Department would continue to provide the benefits of the Enterprise Agreement which fell within the named categories to each of them as long as they remained in their substantive positions as safety inspectors. The identity of the parties was clear as were the terms. For the reasons given above, I am satisfied that there was an intention on the part of the affected employees and the Department to create legal relations which would be enforceable at law by each of the affected employees (and, if need be, the Department). The Department's promises were supported by valuable consideration.
Mr Seck assured me that the Department would comply with any declarations of rights by this Court and that it was not necessary to make an order for specific performance of the condition as to the private use of a motor vehicle or for the shortfall in the remuneration of the plaintiffs.

[21]

Remaining claims

As I have found that the plaintiffs have established their claim for relief under the contract, it is not necessary to decide the remaining alternate claims for relief under s 106 of the Act or on the basis of an estoppel. However, as the primary judge, I am obliged to determine all issues of fact which arise in order that in the event that an appellate court comes to a different view, the matters can be determined to finality.

[22]

Alleged unfair contract

The plaintiffs' claim for relief under s 106 of the Act is put in the alternative and presupposes that their contract claim, which is their primary claim, has failed.
Section 106 of the Act relevantly provides in part: "106 Power of Supreme Court to declare contracts void or varied (1) The Supreme Court may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Supreme Court finds that the contract is an unfair contract. (2) The Supreme Court may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason. … (3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time. …"
For so long as the Enterprise Agreement was in force, the right of the affected employees to a motor vehicle for private use was protected. Had the affected employees ceased to be entitled, in accordance with the letter of 18 September 2007, to this benefit (because each had left the Department or been promoted to a higher substantive position), their contracts of employment would not have become unfair. However, once the Enterprise Agreement was terminated, the only source of the affected employees' rights to a motor vehicle for private use was the agreement reflected in the exchange of correspondence between the Department and the PSA in September 2007.
The plaintiffs, and the other affected employees, gave up the claim for a new award which the PSA was propounding on their behalf in the award proceedings. If the plaintiffs' claim in contract is not found to have been made out with the result that the Department is entitled to withdraw the benefit unilaterally, the plaintiffs must be taken to have instructed the PSA to discontinue the award proceedings on a false basis. In other words, the plaintiffs understood that the Department would continue to provide them with the benefit of a car and additional salary and on that basis instructed the PSA to discontinue the award proceedings. However, if the Department were free to resile from its assurances, the plaintiffs would lose the opportunity that the PSA might obtain an award in their favour which protected these conditions of employment and would have obtained nothing in return. This Court is entitled, when considering whether a contract of employment is unfair within s 106 to have regard to conduct which post-dates the making of the contract. As Kirby P said in Walker v Industrial Court of New South Wales (1994) 53 IR 121 at 133-134: "In determining whether 'unfairness' in the contract or arrangement has been established, regard may be had not merely to the terms of the contract or arrangement, as originally negotiated, but also to the manner in which the contract or arrangement has ultimately worked out and operates as between the parties to it."

[23]

Estoppel claim

The defendant submitted in its written submissions that the pleading with respect to the estoppel claim was embarrassing. The pleading was subsequently amended. Mr Seck ultimately accepted that the pleading was sufficiently clear for the claim to be maintained. I consider the further amended pleading to allege adequately the claim put by the plaintiff on this basis.
The defendant ultimately accepted that the representation made by the Department in its letter of offer of 18 September 2007 was sufficiently certain for the purposes of a promissory estoppel. However, Mr Seck argued that, despite the statements of principle relating to the ambit and effect of promissory estoppel in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7 (Waltons Stores) and their application to the facts in that case, the position in New South Wales is reflected in the obiter statements of Handley JA in Saleh v Romanous (2010) 79 NSWLR 453; [2010] NSWCA 274 (Saleh) at [74]. The effect of his Honour's statements was that promissory estoppel could be used only as a shield (a restraint on the enforcement of legal rights) and not as a sword (an independent source of legal rights).
There is significant controversy about the principles of promissory estoppel in New South Wales arising from Saleh: see the detailed analysis in Silink, "Can promissory estoppel be an independent source of rights?" (2015) 40(1) University of Western Australia Law Review 39. The statements relating to promissory estoppel in Saleh were not the subject of argument in that case and were obiter. The Court of Appeal has nonetheless said that lower courts in this State are bound by Saleh: see, for example, Nock v Maddern [2018] NSWCA 239 at [35] (White JA, Leeming JA and Sackville AJA agreeing).
In Ashton v Pratt (2015) 88 NSWLR 281; [2015] NSWCA 12, Bathurst CJ (McColl JA agreeing, Meagher JA finding it unnecessary to decide the question) concluded, after considering the authorities, that: "This analysis of the authorities demonstrates two significant obstacles to Ms Ashton's claim based on equitable estoppel. First, there is a significant body of authority in this Court, as well as at least one decision of the House of Lords, which has maintained the distinction between the scope of promissory and proprietary estoppel. These cases indicate that the former only acts as a restraint on the enforcement of legal rights whilst the latter can be a source of obligation. However, it must be acknowledged that there is significant dicta contrary to this limitation on promissory estoppel."

[24]

Costs

The defendant accepted in its written submissions that costs ought follow the event. I will preserve liberty to apply in the event that the plaintiffs seek their costs on any basis other than the ordinary basis.

[25]

Proposed orders

As the relief to be granted is declaratory, I wish to hear from the parties as to the form of the declaration to be made. Subject to hearing from the parties as to its form, I propose a declaration to the following effect: 1. Declare that the contract of employment between each of the plaintiffs on the one hand and the defendant contains the following term: "1. While Christine Rudge / William Wynn (the plaintiff) continues to occupy the substantive position of safety inspector, the defendant is obliged to provide the plaintiff with a motor vehicle for private use on the following terms: a) Omitted. b) Vehicle type to be in the classification of a large six-cylinder sedan. c) The defendant will pay the cost of: 1. Registration 2. Compulsory Third Party insurance 3. Comprehensive insurance 4. Maintenance and repair 5. Petrol (see Sub-Clause (f)) 6. NRMA membership 7. Hiring a vehicle to permit an Inspector to complete normal duties in instances where the allocated vehicle is unavailable for 48 hours or more. d) The plaintiff is to maintain the cleanliness of the vehicle and ensure the roadworthiness by reporting faults or necessary repairs. e) The plaintiff will be entitled to private use of the vehicle during flex days, public holidays, sick leave, study leave, special/short leave, recreation leave and Long Service Leave up to a maximum period of four (4) continuous weeks (see Sub-Clause f)). f) The plaintiff is to meet petrol costs during recreation and Long Service Leave where the absence is in excess of seven calendar days. g) The plaintiff will have the right to use the vehicle during non-working hours. h) In return for the defendant meeting Fringe Benefits Tax ('FBT') costs of the vehicle, the plaintiff will no longer be eligible to claim refunds under the semiprivate telephone arrangements in place prior to the registration of this Agreement. i) The garage allowance previously payable for the care and security of the vehicles whilst garaged by the plaintiff will no longer be payable as the vehicles will now be available for private use when not being used for the defendant's business. j) Motor vehicle accessories - the cost of standard accessories (air-conditioning, mud flaps, ABS brakes, bonnet and headlamp protectors, floor mats and weather shields) will be met by the defendant on all vehicles. Non-standard accessories such as cruise control, tow bar or other accessories must have the prior approval of the defendant. In the case of non-standard accessories, the cost will be a once-only cost to the plaintiff. Subsequent vehicles will be fitted with similar accessories at no further cost to the plaintiff. On termination of employment, for reasons other than misconduct, the depreciated value of the accessory is to be refunded to the plaintiff."

[26]

Orders

I make the following orders: 1. Direct the parties to provide to my Associate short minutes of order to give effect to these reasons within seven days hereof. 2. Order, subject to any application by the plaintiffs in writing to my Associate within seven days that their costs be paid on a higher basis, the defendant to pay the plaintiffs' costs of the proceedings. 3. Grant liberty to apply to restore the matter before me on three days' notice.

[27]

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: 15 October 2020

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