Solicitors:
Levitt Robinson Solicitors (plaintiff)
Norton Rose Fulbright Australia (defendant)
File Number(s): 2016/045027
[2]
Judgment
The plaintiff enlisted in the Royal Australian Navy on 17 January 2011 at the age of 18 years for an initial period of service of four years, in the role of Marine Technician. Within a few months he was invited by his superiors to sign a "Training Contract" which purported to be legally binding between himself and the Navy and to provide that he would undertake a course of training towards a Certificate IV in Engineering, a nationally recognised vocational qualification.
The plaintiff signed the Training Contract on 20 June 2011. He claims in these proceedings that the Navy breached it by failing to provide the training necessary for him to attain the Certificate IV. The plaintiff was discharged from the Navy on 19 December 2015 without having achieved the qualification. He has brought these proceedings against the Commonwealth (the legal entity of which the Navy is an emanation) claiming damages for breach of contract.
The Commonwealth denies it ever became legally bound by the Training Contract. It contends that the plaintiff's considerable obligations and limited rights as an enlisted member of the Navy were exclusively defined by the common law and by legislation. The Commonwealth says the Contract purports to bind the Navy as to what training it must provide to the plaintiff and require him to undertake and that it is therefore void as a fetter on the Commonwealth's executive power of command of the Defence Force.
The plaintiff accepts that as an enlisted serviceman his relationship to the Commonwealth was not contractual. He concedes that his enlistment did not create a relationship of employer and employee and that the legal incidents of his position were as prescribed by the common law and by statute. But he contends the Training Contract was nevertheless binding and that it constituted an additional legal relationship superimposed upon his underlying status as a member of the Navy.
A second basis upon which the Commonwealth denies it is bound by the Training Contract is its contention that the plaintiff was at the time of entering into it already bound by his terms of service to undertake any and all training which the Navy might direct or provide. It is said that he therefore gave no effective consideration by promising to undertake the course of training necessary for the Certificate IV in Engineering and that promises by the Navy contained in the Contract are unsupported by consideration and on that account unenforceable.
The plaintiff counters these defensive arguments with a claim, in the alternative, of estoppel. It is argued that the Commonwealth held out to the plaintiff that the Training Contract would be legally binding. He contends the Commonwealth knew that on the faith of that understanding he was altering his position to his detriment. The plaintiff says it is unconscionable for the Commonwealth now to resile from its representations of June 2011 that the Contract gave rise to enforceable obligations and that it should not be permitted to do so without paying equitable compensation.
The plaintiff gave evidence of his employment and earnings since leaving the Navy. He has endeavoured to show that his earnings would have been higher had he attained the Certificate IV in accordance with the Training Contract. He claims the alleged shortfall up to the date of trial plus a projection of shortfall into the future as his damages caused by the Commonwealth's alleged breach of the Contract or, alternatively, as the appropriate level of equitable compensation.
I find that the Training Contract purported to have the effect of fettering the plaintiff's commanding officers in what they could order him to do, both with respect to the nature of training they might require him to undertake and with respect to the performance of other duties which might interrupt his training. I hold that it was beyond the power of the Commonwealth to fetter Naval officers in their command of an enlisted sailor by such a contract. The Contract was beyond the power of the Commonwealth to make and it is void.
My reasons for this conclusion follow, together with relevant findings of fact, organised under the following headings:
1 The plaintiff's enlistment - [10]-[13]
2 Initial training in service and signing the Training Contract - [14]-[16]
3 The Certificate IV national qualification - [17]-[23]
4 The Navy's authority to award a Certificate IV - [24]-[26]
5 The MT2010 program and log - [26]-[41]
6 The plaintiff's postings to HMAS Kuttabul and HMAS Melbourne - [42]-[47]
7 The Navy's review of apprenticeship agreements with MTs - [48]-[58]
8 The plaintiff's training for a Certificate III in Refrigeration - [59]-[62]
9 Common law and statute concerning Defence Force members - [63]-[96]
10 Statute law governing enlisted service as at June 2011 - [97]-[101]
11 MT training was prescribed by military command - [102]-[105]
12 The terms of the Training Contract - [106]-[110]
13 The Commonwealth cannot fetter executive power - [111]-[116]
14 The Training Contract is void as a fetter on command - [117]-[125]
15 Absence of consideration and uncertainty - [126]
16 Estoppel - [127]-[137]
17 Damages - [138]-[156]
18 Common questions and costs - [157]-[167]
19 Orders - [168]
[3]
1 The plaintiff's enlistment
The plaintiff applied to join the Navy in about April 2010. He thereafter undertook an aptitude test and was interviewed by a recruiting officer. By letter of 19 July 2010 from the senior military recruiting officer for North Queensland he was offered enlistment on 17 January 2011 "in the role of Marine Technician". The offer was subject to medical and fitness tests, which he passed, and other requirements all of which were fulfilled.
The letter of offer was accompanied by an acknowledgement of conditions of service. The plaintiff signed this on 3 August 2010 and returned it, thereby accepting the offer. The acknowledgement was as follows:
… having been accepted as competitive for entry as a Marine Technician in the Royal Australian Navy, [I] acknowledge that if offered a position in the Navy, I will have no right after enlistment to change my category. I acknowledge however, that the Navy is not bound nor limited to employing me in my chosen category and that I may be employed in any element in the Navy if the Navy considers such employment to be in its interest.
I … acknowledge that if offered a position in the Navy, my failure to pass any module of my training, including swimming test, could lead to my discharge.
On 17 January 2011 the plaintiff travelled from his home in Rockhampton to the recruitment office in Townsville and there signed a series of further acknowledgements. These included acknowledgements that he might be required to perform combat or combat-related duties, that he might be required to serve either within or beyond the territorial limits of Australia and that, whilst he had agreed to serve as a Marine Technician, from time to time he might be required to undertake duties, tasks and roles outside "the strict bounds of that employment".
On 17 January 2011 the applicant also made an affirmation of allegiance in accordance with reg 24 of the Defence (Personnel) Regulations 2002 (Cth), whereby his enlistment took effect as provided in reg 25. This committed him to four years' initial minimum period of service. As will be seen, his enlistment in the Navy did not give rise to a contractual relationship between himself and the Commonwealth. The acknowledgements he signed on 17 January 2011 are not of legal significance. The matters he acknowledged were terms of his service by force of statute and regulations and by reason of him being subject to the command of officers in exercise of the Commonwealth's executive power, not by force of the acknowledgements themselves.
[4]
2 Initial training in service and signing the Training Contract
Immediately after enlistment the plaintiff was transferred to HMAS Cerberus, a Naval training facility on the Mornington Peninsula in Victoria. He underwent approximately ten weeks of Recruit School comprising physical training, general instruction about the Navy and weapons training. There were numerous other recruits undergoing this initial phase of training at the same time including between fifteen and twenty who had been accepted into the Navy as Marine Technicians ("MTs").
When Recruit School concluded on 1 April 2011 the plaintiff commenced Initial Technical Training in the Engineering Faculty at HMAS Cerberus. This continued until 31 October 2011. The plaintiff was trained in a class with instruction given in modules, each dedicated to the use of certain tools or the functioning of a particular piece of machinery. The plaintiff passed each module and moved on to the next.
In June 2011 the plaintiff and the other MT recruits in training were asked by officers of the Engineering Faculty staff to sign a Training Contract. On 20 June 2011 the plaintiff signed such a Contract and a Mr Palmer signed on behalf of the Navy. I will return to the terms of the plaintiff's Training Contract in detail later in these reasons. For present purposes it is sufficient to note that it purported to be an agreement between the Royal Australian Navy and the plaintiff to "negotiate and sign a Training Plan" in accordance with which the Navy would train the plaintiff to achieve the qualification of Certificate IV in Engineering, over an "expected duration" of 48 months from 4 April 2011. It was in effect an apprenticeship agreement.
[5]
3 The Certificate IV national qualification
The competencies required to be achieved in order to attain the Certificate IV in Engineering are set out in a 36-page syllabus published by the Commonwealth Department of Education, Employment and Workplace Relations. The parties did not explore, either in evidence or in submissions, the source of the content of this specification or the status of the document. It appears to be one of a large number of such specifications, with varying degrees of specialisation, complexity and difficulty of attainment, which form a "Metals and Engineering Training Package". Each of the numerous specifications within this Package was designated by a serial number commencing with the prefix "MEM". The Certificate IV in Engineering was MEM40105. By way of example there were specifications for a Certificate II in Engineering MEM20105 and a Certificate III in Engineering - Mechanical Trade MEM30205.
These specifications were drawn up, approved and developed progressively over the years by national bodies the first of which was established under the Australian National Training Authority Act 1992 (Cth). There are similar "training packages" comprising graded specifications for attainment of competency, more or less specialised, in fields other than engineering such as automotive, construction, community services, health, timber-working and many others. Such specifications have been adopted and placed on a register by successive national bodies. The responsibility for adoption and registration has been conferred on those bodies under Commonwealth legislation, apparently with the approval of the States through the Council of Australian Governments. The registered specifications constitute a national scheme of standardised vocational training and certification.
The Training Contract provided that it was to be registered under legislation of one of the States or Territories and that the parties would be bound by the legislation of the State in which registration was effected. It was lodged with the Department of Education and Early Childhood Development of Victoria ("the Victorian Education Department") pursuant to s 5.5.12(1)(a) of the Education and Training Reform Act 2006 (Vic). That section referred to lodgement of contracts with the Victorian Skills Commission "or a person or body nominated by the Commission". I infer that the Victorian Education Department had been so nominated. No direct evidence was adduced about this. The Department wrote to the Navy on 7 July 2011 confirming that the Training Contract with the plaintiff had been registered. A letter substantially to the same effect was sent by the Department to the plaintiff on 12 September 2011.
Agreements could be registered under the Education and Training Reform Act if they provided for training of employees in accordance with "approved training schemes". In the Act these agreements were referred to as "training contracts". In the evidence they were called apprenticeship agreements. By s 5.5.2 the Victorian Skills Commission was empowered to approve a "specified training scheme" by publishing notice of a determination in the Victorian Government Gazette. On 12 February 2009 the Commission published in the Gazette approval of a long list of specifications for competency-based training, including the Certificate IV in Engineering and many others in the Metals and Engineering Training Package. The specification for the Certificate IV national qualification, MEM40105, thereby became an approved training scheme in Victoria.
The Act also prescribed (by ss 5.5.4, 5.5.5 and Schedule 4) certain minimum terms in favour of the apprentice or trainee to be incorporated in a registrable training contract. Schedule 4 contained cl 4 as follows (emphasis added):
4 Training conditions
(1) The employer must during the duration of the training contract provide a level of supervision that is in accordance with that agreement and the approved training scheme.
(2) Training must be directed at enabling the apprentice to attain the standards of skill and knowledge required by the approved training scheme to be attained by persons undertaking the scheme.
This was substantially duplicated in s 5.5.8, with penal consequences for non-compliance (again, emphasis added):
5.5.8 Employer's obligations under a training contract
(1) An employer who employs an apprentice under a training contract -
(a) must ensure that the apprentice is trained in accordance with an approved training scheme; and
(b) must allow the apprentice to comply with the approved training scheme without hindrance if that scheme or any part of that scheme is conducted during normal working hours.
Penalty: 10 penalty units for a natural person and 50 penalty units for a body corporate.
It was by a combination of express terms in the Training Contract signed by the plaintiff and provisions of the Education and Training Reform Act that the Contract purported to bind the Navy, as summarised at [16] above, to train the plaintiff to attain a Certificate IV and to devise and agree with him a Training Plan under which that could be achieved.
[6]
4 The Navy's authority to award a Certificate IV
From the terms of the Victorian Education Department's letters to the Navy and to the plaintiff it appears the Navy itself was a Registered Training Organisation (or "RTO") under s 4.3.14 of the Education and Training Reform Act. As such the Navy was able to recognise "the award, conferral or issue of a registered qualification that it is registered to award, confer or issue": s 4.4.5. "Qualification" is defined in s 4.1.1 as including "a nationally endorsed training package for which details of the qualification have been registered by the Commonwealth". This description captures the specification for a Certificate IV in Engineering (and all the other specifications in the Metals and Engineering Training Package). Hence, the Navy had authority under the Victorian statute to award a Certificate IV in Engineering to any sailor MT who attained the necessary competencies during his service. (Inappropriately the Department's letter to the Navy of 7 July 2011 stated "the RTO is to assist you and your apprentice to develop a training plan that reflects the apprentice's job role", as if there were a registered training authority separate from the Navy itself for the purposes of this Contract. In fact the Navy was its own RTO.)
The requirement of the Training Contract that the parties "negotiate and sign a Training Plan with the chosen RTO" reflected a statutory obligation of the employer under s 5.5.13, as follows:
5.5.13 Apprentice to be enrolled in training
The employer must arrange for -
…
(b) a training plan to be signed by -
(i) the employer; and
(ii) the apprentice; and
(iii) the registered education and training organisation; and
(c) a copy of the training plan referred to in paragraph (b) to be lodged with the Commission, a person or body nominated by the Commission or an approved training agent within 3 months after the date of commencement of the training contract.
It is common ground that no such training plan was ever drafted by the Navy or by the plaintiff or discussed between them. There was never settled or agreed or lodged with the Victorian Skills Commission any plan pursuant to which the parties would achieve completion by the plaintiff of the units of competency for a Certificate IV in Engineering. The Commonwealth has not argued that the Contract was void for uncertainty, as a mere agreement to agree, in the absence of a mutually accepted Training Plan.
[7]
5 The MT2010 program and log
Throughout his service the plaintiff and others who had enlisted as MTs at the same time as him were trained according to a program devised by the Navy in 2010, designated MT2010. This replaced an earlier MT training program which had been designated Technical Training Plan 92 ("TTP92"). In accordance with the MT2010 program, at the completion of his Initial Technical Training the plaintiff and other MTs in his class were posted from HMAS Cerberus to other Naval facilities to gain on-the-job experience and further training. This was to be continued on a ship as each MT could be posted to one. This depended upon berths on ships becoming available.
The MT2010 program was the subject of an audit during 2013 which resulted in a report dated 19 July 2013. This provided a history of the introduction of the program and an appraisal of its performance during the first three years of implementation. The program was developed from early 2009 in response to a directive from the Chief of the Navy to the Chief Naval Engineer "to re-evaluate MT training and employment to ensure that the category would be sustainable to deliver optimum maritime capability and to gain maximum skills utilisation". This directive followed a report which had indicated that over time the training and utilisation of MTs had prioritised the operation of machinery and systems at the expense of maintenance functions. The report had assessed that maintenance skills had been degraded in the category.
"Category" and "rating" are equivalent terms used to describe a class of sailors trained in a specialisation. The position of Director of Navy Category Management is held by a senior officer under whose direction there exist groups of Navy personnel referred to as Category Sponsors, based in Canberra. Each such sponsor is responsible for oversight of the training of seamen in its category, to ensure that the category is at sufficient strength and that adequate skills are being acquired to meet the Navy's needs.
Pursuant to the directive from the Chief of the Navy referred to at [28] it appears the Director of Navy Category Management caused the MT2010 program to be developed. The changeover from TTP92 to this program was referred to in the Navy as the MT Category Restructure. The program provided for the sequence in which each intake of MTs recruits would undertake Recruit Training, Initial Technical Training, posting to a shore facility for on-the-job experience and consolidation of learning, posting to a ship, return to HMAS Cerberus for further coursework and simulator training and so on. The whole program is represented in a flowchart which is Annexure B to the report of 19 July 2013 referred to above.
The plaintiff and other MTs graduating from Initial Technical Training were each issued with a pre-printed MT2010 log for the recording of work experience and competencies they were expected to gain from that time onwards. The MT2010 log is one of the more detailed parts of the overall program. It was divided into two parts, the first being a "Trade Experience Journal". In this the MT could record his mechanical work experience in the course of his service. The Journal was in sections, the first four of which concerned basic generic skills such as manual handling of equipment and heavy items, working safely with industrial chemicals and operating load-shifting equipment. Each section in turn was broken up into components which described in detail the work experience the sailor was expected to acquire. Next to each component was a box to be completed by a supervisor who would confirm that the experience had been gained and who would then enter the date and remarks and a signature.
After the four sections of the Trade Experience Journal dealing with these basic skills there were further sections on such topics as routine manual arc welding, routine oxyacetylene cutting and heating, routine MIG welding and so on, progressing through to pages concerned with more complex tasks of planned maintenance of marine systems and corrective maintenance of plant and machinery. Each section followed the pattern of having a box printed beside it, to be completed by a supervisor with date and remarks, to confirm performance.
At intervals throughout the Trade Experience Journal there were Log Progression Sheets required to be completed by a Training Coordinator and by an officer or other responsible member of the Competency Management Cell at HMAS Cerberus, to confirm satisfactory completion of the sections of the Journal up to that point. For example, there was a sequence of fully detailed mechanical experiences designated ME-11 to ME-15 covering such things as fault diagnosis, installation and removal of bearings, installation and removal of mechanical seals, gland packing and so on. Immediately after section ME-15 there appeared a Log Progression Sheet which was to be completed by the Training Coordinator and the Competency Management Cell to confirm successful completion of ME-11 to ME-15.
The second part of the MT2010 Log was entitled "Operator Competency Task Journal". This specified work experience required to be undertaken by the MT in order to achieve successive grades of Naval service capability as follows: Engineering Harbour Watchkeeping Certificate ("EHWC") Phase 1; Marine Systems Technician; EHWC Phase 2; Marine Systems Controller; EHWC Phase 3 and, finally, Marine Systems Manager. The Task Journal specified coursework and on-the-job proficiencies which had to be undertaken to achieve certification in each of these levels of capability, some of which could only be completed at sea. The grades referred to were purely Naval designations, not part of the system of national qualifications referred to earlier.
An introduction to the MT2010 Log contained the following information (using the expression "Work Experience Log" to describe the part of the document which is in fact entitled "Trade Experience Journal", as described above):
1. The purpose of this log is to manage the MT2010 Marine Technician through on-job-training during their initial engagement in the Royal Australian Navy. The log is designed to provide a list of tasks to be completed in the workplace to provide the sailor with the practical skills to assist with maintenance in the Marine Engineering environment and monitor progression of the apprenticeship Trade skills.
2. The Work Experience Log [ie Trade Experience Journal] is structured to provide a framework for the gathering of evidence of the on job abilities. Tasks in this Log address specific technical areas of the job as specified in the MT Job Scalar, and should be completed over a period of time in a technical workplace - either at sea or ashore.
…
RELATIONSHIP TO OPERATOR JOURNAL
4. The MT2010 Operator Competency Task Journal, issued with this Experience Log, may be completed concurrently with this Work Experience Log; it is to take precedence for completion when at sea.
APPRENTICESHIP
5. Sailors have been signed to an apprenticeship and as such are required to demonstrate progression of their trade. Apprentices will receive government incentive payments during their apprenticeship which is managed by the Competency Management Cell at HMAS Cerberus.
…
TRAINING PLAN
14. Workplace Supervisors in consultation with Training Coordinators will develop a training plan with you to monitor your task progression.
RECORDING AND REPORTING
15. To provide a record of Apprenticeship progression there are 3 perforated progress sheets in the Mechanical Experiences section [ie Trade Experience Journal] of this Log that are to be returned to the [Competency Management Cell] for recording to the progression database.
The descriptions of coursework, training and proficiency in the MT2010 Log did not conform directly to the units of competency which were required for the attainment of a Certificate IV in Engineering as prescribed in the nationally registered specification for that qualification. The first part, the Trade Experience Journal, appears to have been largely for the sailor's own benefit to enable him to keep a record of the general development of his skills. The second part, the Operator Competency Task Journal, was primarily for the Navy's purposes to measure progress towards the various levels of certification. Evidence was given by Mr Palmer concerning the Navy's attempts to correlate parts of the training and experience a sailor would gain by working through the MT2010 Log with units of competency required for nationally recognized qualifications such as the Certificate IV in Engineering.
Mr Palmer served in the Navy in technical and engineering capacities for a total of 26 years, over two periods. He served as a petty officer and chief petty officer. He ceased to be a member of the Navy in 2007. From 2010 he was employed by Scientific Management Associates (Operations) Pty Ltd. This company was engaged by the Navy to manage the functions of the Competency Management Cell based at HMAS Cerberus. Mr Palmer managed the Cell from 2010 until June 2015 when he retired and moved to Cairns.
Mr Palmer gave evidence that the content of the log was monitored and revised from time to time according to directions from the Category Sponsor for the MT rating. The entire MT2010 program, including the log, was drawn up, approved and implemented in accordance with the judgment and orders of senior officers, with the objective of raising and maintaining the MT category to the standard of competence and proficiency required to support naval capability.
According to Mr Palmer, following implementation of the MT2010 program from September 2010 the Competency Management Cell attempted to achieve "alignment" of the capabilities the Navy required of its MTs (through the MT2010 log) with units of competency which would count towards nationally recognised trade qualifications such as the Certificate IV in Engineering. He said the "alignment" was carried out:
so that the Navy as a Registered Training Organisation could claim that the National Units of Competency had been achieved when the Naval capabilities were met.
The Commonwealth did not, through evidence or submission, attempt to establish that any such correlation could be made or, if it could, to what extent. It did not, for example, provide evidence to explain or elaborate upon the work designated on a particular page or pages of the Operator Competency Task Journal in order to demonstrate equivalence to one or more of the units of competency in the specification for the Certificate IV. Despite the references to "apprenticeship" in pars 5 and 15 of the introduction to the MT2010 log (quoted at [35]) the evidence does not satisfy me that Naval personnel in the Competency Management Cell or elsewhere actually recorded the plaintiff's experiences noted on progress sheets in the MT2010 log against the requirements of the Certificate IV. Clearly the MT2010 log itself did not constitute or function as the Training Plan for attainment of the Certificate IV as envisaged in the Training Contract.
The Competency Management Cell was tasked to collect assessments made of individual servicemen, including MTs, by Naval personnel qualified to assess their progress and achievements. The Cell was required to process the progressive assessments onto internal Navy personnel records for each sailor. This was for the purpose of monitoring the progress of MTs, amongst others, towards attainment of the capabilities the Navy required of them. If fully carried out this should also have enabled verification of the completion of units of competency according to nationally recognised specifications, such as the Certificate IV in Engineering, for the purpose of the Navy as a Registered Training Organisation awarding such qualifications. But I am not satisfied that such verification was carried out and it is clear that in fact not all the competencies in the Certificate IV specification were attained during the plaintiff's training under the MT2010 Log.
[8]
6 The plaintiff's postings to HMAS Kuttabul and HMAS Melbourne
After receiving his MT2010 log at HMAS Cerberus in late October 2011 the plaintiff was posted to the Fleet Support Unit at HMAS Kuttabul in Sydney. He remained there until September 2012. At this facility he was given very little work to do. He estimates that he was assigned on average only one job per fortnight. Consequently he had very few opportunities to complete any of the competencies in the MT2010 log and made very little progress towards attaining his EHWC Phase 1 or his Marine Systems Technician qualification under the Navy's MT2010 scheme. He sought out work but little was available. At HMAS Kuttabul the plaintiff completed courses of instruction conducted by the Navy whilst he waited for work opportunities or for posting to a ship.
The MT2010 audit report of 19 July 2013 corroborates the plaintiff's evidence concerning delay in posting him to a ship and the insufficiency of work to keep him occupied. In 2012 and 2013 there were insufficient sea berths to permit the Navy to post all MTs to ships at the rate they were passing through HMAS Cerberus.
On 17 September 2012 the plaintiff was posted to HMAS Melbourne. The plaintiff remained with that ship for 19 months until April 2014 during which time the vessel was deployed to waters near the Middle East for some months and at other times was alongside. In the 19 months of this posting the plaintiff completed the requirements of the MT2010 Log to qualify as a Marine Systems Technician. That certification was awarded to him on 26 October 2013 specific to the type of vessel upon which he had served, namely, a frigate. During the plaintiff's service on HMAS Melbourne he also advanced his experience and training towards completion of the EHWC Phase 1 requirements, which in due course he satisfied.
In January 2014 whilst the plaintiff was still serving aboard HMAS Melbourne he lodged a request for discharge to take effect in January the following year. That would be at the completion of his mandatory initial period of service of four years. He was required to give 12 months' notice in order to be discharged at that time. By January 2014 the plaintiff was frustrated by the lack of training or experience he received relative to a trade qualification which he could use in the civilian workforce upon leaving the Navy.
In April 2014 the plaintiff left HMAS Melbourne and took post-deployment leave. Whilst on leave he was offered by the Navy training for a Certificate III in Refrigeration which would take two years. This required that the plaintiff revoke his request for discharge. He agreed to do so and commenced the course on 28 February 2014. It included an initial four months of coursework at HMAS Cerberus, then some months of further coursework at the Ultimo Campus of the New South Wales Technical and Further Education College, followed by 12 months of workplace consolidation.
From the sequence of events up to mid-2014 it is clear that during the three years after the Training Contract was signed not only had the Navy failed to propose, negotiate or agree a Training Plan to enable the plaintiff to attain a Certificate IV in Engineering but it had proceeded to train him to its own requirements without attempting to satisfy those of the Certificate IV. If any of his attainments under the MT2010 Log happened to coincide with units of competency in the specification for the Certificate IV in Engineering, they could be counted towards that qualification. If the Competency Management Cell fully performed its duties, this would be recorded. However, such progress towards a Certificate IV would be purely incidental. There is no evidence that anyone in the Competency Management Cell actually did record any progress that he made through the Certificate IV units. Certainly there was no supervision or direction of him towards systematically working through the Certificate IV competencies.
[9]
7 The Navy's review of apprenticeship agreements with MTs
According to the 19 July 2013 audit report on the MT2010 program, MTs who commenced at the time of the plaintiff's enlistment were scheduled to attain the first stage of certification under the log (EHWC Phase 1 and Marine Systems Technician - see [34] above) by about the end of their second year of service. This required that they should have served about twelve months on a ship by that stage. They would then be posted ashore and would work through further sections of the Operator Competency Task Journal and undertake simulator training, towards certification at the level of Marine Systems Controller. Further sea time for consolidation of skills taught ashore would be required before that certification could be attained. The program envisaged that this would take MTs to the end of their four years' Initial Mandatory Period of Service and that "trade training" would begin only then. Up to July 2013, when no sailors had yet been trained under the MT2010 program to the stage at which trade training was to commence, it still had not been determined by the officers in charge of implementing the program exactly what the trade training was to be. The author of the audit report expected it to be training under the national system to Certificate III in Diesel, Electrical, Refrigeration or Fabrication.
The incompatibility of the MT2010 program apprenticeship contracts commencing in the MTs' first year of service was recognised in October 2012, as explained in the audit report at par 4-3:
As of Oct 2012, the Deputy Director Training Authority Engineering directed that the Competency Management Cell cease this process [of signing apprenticeship contracts], as the MT2010 sailors were unable to achieve a Cert IV in 48 months, noting the backlog of getting sailors to platforms to achieve their [Marine Systems Technician], [Marine Systems Controller] qualification and trade specific training within the four years, as the MTE career continuum has them undertaking their trade training after the four year mark.
The audit report of 19 July 2013 stated at par 4-18 that the MT2010 sailors would be awarded a Certificate IV in Engineering "on completion of their trade training" which meant, necessarily, well beyond their initial four years of service. Obviously that meant the timeframe of the Training Contract was in fundamental conflict with the MT2010 program. Although the evidence did not descend to a detailed comparison of the competencies an MT would satisfy through the MT2010 log with those required by the Certificate IV syllabus, this part of the report makes very clear that there were major differences.
On 14 February 2014 a senior officer prepared a decision brief for the Chief of the Navy concerning MT training. This was the commencement of a process to reconfigure the program to have MTs undertake a national system qualification more suitable to the Navy's purposes than the Certificate IV and to schedule training for that qualification at a stage in the overall program which would be consistent with Navy training requirements. This decision brief included the following information:
The attainment of [a Certificate IV in Engineering] in that timeframe [four years commencing in the first year of service] was never achievable nor does it align with the original MT2010 career continuum.
The proposed alternative of undertaking a Certificate III trade contract will provide a specific trade.
[S]hould the [apprenticeship] contracts be varied to a Certificate III trade contract, with the current overlap of MT2010 and TTP92 training, it is forecast the final affected MT2010 sailors will not complete their "trade training" until as late as Q1 2017.
The evidence suggests that the Certificate III syllabus could be undertaken with specialisation in either Diesel, Electrical, Fabrication or Refrigeration such that it would constitute a qualification of greater utility for civilian trade employment than the Certificate IV. In memoranda and reports during 2013 and 2014 senior officers either asserted or assumed this difference between the two qualifications. Mr Palmer expressed a similar view in email correspondence with some of the MTs at that time. The parties did not explore in evidence the comparative details of the specifications for the two Certificates. The evidence is not sufficient for me to conclude which was the more marketable in civilian employment. But the case can be decided without resolving that issue.
An attachment to the decision brief, also dated 14 February 2014, stated that:
The … MT2010 career continuum developed … in 2009 proposed that Certificate III trade training be delivered post the four-year mark from initial enlistment, on promotion to [Leading Seaman]. This put trade training beyond the Initial Minimum Period of Service, which was changed from six years to four years … .
In another passage of this attachment it was stated that from the first implementation of the MT2010 program MTs were to be "qualified at sea" by the end of two years from enlistment, having by that stage completed shore based instruction and been posted to a ship for about twelve months. The attachment noted that the program envisaged them remaining at sea for the next two years, being "essentially the 'return on investment' for their training". Only after that would they commence trade training in Certificate III. It can readily be seen that this program would suit the Navy's requirements for manning its ships and, equally clearly, that an apprenticeship for a Certificate IV commencing six months from enlistment would not fit the program and would be of no use to the Navy.
On 13 June 2014 Rear Admiral Uzzell wrote to MTs who had signed Training Contracts, in the following terms:
1. The MT2010 career scheme policy was introduced in October 2010, with the first training occurring at the Engineering Faculty, HMAS Cerberus in February 2011. You are a part of this scheme.
2. Navy has identified some conflicting information concerning the introduction of the MT2010 career scheme policy. This information relates to the particular level of trade training that was offered to you and the time in which that trade training would be completed.
3. As trade training attracts financial assistance under State and/or Commonwealth programs, a "training contract" was provided to you for the purpose of allowing you to access any relevant trade training financial assistance under those programs. That contract specified that a Certificate IV in Engineering would be obtained within a period of forty-eight months. It did not reflect the MT2010 career scheme policy. Verbal advice from the Competency Management Cell staff at Cerberus at the time should have indicated to you that the contract was necessary to enable you to access trade training financial assistance, that the Certificate IV level was not achievable in the forty-eight months time frame, and that an amended training contract for a Certificate III would be offered once a suitable trade stream had been identified for you.
4. Navy acknowledges that the conflict between the training contract you were provided to enable access to trade training financial assistance and the MT2010 career scheme policy has caused confusion, and that the verbal advice at the time may not have been understood.
5. [The letter promised that resolution of "this contract issue" was being pursued and that individual MTs would be updated on progress].
6. You should be aware that nationally recognised Certificate III Electrical Fitter training has commenced at Cerberus and local TAFEs. The commencement of courses for Diesel Fitter, Fabrication and Welding and Refrigeration trades is imminent. These courses will enable you to achieve a nationally recognised Certificate III in your trade stream as was intended by the MT2010 career scheme policy. This is considered more beneficial than the Certificate IV trade in Navy Engineering under your present "training contract" which does not feature the same degree of national recognition.
The plaintiff received at this time a letter to similar effect but cannot recall if it was in terms identical to what I have quoted above. I am satisfied that a letter was sent out in these terms to all MTs who had signed Training Contracts and that therefore the plaintiff received such a letter. He disputes that he was orally informed at the time the Training Contract was signed or at any time before receipt of this letter that a Certificate IV in Engineering was not achievable within 48 months.
Some of Mr Palmer's evidence tended to suggest that the purpose of certain Navy personnel in having the Training Contracts executed and registered was to enable the MTs to obtain financial assistance in the form of a "tools allowance". Such an allowance was available to apprentices who had entered into registered agreements, to a total of about $5500 payable in instalments. The evidence does not reveal the details of the administration of this financial assistance scheme or identify the authority whose vote of public money funded it. There is not sufficient evidence to enable me to attribute to the Navy itself a purpose of having apprenticeship contracts signed in order to make MTs eligible to receive the tools allowance. It is not apparent what basis Rear Admiral Uzzell had for stating that that was the purpose.
In any event, whether or not the obtaining of a tools allowance for MTs was a purpose of the Navy in having these Training Contracts signed, the evidence does not show that the Navy intended the Contracts should not take effect according to their terms. If the latter intention was held by any person whose state of mind could be attributed to the Navy, it would not be an answer to the case brought by the plaintiff because there is certainly no evidence that he shared any such intention.
[10]
8 The plaintiff's training for a Certificate III in Refrigeration
In July 2014 officers of the Navy's Career Management Agency addressed the plaintiff and a number of other MTs who at that time were undertaking Certificate III courses in Refrigeration, Diesel Fitting and Electrical at HMAS Cerberus. The officers stated that the Certificate IV would never have been attainable in 48 months. The plaintiff understood what he was told at this time as having the effect that in order to be awarded the Certificate III he and the other MTs present would each have to sign a variation of Training Contract and commit to a further two years of service. According to the plaintiff the sailors present voiced dissatisfaction with this and they were shortly afterwards advised that they need not commit to two years' return of service.
Mr Palmer gave evidence that the MTs did not have to vary their Training Contracts in order to complete the Certificate III. He said they were told that they only needed to sign variations if they wished to complete that Certificate under the "envelope" of an apprenticeship. He said the Navy was able to monitor attainment of the competencies for a Certificate III and in due course to award the Certificate without there being in place a varied Training Contract to cover this. On the balance of probabilities I accept Mr Palmer's recollection of this conversation. He appeared to me to be a disinterested and forthright witness. In comparison to the plaintiff he would have had a considerably greater depth of understanding of the necessity or otherwise of signing a variation to the Training Contract. I accept that in fact and in law it was not necessary for the Training Contract to be varied, even assuming it was valid, in order for the Navy as a Registered Training Organisation to tick off the competencies and in due course award the Certificate. I consider it highly likely that Mr Palmer would have conveyed this position accurately to the MTs. The plaintiff could readily have misunderstood what he was told in this regard. In the end my resolution of this difference of recollection is not significant to the outcome of the case. As I find that the Training Contract did not bind the Commonwealth it makes no difference to the plaintiff's position that he signed a variation of it, whether under the inducement of a representation (as he recalls), or not.
On 4 August 2014, the day the plaintiff completed the first component of his Certificate III in Refrigeration at HMAS Cerberus, Mr Palmer invited him to sign a form of Application for Approval to Vary the Training Contract. The only variation was deletion of "Certificate IV in Engineering" and substitution of "Certificate III in Engineering Mechanical Trade (Refrigeration)". The plaintiff signed but expressed to Mr Palmer his dissatisfaction that, after more than three years in the Navy, he was only now commencing trade training. Other MTs who were present that day were invited to sign an Application for Approval to Vary, which some did and some did not. The difference in recollection between the plaintiff and Mr Palmer referred to at [60] above also applies to the conversation on 4 August 2014 and I resolve it the same way.
The plaintiff proceeded with his coursework for the Certificate III (Refrigeration) and completed it in September 2014. He was then posted back to the Fleet Service Unit at HMAS Kuttabul for two months. In early December 2014 he was informed that he would be posted to HMAS Newcastle from January the following year. He applied to be discharged from the Navy in 12 months' time, effective 15 December 2015. He served out most of calendar year 2015 on HMAS Newcastle, working as a refrigeration mechanic on air-conditioning and cooling units. As earlier mentioned he was discharged on 19 December 2015.
[11]
9 Common law and statute concerning Defence Force members
The Commonwealth contends that the Training Contract is an agreement "fettering executive action or statutory duties or powers" and on that ground "void against public policy". In order to see what executive or statutory duties or powers of the Commonwealth may be fettered by the Contract it is first necessary to restate briefly the law governing the relationship between the Commonwealth and an enlisted member of the Navy. The historical legal status of the armed forces in the common law of England has been treated by the High Court as the base position with respect to the armed forces of the Commonwealth of Australia, subject to the Constitution and Federal legislation.
In China Navigation Co v Attorney-General [1932] 2 KB 197 the history of the relationship between the Crown, the armed forces (specifically, the Army) and Parliament was examined. Their Lordships quoted a recital to an Act of 1661 (13 Charles II, c 6) by which Parliament acknowledged the Crown's prerogative of command of the forces. This recital had been expressly preserved in subsequent enactments and was still law in 1932. The recital is in these terms:
Forasmuch as within all His Majesty's realms and dominions, the sole supreme government, command and disposition of the militia, and of all forces by sea and land, and of all forts and places of strength, is, and by the laws of England ever was, the undoubted right of His Majesty, and his Royal predecessors Kings and Queens of England; and that both, or either of the Houses of Parliament cannot nor ought to pretend to the same …
The Court of Appeal also referred to the declaration embodied in the Bill of Rights at the time of the accession to the throne of William and Mary in 1689, that:
the raising and keeping a standing Army within the Kingdom in time of Peace, unless it be with Consent of Parliament, is against Law.
From 1689 the army had "only continued to exist by virtue of the annual renewal of the sanction given by Parliament": at 226 (Lawrence LJ). The common law position from 1661 was summed up as follows at 239 (Slesser LJ):
This short investigation of the history of the relations of Parliament and the army shows clearly that at no time has Parliament derogated from the prerogative with regard to the command of the forces as it was declared in the time of Charles II. It has declared the standing army illegal in time of peace without the consent of Parliament, but has abstained from interfering with the command by the Crown over a legalised army.
An aspect of the Crown's relationship to the armed forces, according to the common law of England as declared by Lord Esher MR in Mitchell v The Queen [1896] 1 QB 121, is that:
all engagements between those in the military service of the Crown and the Crown are voluntary only on the part of the Crown, and give no occasion for action in respect of any alleged contract.
That case was decided in 1890 and is reported as a note at the citation given above. The claimant in that case (referred to as "the suppliant") was a retired officer of the army who alleged that an amount awarded to him had not been correctly calculated in accordance with a Royal Warrant (apparently having the status of a regulation made by the executive, namely the War Office). Lord Esher MR continued:
The suppliant is not, it must be remembered, suing in respect of a matter which is provided for by an Act of Parliament, but of a matter which arises under the War Office Regulations. It is a matter which arises between him and the Crown in consequence of certain regulations which the Crown has made with regard to its officers. It has been decided over and over again that, whatever means of redress an officer may have in respect of a supposed grievance, he cannot as between himself and the Crown take proceedings in the courts of law in respect of anything which has happened between him and the Crown in consequence of his being a soldier. The courts of law have nothing whatever to do with such matter.
Fry and Lopes LJJ concurred, the former stating:
I am clearly of opinion that no engagement between the Crown and any of its military or naval officers in respect of services either present, past, or future can be enforced in any court of law. That being so, I entirely agree with the Master of the Rolls.
This decision was cited in Dunn v The Queen [1896] 1 QB 116 for the proposition, simply stated, that:
all engagements between those in the military service of the Crown and the Crown are voluntary only … and give no occasion for action in respect of any alleged contract.
In Australia the non-contractual nature of the relationship between the Commonwealth on the one hand and officers and enlisted personnel of the armed forces on the other hand has been recognised by the High Court on the basis of the English authorities. It has also been restated in Commonwealth Acts and regulations which govern terms of service.
In Commonwealth v Quince (1944) 68 CLR 227; [1944] HCA 1 the Commonwealth sought to recover damages for loss of the services of an airman in the Active Citizen Air Force. He had been injured in a motor accident for which the defendant was liable in negligence. The Court was divided as to whether the action per quod servitium amisit would lie. Four of the justices expressed opinions in very similar terms concerning the nature of the relationship between the enlisted airman and the Commonwealth.
At 234-235 Latham CJ said:
… the relation between an airman and the Commonwealth is not contractual in character. The relation is constituted by the airman taking an oath of enlistment. … Upon taking the oath [the airman] became a member of the Active Citizen Air Force [by the operation of r 95 of the then Statutory Rules which] provides:- "The oath of enlistment shall bind the person taking it to serve in the Air Force in accordance with the tenor of the oath until he is discharged, dismissed, or removed therefrom, or until his resignation is accepted." … An airman cannot terminate his service at his own will, but he may be discharged at any time for any reason as the Air Board may think fit … . Thus the general rule of law that members of the forces hold their positions at the pleasure of the Sovereign, who may dismiss them at any time, has not been altered in its application to airmen: Dunn v The Queen; Mitchell v The Queen; Leaman v The King [1920] 3 KB 663.
The oath of enlistment imposes an obligation to render service, but that obligation is created by law, and does not depend upon any contract to which the airman and the Crown are parties. The airman becomes subject to military discipline; but in enforcing discipline officers in the forces are not performing or acting under a contract; they are performing duties incidental to their position. ... The airman, in rendering service in the military forces, is performing a national duty, now largely defined by statute, and is not performing a contract made with the Commonwealth. The Commonwealth in relation to the airman acts in pursuance of statutory and common law powers, and is not engaged in performing any contract with him.
Starke J (at 245) and McTiernan J (at 250) described the legal nature of the relationship between the Crown and an enlisted member of the Australian armed forces in similar terms. When the plaintiff in the present case enlisted, regs 24 and 25 of the Defence (Personnel) Regulations 2002 had the same effect concerning enlistment by the taking of an oath as r 95 of the Statutory Rules to which Latham CJ referred.
In Commonwealth v Welsh (1947) 74 CLR 245; [1947] HCA 14 regulations made under the Air Force Act 1923 (Cth) prescribed rates of deferred pay to which the respondent, an officer, would be entitled with interest at the completion of his commission. He served from October 1939 until his discharge in September 1945. An amending regulation made in April 1943 purported to have the effect that the respondent was deprived of his deferred pay in respect of the period from his enlistment in October 1939 until the date he was deployed overseas in September 1942. The question whether the amending regulation had valid retrospective operation turned upon whether the respondent had accrued rights as at the date of promulgation which would be prejudicially affected.
Regulation 31 conferred upon a member of the Air Force the right to sue for "any monies which under his engagement or by any agreement with the Commonwealth are due to him" but this right was exercisable only upon cessation of membership. Regulation 32 was in these terms:
32 The appointment or promotion of an officer under these Regulations shall not create a civil contract between the King or the Commonwealth and the officer.
During the service of the plaintiff in the present case, the effect of reg 32 quoted in the preceding paragraph was replicated in reg 117 of the Defence (Personnel) Regulations, together with express disavowal of any contract being made by "the enlistment of an enlisted member" (see [100] below). In Commonwealth v Welsh it was necessary for the High Court to examine what, if any, rights a member of the Air Force had against the Commonwealth in respect of deferred pay as it accrued and prior to cessation of membership of the service. Latham CJ said (at 257):
Regulation 32 … states the principle of the common law applying to the relation between a member of the armed services and the Crown. The engagement of a member of the Forces does not result in the creation of a contract between him and the Crown. He holds his position at the pleasure of the Sovereign; he may be dismissed at any time; he can bring no action for damages for wrongful dismissal, nor can he claim to be discharged from his obligations by reason of any alleged breach of duty on the part of the Crown (Dunn v. The Queen; Leaman v. The King; Commonwealth v. Quince).
At 258 Latham CJ held that the respondent's claim based upon an agreement with the Commonwealth had been correctly rejected in the court below. His Honour said:
The plaintiff became bound, by reason of the law applying to service and the forces, to perform the duties of his position, but the Crown made no promises to him. There was no agreement which he can say binds the Crown. His claim depends upon the existence of rights under the Air Force Act and the regulations made thereunder.
Starke J (at 264) held that the respondent's claim could not be supported on a contractual basis, citing Mitchell v The Queen and Dunn v The Queen. His Honour said:
This principle is enforced by the Air Force Regulations which provide (reg 72) that an officer shall hold his appointment during the pleasure of the Governor-General and (reg 32) that the appointment or promotion of an officer under the regulations should not create any civil contract between the King or the Commonwealth and the officer and also (reg 541) that a member or other person for whom provision is made by the regulations should not be recognised as having any vested rights to any rate of pay, deferred pay, allowance rather a monument except especially provided therein.
Dixon J (as his Honour then was) said (at 268-269):
… in considering the meaning and effect of the Air Force Regulations their purpose cannot be neglected, namely to provide rules to govern one of the armed forces of the Crown. The relation to the Crown of members of the Armed Forces is no new subject; the rules of the common law define it. The regulations are not to be read in disregard of those rules and of the long tradition to which they have contributed. At common law neither commission nor enlistment in the services does or can amount to a contract with the Crown and neither officer nor man obtains any legal right against the Crown to pay, deferred pay, half pay, pension or emolument. "All engagements between those in the military service of the Crown and the Crown are voluntary only on the part of the Crown, and give no occasion for an action in respect of any alleged contract:" per Lord Esher MR in Dunn v. The Queen [additional citations omitted].
… By regs 31 and 32, which are the counterparts of ss 12 and 13 of the Defence Act, provisions are made which, in part, vary and, in part, confirm the common law rule. Regulation 31 says that any person who has been a member of the Air Force may, after having ceased to be a member, recover from the Commonwealth in a court of competent jurisdiction any moneys which under his engagement or by agreement with the Commonwealth are due to him. This breaks in upon the common law, but the right of action which it gives is strictly conditioned and arises only on the termination of the member's service. …
Rich J dissented but, relevantly for present purposes, held (at 262-263):
The general rule is well established that at common law the Crown is not contractually bound to persons whom it takes into its military or civil service, and may at its will dismiss them or refuse to pay them (Commonwealth v. Quince). It is equally well established that the Crown's right to treat such engagements as purely voluntary may be effectually abridged or nullified by statute. ...
As will be seen s 117B of the Defence Act 1903 (Cth), as in force during the plaintiff's service, "[broke] in upon the common law", in Dixon J's words, to an even greater extent than reg 31 of the Air Force Regulations which the High Court considered in Commonwealth v Welsh. Section 117B (reproduced at [98] below) permitted an action for recovery of pay by a member of the Defence Force at any time, not just after completion of service.
In summary these two decisions confirm that in Australia the legal content and incidents of the relationship between the Commonwealth and an enlisted man such as the plaintiff derive from the common law and from statute and that no contract is entered into as a result of enlistment. Further, when interpreting legislation which may appear to modify the common law, it must be ascertained whether any departure was intended and has been effected.
The High Court reaffirmed this position in Coutts v Commonwealth (1985) 157 CLR 91; [1985] HCA 40. There the appointment of an Air Force officer was terminated by the Governor-General. The officer complained that this had been done on medical grounds and he had not been accorded procedural fairness. Regulation 72 of the Air Force Regulations provided:
72 An officer shall hold his appointment during the pleasure of the Governor-General, but the commission of an officer shall not be cancelled except for cause and after he has had notice in writing of any complaint or charge made, and of any action proposed to be taken against him and has been given the opportunity of making such statement as he thinks fit regarding the cause.
Wilson, Brennan and Dawson JJ held that once it was established the appointment had been terminated in exercise of the power under reg 72 it was immaterial that any cause be assigned, as the officer's appointment was at the pleasure of the Governor-General. At 98-99 Wilson J cited Commonwealth v Quince and Commonwealth v Welsh. His Honour said:
the fundamental feature of the relationship at common law is that members of the armed services hold their engagement at the pleasure of the Crown. … Moreover, although always subject to modification by statute, the passage of time does not appear to have affected the strength of the Crown's common law prerogatives so far as the armed services are concerned.
At 100-101 Wilson J examined the regulations "to see whether these common law rules have been developed or modified in such a way as would favour the appellant's claim to judicial review". His Honour quoted reg 32 (see [76] above) and said that it "preserves the well-established common law rule governing the relationship between the Crown and members of the armed services". His Honour said that the introductory words of reg 72 (quoted at [84] above) "are also a classic restatement of the basic common law rule".
Brennan J said (at 105):
The power to dismiss an officer of the Defence Force, whether it flows from statute or the prerogative, is a power to dismiss at pleasure. That is, the power to dismiss may be exercised at any time and for any reason, or for no reason or for a mistaken reason. In point of law, an officer has no security of appointment. ... A power to dismiss members of the Defence Force at pleasure is an exceptional, perhaps anachronistic, power nowadays, but the legislature has seen fit to leave that power undiminished.
At 119-120 Dawson J said the common law rule that Crown servants may be dismissed at pleasure and without notice "has its origin in military service [and] is copiously supported by authority", which his Honour cited. His Honour differentiated military service from service under a contract of employment with a private employer in that:
officers serve in accordance with their commissions and other members in accordance with their engagements. In the absence of statute, it is the prerogative power which supports the relationship between members of the armed forces and the Crown and it is a concomitant of that relationship that none of them has at common law any right of action against the Crown for breach of contract or any right to sue for pay. The relationship is not a contractual one. However, in Marks v Commonwealth (1964) 111 CLR, at p 564, Windeyer J also pointed to the fact that in Australia the position of the Crown in relation to the forces is dependent upon statute and not the prerogative and, that being so, the inquiry turns to whether the relevant statute law, which in this case is the regulations, adopts, modifies or abrogates the common law position.
In C v Commonwealth of Australia [2015] FCAFC 113 the Full Court of the Federal Court (Tracey, Buchanan and Katzmann JJ) made these observations pertinent to the present case:
[43] During the life of the Defence Act 1903 (Cth) the provisions of the Regulations and their predecessors have become progressively more prescriptive in dealing with the terms and conditions on which members of the Defence Force serve. Service at pleasure has, for example, been replaced by termination for cause. Wage rates, leave entitlements and allowances are prescribed by the Defence Force Remuneration Tribunal under Part IIIA of the Act. …
…
[50] Despite these developments, one essential element of the former common law arrangements has been preserved by statutory prescription. As Logan J reaffirmed in Millar v Bornholt (2009) 177 FCR 67; [2009] FCA 637 (at [87]) the relationship between the Crown and a member of the Defence Force has not been and is not founded on contract and is not that of employer and employee.
The aspect of the law governing enlisted service which is of most importance to the determination of the plaintiff's claim is that which is least considered in the authorities. I refer to the Commonwealth's executive power of command, that is, its power to give orders or to have orders given, down through the chain of command to commissioned or enlisted service personnel who must execute the orders. This power of the Commonwealth is exercised by the Governor-General through the Chief of Defence, the Chiefs of the three services and subordinate officers.
Sections 61 and 68 of the Australian Constitution provide:
61 The executive power of the Commonwealth is vested in the Queen and is exercisable by the Governor-General as the Queen's representative, and extends to the execution and maintenance of this Constitution, and of the laws of the Commonwealth.
68 The command in chief of the naval and military forces of the Commonwealth is vested in the Governor-General as the Queen's representative.
The Defence Act as in force at June 2011 contained these provisions relevant to command of the armed forces:
8 Powers of Minister in relation to Defence Force
The Minister shall have the general control and administration of the Defence Force, and the powers vested in the Chief of the Defence Force, the Chief of Navy, the Chief of Army and the Chief of Air Force by virtue of section 9, and the powers vested jointly in the Secretary and the Chief of the Defence Force by virtue of section 9A, shall be exercised subject to and in accordance with any directions of the Minister.
9 Command of Defence Force and arms of Defence Force
(1) The Governor‑General may appoint an officer of an arm of the Defence Force to be Chief of the Defence Force and:
(a) may appoint an officer of the Navy to be Chief of Navy;
(b) may appoint an officer of the Army to be Chief of Army; and
(c) may appoint an officer of the Air Force to be Chief of Air Force.
(2) Subject to section 8, the Chief of the Defence Force shall command the Defence Force, and the service chief of an arm of the Defence Force shall, under the Chief of the Defence Force, command the arm of the Defence Force of which he is service chief.
(3) It is a function of the Chief of the Defence Force to advise the Minister, in such manner as the Minister directs, on matters relating to the command by the Chief of the Defence Force of the Defence Force, and it is a function of the service chief of an arm of the Defence Force to advise the Minister, in such manner as the Minister directs, on matters relating to the command by the service chief of the arm of the Defence Force of which he is the service chief.
(5) Subsection (2) has effect subject to section 68 of the Constitution.
9A Administration of Defence Force
(1) Subject to section 8, the Secretary and the Chief of the Defence Force shall jointly have the administration of the Defence Force except with respect to:
(a) matters falling within the command of the Defence Force by the Chief of the Defence Force or the command of an arm of the Defence Force by the service chief of that arm of the Defence Force; or
(b) any other matter specified by the Minister.
In Marks v Commonwealth (1964) 111 CLR 549; [1964] HCA 45 the High Court had to determine whether an officer who had tendered his resignation was entitled to have it accepted by the Governor-General. At 564, in a passage which was not essential to his Honour's reasoning, Windeyer J characterised the power of military command under Australian law in these terms:
Australian military law differs from that of the United Kingdom in an important aspect. The position of the Crown in relation to the Forces is in Australia dependent on statute and not on the prerogative. Doubtless the prerogative powers of the Crown in relation to military defence are constitutionally an attribute of the Crown in right of the Commonwealth, except in so far as they have been superseded by statute: but the Australian Military Regulations are made under the authority given by the [Defence Act] (s 124) and by the same procedures and subject to the same Parliamentary controls as are other statutory regulations. They are made by the Governor-General in Council, not by the Governor-General as Commander-in-Chief exercising a prerogative power on the advice only of a responsible minister. In the United Kingdom the Queen's Regulations are made under the royal prerogative of the command of the army, although recently, since 1955 especially, the area of regulation based on statutory authority has increased. Some aspects of the Crown's immunity from the control of the courts that were discussed by Scrutton L.J. and other members of the Court of Appeal in China Navigation Co v Attorney-General are thus not, I think, applicable in Australia.
In Barton v Commonwealth (1974) 131 CLR 477 Mason J said (at 498):
By s 61 [of the Constitution] the executive power of the Commonwealth was vested in the Crown. It extends to the execution and maintenance of the Constitution and of the laws of the Commonwealth. It enables the Crown to undertake all executive action which is appropriate to the position of the Commonwealth under the Constitution and to the spheres of responsibility vested in it by the Constitution. It includes the prerogative powers of the Crown, that is, the powers accorded to the Crown by common law.
Windeyer J's statement in Marks v Commonwealth that "the prerogative powers of the Crown in relation to military defence are constitutionally an attribute of the Crown in right of the Commonwealth" is consistent with Mason J's observation and with ss 61 and 68 of the Constitution. The power of military command may be regarded as a prerogative confirmed by the Constitution. It is within the class referred to as "executive prerogatives", as distinct from the prerogatives accorded to the Crown by reason of it being a legal person: James Stellios, Zines's The High Court and the Constitution (6th ed, 2015, Federation Press) at 375.
The chain of command from the Governor-General through the Defence Force Chiefs is prescribed by the Defence Act. There is nothing in that Act or in other legislation or regulations which detracts from the breadth of the power of command. So far as concerns the plaintiff as an enlisted man, it is a power to require him at any time to carry out whatever orders his officers might give in furtherance of the interests and objectives of the Navy. No doubt the breadth of this power is little discussed in the cases because, inherently, the exercise of military command is not justiciable.
[12]
10 Statute law governing enlisted service as at June 2011
Against the common law background the statutes and regulations governing the plaintiff's service in the Navy are to be considered as at June 2011 when the Training Contract was signed. Between the date of the plaintiff's enlistment and his discharge on 19 December 2015 there were no legislative changes material to the determination of this case.
As mentioned earlier, the common law position that engagement of armed forces personnel is voluntary on the part of the Commonwealth and that remuneration cannot be sued for in the courts (see [67]-[82] above) was certainly displaced by the Defence Act as in force at June 2011. Section 117B provided as follows:
117B Members and former members may bring actions for money due in respect of service
A person who is or has been a member of the Defence Force may recover from the Commonwealth, by action in a court of competent jurisdiction, money due to the person by the Commonwealth in respect of the person's service as a member of the Defence Force.
Section 124(1) of the Defence Act empowered the Governor-General to make regulations "for securing the good government of the Defence Force, or for carrying out or giving effect to this Act". Specific topics for which regulations could be made included:
1. enlistment, promotion and discharge of members (par (a));
2. transfer of members between different arms of the Defence Force and between different parts of the same arm (par (aa));
3. the training of members (par (ab));
4. the conditions of service of members (par (ac)).
The common law position that appointment of an officer or enlistment of a member of the Armed Forces does not give rise to a contractual relationship remained intact at the date of the plaintiff's enlistment and throughout his period of service. This was expressly confirmed in reg 117 of the Defence (Personnel) Regulations 2002:
117 No civil contract
No civil contract of any kind is created with the Crown or the Commonwealth as a result of:
(a) the appointment of an officer; or
(b) the enlistment of an enlisted member; or
(c) the promotion of a member; or
(d) the transfer of a member; or
(e) the posting of a member.
The Defence (Personnel) Regulations and the Defence Force Regulations 1952 (Cth) as in force at June 2011 made provision for many of the terms of service of an enlisted person such as the plaintiff. The following are some of the provisions of the Defence (Personnel) Regulations which conflicted with the Training Contract, or carried the potential for conflict:
1. Regulation 42 provided that the Chief of the Navy could post a member to a place in or outside Australia or to a position in or outside the Navy. This to some extent duplicated s 33 of the Naval Defence Act 1910 (Cth), which provided that:
Members of the Navy may be required to serve either within or beyond the territorial limits of Australia.
1. Regulation 50 provided for a member who had enlisted for a limited period to apply to the Chief of the Navy to serve for another limited period or to convert to enlistment for indefinite period. The Chief was empowered to extend or convert the enlistment or to refuse the application.
2. Regulation 83 provided for termination of a member's service upon determination of redundancy.
3. Regulation 87 provided for termination of service on various grounds including a determination by the Chief of the Navy that the enlisted person "is not suited to be an enlisted member of the Defence Force" or, if the person was undergoing training, that he or she was unsuitable for further training.
4. Regulation 95 provided for resignation from the service upon application with 12 months' notice.
[13]
11 MT training was prescribed by military command
The parties did not identify to the Court any regulation which spelt out in detail the subjects upon which an MT was to be trained, or the manner in which the training was to be administered, or the work experience to which an MT was to be exposed, or the certificates which should be awarded at any stage in the acquisition of competence. During the plaintiff's service those matters were not the subject of regulations but of orders which led to the implementation of the MT program as described at [26]-[35]. The detail of MT training was prescribed and revised by Naval personnel of the MT Category Sponsor in conjunction with the Competency Management Cell. The MT2010 log, over which the Sponsor exercised control, stipulated the experience and the competencies that MTs were to acquire. The MTs' immediate superiors (leading seamen or petty officers) and training coordinators were required to instruct them in the performance of their work, to assist them in the acquisition of skills and to verify what capabilities they developed, all in accordance with the log and the other elements of the MT program. Others, particularly personnel of the Competency Management Cell, had oversight of the MTs' progress, individually and as a workforce.
The MT2010 program was integrated with the promotion of trained sailors to ranks and to positions of greater responsibility from which they, in turn, could train and direct more junior members. With certification at the successive levels in the log (see [34]) the MT could progress in rank from seaman to able seaman then leading seaman. Petty officers who supervised MTs made periodic assessments of them in Sailor Performance Appraisal Reports. These were submitted to Navy personnel in a Promotion Cell. The Appraisal Reports addressed the MTs' reliability, motivation, initiative and other qualities and were taken into account in determining promotion.
This entire MT2010 system of training MTs to the capability the Navy required of them was established and directed by command of Naval officers. It was an exercise of the Commonwealth's executive power of command in chief of the Navy by the Governor-General, as referred to at [90]-[94]. Prescription of the skills an MT should acquire and of the required sequence and thoroughness of developing them was (and no doubt still is) as much a matter of professional military decision-making by officers as an infantry commander's orders regarding the weapons to be issued to soldiers or regarding the deployment and disposition of troops or artillery.
For a naval vessel and its complement to be part of an effective fighting force it is critical the ship be seaworthy and in a material sense ready for conflict. In a modern warship those qualities are not limited to the integrity of the hull, propulsion and steering but involve, in addition to weapons and navigation equipment, the functioning of numerous auxiliary systems, mechanical, hydraulic, electrical and electronic, of varying degrees of complexity. The capability of MTs both at sea and at Fleet Service Units to operate, maintain and repair all components of the Navy's vessels is vital to the service. Specifying and administering the training of MTs is a fundamentally important element of Naval command.
[14]
12 The terms of the Training Contract
Relevant operative parts of the Training Contract commenced with these general clauses:
We understand that this [Apprenticeship] Contract is legally binding in accordance with the Training Contract Obligations set out below and the legislation of the [State] in which this Training Contract is to be registered [Victoria].
We understand that this Training Contract can only be terminated within the period of the probation [3 months] and/or in accordance with the requirements of the [Victorian] legislation … .
We undertake to negotiate and sign a Training Plan with the chosen RTO as required by the [Victorian] Training Authority.
These clauses were followed by the signature of Mr Palmer as "employer representative" and the plaintiff as "apprentice". The Royal Australian Navy was named as the "employer". Following the signatures was a heading "Training Contract Obligations" which was divided into sections containing, firstly, joint obligations of the employer and apprentice and, secondly, undertakings of the employer alone. The latter included purported covenants of the Navy that it would:
(a) employ and train the [apprentice] as agreed in our Training Plan and ensure the [apprentice] understands the choices that [he] has regarding the training
(b) provide the appropriate facilities and experienced people to facilitate the training and supervise the [apprentice] while at work, in accordance with the Training Plan
(c) make sure the [apprentice] receives on-the-job training and assessment in accordance with our Training Plan
(d) provide work that is relevant and appropriate to the vocation and also to the achievement of the qualification referred to in this Contract [ie Certificate IV in Engineering]
…
(h) work with our RTO and the [apprentice] to make sure we follow our Training plan, keep training records up-to-date and monitor and support the [apprentice's] progress
The plaintiff promised that he would:
(a) attend work, do my job and follow my employer's instructions, as long as they are lawful
(b) work towards achieving the qualification stated in our Training Contract
(c) undertake any training and assessment in our Training Plan.
Without it being necessary to make a close or detailed comparison, it is obvious the specification for the Certificate IV in Engineering national qualification is quite different from the catalogue of competencies an MT was required to attain by working through the Operator Competency Task Journal of the MT2010 Log toward certification as a Marine Systems Technician, Marine Systems Controller and, eventually, Marine Systems Manager. This was common ground. The Certificate IV requires completion of 13 core units, each of a very general nature such as "Perform engineering measurements", "Plan to undertake a routine task" and "Organise and communicate information". Those unit titles are the subject of further detailed specifications of the competency to be achieved, each of them registered under the national scheme. The specifications for individual units were not tendered in evidence. The Certificate IV also requires successful completion of units from two lists of electives to a total value of 109 points. At an average of about four points per unit this would require completion of approximately 27 units. Again the content of these has not been put in evidence but it is apparent from the titles that many of them would not be of specific utility to the Navy in its training of an MT. The requisite points total could be gathered within quite a narrow range of mechanical or electrical engineering experience.
Not only did the Training Contract specify (by reference to the Certificate IV) content of training different from the Navy's MT2010 log and the system of assessment and graded certification referred to at [34] and [102]-[103], it also required the Navy to agree with the plaintiff a Training Plan without a limitation that the Plan should conform to the course of training or of other duties which the plaintiff's commanding officers might require of him. Thus the Training Contract purported to restrict in advance the commands of officers by which the plaintiff would be posted to bases or to ships and directed what duties to perform, or left idle.
[15]
13 The Commonwealth cannot fetter executive power
It was beyond the power of the Commonwealth to fetter Naval command of an enlisted serviceman by making with him a purported contract of this nature. That is no less so where the contract was purportedly made through the agency of a representative signing on behalf of the Navy itself.
In Ansett Transport Industries (Operations) Pty Ltd v Commonwealth (1977) 139 CLR 54; [1977] HCA 71 ("Ansett Transport Industries v Commonwealth") the High Court considered a series of agreements between the parties concerning the operation of airlines on trunk routes within Australia. These agreements, at least arguably, were premised upon an expectation that only two airlines would service the trunk routes, one operated by the appellant and the other owned by the Commonwealth and operated by a Commission. A question arose as to whether there was an implied term in one or more of these agreements that the Commonwealth would not do anything within its lawful power to enable a third airline operator to carry for reward on a trunk route. The appellant contended that the alleged implied term would be breached if the Secretary of the Department of transport should issue a permit, under the Customs (Prohibited Imports) Regulations 1956 (Cth), for the importation of aircraft intended to be used by third-party competitors.
Mason J (as His Honour then was) considered whether the alleged implied term would be beyond the power of the Commonwealth to contract, as a fetter on the executive power to grant or withhold an aircraft import permit (at 74-75):
[27] … I have already referred to the question whether the executive government can by contract fetter its power to make regulations. A similar question arises in relation to the making of a contract which attempts to fetter the exercise of a discretionary power conferred by statute or regulation. There is a general principle of law that a public authority cannot preclude itself from exercising important discretionary powers or performing public duties by incompatible contractual or other undertakings (Ayr Harbour Trustees v Oswald (1883) 8 App Cas 623).
[28] A somewhat similar principle seems to have been expressed in relation to government contracts in Rederiaktiebolaget Amphitrite v The King [1921] 3 KB 500, at p 503 where Rowlatt J. acknowledged that the government can bind itself through its officers by commercial contract but went on to say "it is not competent for the Government to fetter its future executive action, which must necessarily be determined by the needs of the community when the question arises. It cannot by contract hamper its freedom of action in matters which concern the welfare of the State". This statement has been criticized on the ground that it is expressed too generally and so it is. [Citations of texts and learned articles omitted.]
[29] 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. Yet on the other hand the public interest requires that neither the government nor a public authority can by a contract disable itself or its officer from performing a statutory duty or from exercising a discretionary power conferred by or under a statute by binding itself or its officer not to perform the duty or to exercise the discretion in a particular way in the future. To take an example related to this case: the Commonwealth could not, by making a contract with an airline company whereby it promises that the Secretary of the Department of Transport would not for the next fifteen years issue to other airline companies import permits for aircraft, fetter the future exercise by the Secretary of the discretion conferred upon him by the Customs (Prohibited Imports) Regulations. The Secretary must at all times deal with applications for import permits in accordance with the law; if he considers that, in conformity with government policy, the public interest calls for the importation of the aircraft, he should grant the application notwithstanding that the Commonwealth has entered into a contract which provides to the contrary. To hold otherwise would enable the executive by contract in an anticipatory way to restrict and stultify the ambit of a statutory discretion which is to be exercised at some time in the future in the public interest or for the public good.
At 75-76 Mason J referred to an analogous restraint upon the contractual capacity of bodies entrusted under legislation with powers to be exercised and duties to be discharged in the public interest. As with the executive, such bodies cannot bind themselves by contract to obligations or restrictions incompatible with their statutory powers and duties. His Honour's survey of authority on the subject led to the conclusion (at 78) that "in the absence of specific words [in the Agreements], an undertaking which would affect the exercise of discretionary powers to be exercised for the public good, should not be imputed to the Commonwealth". Mason J accepted that a contract approved by the legislature could validly fetter the exercise of discretionary executive power but considered that this had no application to the appeal before the Court, although the Agreements had been approved by Parliament, because the term which was said to give rise to the fetter was not express.
Barwick CJ and Gibbs J did not disagree with Mason J's statements of principle as quoted above but they did not consider that the subject Agreements were in any respect beyond the power of the Commonwealth to enter into. Aickin J at 113 expressed reservation concerning the limits of the doctrine against contracts which fetter executive action but did not need to decide the matter.
In Peregrine Mineral Sands Pty Ltd v Wentworth Shire Council [2014] NSWCA 429 the Court of Appeal considered an agreement made by a Council to fix the rates for a parcel of land for the ensuing 20 years, subject only to rate adjustments published in the New South Wales Gazette pursuant to the Local Government Act 1993 (NSW) and without reference to periodic revaluation. At [4]-[13] (McColl JA) and [144]-[153] (Ward JA) it was held that it was beyond the power of the Council to fetter its authority and duty to fix rates in the future by committing to this agreement. McColl JA said at [4]:
The principles to which Mason J referred [in Ansett Transport Industries v Commonwealth] concerning fetters on statutory discretion have been accepted as authoritative despite being uttered in a dissenting judgment.
[16]
14 The Training Contract is void as a fetter on Naval command
The considerations which inform the principles expounded by Mason J in Ansett Transport Industries v Commonwealth are fully engaged in relation to the Training Contract. By that Contract the Commonwealth purported to promise an enlisted serviceman that he would be trained in the subjects described therein, referable to the Certificate IV syllabus and, in effect, that this training would be given priority. Thereby a restraint was purportedly placed upon his superior officers with respect to orders the plaintiff might be given on topics such as how and in what skills he would be trained and when and to what extent he should perform other duties which would displace or defer training. Such a fetter on the command function of Naval officers would be particularly detrimental to the public interest given the direct bearing it would have upon national security.
As technology and equipment develop effective command requires that officers who have responsibility for ensuring capability of the MT category must be free to change the content and scheduling of their training. Depending upon the exigencies of conflicts and urgent deployments, for example for disaster relief, commanding officers may need to suspend training and direct MTs to other duties. A Training Contract having the effect of impeding Naval officers' freedom of decision-making and command in these respects would compromise their ability to achieve efficiency in their service.
It is not to the point that one might comb through the Certificate IV syllabus and find units which would correspond with Naval training under the MT2010 scheme. Nor does it matter that the Navy and the plaintiff might adopt as the plaintiff's Training Plan under the Contract a program which would also satisfy personnel of the MT Category Sponsor and of the Competency Management Cell. The impermissible fetter upon Naval officers' command is brought about by the Contract purporting to establish, for the specification and scheduling of a sailor's training, a regime other than the free decision-making from time to time of the responsible officers.
There are further ways in which the Training Contract would, if given effect, restrict naval command. First, by force of ss 5.5.4 and 5.5.5 of the Education and Training Reform Act the terms set out in Schedule 4 of the Act are incorporated in the Training Contract. Clause 5(5) of Schedule 4 makes this provision:
5(5) An apprentice must not work shiftwork unless the apprentice and the employer have agreed that satisfactory provision is made for approved training under the relevant approved training scheme [ie Certificate IV]. Training for shiftwork employees may be applied over a cycle in excess of a week but must average over the relevant period no less than the amount of training required for non-shiftwork apprentices.
"Shiftwork" is not defined in the Act. Its ordinary English meaning is wide enough to embrace the standing of watches by the crew of a vessel at sea. Clause 5(5) of the Schedule is thus an additional and specific purported fetter on the command of the officers of any ship to which the plaintiff might be posted.
Secondly, s 5.5.8(1)(b) of the Education and Training Reform Act stipulates that an employer who employs an apprentice under a training contract:
(b) must allow the apprentice to comply with the approved training scheme [ie Certificate IV] without hindrance if that scheme or any part of that scheme is conducted during normal working hours.
Section 5.5.8(1)(b) is a penal provision contravention of which is punishable by fine. The Act is expressed to be binding upon the Crown, including in right of the Commonwealth. It is not necessary to reach a conclusion whether this penal section would be enforceable against the Commonwealth because it is replicated in contractual obligations assumed by the Navy as "employer" in the Training Contract itself. See for example par (d) quoted at [107] above. Those obligations, requiring continuance of the plaintiff's progress through the Certificate IV syllabus, would be inconsistent with the authority of the Chief of the Navy to post a member of the service to a place outside Australia or to a position outside the Navy: see reg 42 of the Defence (Personnel) Regulations.
The Contract obligations also have the effect of fettering the command of superior officers who may require the plaintiff, as an MT sailor, to join a boarding party, or to engage in some other aspect of combat, or to assist (other than through performance of normal duties) in the operation of the ship to which the plaintiff is posted. The Commonwealth's contractual undertaking to allow the plaintiff to pursue his Certificate IV unhindered would require that such commands not be given and would constitute them actionable breaches if they were.
Two other differences between the parties' mutual obligations under the Training Contract and their rights, authorities and obligations according to common law and statute require mention. Clause 5(1) of Sch 4 (providing for termination of the apprentice's employment on notice) and cl 6 (prescribing the wages payable to an apprentice in accordance with the National Training Wage Award) are inconsistent with the Regulations for termination of service and for rates of pay, respectively. Although the Commonwealth pointed out these conflicts in its submissions it did not identify a doctrine of law according to which inconsistency of this nature would avoid the entire Training Contract, rather than just the individual terms which conflict with the Regulations. The provisions of the Contract which place it beyond the Commonwealth's power to bind itself are those which purport to interfere with the authority of officers to command an MT sailor's training and his performance of other duties. The very core of the Training Contract, the purported obligation of the Navy to prioritise training of the plaintiff for his Certificate IV, is of this nature.
[17]
15 Absence of consideration and uncertainty
It is not necessary to decide whether the Training Contract is also unsupported by consideration from the plaintiff. If that had to be decided I would conclude that there was an absence of consideration. As the plaintiff was bound to carry out any and all training, work experience, coursework, study and other duties as directed, he promised nothing additional by the obligations he assumed as listed at [108] above. He would only work towards achieving the Certificate IV in Engineering if directed by those in charge of him to undertake the necessary competencies. If they did so direct him he was bound to carry out the order irrespective of the Training Contract.
[18]
16 Estoppel
The Commonwealth could no more estop itself, by representation or conduct, from freely exercising its executive power of command over enlisted servicemen than it could bind itself by contract to restrict in advance the exercise of that power. What renders the Training Contract void is the principle which avoids a fetter on the full breadth and freedom of military command. The same principle of preservation of the exercise of executive power precludes the Commonwealth estopping itself from disavowing a contract which would constitute such a fetter.
In Maritime Electric Co Ltd v General Dairies Ltd [1947] AC 610 the appellant energy supply utility was obliged by statute to charge "no greater or less compensation" for electricity than as prescribed in a schedule. It had inadvertently invoiced the respondent, over a considerable period, at less than the scheduled rate. The respondent resisted a claim for the amount of the under-charge, contending that the appellant was estopped from claiming more than it had represented, by way of its invoices, was due. The advice of the Privy Council, delivered by Lord Maugham, included the following (at 620):
The sections of the Public Utilities Act which are here in question are sections enacted for the benefit of a section of the public, that is, on grounds of public policy in a general sense. In such a case … where, as here, the statute imposes a duty of a positive kind, not avoidable by the performance of any formality, for the doing of the very act which the [appellant] seeks to do, it is not open to the [respondent] to set up an estoppel to prevent it. This conclusion must follow from the circumstance that an estoppel is only a rule of evidence which under certain special circumstances can be invoked by a party to an action; it cannot therefore avail in such a case to release the [appellant] from an obligation to obey such a statute, nor can it enable the [respondent] to escape from a statutory obligation of such a kind on his part. … The duty of each party is to obey the law. … [T]he Court should first of all determine the nature of the obligation imposed by the statute, and then consider whether the admission of an estoppel would nullify the statutory provision.
In Southend-on-Sea Corporation v Hodgson (Wickford) Ltd [1962] 1 QB 416 at 423-425 the Queen's Bench Division held that the principle underlying the Privy Council's decision extends to cases where a discretion to act in the public interest, rather than a positive duty to act in a specific way, is conferred on a body and where an estoppel is sought to be raised against the exercise of the discretion. The appellant in that case was a borough corporation upon which a town planning statute conferred a discretion "if they consider it expedient to do so" to serve an enforcement notice upon the owner of any land on which a development may have been undertaken without permission. On the faith of written advice from the borough engineer that certain land had "an existing user right as a builder's yard", the respondent purchased the land and developed it as a builder's yard without obtaining planning permission. When the borough served notice for this usage to cease, in response to complaints from neighbours, the respondent contended that the appellant was estopped from enforcing the notice.
Lord Parker CJ, with whom the other members of the Court agreed, quoted the passage from Maritime Electric Co Ltd v General Dairies Ltd which I have set out above and continued (at 423-424):
… I can see no logical distinction between a case, such as that, of an estoppel being sought to be raised to prevent the performance of a statutory duty and one where it is sought to be raised to hinder the exercise of a statutory discretion. After all, in a case of discretion there is a duty under the statute to exercise a free and unhindered discretion. There is a long line of cases [citations omitted] to which we have not been specifically referred which lay down that a public authority cannot by contract fetter the exercise of its discretion. Similarly, as it seems to me, an estoppel cannot be raised to prevent or hinder the exercise of the discretion.
These principles are recognised in Australian law. In Minister for Immigration Local Government and Ethnic Affairs v Kurtovic (1990) 21 FCR 193; [1990] FCA 22 ("Minister for Immigration v Kurtovic") it was contended the Minister had become estopped from exercising a discretion to order deportation, conferred upon him by the Migration Act 1958 (Cth). The estoppel was said to arise from a letter which the deportee construed as representing he would not be deported unless he committed offences additional to prior matters for which he had already been convicted and sentenced. Both Ryan J and Gummow J (then a member of the Federal Court) held that the Minister could not be estopped against exercising the statutory discretion. Gummow J said (at 210):
[I]t would be taking too narrow a view of the authorities to say that the concerns which find expression in the limitation put upon the doctrine of estoppel are limited to ensuring the performance of a statutory duty. The same limitation has been said by high authority to apply where there is no duty to act, but merely a discretionary power. This has been put on the basis that in a case of a discretion, there is a duty under the statute to exercise a free and unhindered discretion and an estoppel cannot be raised (any more than a contract might be relied upon) to prevent or hinder the exercise of the discretion; the point is that the legislature intends the discretion to be exercised on the basis of a proper understanding of what is required by the statute, and that the repository of the discretion is not to be held to a decision which mistakes or forecloses that understanding; see NSW Trotting Club Ltd v Glebe Municipal Council (1937) 37 SR (NSW) 288; Cudgen Rutile (No 2) Pty Ltd v Chalk [1975] AC 520 at 533; Southend-on-Sea Corporation v Hodgson (Wickford) Ltd [1962] 1 QB 416 at 423-425. Of the last mentioned decision, Sir Alexander Turner ("The Law Relating to Estoppel by Representation", 3rd Ed, 1977, p 150) said:
"It has been authoritatively laid down (and it must inexorably follow from principle) that there is no logical distinction, as regards the point now under discussion, between a duty imposed, and a discretion conferred, by statute in the public interest; the fact that the duty is imposed or discretion given in the public interest should be sufficient, on the ground of public policy, to prevent any estoppel arising whereby the performance of the duty or the exercise of the discretion is frustrated. If a public authority cannot by contract fetter the exercise of its discretion, it can hardly by the invocation of the doctrine of estoppel be brought to the same position. But it must appear that frustration of its duty or of its discretion will be the result of allowing the estoppel; anything less than this will be insufficient as an affirmative answer."
Gummow J's summation of the principles in that passage was quoted with approval by Mason CJ in Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 17; [1990] HCA 21 ("A-G (NSW) v Quin"). There it was contended that a representation had been made or an impression created by the Attorney-General which precluded the Executive from adopting a policy of considering Mr Quin's application to be appointed a magistrate competitively with the applications of other persons. The discretionary power of appointment was conferred on the Governor of NSW by statute in the widest terms: that he "may, by commission under the public seal of the State, appoint any qualified person to be a Magistrate". At 16 Mason CJ observed that the section:
makes no attempt to prescribe the procedures to be followed or the criteria to be applied in making such an appointment, except insofar as s 12(1) requires appointment by commission under the public seal of the State. In all other respects the section leaves open to the Governor and to those responsible for advising him to adopt such procedures and apply such criteria as may be considered appropriate. … After all, the Attorney-General may without adopting any procedure or applying any set of criteria, decide to recommend a particular person for appointment and that recommendation may be accepted by Cabinet, resulting in appointment by the Governor.
At 17 his Honour continued:
The Executive cannot by representation or promise disable itself from, or hinder itself in, performing a statutory duty or exercising a statutory discretion to be performed or exercised in the public interest, by binding itself not to perform the duty or exercise the discretion in a particular way in advance of the actual performance of the duty or exercise of the power: [Ansett Transport Industries (Operations) Pty Ltd v Commonwealth; Southend-on-Sea Corporation v Hodgson (Wickford) Ltd and other authorities cited].
His Honour then quoted part of the passage from Minister for Immigration v Kurtovic which I have set out at [131] and continued (at 18):
No doubt the principle gains some of its force from the circumstance that the discretion has a legislative foundation and it is not readily to be supposed that the legislature intended that a proper exercise of the discretion in the public interest was to be frustrated, hindered or circumvented by executive action. Nonetheless there is no reason why the same principle should not apply to common law powers and functions of the Crown or the Executive when they involve the making of decisions in the public interest.
What I have just said does not deny the availability of estoppel against the Executive, arising from conduct amounting to a representation, when holding the Executive to its representation does not significantly hinder the exercise of the relevant discretion in the public interest.
The two other judges in the majority in A-G (NSW) v Quin decided the case on administrative law principles and did not address the question of fettering by estoppel the exercise of an executive discretion.
In NSW Rifle Association Inc v Commonwealth [2012] NSWSC 818 White J considered an argument that a license granted by the Commonwealth over land at Malabar was void as a fetter on the exercise of executive discretion. His Honour quoted the passage from Mason CJ's judgment in A-G (NSW) v Quin which I have set out at [134] and said this (emphasis in original):
[96] It is not clear what Mason CJ intended to encompass by his reference to the non-fettering of "common law powers and functions of the Crown or the Executive" that involve making decisions in the public interest. … I consider his Honour was referring to the Crown's exercise of a prerogative that it enjoys alone and in contradistinction to the capacities of its subjects. In other words, the kind of common law power which Devlin LJ described Commissioners of Crown Lands v Page [1960] 2 QB 274 at 291, viz. a discretionary power by virtue of the prerogative to be exercised for the public good. At the widest, his Honour was referring to common law powers and functions involving the future exercise of a duty or discretion required to be exercised in the public interest, as that was the principle in relation to the exercise of a statutory discretion his Honour addressed.
The principle stated by Gummow J in Minister for Immigration v Kurtovic and endorsed by Mason CJ in A-G (NSW) v Quin is directly applicable to the plaintiff's contention that the Commonwealth is estopped from denying the binding effect of the Training Contract. As that Contract would fetter the executive power of military command, an estoppel cannot be employed to give effect to it. This is at least as strong a case for engagement of the principle as A-G (NSW) v Quin, in that the discretionary executive power of military command is one to be exercised for the most fundamental public purpose of national security and, in its nature, must be exercised with great latitude. Further, if White J is correct in the view that the principle applies only to powers which the Crown may exercise "alone and in contradistinction to the capacities of its subjects", then command of the armed forces is such a power. There is no estoppel. The Commonwealth is at liberty to disavow the Training Contract, as it has done.
[19]
17 Damages
As I have read and heard a considerable amount of evidence on quantum of damages I will record my findings on that subject in case my decision on liability should be appealed and reversed. There are two parts to the plaintiff's case on the subject. The first part is the evidence he has called to establish the hypothetical income he could have earned if the Training Contract had been performed and he had left the Navy in December 2015 with a Certificate IV in Engineering. The second part is the plaintiff's own evidence of the income he has in fact received, without having attained a Certificate IV.
As to the first, the plaintiff did not identify any specific available job for which a Certificate IV was a qualification and which he would likely have successfully applied for if he had held the Certificate. No evidence was led from the plaintiff at all concerning the hypothetical question of what employment would have been open to him as the holder of a Certificate IV. The only evidence called on his behalf on this subject was opinion evidence from an experienced remuneration and human resource consultant, Mr Leck.
The evidence does not establish that a Certificate IV in Engineering is so generally and readily accepted amongst employers in any defined field that an employee holding the qualification would command employment in that field at a salary within a reasonably ascertainable range. The Certificate is to be contrasted with, for example, a practising certificate held by a recently admitted solicitor. It would no doubt be possible to adduce evidence of the range of salaries paid to a solicitor entering his or her first year of employment in a private firm. There is almost certainly a sufficiently large employment market for junior solicitors to enable remuneration levels to be determined fairly accurately on the balance of probabilities. Also, there would be little question that the holding of the practising certificate is a principal determinant of gaining such employment.
Mr Leck's evidence did not satisfy me that there exists any reasonably homogenous group of employment positions for which the Certificate IV is a pre-requisite and for which rates of pay are within a consistent band. The plaintiff gave evidence that upon leaving the Navy he wished to reside in the Rockhampton area which is where he has lived all his life apart from his period of service. His family reside there and the plaintiff purchased a house in the area before his discharge. In particular I am not satisfied on the evidence in the plaintiff's case there was in December 2015 or at the date of the trial an homogenous range of jobs available in the Rockhampton area from which a hypothetical potential pay scale for an employee with a Certificate IV could be derived with any confidence.
Mr Leck's methodology commenced with a search of positions advertised online by an agency named "SEEK", using the search words "Cert IV (Engineering)", "Technical Officer (Engineering)" and "Senior Technical Officer (Engineering)" in various search fields. This produced 446 jobs, the detailed descriptions of which and pre-requisites for which were then examined by Mr Leck. Many of the jobs called for specialisation or experience in areas additional to engineering and many required higher or more specialised qualifications as well as the Certificate IV. When those were discarded Mr Leck was left with about 50 job descriptions. These were not confined to jobs available in the Rockhampton area or within reasonably close reach of it.
From this group of about 50 job descriptions Mr Leck formulated his own generic category of Technical Officer, with the qualification prerequisite of "Certificate IV in a relevant field and minimum 3 years experience" and with a list of what he terms "accountabilities" (being what the employee would be required to do). This generic description of a job was then used as the basis for applying a manual compiled in Mr Leck's business, by which points are ascribed to each of three aspects of any job description and a formula is then used to estimate the amount of remuneration commonly paid to an employee in a job with that number of points.
The three aspects for which points are ascribed are the knowledge and skills required, the level of complexity involved in execution of the job and the outcome or accountability of the job. For example, in Mr Leck's manual under the aspect of knowledge and skills 60 points are ascribed if the job requires secondary school completion together with a Certificate III in the national scheme. If the job requires diploma level education and extensive work experience then over 90 points may be ascribed for this aspect. Similarly, different point values will be attributed to the job according to where it sits in a range of complexity and likewise according to where it lies on a scale of "accountabilities" and value to the business.
Applying this system Mr Leck attributed 210 points to the generic job description of Technical Officer which he had compiled by reviewing the approximately 50 job offers that he found on SEEK and that appeared to him more or less within the scope of the plaintiff's eligibility if he had a Certificate IV. Mr Leck's formula for attributing a pay range to a job according to its points score under his system recognises three different levels. The first, designated "Q1", is a pay level at which 25% of employers will pay less and 75% will pay more. The second, designated "Median", is a level at which 50% of employers will pay less and 50% will pay more. The third, "Q3", is a level at which 75% of employers will pay less and 25% will pay more.
The number of points which Mr Leck's manual prescribes at each level of each of the three aspects of any job and the correlation between the points total and remuneration for any given job are matters which Mr Leck has derived over the course of 30 years, by reviewing the descriptions of thousands of jobs and collecting data on the rates of pay those jobs attract. Mr Leck's data has been drawn from over 200 employer organisations that are and have been over several years clients of his firm. It is also drawn from the results of surveys which his firm administers to employers who are not clients. These surveys are carried out during a three month period each year, in which Mr Leck's firm undertakes a marketing and business development drive.
The result of the above process is that Mr Leck produced the following estimation of the annual gross salary (plus superannuation contribution) which he would expect to be paid for a job of the generic description which he considered the plaintiff would be eligible to take up if he held a Certificate IV:
Financial year ended 30 June $
2016 89,323
2017 91,681
2018 93,611
2019 95,951
2020 98,350
2021 123,130
[20]
The step up at the 2021 financial year assumes promotion to a job in a higher generic category, which Mr Leck entitles "Senior Technical Officer" and to which he attributes more points. Increases between 2016 and 2020 are at 2.5% per annum. Mr Leck also projected the plaintiff's salary forward to 30 June 2030, applying the same annual increase of 2.5%.
As to the second part of the evidence to quantify damages, the plaintiff said that his employment and remuneration since discharge had been as follows:
1. From 22 February 2016 he was employed by Ergon Energy on a six-month engagement as a customer assistant. His rate was approximately $1,046 per week gross including superannuation. In the four months up to 30 June 2016 he would have earned approximately $18,000 in civilian employment.
2. From 14 November 2016 the plaintiff occupied a full-time permanent position with Ergon Energy at a higher rate. In the year to 30 June 2017 his gross earnings were $55,951.
3. From 1 July 2017 the plaintiff's salary at Ergon Energy increased again and from then until he left that employment on 24 November 2017 he would have earned approximately $24,000.
4. From 4 December 2017 to the date of the trial the plaintiff worked as a fire services technician for Fire and Safety Industries, at an annual salary of $78,000. His full-year earnings to 30 June 2018, from the two successive employers, will be in the order of $69,500.
If Mr Leck's estimations and projections are accepted, a simple arithmetic calculation can be made of the plaintiff's shortfall in earnings, as a result of him not having a Certificate IV, up to the date of trial. Similarly a projection forward can be made on the basis of a current differential of approximately $15,600 per annum. The defendant did not adduce evidence to contradict Mr Leck's methodology but tendered a report of an actuary, Mr Plover, which asserted some errors of calculation only. This report was expressly prepared upon the basis that it took Mr Leck's hypothetical earnings figures "at face value".
I am not satisfied on the balance of probabilities that if the plaintiff had been discharged from the Navy with a Certificate IV in December 2015 he would have found a position in the Rockhampton area, on the strength of the Certificate, from which he could have earned salaries at the annual rates hypothesised by Mr Leck. There are numerous significant uncertainties inherent in Mr Leck's methodology. The evidence does not satisfy me on the balance of probabilities that from December 2015 to the present there would in fact have been any job of the description Mr Leck has propounded available in the Rockhampton area. Still less is the evidence capable of showing that holding a Certificate IV, combined with the plaintiff's experience and other attributes, would have secured him the job if it existed.
I accept that if the plaintiff had a Certificate IV it may at least have given him an edge over competitors if there was a job on offer with technical engineering aspects. I accept that holding the Certificate might have been decisive in relation to some jobs, if they were open and advertised. But the evidence does not satisfy me that there was any such job in his geographic area at the relevant time for which the Certificate would have been so important and which he could and would have applied for.
The plaintiff gave evidence that his Naval training is not directly applicable to his present position but that the mechanical aptitude he acquired and demonstrated during his service assists him in a general way to perform his duties. In the interval between his discharge and the engagement by Fire and Safety Industries in November 2017 he did not acquire any additional training or qualification relevant to this current position. The plaintiff's earnings as a fire services technician are in the order of 50% greater than what he earned with Ergon Energy. The two rates are not directly comparable because the terms of his present employment may be regarded as more onerous; for example, he works seven days on and seven days off from a base which is two hours' drive from his home.
Taking all these considerations into account I infer from the evidence in the plaintiff's case taken at its highest, that notwithstanding the lack of a Certificate IV, his earning capacity during the two and a half years since he left the Navy is unlikely to have fallen short of what it would have been if he had held the qualification by any more than about $15,000 per annum. This is so notwithstanding that the plaintiff accepted significantly lower-paying employment for the first 20 months of that period. It is the shortfall in earning capacity to which I must have regard, not the shortfall in actual earnings. The latter may be attributable to limitations of the employment market in the Rockhampton region and other factors not causally related to the lack of a Certificate.
It would not be sound to assess damages on the basis that any shortfall is fixed and perpetual. As the plaintiff has matured and gained work experience up to the present time I conclude it is likely that his earning capacity has increased. I infer this process is likely to continue into the future so that accumulated experience will progressively compensate for the absence of the formal qualification which in any event, on Mr Leck's evidence, has a highly uncertain correlation with earning capacity.
Thus I can assess damages only on the basis that holding the Certificate IV in Engineering would have accorded some marketability or potential to secure a higher paying job for which the plaintiff has been ineligible without it. The economic value of this potential is amenable to only the crudest numerical estimation. On such uncertain evidence I can award damages only in a nominal lump sum to represent the lost chance, with its indeterminate degree of possibility, that some margin of higher earnings might have been attained. I assess damages on that basis at $60,000.
[21]
18 Common questions and costs
These proceedings have been pleaded as a class action in which the plaintiff's claim has many points in common with similar claims by a large number of other MTs who signed Training Contracts in 2011 and 2012. Counsel accepted during the hearing that I should in the first instance decide the plaintiff's claim only. The parties would then consider to what extent my judgment resolves or simplifies the claims of other class members. Accordingly, I have not endeavoured to formulate answers to common questions. When these reasons have been considered by the parties the proceedings will be relisted for that purpose and to address the further conduct or disposition of the other class members' claims.
Although the Commonwealth has successfully defended the claim it does not necessarily follow that it should have an order against the plaintiff for its costs. I will reserve that question and hear argument from the parties in light of my findings and reasons. Two considerations which will have to be addressed in submissions on costs are as follows.
First, the Navy was at fault in signing sailors up to these agreements. In the internal reports of 2014 senior officers fairly acknowledged the Navy's error, recognising that a Certificate IV apprenticeship was inapt and unworkable in the context of the Navy's program for instruction of Marine Technician ratings. There was also a failure of legal control and system in that these agreements were apparently made without advice and without an understanding that apprenticeships under the general law of contract and under State legislation could have no role for enlisted servicemen. The personnel who purported to commit the Navy to these contractual obligations would not have done so if they had accurate knowledge of the law or if they had obtained competent advice, particularly with respect to principles peculiarly applicable to military service.
Each of the affected sailors was a young man who had no reason to doubt that when his superiors asked him to sign an apprenticeship agreement it would be a proper engagement, that it would mean what it said and that it would be honoured by the Navy. False expectations were carelessly created. Disappointment followed when the contracts were disavowed in 2014, not on the legal basis I have upheld in these reasons but because Certificate IV training would have conflicted with the Navy's MT2010 program, both in content and in timing. This litigation has ensued from the sense of grievance these spurious apprenticeships engendered.
The second matter which must be addressed in submissions on costs is that the Commonwealth has been extremely tardy in identifying the legal doctrine upon which it has contended, successfully, that the Training Contract is void. In par 6 of its defence to the second further amended statement of claim the Commonwealth denied generally that the Contract had been entered into. The defence continued to the effect that the Commonwealth:
(b) says that the Training Contract was a nullity or invalid or otherwise unenforceable as the Plaintiff had no contractual relationship with the Defendant pursuant to such document or otherwise;
(c) says that the relationship between the Plaintiff and the Defendant is governed by section 61 of the Commonwealth of Australia Constitution Act, the Defence Act 1903 (Cth) and the regulations promulgated thereunder including regulation 117, all being laws of the Commonwealth;
(d) says that the Training Contract cannot establish a relationship of employee and employer between the Plaintiff and the Defendant when there is not one at common law; and
(e) further says that the Training Contract is not supported by consideration and is void.
Neither in this paragraph nor elsewhere in the defence was it specified that the legal doctrine according to which the Training Contract was alleged to be void was that which forbids a fetter upon the Commonwealth's power of command. Nor was this principle identified in the defendant's opening submissions. On the first day of the hearing (Tcpt pp 62-67) I invited counsel for the Commonwealth to cite the authorities relied upon for the proposition that the Training Contract was "a nullity or invalid". I informed counsel of my initial surprise that such apparently formal agreements should have been entered into by the Navy and subsequently disclaimed by it. In the discussion which followed counsel did not submit that invalidity arose from a fetter on military command.
Even when counsel provided to the Court on the second day of the hearing a folder of authorities which included Ansett Transport Industries v Commonwealth (Tcpt p 98), the aspect of that decision relied upon was not explained. The case dealt with a number of legal issues other than the principle which the Commonwealth has ultimately deployed. I was invited to concentrate upon three other authorities in the Commonwealth's list as establishing, in counsel's words:
… the non-existent characterisation of the relationship between a member of the ADF and the Crown as one of employer and employee and why we say that, it simply was not possible for the Commonwealth to even agree to alter the nature of its relationship by entering into the training contract in that regard.
For the Commonwealth to resist enforcement of the Training Contract it was never enough simply to say that enlisted service is non-contractual and that the Contract could not alter the character and status of that underlying relationship. The plaintiff's case always was that a separate, additional legal relationship could be created in contract, parallel with or superimposed upon the engagement of service under common law and statute, without altering that engagement. The plaintiff's question throughout the hearing was: what, if anything, renders the separate contractual relationship a nullity?
The first expression of an argument that the Training Contract was void as a fetter on executive power came in a single paragraph, par 28, of the Commonwealth's closing submissions dated 27 February 2018. In oral argument on 1 March 2018 the plaintiff's counsel stated that that issue had:
… only been identified to us for the first time in the submissions that we received two days ago.
The Commonwealth's counsel did not challenge that statement when he developed the point, very slightly, in oral argument on the same day (Tcpt pp 350-351).
The plaintiff has submitted the Commonwealth should not be permitted to rely upon the principle in Ansett Transport Industries v Commonwealth because that was not pleaded. But the Commonwealth did plead that the Trading Contract was a nullity and late identification of the principle supporting that contention is only a matter of legal argument. The plaintiff has not been prejudiced except possibly as to costs. His counsel has been able to respond to the Commonwealth's submissions concerning the point both orally on 1 March 2018 and in detailed supplementary written submissions dated 6 March 2018. The plaintiff has not contended that he would have run a different evidentiary case if he had been notified earlier that the Commonwealth would invoke this legal doctrine. The core facts which engage it are incontrovertible.
Unless additional evidence should now be called to show that the timing of emergence of this argument was different from what I have summarised above, prima facie the Commonwealth's failure to nominate at the beginning of the proceedings the legal doctrine upon which it has ultimately succeeded would have a strong bearing upon the incidence of costs.
[22]
Orders
For these reasons the order of the Court will be:
1. The plaintiff's claim is dismissed.
The proceedings will be listed on a date to be fixed for argument with respect to costs and for the making of orders with respect to the claims of remaining members of the class, including the provision by the Court of answers to any common questions in the proceedings.
[23]
Amendments
04 July 2018 -
[82]: delete 'plaintiffs' substitute 'plaintiff's'; insert 'a' before 'member
[114]: delete 'to discharged' substitute 'to be discharged'
[129]: delete 'Court of Appeal' insert 'Queen's Bench Division'
[132]: delete 'and been made' substitute 'had been made'
04 July 2018 -
[160]: delete 'men' substitute 'man'
28 June 2023 - Judgment to be numbered (No 2)
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Decision last updated: 28 June 2023
Parties
Applicant/Plaintiff:
Searle
Respondent/Defendant:
Commonwealth of Australia
Legislation Cited (11)
Australia Constitution Act, the Defence Act 1903(Cth)