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

Introduction

1. 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.
2. 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.
3. 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.
4. 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.

The Enterprise Agreement

1. 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.
2. 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. After the enactment of the Act, the Enterprise Agreement continued to have operation and effect by reason of the transitional provisions in Sch 4 to the Act.

The background facts

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.

The genesis of the dispute

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. On 11 April 2006 the Department wrote to the PSA and offered to settle the industrial dispute on the basis of a "Premier's Department Determination". It was common ground that this was a reference to a public sector industrial agreement under s 64 of the Public Sector Management Act 1988 (NSW) (now repealed) or its statutory successor, s 131 of the Public Sector Employment and Management Act 2002 (NSW). Such agreements did not constitute enterprise agreements under the Act. The offer provided that the affected employees "will be able to enter into a salary sacrifice arrangement for the private use of departmental motor vehicles". The PSA responded by letter dated 4 May 2006 and referred to the potential prejudice to members which could arise in relation to their entitlement to income-tested government benefits. The PSA also raised its concern to avoid prejudice to the affected employees if there were future restructures which affected the identity of their employer, as follows: "Please note that the Association would request the usual caveat to any formal offer that will protect the membership against any future name changes to departments etc."
7. On 9 May 2006, the Department responded by seeking specific information about how its proposal would alter each affected employee's entitlement to the Medicare levy and other income-tested government benefits. Mr Wynn explained in his evidence that the affected employees were reluctant to disclose their individual circumstances to the Department since they believed that they had more bargaining power if they presented a united front.
8. In its letter of 29 May 2006 the PSA informed the Department that it rejected the offer of a Premier's Department Determination in the following terms: "The Association rejects the mechanism proposed (Premier's Department Determination) to rescind the current Enterprise agreement and seeks the certainty of an Award made by the NSW Industrial Relations Commission, given the current uncertainty created by the Liberal industrial relations agenda."
9. The PSA's letter concluded: "Please note that the Association would request the usual caveat to any formal offer that will protect the membership against any future name changes to departments etc. The Association also requests some form of words that will encompass the intent of the use of words such as petrol to denote fuel in the parts of the 1994 agreement [the Enterprise Agreement] which the offer relates to."
10. By letter dated 31 May 2006, the Department again sought the information which it had requested in its earlier letter as to how the rights of particular affected employees to Government benefits would be prejudiced by its proposal for salary sacrifice.
11. On 27 June 2006, the PSA reported to the IRC on the remaining areas of disagreement. It annexed the relevant offers between the parties. The PSA's report contained the following: "AREAS OF DISAGREEMENT BETWEEN THE PARTIES REGARDING THE RECISION AND REPLACEMENT OF THE MOTOR VEHICLE REPAIR INDUSTRY COUNCIL ENTERPRISE AGREEMENT 1994 INSTRUMENT PROPOSED TO REPLACE AGREEMENT The Department is seeking to replace the Motor Vehicle Repair Industry Council Enterprise Agreement 1994 by way of Premier's Determination. The Association is seeking that the agreement be replaced with an Award of the Commission. Please see the attached claim, Crown Employees Office of Fair Trading - Motor Vehicle Repair Industry Authority (Inspector Award) 2005. The Association submits that our members are currently afforded the protections of an enforceable industrial instrument, which cannot be rescinded, replaced or altered unilaterally. The Department is seeking to diminish our members' rights by replacing such an instrument with an inferior instrument, which can be unilaterally rescinded, replaced or altered. This is of particular concern to the Association given the current uncertainties created by the Liberal industrial relations agenda. … The Association further submits that the Department's offer financially disadvantages our members who do not elect to enter into a salary sacrifice arrangement for the private use of Departmental motor vehicles as the offer does not indicate what compensation if any would be paid to those members who lose their current benefit of private use of motor vehicles if they do not enter into a salary sacrifice arrangement."
12. In about March 2007 the parties began without prejudice discussions with a view to settling the award proceedings. It was common ground that, to the extent to which such communications would have been privileged, the privilege has been waived by both parties and that therefore the evidence of the communications was admissible under the common law and by reason of s 131(2)(f) of the Evidence Act 1995 (NSW).
13. By letter dated 25 May 2007, the PSA wrote to the IRC and provided it with a document which proposed a management plan for the integration of the Authority into the Office of Fair Trading. The Department sent a further letter of offer to the PSA on 27 June 2007 to which the PSA responded on 17 July 2007. In its letter, the PSA said that it was prepared to accept the offer of 27 June 2007 as long as amendments were made to make sure that it was clear that the offer also covered the Manager of Technical Services, Kenneth Buscombe.

The resolution of the dispute in 2007

1. 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."
2. It was common ground that, by that time, the five affected employees who were named in the letter of offer were the only persons who would be adversely affected by the termination of the Enterprise Agreement. Other employees of the Authority, such as the clerical staff, would be better off under the award that applied to Departmental employees and, accordingly, no longer needed the PSA to advocate on their behalf.
3. On 25 September 2007, the PSA met with the five affected employees named in the letter to consider the Department's offer. The five voted unanimously to accept the offer and instructed the PSA to communicate their acceptance to the Department. The PSA acted in accordance with the unanimous vote of the affected employees and accepted the Department's offer. Mr Wynn's understanding was that, as a consequence of the acceptance of the Department's offer: "We had an agreement, a binding agreement, a contract so to speak. A promise from them to say that they would abide by the conditions and we had a promise to them that we'd abide by those conditions."
4. There is no evidence to suggest that the PSA would not have acted in accordance with the instructions of the affected employees or that it would have been prepared to discontinue the award proceedings on any basis other than that an offer acceptable to all the affected employees had been made. At that time, the only employees for whom the PSA was concerned in the award proceedings were the affected employees.
5. On 25 September 2007 Mr Rhodes emailed Ms Hameed (the PSA official who was performing the role which Mr Deguara had performed before his departure overseas) to tell her that the inspectors had accepted the offer.
6. By letter dated 26 September 2007 the PSA wrote to the Department to confirm its acceptance of the offer and inform the Department that it had filed a notice of discontinuance in the IRC. The letter of acceptance said: "The PSA confirms the verbal advice of 25 September 2007, that the Department's offer of 18 September 2007 in relation to matter no. 91 of 2006 has been accepted. A Notice of Discontinuance was filed with the Commission, on 26 September 2007. Please contact Shabnam Hameed on [xxx] if you wish to discuss this correspondence further."
7. On the same day, the PSA wrote to the IRC and said: "The PSA advises that the above application for an Award has been withdrawn. Please find attached the Department's offer, which was accepted by the PSA on 25 September 2007. A notice of discontinuance is also attached. The Association appreciates the Commission's assistance in this matter."
8. On 28 September 2007, as a consequence of the communication received from the PSA, the IRC issued a determination of the award proceedings, noting that the parties had resolved the matter. The PSA circulated these documents to the affected employees. The acceptance by the PSA was ratified by John Cahill, its General Secretary, who signed an approval to that effect on 28 September 2007. I infer that his signature on the memorandum was a mere formality as the notice of discontinuance had already been filed by the PSA on 26 September 2007, two days earlier. This inference is consistent with the circumstance that the PSA had no interest in the dispute in the IRC other than to act in accordance with the instructions of the five affected employees. As Mr Deguara explained, the formal processes of the PSA, which required the general secretary to sign off on a recommendation and which required the endorsement of the PSA's executive council and central council, were designed to "make sure that the secretary is not selling people [the employees] a lemon". Mr Deguara said that sometimes the sign-offs were "after-the-fact" because of the need to do certain things within critical timeframes and to ensure that members' interests were not prejudiced.

The aftermath

1. 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.
2. 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.
3. 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.
4. 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.
5. 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."
6. In about March 2015, Ms Rudge applied for a position as Senior Investigator in the Compliance and Enforcement Division. The reason she had been considering a change was that the office where the inspectors were based had moved from Parramatta to Penrith. Ms Rudge mainly worked in the northern beaches. When she had finished her work there she had to drive to Penrith, effectively past her residence in Gladesville, which she considered to be a waste of resources because she was spending so much time on the road.
7. She had mistakenly understood this position to relate to the automotive industry. However, in the course of the interview in March 2015, she appreciated that the role related to the real estate industry. At that point she realised that she was not qualified to do the job. She was not successful in obtaining an offer for the new position. She explained in cross-examination that, had she been successful in obtaining such an offer, she would have had to consider whether it was worth her while to accept the promotion or whether she would be better off remaining as an inspector, with the associated benefit of a motor vehicle for private use. As she was not successful, she did not have to make such a decision. Subsequently, the Department moved the inspectors' office back to Parramatta, which suited Ms Rudge better than when it was based in Penrith and was only 15km from where she lives.
8. In reliance on the Department's assurances in its letter of 18 September 2007, Mr Wynn has not applied for any other substantive position and has remained in the position of inspector since first being employed by the Authority. Mr Wynn is presently about 53 years old. He considers that it would be difficult for him to return to work as a mechanic (his job before he joined the public service as an inspector) as he has had two knee replacements and he would be competing against younger, fitter people for such positions. I accept his evidence that he would be in a relatively disadvantageous position were he to seek other employment now, including because he has chosen to remain in the same position for 16 years.

The proposed changes to the arrangement affecting inspectors

1. 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."
2. 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.
3. 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.
4. 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.
5. However, by about December 2016 the Department had decided to terminate the Enterprise Agreement with a view to ensuring consistent work conditions for those performing the role of inspector for the Department in order to comply with the new guidelines. It was not suggested that the guidelines had statutory force or that they fettered executive discretion: cf. Searle v Commonwealth of Australia (2019) 100 NSWLR 55; [2019] NSWCA 127. Thus, the considerations referred to by Brennan J in Director-General of Education v Suttling (1987) 162 CLR 427 at 437-438; [1987] HCA 3, which relate to consistency between contractual terms and statutory instruments do not arise.

The proposed changes to the plaintiffs' entitlements

1. 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.
2. 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.
3. 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.
4. 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.
5. 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."
6. Mr Wynn took exception to the letter and referred to the 2007 agreement. None of the representatives of the Department who was present at the meeting (including Mr Davies) was aware of what had occurred in 2007 to resolve the industrial dispute. In particular, none had seen the Department's letter of offer dated 18 September 2007 or the PSA's letter dated 26 September 2007 accepting the offer.
7. Also on 21 June 2018 the PSA wrote to the Department on behalf of the plaintiffs in the following terms: "The PSA writes on behalf of Ms Christine Rudge and Mr William Wynn in relation to the intention to terminate the Motor Vehicle Repair Industry Council Enterprise Agreement 1994 (the EA). Before entering into any negotiations, this matter was subject to dispute proceedings, IRC Matter No 91 of 2006 and settled on 28 September 2007. The terms of that settlement as outlined by the then Director General for the NSW Department of Commerce, gave an assurance that their rates of pay, hours of work, flexitime, overtime and motor vehicles would continue to be that of the EA while they remained in that role (letter attached). As such, the PSA considers that the terms of this settlement remain in effect until either Ms Rudge or Mr Wynn accept a role different to that of their current ongoing role. The PSA seeks a response from the Department by 28 June 2018 in relation to this question, to reply and any further questions please contact Simon van Vegchel by [xxx]."
8. On 21 August 2018, the Department notified each of the plaintiffs of an intention to terminate the Enterprise Agreement. On 30 August 2018 the plaintiffs and representatives of the PSA met with representatives of the Department. At that meeting one of the Department's representatives asserted that the role of inspector had changed. Mr Seck confirmed that the Department no longer presses this argument. Mr Wynn urged the Department to honour the agreement made in 2007. The Department refused to do so. At that stage, the Departmental representatives were still unaware of the plaintiffs' acceptance of the Department's offer in September 2007 and the circumstances in which these letters were exchanged.
9. Subsequently, the PSA notified a dispute to the IRC resulting from the proposed termination of the Enterprise Agreement. On 25 September 2018, the PSA commenced proceedings in the IRC which it ultimately did not pursue. It was common ground that the Enterprise Agreement terminated on 22 November 2018, being three months after notice of intention to terminate had been given by the Department. The PSA filed a notice of discontinuance of the IRC proceedings on 1 February 2019.
10. On 23 November 2018 the Department wrote to the plaintiffs and informed them that the terms and conditions of their employment had changed. Of present relevance, they were told that a pay freeze would be implemented and that they were required to return their motor vehicles by 23 January 2019. This date was later extended to 15 February 2019. The November 2018 pay freeze resulted in a net loss of pay. The reason for this is that the plaintiffs work a 38-hour week whereas the other inspectors work a 35 hour week. The plaintiffs only have access to one flex day every four weeks. Following receipt of the letter of 23 November 2018, the plaintiffs have continued to work a 38-hour week.

The commencement of these proceedings

1. 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.
2. 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.

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

1. 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.
2. 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.
3. 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.

The parties to the proceedings

1. 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.

The relevant statutory framework

1. 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.
2. 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)).
3. 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.
4. 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.
5. 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.
6. The Act confers limited industrial rights on individuals, including the right to seek relief on the basis of an unfair contract under s 106 (contained in Part 9 of the Act) and the right to obtain relief for unfair dismissal under s 84. Neither right can be enforced in the IRC (now that it no longer acts in Court session). Only the Local Court and this Court have jurisdiction with respect to such claims by individuals.
7. Industrial disputes brought before the IRC are to be resolved by conciliation between the parties and, if conciliation is unsuccessful, the IRC arbitrates the dispute.
8. The hierarchy of legal instruments in industrial relations in New South Wales has a protective purpose and effect. Thus, if a contract between an employer and an employee is inconsistent with an enterprise agreement, the contract will prevail to the extent to which it confers greater entitlements on the employee than the enterprise agreement but the enterprise agreement will prevail to the extent to which it confers greater entitlements on the employee than the contract. In substance, an employer and employee can contract out of an award or enterprise agreement but only to give an employee greater rights. Applicable statutory provisions which govern industrial relations have the effect that any term of a contract which purports to put the employee in a worse position than under an award or industrial instrument is unenforceable: McLennan v Surveillance Australia Pty Ltd (2005) 142 FCR 105; [2005] FCAFC 46 at [48] and [50] (Black CJ and Moore J, Lander J agreeing) and Regional Express Holdings Ltd v Clarke [2007] FCA 957; (2007) 165 IR 251 at [56] (Gordon J). As Mr Deguara put it in evidence, "there's no offence to the law by … paying something higher than the enterprise agreement".

Consideration

1. 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.

The parties' submissions

1. 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.
2. 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.
3. 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.

Whether the agreement was within power

1. 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.

Whether the terms evince an intention to create legal relations

1. 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").
2. 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.
3. 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").
4. I do not regard it as significant that the letter of offer contains passages which are not promissory or with which the affected employees are not concerned. I refer, in particular, to the statement about the position of other employees. The letter was addressed to the PSA. The PSA acted in its capacity as agent for the affected employees as well as in its capacity as principal, in its role as a party to proceedings in the IRC. In describing what was to occur with other non-affected employees, the Department was informing the PSA of its view of the effect of the resolution on other employees. The letter of offer thus formed part of the legally binding contract between the Department and the affected employees as well as part of the arrangement between the Department and the PSA to resolve the industrial dispute. I reject the Department's submission that the 18 September 2007 offer "sought to bind future employees by providing that the Enterprise Agreement would not apply to them even though such persons did not consent to its making". I do not consider this reading of the letter to be correct. The Department was simply setting out what it understood the position of future employees was to be.
5. There is no reference in the letter to the formation of an industrial instrument or agreement within the meaning of the Act. There is no suggestion that any dispute about the performance of the assurances can only be agitated in the IRC by the PSA. Indeed, it is evident from the context provided by the prior negotiations that the PSA and the affected employees would not have been prepared to discontinue the award proceedings commenced by the PSA on the basis of a public sector industrial agreement under s 131 of the Public Sector Employment and Management Act since they wanted any resolution of the proceedings to bind the Department to provide the favourable conditions of employment. This context is significant when construing the agreement because it provides the matrix of background facts against which any ambiguity in the terms falls to be determined: Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 (Codelfa) at 352-353 (Mason J); [1982] HCA 24.

Whether the PSA was agent for the affected employees

1. 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).
2. 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.
3. 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.
4. 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.
5. It does not alter the relationship of agency between the PSA, as agent, and the affected employees, as principals, that the PSA was also acting as a principal in the sense that it was a named party and that it was the only person who could fulfil the condition that it file a notice of discontinuance of the award proceedings.
6. It is open to parties to proceedings to resolve their disputes by a legally enforceable agreement between the parties themselves or by an agreement which may include parties who were not and could not have been (because of issues of standing) parties to the proceedings. Although the IRC was the initial forum chosen by the PSA to resolve the dispute with the Department (since this was the forum where the notice of industrial dispute was filed and where the award proceedings were commenced), it does not follow that the PSA, the affected employees and the Department were not entitled to resolve their dispute in a manner which was outside the IRC and not enforceable by the IRC. A legally binding agreement to resolve proceedings wherever commenced is commonly enforced in this Court, being the Court which has the power to make declarations and grant specific performance of such agreements. It was common ground that the agreement reached between the parties in September 2007 was not an industrial agreement within the meaning of the Act.
7. The present case is to be distinguished from the cases relied on by Mr Seck such as Ford Motor Co Ltd v Amalgamated Union of Engineering and Foundry Workers [1969] 2 QB 303 (Geoffrey Lane J) (Ford Motor Co) where those intended to be benefitted are insufficiently described to enable any conclusion to be drawn as to the members of such a class. Further, in that case, the terms of the alleged contract were so vague and aspirational as to be incapable of being enforced. In Ford Motor Co the Court formed the entirely orthodox conclusion that one could not infer that the parties had the requisite intention to create legal relations.
8. The present case is a significantly stronger case than Ajax Cooke Pty Ltd t/as Ajax Spurway Fasteners v Nugent [1993] 5 VIR 551 (Ajax Cooke) in which Nugent's entitlement to the benefit of an offer made by his employer to the union turned on the posting of a notice in the workplace where Nugent worked which was held to constitute an offer.

Whether the Department's promises were supported by adequate consideration

1. 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."
2. 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."
3. 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.
4. 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.
5. This was no mere indulgence which was being granted, it was a promise extracted from the Department by the PSA in the context of the resolution of a dispute. It can be inferred that the Department was prepared to buy off the affected employees, who would inevitably move on or retire in time, in return for obtaining the PSA's agreement to confine the entitlement to a private vehicle to a select few rather than have the PSA seek the benefit of a private vehicle to be entrenched more widely. In these circumstances, the benefit obtained by the Department from the affected employees constituted valuable consideration which was sufficient to support the Department's promises.

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

1. 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.
2. 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."
3. 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.
4. 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.

Conclusion

1. 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.
2. 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.

Remaining claims

1. 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.

Alleged unfair contract

1. 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.
2. 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. …"
3. 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.
4. 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."
5. Had the Department not given the assurances in its letter of offer of 18 September 2007, the IRC proceedings would not have resolved. Had the proceedings been arbitrated by the IRC, it may be that the new award would not have included the old conditions of employment. However, in this event, the plaintiffs would have had the opportunity to put their claims, through the PSA, and have the IRC arbitrate the dispute, after hearing from the Department and the PSA. Because the proceedings were resolved by an agreement based on those assurances, the plaintiffs would be prejudiced by the Department's refusal to abide by its assurances.
6. An omission of a term is capable of rendering a contract of employment unfair: T D Preece & Co Pty Ltd v Industrial Court of New South Wales [2008] NSWCA 285 (Preece). In Preece, it was held that the unfairness arose from the omission of "fair termination procedures": see [33], [43] and [62] (Spigelman CJ). The benefits which they had enjoyed would have been removed by the unilateral act of the Department (the giving of assurances which were departed from) and not by the process of arbitration. In Gillies v Health Administration Corporation [2003] NSWIRComm 243, Schmidt J, sitting in Court session, held at [153] that a Government department's attempted removal of motor vehicle entitlements was unfair because the government purported to do so by unilateral act.
7. In my view, the unilateral conduct of the Department in resiling from its assurances to the plaintiffs has made the plaintiffs' contracts of employment unfair because the contracts, on this basis, omit the favourable conditions to which the plaintiffs had hitherto been entitled. The Department's conduct in making assurances from which it later departed deprived the plaintiffs of the opportunity of having their dispute arbitrated in the IRC. The unfairness derives not only from the Department's change in position (giving an assurance and then purporting to resile from it) but also from the time that has passed in the interim. Each of the plaintiffs has confined their working lives since acting on the Department's assurances, to the service of the public as safety inspectors employed by the Department. They have chosen not to be promoted and have not left the Department. Their employability in any other role must be taken to have substantially diminished. They are no longer in a position to extract a beneficial assurance from the Department because it can be inferred that there are now younger, stronger safety inspectors and other employees with years of experience and those beneath them whom I would infer could readily take the plaintiffs' places in the Automotive Unit of the Department.
8. I have taken into account in coming to this conclusion that other employees who perform the same work as the plaintiffs do are not entitled to a vehicle for private use as part of their conditions of employment. I do not consider this circumstance to be sufficient to ameliorate the unfairness in the plaintiffs' contracts of employment occasioned by the Department's conduct. I reject Ms Crowle's statement that there was "nothing unique" about the plaintiffs' position, which was made at a time when she was unaware of the agreement which had been made in 2007 to resolve the IRC proceedings. By reason of that agreement and the plaintiffs' reliance on the Department's assurances, which have governed their respective career choices ever since, the plaintiffs position is different from that of others performing work as safety inspectors for the Department. In this context their contracts of employment are unfair to the extent to which the contracts fail to reflect this difference.

Estoppel claim

1. 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.
2. 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).
3. 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).
4. 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."
5. I understand the "significant dicta to the contrary" to include the majority judgments in Waltons Stores. Meagher JA said in Ashton v Pratt that it was unnecessary to decide: "whether the doctrine of equitable estoppel extends to assumptions or expectations created in relation to the fulfilment of promises which are not negative in substance and do not suspend or extinguish existing contractual or other rights, as Brennan J considered to be the position in Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; 164 CLR 387 at 425-426. See also the discussion in DHJPM Pty Ltd v Blackthorn Resources Ltd [2011] NSWCA 348 at [43]-[48]."
6. The defendant also opposed the plaintiffs' claim for relief based on estoppel on the basis of the principle that estoppel will not apply to the exercise of a statutory power: Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 17-18 (Mason CJ); [1990] HCA 21 (Quin). The defendant was not exercising a statutory power when it made the assurances to the plaintiffs and therefore this principle does not apply.
7. Further, the defendant also called in aid the principle that an estoppel will not arise where it is against public policy: Kell and Rigby Pty Ltd v Flurrie Pty Ltd (2006) 67 NSWLR 113; [2006] NSWSC 906 at [57] (Brereton J). This principle does not apply since it was common ground that the defendant could enter into contracts of employment with its employees which were more favourable than industrial instruments such as enterprise agreements and awards. The assurance in the letter of 18 September 2007 was more favourable to the affected employees because it entrenched their rights to the favourable conditions for as long as they remained in their current substantive positions, whereas their rights to those favourable conditions under the Enterprise Agreements were subject to the termination of that agreement by notice or in proceedings in the IRC.
8. For the reasons given above, the plaintiffs' claim for relief based on promissory estoppel does not arise since I have found that they are entitled to succeed on their primary claim in contract. I am obliged to consider it only to fulfil my function as the primary judge. In these circumstances I propose to make findings on the claim on the basis of Waltons Stores. If, however, Saleh binds me to find that promissory estoppel can only be used as a shield and not a sword, then the plaintiffs' claim on the basis of promissory estoppel must fail since the plaintiffs purport to use it to prevent the defendant resiling from a promise or representation it made as to the plaintiffs' future entitlements to favourable terms and conditions.
9. The judgments of the majority in Waltons Stores endorse the approach of Brennan J who said, at 428-429: "In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (I) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiffs action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise."
10. In Commonwealth v Verwayen (1990) 170 CLR 394; [1990] HCA 39, Deane J said at 444, to similar effect, that an estoppel may operate against a party: "…where that party: (a) has induced the assumption by express or implied representation; (b) has entered into contractual or other material relations with the other party on the conventional basis of the assumption; (c) has exercised against the other party rights which would exist only if the assumption were correct; (d) knew that the other party laboured under the assumption and refrained from correcting him when it was his duty in conscience to do so."
11. It is sufficient for the purposes of an estoppel that the assurances influenced the plaintiffs or were a "significant factor" in their future conduct: Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 at [71]-[78] (French CJ, Kiefel, Bell and Keane JJ).
12. In the present case, I am satisfied that the plaintiffs expected that if they instructed the PSA to accept the Department's offer, they would be entitled to the benefits which the Department assured them they would have as long as they remained in their substantive positions as safety inspectors and that the Department would not be free to withdraw those benefits. I am also satisfied from the terms of the letter of offer that the Department induced the plaintiffs to adopt that expectation. The plaintiffs would not, in my view, have instructed the PSA to discontinue the award proceedings but for the "assurances" made in the letter of offer. The plaintiffs continued to rely on the Department's assurances by remaining in the Department in their substantive positions as safety inspectors. The plaintiffs' reliance on the Department's assurance was an important factor in their decisions to remain in the same substantive position which has rendered them significantly less employable in the open market than they were when the assurances were given. The Department plainly intended them to rely on its assurances and can be taken to have appreciated that it was necessary for it to make binding assurances in order to resolve the industrial dispute. If the assurance is not fulfilled, the plaintiffs will suffer detriment, which the Department has, unconscionably, brought about and failed to act to avoid.
13. I do not consider that the circumstance that the Department was part of the Crown to alter the finding that the plaintiffs were entitled to rely on the assurances which it gave. As Mason J said in Ansett Transport Industries (Operations) Pty Ltd v Commonwealth (1977) 139 CLR 54 at 74; [1977] HCA 71 that: "Public confidence in government dealings and contracts would be greatly disturbed if all contracts which affect public welfare or fetter future executive action were held not to be binding on the government or on public authorities. And it would be detrimental to the public interest to deny to the government or a public authority power to enter a valid contract merely because the contract affects the public welfare…"
14. It follows from these findings that if the law in New South Wales is that promissory estoppel operates in accordance with the way the High Court found it to operate in Waltons Stores, the Department would be estopped from departing from the assurances it gave to the plaintiffs in its letter of offer.

Costs

1. 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.

Proposed orders

1. 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."
2. It is not clear from the evidence how the remaining term regarding salary, hours of work and flexitime ought be worded. The parties are to endeavour to agree on the appropriate wording or, failing agreement, make submissions to support their suggested wording. If it is necessary for an order to be made that the plaintiffs be paid back-pay, this should be included in draft short minutes of order.

Orders

1. 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.

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