Simmons v South Western Sydney Area Health Service and ors

THIRD RESPONDENT New South Wales Health Department

CATCHWORDS: Unfair contract - interlocutory proceedings - application to amend summons - requirement by rule 18A for summons to specify matters of fact and law - proposed amended summons referred to arrangement but failed to specify in summary the matters of fact which formed the basis of the application - held rule 18A not complied with - motion to amend dismissed - proceedings adjourned to allow applicant limited time in which to file application to further amend the summons.

Health Administration Act 1992 s 115 Health Services Act 1997 s 7 10 16 17 22 33 LEGISLATION CITED: Industrial Relations Act 1996 s 105 106 108B Industrial Relations Commission Rules 18A

Baffis v Macquarie Health Service [1999] NSWCA 274 Baldestowe v Brown (1990) 19 NSWLR 459 Fish & Anor v Solution 6 Holdings Limited & Ors [2002] NSWIRComm 93 Fish v Solution 6 Holdings Pty Ltd (2002) NSWIRComm 93 CASES CITED: Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1992) 28 NSWLR 443 Mitchforce Pty Ltd v Starkey (No 2) (2003) 130 IR 378 Mounsey v Findlay (1993) 32 NSWLR 1 Production Spray Painting & Panel Beating Pty Ltd v Newnham (1991) 27 NSWLR 644 Solution 6 Holdings Limited & Ors v Industrial Relations Commission of NSW & Ors [2004] NSWCA 200

APPLICANT ON MOTION Mr G Hatcher SC with Mr S Coleman of counsel Solicitor: S Shearman Charleton Shearman Read Lawyers LEGAL REPRESENTATIVES:

RESPONDENTS ON MOTION Mr M Kimber SC Solicitor: Judith Healy Phillips Fox

• 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: MARKS J Friday 3 June 2005 Matter No IRC 5499 of 2004 GISELLE SIMMONS v SOUTH WESTERN SYDNEY AREA HEALTH SERVICE AND ORS Application under s 106 of the Industrial Relations Act 1996 JUDGMENT ON APPLICATION TO AMEND PROCEEDINGS [2005] NSWIRComm 32 1 By summons filed on 13 September 2004 the applicant, Giselle Simmons, sought certain relief under s 106 of the Industrial Relations Act 1996 ("the Act") against three named respondents. They are, respectively, South Western Sydney Area Health Service (first respondent), Health Administration Corporation (second respondent) and New South Wales Health Department (third respondent). The summons sought orders directed to "the contracts or arrangements between the applicant and the respondents (hereafter called "the contract") whereby the applicant performed work for the respondents in the health care industry, and any contracts or arrangements collateral thereto" and asked that they be found to be unfair. Consequential orders were sought varying the contracts or arrangements and for the payment of compensation, costs and interest. 2 The summons, as is required by the rules of this Court, contained a summary of matters of fact and law upon which the applicant relied. There is, within the matters of fact recited in the summons, a history of the applicant's career as a registered nurse dating back to 1987. When read in conjunction with the material under the heading "matters of law" it is plain that there are allegations that the applicant's contract or arrangement with the respondents became unfair, harsh and unconscionable by reason of certain events which occurred whilst the applicant was working first at Fairfield Hospital and later at Liverpool Hospital. The matter proceeded on the basis that both those hospitals were within the first respondent's area. The summons asserted that the first respondent was "the actual employer" of the applicant, that the second respondent "is the corporate arm of the Department of Health in New South Wales and is, for the purposes of litigation, the employing body of the applicant", and that the third respondent "is the State Department of Health and was the ultimate employer of the applicant". 3 It was also common ground for the purpose of these interlocutory proceedings that the applicant last worked for a hospital within the South Western Sydney Area Health Service on 4 September 2003. On 20 August 2003 she signed a document entitled "notice of resignation" which gave two weeks notice of resignation from the applicant's "present position". The reason for resignation was given as "family". Under a sub-heading "entitlements on termination" the applicant indicated that she was transferring to the Illawarra Area Health Service and that she wished to transfer her annual leave, long service leave and sick leave entitlements. 4 The respondents sought, by notice of motion, to have the proceedings dismissed because they were commenced more than twelve months after the date of termination of the contract of employment which was the basis for the applicant's summons. In doing so the respondents relied on s 108B of the Act which is in the following terms: s 108B Time for making application (1) An application for an order under this Division in relation to a contract that has been terminated must be made not later than 12 months after the termination of the contract. (2) The Commission does not have jurisdiction to extend the time for making any such application or to accept an application made after the time prescribed by subsection (1). 5 The applicant resisted the notice of motion on three essential bases, being: 1. The applicant was not in fact an employee of the South Western Sydney Area Health Service but of either the Health Administration Corporation or the New South Wales Health Department, and her contract of employment had not come to an end but she had merely transferred positions and remained subject to the same contract of employment. 2. That in any event the applicant's claim was based on an arrangement between all of the respondents and that that arrangement persisted. 3. That this was not the appropriate time at which to consider the strike-out application, and that such consideration should only be given when all of the evidence was before the Court, presumably in the substantive hearing. All of these matters were fully argued. 6 During the final stages of argument the applicant sought an adjournment so that she could seek to amend the summons so as to avoid it being caught by s 108B. This interlocutory judgment deals with a notice of motion seeking to amend the summons subsequently filed, which was opposed by the respondents. 7 The proposed amended summons seeks a finding of unfairness concerning "the contracts or arrangements between the Applicant and the Respondents (hereafter called "the contract") whereby the Applicant performed work for the Respondents in the healthcare industry, and any contracts or arrangements collateral thereto ("the collateral arrangements")…". Consequential orders are sought with respect to the avoidance or variation of the contract and collateral arrangements as described. 8 The summary of matters of fact and law contains the following: "There is an arrangement between the Applicant and the Second and Third Respondents whereby the Applicant performs work within the industry of the Third Respondent, employed by various Area Health Services including, relevantly, the First Respondent, which persists to the present, and in which the terms and conditions of employment are set by the Second Respondent, which is also deemed to be the employer for certain specific purposes". 9 There then follows a narration of the applicant's working history as a nurse, commencing in 1983 as a student nurse. There is an assertion that "the Applicant has been, since 1983, and remains, an employee in the New South Wales Health Service". This is followed by an assertion that the first respondent is an Area Health Service operated by the New South Wales Department of Health, and that the second respondent "is responsible for the conditions of employment of the applicant, and other employees in the New South Wales Health Service; is taken to be the employer of the employees in the New South Wales Health Service for the purposes of any termination by a competent tribunal of those conditions and is for the purposes of any proceedings before a competent tribunal having the power to deal with industrial matters, taken to be the employer of the employees in the New South Wales Health Service". It is also asserted that "at all material times the applicant was an employee within the New South Wales Health Service conducted by the Third Respondent and was engaged in the service of the Crown". 10 With respect to employment by the first respondent, the proposed amended summons asserts that the applicant was reclassified as a casual employee on or around 8 September 2003, that she was telephoned between 6 and 8 times during September and October 2003 to ascertain her availability for work as a casual but she declined on each occasion because of other work or family commitments. 11 There is a narration in the proposed amended summons alleging that the applicant was marginalised by the first respondent as a result of complaints made by the applicant to the Minister for Health and others concerning healthcare standards at institutions operated by the first respondent. 12 In order to deal effectively with what I perceive to be the fundamental issue which will require to be determined in these interlocutory proceedings it is necessary to have regard to the statutory structure which is to be found in the Health Services Act 1997. 13 An Area Health Service is constituted by s 17 of the Act as a body corporate and comprises particular local government areas specified in a schedule to the Act. By s 22 an Area Health Service has perpetual succession and is, in effect, constituted as a body corporate. The functions of Area Health Services are described in s 10 as including the conduct and management of public hospitals, health institutions, health services and health support services under its control, which in turn is a reference to those institutions and services provided within its geographic area. 14 By s 33 an Area Health Service is empowered to "appoint and employ such employees as may be necessary for the purpose of exercising its functions". 15 The matter proceeded on the basis that the third respondent as named was in effect the "New South Wales Health Service" as described by s 16 of the Health Services Act. The New South Wales Health Service is said by s 16 to consist of all persons employed by each Area Health Service, by each statutory health corporation and as members of staff by affiliated health organisations. Thus, the New South Wales Health Service is constituted by the persons who provide, in general terms, health services throughout New South Wales. It should be noted that s 16 specifies in connection with Area Health Services that it is persons employed under s 33 of the Act, to which reference has earlier been made. 16 Accordingly, s 16 refers back to employment by an Area Health Service. 17 The second respondent, Health Administration Corporation, is constituted by the Health Administration Act 1992. Section 115 of the Health Services Act describes the role of the Health Administration Corporation within the New South Wales Health Services. It is in the following terms: s 115 Determination of conditions of employment of staff (cf AHS Act s 26, PH Act s 40BA) (1) Definitions In this section, "enterprise agreement" and "industrial matters" have the same meanings as in the Industrial Relations Act 1996 . (2) Conditions of employment Except in so far as provision is otherwise made by law, the conditions of employment (including salaries, wages or remuneration) of the employees in the NSW Health Service are to be as may be determined from time to time by the Health Administration Corporation. (3) Corporation is taken to be employer for certain purposes The Health Administration Corporation: (a) is, for the purpose of making any determination under subsection (2), taken to be the employer of the employees in the NSW Health Service, and (b) is, for the purpose of entering into an enterprise agreement relating to the enterprise carried on by a public health organisation, taken to be the employer of the employees of the organisation concerned, and (c) is, for the purpose of any proceedings before a competent tribunal having power to deal with industrial matters, taken to be the employer of the employees in the NSW Health Service. (4) Corporation may delegate functions To remove any doubt, the Health Administration Corporation may, in accordance with section 21 of the Health Administration Act 1982 , delegate its functions as such an employer. (5) Corporation may enter industrial agreements The Health Administration Corporation may enter into an agreement (not being an enterprise agreement taken to have been entered into by the Corporation under subsection (3) (b)) with any association or organisation representing any group or class of employees in the NSW Health Service with respect to the conditions of employment (including salaries, wages or remuneration) of that group or class. Any such agreement may (subject to Part 2) extend to conditions in respect of the employment of persons convicted of, or charged with, serious sex or violence offences. (6) Industrial agreements bind employees An agreement referred to in subsection (5) binds all employees in the group or class affected by the agreement and no such employee, whether a member of the association or organisation with which the agreement was entered into or not, has any right of appeal against the terms of the agreement. (7) Actual employers bound by industrial agreements A public health organisation must give effect to: (a) any determination made by the Health Administration Corporation under subsection (2), and (b) any enterprise agreement referred to in subsection (3), and (c) any order or determination made by a competent tribunal in proceedings referred to in subsection (3), and (d) any agreement referred to in subsection (5). (8) Corporation taken to be employer only for certain purposes Nothing in this section authorises: (a) the Health Administration Corporation to act as an employer, or (b) any function to be exercised by or in relation to the Health Administration Corporation, otherwise than for the purposes of and in accordance with this section. (9) Application to chief executives and other senior executives This section does not apply to any conditions of employment determined under Part 3 of Chapter 9 of this Act or Part 3.1 of the Public Sector Employment and Management Act 2002 of: (b) the chief executive of a statutory health corporation whose employment is subject to either of those Parts, or (c) any other employee of a public health organisation whose employment is subject to either of those Parts. 18 I agree with submissions made on behalf of the respondents that the effect of sub-section 115(3) is to allow the Health Administration Corporation to enter into certain industrial agreements and to undertake certain other functions as if it were the employer of employees within the New South Wales Health Service, but for no other purpose. Accordingly, the "relevant public health organisation" which by s 7 of the Health Services Act is defined to be, inter alia, an Area Health Service, remains the employer for all other purposes. Accordingly, assuming that s 115(3)(c) applies to proceedings brought under s 106 of the Act, the Health Administration Corporation, being the second respondent, would be taken to be the employer only for the purpose of the proceedings. That is, for the purpose of the conduct of the proceedings. 19 I should interpolate that in my opinion there must be some doubt as to whether s 115(3)(c) applies in any event to proceedings brought under s 106 of the Act. Section 115(2) is clearly directed to conditions of employment and this is consistent with s 115(3)(a). Section 115(3)(b) is to the same effect, being directed to enterprise agreements. In addition, s 115 is entitled "determination of conditions of employment of staff". It is with this background that the provisions of sub-section (3)(c) may be considered. There is a reference to proceedings "before a competent tribunal having power to deal with industrial matters". Whilst there is no definition in that Act of "industrial matters" it may be thought that the general meaning of that expression may be found by reference to well-known definitions within the Industrial Relations Act. The concept is of matters dealing with conditions of employment in general terms between employees and an employer or employers. On this basis it might be thought that the reference to a competent tribunal having the power to deal with industrial matters is a reference to a tribunal whose powers are directed to dealing with industrial matters in a general sense. This would more appropriately encompass the Industrial Relations Commission of New South Wales, other than when acting as a court for the purpose of exercising the powers and functions of a court as created predominantly by the Act. This reasoning is consistent by analogy with the judgment of Handley JA (with whom Samuel AP and Priestley JA agreed) in the New South Wales Court of Appeal in Baldestowe v Brown (1990) 19 NSWLR 459 commencing at 463. I acknowledge that Clarke JA in Mounsey v Findlay (1993) 32 NSWLR 1 in the New South Wales Court of Appeal doubted the correctness of what was said in Baldestowe, however, as Mr Kimber SC, counsel for the respondents, pointed out, the New South Wales Court of Appeal declined leave to re-open Baldestowe in Baffis v Macquarie Health Service [1999] NSWCA 274. Because of the view which I have taken in connection with the disposal of these proceedings it is not necessary that I determine this matter in a concluded sense. 20 For the reasons which I have set out above I conclude that, at all material times and for the purpose of these proceedings, the applicant was an employee of the first respondent but not an employee of either the second respondent or the third respondent. 21 It was properly conceded by the applicant that if she were restricted in these proceedings to relying on an unfair contract being her contract of employment with the first respondent which terminated in September 2003, the proceedings would be caught by s 108B. Obviously, therefore, the applicant was compelled to direct her attention to some other contract, as that word is defined in s 105 of the Act. By s 106 any such contract must be one "whereby a person performs work in any industry". 22 The respondents submitted that the proposed amended summons does not disclose on its face any entitlement to maintain proceedings under s 106. The applicant countered by asserting that the appropriate stage had not been reached in the proceedings to enable any definitive determination about such an issue to be made. It is not necessary that I deal with this issue, for reasons which follow. 23 The respondents also submitted that the proposed amended summons does not comply with rule 18A of the Industrial Relations Commission Rules and should be rejected on this basis.

24 In order to consider this submission it is necessary to have regard to the provisions of Rule 18A(1) which are as follows: r18A New procedure under section 106 (Unfair contracts) (1) An application to the Commission to exercise the powers conferred on it by section 106 must be in Form 12A and must: (a) specify in summary the matters of fact and law which form the basis of the application, but not the evidence by which those facts are to be proved, and (b) contain sufficient information to allow the Commission to carry out its duty to conciliate under section 109 by a succinct summary. 25 The history of the introduction of Rule 18A and its purpose have been discussed by Schmidt J in this Court in Fish & Anor v Solution 6 Holdings Limited & Ors (2002) NSWIRComm 93. Her Honour noted that the purpose was to reduce costs, particularly in anticipation of the mandatory conciliation process required by s 109 of the Act. 26 The provisions of Rule 18A(1) are expressed in a mandatory form. There is a compulsion to utilise Form 12A and to specify in a summary manner "the matters of fact and law which form the basis of the application…". The evidence by which those facts are to be proved is not to be contained within the summons. 27 Form 12A requires that the applicant specify firstly the nature of the claim and secondly the contract or arrangement in respect of which the application is made. I apprehend that "specify" is used in accordance with its ordinary English usage meaning. This requires that there be a reference to the particular subject matter in a definite or explicit manner, and a description of it in some detail. 28 The attack made by the respondents on the form of the proposed amended summons is by reference to the description contained within the summary of matters of fact and law which I have previously set out verbatim. There is an assertion of an arrangement existing between the applicant and the second and third respondents whereby she performed work within the third respondent's industry, employed inter alia by the first respondent, and that that arrangement persists to the present time. 29 Whilst the arrangement as described makes reference to the parties, there is no attempt to describe the arrangement in any detail. Nor does the narrative which follows touch in any way on any understanding reached between the applicant, the Health Administration Corporation and the New South Wales Health Department pursuant to which the applicant would perform work for the first respondent. 30 That which constitutes an arrangement was discussed by Wright J, President and Walton J, Vice-President, in some detail in Mitchforce Pty Ltd v Starkey (No 2) (2003) 130 IR 378 at paragraph [132] their Honours said:

"[132] What may constitute an "arrangement" insofar as the section is concerned was discussed by the Full Bench in Legal & General Assurance Society Limited v Stock (1993) 49 IR 464 (at 480 - 481): "The authorities make clear that the term "arrangement" where used in the section is a wide one and encompasses transactions or plans which are not legally enforceable agreements. The following principles may be drawn from decided cases in the matter in relation to the ambit and reach of the term "arrangement" where used in the section ( Unconscionable Contracts and Economic Duress - Peter M Hall, at 55-56): "(1) The word 'arrangement' in its ordinary meaning and particular statutory context is a word of much wider import than the word 'contract'. (2) An 'arrangement' will be found to exist where there is a bilateral or multilateral plan or concerted action to bring about a particular result. (3) An 'arrangement' may envisage a transaction in the nature of a bargain which may not be legally binding or enforceable, something in the nature of an understanding between two or more persons. (4) The section speaks of an arrangement of a particular kind, namely, an arrangement whereby a person performs work in an industry, that is, a transaction which directly leads to the performance of work in an industry. (5) The term 'arrangement' possessing a broad and extensive meaning may be found disclosed in a document comprising or specifying its terms, or there may be no document specifying the arrangement in which event resort will be had to oral evidence of discussions whilst in other cases an arrangement may be implied or inferred from the circumstances or the conduct of the parties. An arrangement may be discovered in a combination of documentary or verbal communications and the conduct of the parties. The relationship between the parties may itself manifest an arrangement. (6) There may exist two separate contracts each forming part of a specific arrangement and together constituting the means by which it is effectuated so as to produce particular results and whereby a person performs work in an industry. (7) The section accordingly comprehends not only the initial plans but all transactions by which the arrangement is carried into effect. It applies to any dealing the purpose or the effect of which is to achieve a situation as a consequence of which or wholly or partly in fulfilment of which a person performs work in an industry. (8) The term 'arrangement' embraces a situation where there exists two or more separate contracts which, notwithstanding their separateness, are, in a particular factual context, so sufficiently associated with each other in a practical sense as together to constitute an arrangement of which each contract is a constituent part. (9) The arrangement, including the relationship leading to the performance of work and another contract, need not necessarily have sprung into existence at the same time." 31 Later, their Honours said: "[135] For an "arrangement" to be one whereby work is performed in an industry, there need merely be "a plan or concerted action by a number of persons to bring about [that] particular result": see Hall v Alison Clint Floral Delivery Pty Ltd at 64; and also Custom Credit Corporation Ltd v Goldsmith at 131, where the Full Bench held: "But it must be true to say, we think, that it is significant that Parliament did not see fit to include in the Act any definition of "arrangement", which is not a term of art and is not a word which has a very precise meaning. Looking at the setting in which it is used in s 88F, we are of the opinion that in one of its meanings "arrangement" embraces transactions which do not give rise to contracts or obligations, that is to say, obligations enforceable at law; but we are also of the opinion that in another meaning it embraces a situation where there exist two or more separate contacts which, notwithstanding their separateness, are, given the facts, so sufficiently associated with each other in a practical sense as together to constitute an arrangement of which each contract is a part". [136] It is difficult to speak of an element of a "plan or concerted action by a number of persons" as being a "term" of such an arrangement in the manner with which that word was used by the majority in Production Spray Painting. Whilst such language was clearly appropriate in the circumstances of that matter, in the context of an arrangement, as we have described it, such a word is somewhat misplaced. We agree with the respondent that in such circumstances, a reference to "purpose" will clearly be of greater utility and directs attention to the substance of the transaction between the parties. [137] What may constitute an arrangement against which the jurisdictional test (as earlier identified by us) is to be measured is clearly a matter of fact to be determined in all the circumstances. [138] One thing, however, is certain and was emphasised by Mahoney JA in Majik Markets (at 455) "it is in principle necessary [to] know what the arrangement in question is so that [the Court] can determine whether the arrangement is one which falls within s 88F" (our emphasis). This is consistent with observations within the first Full Bench consideration of the section in In Re Becker & Harry M Miller Attractions Pty Limited (No.2) [1972] AR (NSW) 298, where it was stated at 304: "Merely reading the contract in vacuo supplies no answer on the issues both jurisdictional and discretionary which will face the single judge"." 32 Production Spray Painting is a reference to Production Spray Painting & Panel Beating Pty Ltd v Newnham (1991) 37 IR 46 and Majik Markets is a reference to Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1992) 28 NSWLR 443 at 446. 33 For completeness I refer also to the judgment of Spigelman CJ in Solution 6 Holdings Limited & Ors v Industrial Relations Commission of NSW & Ors [2004] NSWCA 200 in which his Honour concludes that a 'contract' is not an 'arrangement' and, for the purposes of those proceedings, an enforceable contract could not be a 'collateral arrangement' (at paragraph [66])". ] 34 For present purposes it is necessary to focus on the essential indicia which must be present before an arrangement may be found to exist. There needs to be a plan or concerted action to bring about a particular result. That is, there must be some mutuality of understanding, or at least some thought process on the part of each of the persons or entities participating in the arrangment which creates some degree of understanding or agreement about something. 35 By s 108 it is necessary that the applicant be a party to the arrangement, otherwise the proceedings are incompetent. 36 A finding that an arrangement exists is a conclusion of law. The determination of whether an arrangement exists involves mixed matters of fact and law. The necessary conclusion of law can only operate upon the factual matrix which establishes the essential indicia of an arrangement. These include, as I have said, some degree of understanding or mutuality of purpose. This must be shared by and with the applicant, either overtly or impliedly before it can be said that she was a party to the arrangement. These factual indicia must be described in the summons for it to comply with rule 18A. Of course, the arrangement must also be one "whereby a person performs work in an industry". 37 As I have previously indicated, the summons in the narration of facts and law is confined to allegations which deal with communications between the applicant and persons within the South Western Sydney Area Health Service. There is no assertion that there was any discussion, negotiation, contact or understanding with any person involving or representing the second respondent, the Health Administration Corporation. The third respondent, as I have said, is constituted by all of the employees in the New South Wales Health Service and would not be an appropriate body, organisation or entity with which to have the necessary understanding or agreement so as to create an arrangement. Accordingly, on this basis, the only assertions contained within the summons relate to dealings between the applicant and the first respondent. There is no assertion which would touch upon any entitlement reposing in the applicant for transfer from one Area Health Service to another. 38 Accordingly, whilst there is an assertion as a matter of law that such an arrangement exists, there is no mention of any matter of fact which touches upon the existence of the arrangement and its subject matter. 39 For these reasons I am of the opinion that the proposed amended summons does not comply with Rule 18A of the Rules and is not one which is framed in a manner which would allow the Commission to carry out its duty to conciliate as mandated by s 109 of the Act. As is made plain by Rule 18A(1)(b), the summons must contain sufficient information to allow the conciliation to occur. In circumstances where the respondents have made it very clear to date that they believe that no such arrangement exists and that the only relationship is between the applicant and the first respondent, the concilation process would be frustrated by the failure of the proposed amended summons to comply with Rule 18A(1)(a). This is particularly so because of the potential application of s 108B to the proceedings as currently constituted. 40 For these reasons, the notice of motion filed by the applicant seeking to amend the summons in the form of the proposed amended summons should be dismissed. This leaves for consideration the respondents' application to dismiss the summons as currently constituted because of the application of s 108B of the Act. That is a matter which has been fully argued before me. However, I propose to give the applicant one further opportunity of seeking to amend the existing summons having regard to the matters to which I have referred in this interlocutory judgment. In view of the delay which has been occasioned to date, and the fact that the applicant has already been granted one opportunity to amend the summons, any such application by way of motion should be filed within 21 days. In the absence of any such application I would propose to deliver judgment with respect to the strike-out motion brought by the respondents directed to the summons in its current form. 41 The question of costs has not been argued before me and I shall reserve costs. 42 ORDERS: 1. The applicant's notice of motion to amend the summons is dismissed. 2. Costs are reserved. 3. The applicant is directed to file any further motion seeking to amend the summons for relief within 21 days of this date.

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