State of New South Wales v Banas

APPELLANT Mr P Menzies QC with Mr D J Dickinson of counsel Solicitor: Ms K Kerr Crown Solicitor's Office LEGAL REPRESENTATIVES: RESPONDENT Mr J J Fernon SC Solicitor: Mr K Gourlie Craddock Murray & Neumann

JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION FULL BENCH CORAM: WRIGHT J, PRESIDENT WALTON J VICE PRESIDENT BOLAND J Friday 3 September 2004

STATE OF NEW SOUTH WALES v JOZEF BANAS Application by State of New South Wales for leave to appeal and appeal against a decision of Justice Haylen on 3 October 2003 in matter no IRC 4628 of 2000 JUDGMENT OF THE COURT [2004] NSWIRComm 255

1 Jozef Banas ("the respondent") had been employed as regional finance and administration manager grade 9/10 in the Central Region of the Department of Corrective Services, a senior accountancy position in the administrative and clerical gradings within the New South Wales public service. In 1996 the Central Region was disbanded and Mr Banas' position, along with 20 other administrative and clerical positions, was abolished.

2 There followed a three year period of considerable difficulty and dispute regarding the respondent's re-deployment to another position within the public service and his entitlement to voluntary redundancy and compensation. In December 1999 the respondent received what was described as the "standard NSW Public Sector Redundancy Package" and his employment ceased.

3 The respondent (applicant at first instance) sought relief under s 106 of the Industrial Relations Act 1996 alleging an unfair contract. The respondent claimed the following relief by way of orders for the following payments: (a) the equivalent of the applicant's salary for the period from 4 November 1998 to 1 November 1999;

(b) in the alternative to (a) an amount of money the Commission considers just in all the circumstances of the case;

(c) an amount of $40,000 to compensate for the depressive illness suffered by the applicant;

(d) in the alternative to (c), an amount of money the Commission considers just and reasonable to compensate for the depressive illness suffered by him;

(e) an order that the respondent pay to the applicant a further 3 months pay in lieu of notice;

(f) an order that the respondent pay to the applicant compensation for the economic loss incurred by him as a result of his diminished earning capacity, calculated as equivalent of five years worth of loss of earnings due to this current employment attracting less remuneration;

(g) in the alternative to (d) and (e), an order for an amount of money the Commission considers appropriate. In final submissions, counsel for Mr Banas abandoned the claim in sub-paragraph (e) for a further three months' pay in lieu of notice.

4 In Banas v State of New South Wales [2003] NSWIRComm 317, a judgment of Haylen J handed down on 3 October 2003, his Honour determined that by virtue of the conduct of the State of New South Wales ("the appellant" - respondent at first instance), the contract of employment of Mr Banas was unfair and he declared the contract partially void. As to the consequential money orders, his Honour ordered the payment of nine months' salary relating to the period between February 1999 and December 1999 when the Department considered the respondent was absent on unauthorised leave, and a payment of $12,500 in relation to stress and suffering arising in the course of the respondent's employment.

5 The appellant has sought leave to appeal and, if leave is granted, appeal against the judgment and orders of Haylen J. We shall come to the grounds of appeal later in this judgment, but is it necessary to summarise the facts of the matter, and his Honour's reasoning, in more detail.

6 As Haylen J recorded in his judgment the respondent, Mr Banas, had a Masters Degree in Economics obtained in Poland recognised by the Australian Committee on Overseas Qualifications as comparable to an Australian Honours degree. He had the equivalent of a graduate diploma in Organising Data Processing. He had satisfied the requirements of the Australian Society of Certified Practising Accountants by completing course work at Macquarie University and the University of Technology, Sydney. By completion of a specified program he had been elevated to the status of a Fellow of the Society.

7 Mr Banas had over 20 years' professional experience mostly in a commercial environment but in both the public and private sector. In the five years before he migrated to Australia, he was Chief Accountant/Chief Economist (Finance Director) of a State owned commercial enterprise. In Australia, he had three and a half years as accountant for a large public electronic company, two and a half years as Head Office Accountant of a large privately owned group of companies and had responsibility for the management of the financial aspects of a community housing cooperative as non-executive director.

8 Mr Banas was employed under the provisions of the Public Sector Management Act 1988 (the PSM Act) and at the time his position was abolished in 1996 he, together with the other officers affected by a reorganisation, became subject to sections 50, 51, 52, 53 and 55 of the PSM Act and the appellant's policy documents for "Managing Displaced Employees". The appellant did not dispute that the respondent's conditions of employment were in part regulated by a contract of employment but did contend the relationship was in larger measure subject to the provisions of the PSM Act.

9 At the time of the disbandment of the Central Region, Mr Banas was 47 years old. Following the announcement to disband, the respondent, now being a "displaced employee" within the Department, sought voluntary redundancy. The respondent's Regional Commander, Mr David Farrell, strongly supported the application for voluntary redundancy, saying that positions currently available within the Department were below the respondent's job status and professional standing and that a placement in a lower position would be detrimental and soul destroying for a person who had operated at the highest level.

10 Upon the closure of the Central Regional Office the respondent was transferred to the Norma Parker Prison in North Parramatta where he undertook project work that was completed on 28 March 1997 after which the respondent proceeded on one month's recreation leave.

11 In the meantime, in February 1997 the respondent was advised that voluntary redundancy was not appropriate and his application was rejected. The basis for rejection would appear to have been that the first priority in relation to displaced persons in accordance with the relevant policy was re-deployment. The policy mandated that as a first step every effort be made to re-deploy displaced persons within their Department and if that was not possible within another area of the public service. In February 1997 the Department appeared confident it could find a new role for Mr Banas and advised him this would occur within a reasonable time.

12 The respondent was also advised in February 1997 at a meeting with Mr M J Batty, Acting Director, Personnel Services for the Department and Mr R Woodham, Assistant Commissioner, that the Department wished to consider him for the position of Business Manager/Clerk Grade 9/10 at its Corrective Services Academy ("the Academy") at Eastwood, a position of equivalent salary to the position that had been abolished. Mr Banas rejected the position as being unsuitable to his skills and experience because it involved running a business including administration, whereas Mr Banas' expertise lay in using his professional accounting skills and advising executives how to run a facility efficiently. Mr Banas was also concerned about his English language skills in relation to such a position. Further, he had previously had financial responsibility for a budget of $50m whereas the budget at the Academy was $5m.

13 At the same meeting in February 1997 it was mentioned to the respondent that a Grade 9/10 position in financial management might be created in the future at the Security and Investigation Group at Windsor and the respondent was asked whether he might be interested. He indicated he would prefer to concentrate on currently available positions. Mr Batty told Mr Banas that he was also evaluating positions at the Metropolitan Remand and Reception Centre (MRRC) at Silverwater in the next month and if the respondent was not placed there, or elsewhere, he would be declared excess to requirements and referred to the Workplace Management Centre (WMC), which was an organisation available to assist with redeployment between organisations within the public service.

14 The policy relating to displaced persons provided that such persons who were not yet declared excess to the needs of the Department, pending consideration of suitable placements within the Department, may be given priority consideration for a vacancy where no excess employee had sought redeployment in the position. Further, displaced employees who were excess were to be considered before other applicants for advertised vacancies if they met the essential requirements for the position or could perform the duties adequately and in a reasonable period of time given access to appropriate training.

15 On 22 April 1997 the respondent received a letter from Mr Batty in which Mr Batty indicated that the Department was continuing the re-deployment process with the allocation of staff to the MRRC "still to occur". Mr Batty said "No negotiation will be undertaken with the WMC until the positions at the MRRC are filled and all avenues for placement in the Department are considered."

16 On his return from leave on 28 April the respondent continued to attend at Norma Parker Prison but there was no further project work to be performed and none was provided to him. Mr Banas made various inquiries about the progress of his placement. He contacted other agencies on his own initiative but without success. He also contacted the WMC for assistance only to be advised he had not been registered by his Department at the Centre as a displaced person. Mr Banas continued to agitate strongly for an appropriate placement.

17 On 24 June 1997 the respondent was informed of a position as Finance and Administration Manager Grade 9/10 at the MRRC and asked whether he was interested in it. The respondent indicated he was interested. On 26 June the respondent contacted the General Manager of the MRRC about the position and was advised the job had already been filled.

18 In relation to the MRRC position, Mr Banas was clearly interested in it and had put himself forward for consideration. The person who was appointed to the position, Mr Cruikshank, was not displaced and his appointment to the position was finalised in October 1997, well after Mr Banas was informed he was not suitable for the position.

19 Haylen J considered that: 240 The positions at the MRRC had not yet been made available for filling but it appears that Mr Woodham had already, if not at this time then shortly after, made an arrangement for Mr Cruickshank to fill the Grade 9/10 position at the MRRC although he was not a displaced person. That placement effectively eliminated Mr Banas from consideration for the MRRC position. It seems an open inference that the Department at a senior level had determined that Mr Banas should be placed at either the Academy or the Windsor position and that, over time, in the absence of any other position becoming available within the Department, Mr Banas could be persuaded or brought to the position where he would accept either of those two positions. … 254 The evidence demonstrates that at no relevant time was Mr Cruickshank a displaced person: Mr Banas should have been appointed to the position at the MRRC but that did not occur. In trying to explain this extraordinary position, Mr Peter Peters was forced into the position of saying that the MRRC position was changing in June 1997 when Mr Banas was interested in it: it was more administrative with less financial responsibilities although he thought that Mr Banas could do the job. Clearly, this explanation was meant to cast doubt on the suitability of the position for Mr Banas with his concentration on financial responsibilities, a concentration which the Department was otherwise critical of as limiting his choices for redeployment. But when it suited the Department, it pressed Mr Banas about accepting the Academy position which was more administrative and human resources oriented than that of a financial role yet nevertheless regarded as a suitable position for him.

255 In final addresses, counsel for the respondent accepted that a mistake was made in not giving Mr Banas this position but that such a mistake should not be determinative of the case. The concession is properly made. Unfortunately, the evidence disclosed that a number of senior managers of the Department regarded Mr Banas as acting unreasonably in rejecting three internal positions and one external position at the Treasury. The three internal positions are the Academy position, the Windsor position and the MRRC position. The approach to Mr Banas is perhaps disclosed by the suggestion that amongst the positions he rejected was the MRRC position, a position he was clearly excluded from by some arrangement apparently made by Assistant Commissioner Woodham: Mr Woodham was a member of the Taskforce to consider placements.

20 In relation to the Windsor position, Mr Banas had rejected it on the basis it did not fit his skills and experience, it had not yet been established and it involved too much travel.

21 In a letter dated 20 June 1997 the respondent was advised, "you are to be declared an excess officer with the Workforce Management Centre". However, the respondent was not registered as such with the WMC until September 1997. During June and July 1997 Mr Banas had inquired why he had not been registered with the WMC as a "displaced person" so that the Centre might provide him with assistance in finding a position outside the Department. According to the appellant the reason why he had not been registered with the WMC earlier than September 1997 was that the Department remained confident that it would find the respondent a position within the Department, namely at the Academy, Windsor or at the MRRC. However, the policy relating to displaced persons, as Haylen J noted at [234], makes it clear that the search for work outside the employing department is a step that can be taken early in the process through the WMC and while consideration was still being given to positions within the Department.

22 The status of a person who is declared to be "excess staff" would appear to be that no position was available within his or her Department and a search is then undertaken, through the WMC, for a position in another part of the public service. According to the guidelines, voluntary redundancy may be offered where redeployment within the public service is not considered viable "in a reasonable period of time".

23 On 18 August 1997 the Department wrote to Mr Banas identifying the options open to him. These were: Redeployment to the position of Finance & Administration Manager Clerk Grade 9/10 Security & Investigations, John Morony Correctional Centre Windsor, or;

The Department will declare you an excess officer and allocate meaningful work for you to undertake. Initially you will be transferred to the Financial Services Branch, Roden Cutler House, effective from 20 August 1997 for a period of six months and allocated appropriate project work which has been assessed at the level of Clerk Grade 9/10. Should you decline the position of Finance & Administration Manager, Security & Investigations, arrangements will be undertaken to declare you an excess officer with the Workforce Management Centre for redeployment assistance at your substantive level of Clerk Grade 9/10. A decision was sought from the respondent within 24 hours.

24 Mr Banas responded by confirming that he considered the Windsor position to be unsuitable and rejected it. Mr Banas raised again the option of voluntary redundancy and reminded the Department of the policy in this regard, namely that "voluntary redundancy may be offered to displaced employees where it is considered that redeployment is not viable in a reasonable period of time." The respondent also referred to vacancies in the Long Service Payments Corporation, State Revenue and the Railway Services Authority that he had applied for and sought information about the outcome of interviews in that respect.

25 The respondent was also interviewed for a position as Finance Analyst with the Treasury and was offered the position initially on a three-month trial basis to give him an opportunity to demonstrate his ability and capacity to undertake the duties of the position. In a letter in late November 1997 to Mr Peter Peters, Acting Director of Personnel of the Department at the time, the respondent expressed concern about the qualifications attached to the offer, namely, successfully completing a three month trial period and addressing the Treasury's concern as to his English language communication skills. He also raised the fact that acceptance of the position would involve additional travelling costs.

26 The respondent ultimately declined the offer of the Treasury position. In his letter of December 1997 to Mr Peters, Mr Banas said that redeployment in the public sector was not his choice and he did not agree to any trial probationary arrangement. He had hardships over the last 12 months, had occupied a permanent position and wished to be placed in a permanent position. He calculated the additional travelling costs to effectively reduce his income by 4 per cent.

27 In the meantime, Mr Banas had taken on the project role at the Financial Services Branch but continued to complain vociferously about what he regarded as unfair treatment, writing letters to the Head of the Department and to the Director General of the Premier's Department, Dr Colin Gellatly, who referred Mr Banas' complaints to the Independent Commission Against Corruption. In relation to Mr Banas' complaints Haylen J observed that these became increasingly strident and his Honour considered this could be put down to the effect on Mr Banas of "unexplained job changes, meaningless work and being isolated from normal work". At [262] his Honour stated: It is undoubtedly true that, as time went by without an appropriate placement or resolution of his position, Mr Banas complained long and hard at the unfairness of his circumstances. I am sure that he dealt with people using harsh language and seeing conspiratorial motives for their actions or inaction. These were all signs of his distress which had been predicted by Mr Farrell and which were addressed by the policy but not by his Department.

28 However, Haylen J observed at [261]: The evidence does not demonstrate Mr Banas to be an unco-operative person who was merely angling for voluntary redundancy: that impression appears to have gained currency within the Department and operated as a significant barrier to a speedy resolution of his situation.

29 On 12 May 1998 the respondent wrote a reply to a letter sent to him by the Head of the Department on 30 April 1998. In his letter the respondent was critical of the Department for its treatment of him, the length of time that had passed since December 1996 when he became a displaced person and the Department's failure either to provide him with voluntary redundancy or redeploy him in a suitable position. The respondent renewed his claim for redundancy as well as additional compensation "for the damage the Department had caused me."

30 In a letter dated 15 June 1998 the respondent was advised by Ms Kay Lord, Executive Director, Human Resources Management for the Department, that approval had been given to offer him a redundancy package. The terms of the package were set out in the letter. Mr Banas was informed that 30 June 1998 was an appropriate last day of service unless special circumstances could be demonstrated. In writing the letter Ms Lord had been unaware of the respondent's earlier claim for compensation in addition to any redundancy. This was brought to her attention in a meeting with Mr Banas on 19 June 1998.

31 In a further letter from Ms Lord dated 26 June 1998 the respondent was advised that his request for compensation had been referred to corporate counsel for advice who recommended that the issue of voluntary redundancy and the claim for compensation be dealt with as separate matters. Ms Lord said, however, the offer of voluntary redundancy remained and the respondent had until 30 June 1998 to respond.

32 On 30 June the respondent advised Ms Lord that he accepted the redundancy package on the condition that the Department would deal with the separate claim for compensation for diminution of job opportunity seriously and expeditiously. On 3 July, solicitors acting for Mr Banas wrote to Ms Lord seeking an answer regarding the compensation claim within 14 days. The letter stated that if there were not a suitable outcome the respondent would not hesitate to commence legal proceedings pursuant to s 106 of the Industrial Relations Act.

33 On about 19 August 1998 Mr Banas informed Mr Schipp, Executive Director of Finance and Asset Management in the Department, that he was not leaving on 28 August because he had not received a reply to his request for compensation. Mr Schipp told him that the issue of adequate compensation was separate to voluntary redundancy and that he was obliged to continue with the voluntary redundancy agreement that he signed, and to pursue compensation separately. Mr Schipp reported that conversation and the next day gave Mr Banas a letter to the same effect. Mr Banas was requested to give written confirmation that he would commence his exit as agreed but no reply was received. On 27 August 1998, Mr Banas was given a further letter formally advising him of the consequences if he failed to proceed with his exit as previously agreed.

34 At [93] of Haylen J's judgment his Honour noted the following: Annexed to Mr Schipp's affidavit were correspondence and briefing notes concerning the difficulty experienced in having Mr Banas proceed to voluntary redundancy with his last day on duty being 28 August 1998. The first correspondence from Mr Schipp was dated 19 August 1998 and copies had been sent to Ms Lord, Executive Director of Human Resources, Mr Nash as Corporate Counsel, and lawyers acting for Mr Banas. This letter noted the discussion with Mr Banas regarding his last day of duty prior to proceeding on Job Search Leave prior to proceeding to voluntary redundancy. It was noted that Mr Banas, in the absence of advice from his legal representative, intended to attend for work on Monday, 31 August 1998 rather than cease duty "as indicated in your acceptance of the Department's offer of redundancy." The issue had been discussed with Corporate Counsel for the Department who had advised that the issue of redundancy and the claim for compensation were being dealt with separately. This had been previously advised in June 1998 and noted by Mr Banas himself in his acceptance of the offer of redundancy. Corporate Counsel had discussed the issue of Mr Banas' claim for compensation with his legal representative and had advised that the investigation procedures that were needed to be followed were being pursued as quickly as possible but, as they were governed by the Public Sector Management Act, no guarantee could be given as to the time needed to resolved the matter. Corporate counsel had also advised that, if Mr Banas attended work on Monday, 31 August 1998, contrary to his advice when accepting the Department's offer of voluntary redundancy, the Department would consider such attendance as "a breach of the offer and acceptance of redundancy". The letter required Mr Banas to confirm in writing, by close of business on 21 August, that he was entering Job Search Leave with effect from 31 August 1998.

35 At [110] of his judgment Haylen J further noted that: 110 Ms Lord emphasised that she and others had explained to Mr Banas that the confirmation of his last day of duty and entry on Job Search Leave was "integral to the offer of voluntary redundancy and that his refusal to enter on to Job Search Leave amounted to a repudiation of the agreement". Ms Lord confirmed that, on 1 September 1998, Mr Schipp prepared a briefing note for the Commissioner recommending that, in the circumstances, the offer of voluntary redundancy be withdrawn and that the Department proceed to place Mr Banas in a vacant position. At this point, it is appropriate to note that, on 19 August, Mr Schipp had written to Mr Banas advising that, if he attended work on Monday, 31 August 1998, the Department would consider such action as a breach of the offer and acceptance of redundancy. This was followed by a further letter dated 27 August 1998 by Mr Schipp pointing out that no reply had been received from Mr Banas and informing him that if he did not proceed on Job Search Leave as agreed the Department would consider such actions to be in breach of the offer and acceptance of voluntary redundancy. Following advice of Corporate Counsel, the Department would withdraw the offer of redundancy following Mr Banas' breach and benefits already provided, including payment for expenses and salary whilst on retraining, would be recovered. It was stated in this letter that the Department would endeavour to place Mr Banas into a position equivalent to his current salary and if that was not possible he would be placed at a lower grade with 12 months' salary maintenance. Such a placement may not be in his current location and, if not, the provisions of the Transferred Officers' Award would be applicable.

36 On 8 September 1998 the respondent was advised by Ms Lord that as a consequence of not entering on Job Search Leave on 31 August the Department deemed him to have breached the offer of voluntary redundancy and accordingly withdrew the offer. Ms Lord offered the respondent one of two vacant positions that she considered "most suitable", namely, Audit Manager, Clerk Grade 9/10 or Business Manager, Clerk Grade 9/10, Corrective Services Academy.

37 In her letter, Ms Lord offered to discuss the respondent's placement in either of the foregoing positions or any other position he would like to be considered for, but if he was unable, or failed to nominate a preference within seven days he would be informed which position was selected to be the most appropriate. On 13 September 1998, Mr Banas returned the letter to Ms Lord stating that he had nominated a legal representative and that he could not accept the correspondence in the circumstances.

38 On 17 September 1998, Ms Lord wrote to Mr Banas informing him of her decision to appoint him to the position of Business Manager, Grade 9/10 at the Academy. His first day of duty at the Academy was nominated to be Monday 28 September 1998. Although it was not stated in her letter, Ms Lord in her affidavit said that this appointment was made pursuant to s 50 of the PSM Act.

39 The respondent subsequently advised Ms Lord that he was ill and would be unfit for duty until 9 October 1998. On that day, as Haylen J recorded in his judgment, Ms Lord received a telephone call from a partner in the firm of solicitors acting for the respondent. She was asked whether the Department would consider reinstating the offer of voluntary redundancy, to which she replied "Yes, on the same terms as before". Later in the day, a letter was received from Mr Banas' solicitors recording their client's instructions that he accepted the Department's offer of voluntary redundancy following the earlier confirmation that such was available in terms of the original offer. That letter contemplated that necessary paperwork would have to be completed to finalise the arrangements.

40 Haylen J then noted at [120] what occurred next: To the best of Ms Lord's recollection, in early November 1998, before the paper work had been fully prepared, she received advice that Mr Banas had, or intended to submit, a claim for workers compensation. To the best of Ms Lord's recollection, another officer informed solicitors for Mr Banas that, under the policy guidelines, voluntary redundancy was not possible whilst there was "extant and unresolved workers compensation claim".

41 The medical opinion regarding the respondent's illness was that he was suffering from depression. He pursued his claim for workers' compensation but the claim was denied. In February 1999 Ms Lord arranged for the respondent to be assessed to determine his fitness to continue employment in the public service. In April the NSW Government Medical Officer provide a report on Mr Banas' condition. The report concluded with a diagnosis that Mr Banas was suffering from an adjustment disorder and that the condition was likely to be exacerbated if he returned to work in the previous work environment, a view which was supported by Mr Banas' treating doctors. The view was expressed that his symptoms were not, however, of sufficient severity to preclude a return to his usual duties in another department. The report concluded with the following recommendation: It is advised that Mr Banas not return to work with the Department of Corrective Services due to the risk of exacerbating his condition. At present, however, his symptoms are relatively mild and would not preclude administrative work elsewhere. Redeployment is advised as he remains fit for his substantive duties outside the Department of Corrective Services.

42 At [126] and [127] Haylen J recorded the relevant events between April and June 1999: 126 On 30 April 1999, Mr Banas wrote to Ms Lord advising her of his complaint against his solicitors for failing to notify the Department of his decision of 25 November 1998 not to lodge a workers compensation claim but rather to receive the redundancy package. He advised that he had made a complaint against his solicitors to the Legal Services Commission. 127 Mr Banas was informed of his right to appeal against the medical assessment and was also advised by Ms Lord that the Department would wait on his decision to appeal before taking any action on the recommendation contained in the medical reports. He was advised that, if no appeal was lodged then the WMC would to be asked again to review placement options in other public sector agencies "in keeping with the terms of the medical assessment". On 9 June 1999, Ms Lord received a letter from Mr Ian Peters, Director Employee Relations, Public Sector Management Office regarding the redeployment of Mr Banas. The letter noted that Mr Banas held a substantive position of Business Manager at the Academy and that redeployment was being sought, not on the basis that he was being displaced because his substantive position was being abolished, but because of medical advice. Ms Lord was advised that redeployment in accordance with the policy "would not be appropriate" in such circumstances. The WMC was able to assist in exploring redeployment opportunities for Mr Banas as part of a 6 month rehabilitation plan that should be developed by the Department taking into consideration the medical report, possible management development programmes and possible adjustments to services and facilities in accordance with the Premier's Memorandum 98-1.

43 On 2 July 1999 the respondent wrote to the Department advising that he was commencing the Job Search Leave on 5 July 1999. Not having received any income in the meantime, the respondent filed an Application for Recovery of Money in the Chief Industrial Magistrate's Court on 5 August 1999. At a hearing on 8 September the Department advised the Court that it intended to settle the matter by making the applicant a fresh offer of voluntary redundancy.

44 On 13 December 1999 the respondent received a redundancy package and training expenses as well as payment in respect of Job Search Leave for the period 5 July to 24 September 1999. The respondent commenced permanent employment with the Australian Public Service in February 2000.

45 There were a number of significant jurisdictional issues that arose at first instance. It was submitted by the appellant below that ss 50, 51, 52, 53 and 55 of the PSM Act and the policies relating to the management of displaced persons constituted a comprehensive scheme for the management of officers of the public service in New South Wales who had been displaced from their former positions as a result of reorganisation.

46 It was submitted for the appellant below that: Exercise by the relevant Department Head of the statutory powers to manage staff displaced by organisational change may give rise to a Public law remedy but they are not capable of being challenged in proceedings brought pursuant to s 106 of the Industrial Relations Act 1996.

47 Haylen J recorded the further submissions of the appellant relating to jurisdiction at [200] to [202]: It was then said that, in order to succeed in the present claim, the applicant had to establish that the contract was relevantly unfair. It was not disputed that the applicant's conditions of employment were in part regulated by contract. However, the relationship was in large measure subject to the provisions of the PSM Act. The contract had to be consistent with the statutory provisions affecting the relationship. To the extent that the PSM Act governed the relationship, it was idle to enquire whether there was a contract which embodied its provisions: the statute itself controlled the terms of service.

201 While it was emphasised that ss 50, 51, 52, 53 and 55 laid down a specific statutory scheme which existed independently of any contractual provision express or implied, the displaced employees' policy, for the most part, mirrored these provisions of the PSM Act. It was also stated that, while the policy would be part of the arrangement under which work was performed in an industry, insofar as the relief sought to set aside the arrangement, it could not be granted because to do so would be to directly, and not merely indirectly, conflict with the PSM Act. If there was a conflict between these provisions of the PSM Act and ss 105 and 106 of the Industrial Relations Act then, to the extent that there is a conflict, the generalia specialibus maxim of construction would apply so that ss 105 and 106 would be deemed not to apply. It was submitted that it would be " simply inconceivable that a provision or provisions providing a remedy for unfair contract were meant as a matter of construction to apply to statutory provisions". 202 The respondent did not assert that the provisions of the PSM Act were not justiciable but asserted that the exercise of the statutory power was not challengeable in proceedings commenced under s 106 of the Industrial Relations Act. It was accepted that the legislation binds the Crown but it was not accepted that the Industrial Relations Act applied to a case where the statutory provisions govern in such a direct way the terms of employment.

48 Another jurisdictional objection taken by the appellant at first instance encompassed the proposition that whilst the conduct of the parties could be taken into account in deciding whether a contract was unfair, it did not permit, in the context of the Act as a whole, an order for the payment of money for personal injury and that the provisions of Pt 5 of the Workers Compensation Act 1987 and, in particular, ss 149 and 151E(3) of that Act precluded his Honour from entertaining the respondent's application in so far as the relief sought related to personal injuries. In any event, the appellant submitted below the trial judge should have exercised his discretion not to entertain the claim. It was also contended that his Honour should have dismissed the claim relating to personal injury on the ground that such claims are more properly brought at common law in courts of competent jurisdiction that regularly hear and determine such claims. Haylen J recorded the appellant's submission thus: 209 It was submitted that s 106 was directed to providing a remedy for matters in relation to which the common law and other statute law did not and does not provide a remedy. To the extent that Parliament had considered it appropriate to modify the common law it had done so by statute, namely, the Workers Compensation Act 1987. Since 1987, there had been significant changes with respect to the entitlement of employees to sue their employers with respect to personal injury sustained in the course of their employment. The result was that common law rights had been modified by statute. In relation to workplace injuries not covered by the common law, claims arising from such injuries are dealt with by a specialist court, namely, the Compensation Court. It would be odd if that specialist court had no jurisdiction to dealt with common law claims for personal injuries but the Commission in Court Session did have such jurisdiction.

49 Haylen J made the following relevant findings: (a) To the extent that at least part of the claim appeared to seek further compensation related to redundancy, that claim could not be made out on the evidence: [230]. (b) It was unconscionable to retain an employee in a number of ad hoc positions and allocating project work for an extensive period (three years) when no suitable employment has been found: [236]. (c) If the Corrective Services Department had determined that it required Mr Banas' skills, even if the Academy position or the Windsor position had to be modified to take advantage of those skills, the decision could have been made in February 1997 by the Department Head pursuant to the provisions of s 50 of the Public Sector Management Act to place Mr Banas in one of those positions. If this step had been taken at that time, Mr Banas could have been placed in the position of negotiating a set of duties which satisfied his desire to increase his financial skills and his area of expertise or alternatively, challenging the suitability of the position or rejecting the placement and leaving the Service. Resignation at this point would not (or may not have necessarily) resulted in the payment of a voluntary redundancy but it would have placed Mr Banas in the position of looking for a position elsewhere in circumstances where his previous position had just been made redundant and where he could present himself to prospective employers as a person in good standing, with senior management financial experience and continuity of service. By 1999, Mr Banas was not in such a position and had to present to a prospective employer as a person who had not worked for a year and who had spent another two years filling in his time by doing "project" work: [248]. (d) Mr Raue accepted that Mr Banas was not experienced in the type of responsibilities involved in the Academy position although he could perform the work: he recommended against the appointment of Mr Banas: [248] (e) Two of the internal positions, the Academy and the Windsor positions, were both distinctly different to his previous positions and were not suitable for Mr Banas and his desire to increase his financial skills - a legitimate interest: [258]. (f) The withdrawal of the offer of voluntary redundancy was both an extreme over-reaction by the Department, and misconceived: [272]. (g) The terms of Memorandum 97-27 also cast doubt on the capacity of Ms Lord for the Department to make Job Search Leave an integral part of the voluntary redundancy package so that rejection of the leave could be regarded as rejection of the package and permitting withdrawal of the voluntary redundancy offer. That Memorandum states that Job Search leave is not part of the voluntary redundancy package: [273]. (h) It is clear from the Premier's Department memorandum that the grant of Job Search Leave could not be part of the voluntary redundancy package and therefore it could not have been part of a contract made with Mr Banas to take voluntary redundancy. Mr Banas' reluctance to leave employment on the nominated date could only have put in jeopardy the concession of Job Search Leave, but could not have called into question his agreement with the Department to take voluntary redundancy. The Department was quite wrong in asserting to the contrary and withdrawing the voluntary redundancy offer - it had no right to do so based on some notion of breach of contract. It may be of some significance that the later Premier's Department memorandum noted that once an officer proceeded on Job Search Leave, then voluntary redundancy could not be refused. It may well have been the Department's desire to rid itself of a person whom it regarded as being unco-operative and difficult that led to the withdrawal of the voluntary redundancy offer as applying pressure to Mr Banas but, ultimately, it was an ill-considered step that was fundamentally unfair to Mr Banas and left the Department appearing in a poor and spiteful light. Indeed, it was Mr Banas' evidence that nobody informed him that Job Search Leave was a condition of the offer of voluntary redundancy: I accept Mr Banas' evidence on this point: [275]. (i) The Department's treatment and handling of Mr Banas during the period of his displacement was unfair: [297]. (j) In light of the medical evidence which I have accepted and which I regard as being extensive, and the direct relationship to his medical condition of the unreasonable and unfair treatment and conduct of the Department while he was a displaced/excess person, it is appropriate in this case that there should be a separate amount paid by the respondent in relation to this aspect of the applicant's case: [300]. (k) On the evidence, when Mr Banas took sick leave in September 1998 following his compulsory appointment to the Academy position, the Department applied the outstanding sick leave, then annual leave and, finally, extended leave available to him. He was apparently considered on unauthorised leave from February 1999 until voluntary redundancy was paid to him in December 1999. In view of the findings I have made in relation to the unfairness arising from the Department's conduct, Mr Banas should be paid a further sum being the equivalent of nine months' salary calculated by reference to his annual salary. In reaching this conclusion, I have given general rather than precise consideration to the various periods of leave available to Mr Banas and thereby discounted the full claim: [303]. (l) I am not prepared to make orders contemplated in Clause 6 and, in the alternative, Clause 7, [of the amended summons] which seek compensation for economic loss incurred as a result of Mr Banas' diminished earning capacity. While the evidence did indicate that his salary in the public service was approximately $60,000 per annum, (there was evidence of his hourly rate only} the position he obtained with the Australian Tax Office ultimately resulted in a very much lower salary of approximately $49,000 per annum. The applicant has already been paid redundancy under the voluntary redundancy scheme and no additional amount is proposed in relation to redundancy. It is frequently the case that a person who loses their employment because of redundancy is unable to obtain a position of the same status or salary, but the redundancy payment does not alter between those who successfully obtain employment at the same or similar level or even at a superior level. There is nothing in the circumstances of this case that justifies an order referable to the amount of lost salary due to Mr Banas' inability to obtain a position at an equivalent rate of pay. There was no direct evidence of lost opportunity outside the public service which would justify such an approach. I deal with consequential orders at the conclusion of the judgment: [304]. (m) There is nothing in the orders proposed to be made which would impermissibly interfere with the power of the department head under s 50 of the PSM Act: [308]. (n) Nothing in the proposed orders touches upon the power of the department head under s 51 of the PSM Act: [309]. (o) Nothing in the proposed orders touches upon any power available under s 52 of the PSM Act although, as stated, s 52 was, most likely, not activated in relation to Mr Banas: [309]. (p) There is nothing in the proposed orders which would conflict with the provisions of s 53 of the PSM Act: [312]. (q) Section 55 of the PSM Act provides that an officer is not, except as provided by the PSM Act or any other Act, entitled to any compensation as a result of the officer's services being dispensed with or the officer's salary being reduced. Putting to one side whether relief under s 106 of the Industrial Relations Act might fall within the term "or any other Act", Mr Banas' services were not dispensed with: [313]. (r) I am unable to accept the submissions made as to the PSM Act operating so as to exclude the relief proposed in the present case: [317]. (s) The respondent also submitted that the claim brought by the applicant was simply a common law claim or workers compensation claim dressed up as a contracts case under s 106 of the Industrial Relations Act . On the analysis of the unfairness which permeated the relationship between the applicant and the respondent Department especially between 1997 and 1999, I am unable to accept that bald characterisation urged by the respondent: [318]. (t) The orders that are proposed in this matter arise from contractual unconscionability or unfairness, treating the contract in the extended sense as defined in s 105 of the Act. It is the unfairness arising from the conduct of the respondent which gives rise to the two proposed primary orders for the payment of money. I am unable to accept the proposition that the provisions of the Workers Compensation Act identified by the respondent were intended to have the effect of impinging upon these orders proposed to be made under s 106 of the Industrial Relations Act : [321]. (u) It would be appropriate to declare the contract void from February 1997 except to the extent of any and all payments made to the applicant: [322]. (v) The applicant is to receive payment of nine months' salary calculated by reference to his annual salary as it stood at December 1999 and an amount which I determine to be $12,500, in relation to stress and suffering arising in the course of the applicant's employment: [322]. (w) The applicant is also entitled to an order for the payment of interest and an order for costs which should ordinarily follow the event. Interest should be paid in accordance with the provisions of the Supreme Court Act and rules from 1 March 1999 in relation to the amount being the equivalent of nine months salary: [322]. (x) Interest on the sum of $12,500 for stress, pain and suffering should run from 1 February 1999 until 1 December 1999: [322].

50 Section 188 of the Industrial Relations Act provides, amongst other things, that an appeal may be made only with the leave of the Full Bench and that leave to appeal is to be granted if, in the opinion of the Full Bench, the matter is of such importance that, in the public interest, leave should be granted.

51 It was submitted by Mr P Menzies QC and Mr D Dickinson, for the appellant, that the appeal raised substantial issues both as to jurisdiction and the proper exercise of the Commission's discretion in relation to claims brought pursuant to the provisions of s 106 of the Act by public servants employed under the provisions of the PSM Act where such claims seek to challenge the operations of the "Managing Displaced Employees Policy" and the exercise by departmental Heads of the powers vested in them under ss 50, 51, 52, 53 and 55 of the PSM Act.

52 It was further submitted that the appeal raised matters of perhaps wider significance for the public interest in that the judgment under appeal awarded the respondent monetary amounts that could only be referable to the respondent's claim that he suffered personal injury. The legislature has by successive amendments to the Workers Compensation Act restricted the entitlements of employees to bring actions in tort or contract for damages with respect to personal injuries. Moreover, it was submitted, the entitlement of employees to obtain weekly payments of compensation with respect to psychological injuries had been significantly modified.

53 It was submitted the appeal raised significant issues going to jurisdiction of the Commission or the proper exercise of the Commission's discretion in relation to claims brought to recover amounts analogous to damages for psychological stress, particularly where in reality that is the only relief that is or can be claimed.

54 The respondent submitted that leave should be refused. Mr J Fernon SC for the respondent submitted the appeal did not raise any issue relating to either the jurisdiction or the discretion of the Commission in respect of claims brought by persons employed under the provisions of the PSM Act. It was submitted that the judgment of Haylen J was concerned with the application and fairness of the appellant's policies for "managing displaced employees". Mr Fernon contended that the appellant conceded that the respondent's employment was regulated in part by contract and that the appellant's policy constituted an arrangement under which work was performed in an industry. It was submitted that the appeal did not concern any conflict with ss 50, 51, 52, 53 or 55 of the PSM Act.

55 Senior counsel for the respondent further submitted that the appeal did not raise any question concerning the monetary amounts that may be awarded in respect of "personal injury". The judgment of Haylen J, it was submitted, was concerned with the unfairness of the respondent's contract and the consequences of that unfairness. Section 151E of the Workers Compensation Act, which was relied upon by the appellant, was concerned with awards of damages in respect of an injury caused by the negligence or other tort of an employer. Mr Fernon submitted that was not the case here.

56 We consider that the appeal does raise important questions going to the interrelationship between the provisions of ss 105 and 106 of the Industrial Relations Act on the one hand and the PSM Act and Workers Compensation Act on the other and that there is a public interest in that statutory interrelationship being dealt with at appellate level, albeit in the factual context of this case. We have hesitated about granting leave in relation to what might be described as the 'merit' issues in the case but we have decided that it would be appropriate to deal with these issues because of their connection with the jurisdictional issues.

57 Section 191 of the Act is relevant to the nature of the appeal. In King v State Bank of New South Wales (No 2) (2002) 126 IR 407 the Full Bench reviewed the authorities as to the effect of s 191 and held that appeals to the Full Bench are directed at correcting error and do not permit the Full Bench on appeal to substitute its decision for that at first instance. That is the approach we have taken in this appeal.

58 There were 13 grounds of appeal as follows: 1 His Honour's finding that the combined effect of ss 50, 51, 52, 53 and 55 of the Public Sector Management Act 1988 did not constitute a code so as to preclude the Commission in Court Session from entertaining the Respondents application under Section 106 of the Industrial Relations Act 1996 as a matter of jurisdiction was wrong. 2 His Honour was wrong in not, as a matter of discretion dismissing the application for relief having regard to ss 50, 51, 52, 53 and 55 of the Public Sector Management Act 1988 . 3 His Honour was wrong in finding that the provisions of Part 5 of the Workers Compensation Act 1987 and in particular ss 149 and 151E(3) of that Act did not preclude him from entertaining the Respondent's application in so far as the relief sought related to personal injuries sustained by the Respondent claim. 4 His Honour was wrong in finding that the provisions of Part 5 of the Workers Compensation Act 1987 and in particular ss 149 and 151E(3) of that Act did not apply to the determination of the Respondent's application so sustained by the Respondent in so far as the relief sought related to personal injuries. 5 His Honour was wrong in that he failed in the exercise of his discretion to dismiss those parts of the Respondent's claim related to personal injuries sustained by the Respondent having regard to the provisions of Part 5 of the Workers Compensation Act 1987 and in particular ss 149 and 151E(3) of that Act. 6 It was wrong for his Honour to exercise his discretion to entertain the claim which in reality was a claim for damages for personal injury. His Honour should have dismissed the claim on the ground that such claims are more properly brought at common law in Courts of competent jurisdiction who regularly hear and determine such claims. 7 His Honour was wrong in finding that the contract between the Appellant and the Respondent was unfair. 8 His Honour's finding at paragraph 236 that it was unconscionable to retain an employee in a number of ad hoc positions and allocating project work for an extensive period when no suitable employment has been found was wrong particularly having regard to Mr. Banas' circumstances. 9 His Honour's findings at paragraph 244 and 258 that the position offered to him at Windsor was anything other than identical to the Respondents former position was wrong. 10 His Honour's finding that the position of Business Manager, Corrective Services Academy was not a suitable position for the Respondent was wrong. 11 His Honour's finding at paragraph 272 of his decision to the effect that the withdrawal of an offer of voluntary redundancy was an extreme over-reaction by the Appellant and misconceived was wrong. 12 His Honour's finding at paragraph 273 of his decision is wrong in that it failed to take into account the provisions of the Displaced Employees Policy whereby only when Job Search Leave is taken, neither party can withdraw from the package. 13 His Honour's finding at paragraph 275 of his decision is wrong in that what was being repudiated by Mr. Banas was an agreement contained in an exchange of letters between the parties to accept a package of benefits conditional upon taking job search leave.

Inconsistency between PSM Act and orders under s 106 - Appeal grounds 1 and 2

59 In its written submissions the appellant helpfully addressed each of the appeal grounds seriatim and we propose to follow the same approach in our consideration of the appeal. The first two grounds go to the question of whether the relevant provisions of the PSM Act preclude the Commission in Court Session from exercising jurisdiction under s 106 of the Industrial Relations Act. Haylen J found that they did not. 60 It was contended for the appellant on appeal that sections 50, 51, 52, 53 and 55 constituted a code regulating staffing within the service and providing a mechanism to deal with staff that become excess to requirements or were displaced within the Public Service. The provisions, it was submitted, were not merely facilitative; they existed independently of any contractual provision express or implied. Whilst it was accepted by the appellant that the "Managing Displaced Employees Policy" was part of the arrangement under which work was performed in an industry it was submitted that, for the most part, the Policy mirrored the provisions of the PSM Act and in so far as the relief sought was to set aside the arrangement, it could not be granted because to do so would directly, and not merely indirectly, conflict with the PSM Act. We would observe, however, the Policy itself was the subject of a number of unwritten practices that had an important effect on the way in which the policy operated and that the Department applied flexibility in the way the guidelines were applied. This detracts from the notion that the statute and the Policy constituted a code.

61 It is apparent from his Honour's judgment that Haylen J considered the contract was unfair because of the Department's treatment and handling of Mr Banas during the period of his displacement ([297]) and that the "findings of unfairness revolve previously (sic) around conduct whereby the respondent misapplied, or did not make fully available to the benefit of the applicant as a displaced person, the provisions of the displaced persons policy" ([314]). His Honour considered that the displaced persons policy had the status of an arrangement operating alongside the contract of employment.

62 It is not entirely, clear, however, whether in finding the contract was unfair his Honour was referring to only the displaced persons policy as an arrangement that was unfair or whether he considered that it was the respondent's contract of employment together with the displaced persons policy that constituted an overall unfair arrangement. The respondent's further amended summons for relief sought relief in relation to "the contract of employment or arrangement" or, in the alternative, a collateral arrangement or related condition, being the displaced persons policy. We note that in making orders, Haylen J avoided (in part) the contract of employment and not the displaced persons policy.

63 Having regard to [321] and [322] of his Honour's judgment it may properly be inferred that the "contract" Haylen J found to be unfair because of the appellant's conduct was an overall arrangement consisting of the respondent's contract of employment and the displaced persons policy and we so find.

64 Haylen J considered that there was no inconsistency or conflict between the orders he made and the nominated provisions of the PSM Act. The orders, it will be recalled, included: declaring the contract partially void; providing for nine months' salary relating to the period between February 1999 and December 1999 when the Department considered the respondent was absent on unauthorised leave; and, providing for a payment of $12,500 in relation to stress and suffering arising in the course of the respondent's employment. The reasons why his Honour found no inconsistency were that: (a) In relation to s 50 the orders proposed did not conflict with a departmental Head's (or his or her delegate's) power to transfer an officer from one position in the department to another position in the department, or to another department, at the officer's existing salary. (b) Section 51 of the PSM Act provided that if the department Head was satisfied that the number of persons employed in the department exceeds the number that appeared to be necessary for the effective, efficient and economic management of its functions and activities then the department Head was to take such steps as were practicable to secure the transfer of the excess persons to vacant positions in other departments at their existing salaries. If excess persons could not be usefully employed in other departments, then a regime was laid down for dispensing with the services of those persons. Section 51 did not require a department Head to declare an officer excess, but that decision was made in relation to Mr Banas in September 1997. Mr Banas was never directed to take up such a vacant position under s 51; no move was made to dispense with Mr Banas' services because he was excess. Nothing in the proposed orders touched upon the power of the department Head under s 51 of the PSM Act. (c) Section 52 provided that where the department Head was satisfied that an officer in a department was in receipt of a greater salary than the maximum fairly appropriate to the work performed by the officer, then the department Head was to take such steps as were practicable to assign the officer work of a class appropriate to the officer's salary. There is no direct evidence that the department Head formed this view in relation to Mr Banas. The section also allowed transfer to a vacant position in another department on existing salary if appropriate work could not be assigned to the officer or where the officer was unfit or incapable of performing work appropriate to the officer's salary. If such work could not be found, there was provision to reduce the officer's salary and certain savings provisions were made in relation to preserving eligibility for promotion and like matters. This part of the provision was not utilised and nothing in the proposed orders touched upon any power available under s 52 although, as stated, s 52 was, most likely, not activated in relation to Mr Banas. (d) Under s 53, an officer who refuses a transfer under ss 50, 51 or 52 may be dismissed from the public service "… but only if that department Head has certified that the officer had no valid reason for so refusing". There was nothing in the proposed orders which would conflict with the provisions of s 53. (e) Section 55 of the PSM Act provides that an officer is not, except as provided by the PSM Act or any other Act, entitled to any compensation as a result of the officer's services being dispensed with or the officer's salary being reduced. Mr Banas' services were not dispensed with. "Dispensed with" means terminated at the behest of the employer and it was inappropriate to use the term to identify a situation where an employee voluntary terminates or where an employer and an employee mutually agree to a termination.

65 Before addressing directly the issue of inconsistency between the orders made by Haylen J and the nominated sections of the PSM Act, we observe that the Industrial Relations Act binds the Crown in the Right of New South Wales (see s 404 of the Act) and there is nothing relevant to these proceedings that would indicate that s 106 did not apply to the contract of employment of Mr Banas or to any relevant arrangement. It was, however, submitted for the appellant that if there was a conflict between the provisions of the PSM Act and ss 105 and 106 of the Industrial Relations Act then, to the extent that there was a conflict, the generalia specialibus non derogant (general provisions do not derogate from special provisions) maxim of construction should be applied so that ss 105 and 106 are deemed not to apply.

66 In so far as the displaced persons policy was concerned, his Honour found it was an arrangement within the meaning of ss 105 and 106 of the Act; indeed, the appellant conceded this was so although it contended that "the provisions of the Displaced Persons Policy are not a collateral arrangement to the contract of employment but are supplementary to and complimentary (sic) to the statutory provisions." It was contended by the appellant in effect that because of the relationship between the statute and the policy, any orders made inconsistent with the policy should be regarded as inconsistent with the statute.

67 In Public Service Association of New South Wales v Industrial Commission of New South Wales [1985] 1 NSWLR 627 the Court of Appeal was concerned with whether the Commission had jurisdiction to make an award in light of ss 113 and 114 of the Public Service Act 1979. These sections correspond to ss 51 and 52 in the PSM Act. The Court held there was no jurisdiction because the wording of the sections indicated by way of negative implication that the functions and powers these sections created were to be exercised only under the Public Service Act. However, the Court also held the Commission retained jurisdiction to flesh out or complement the scheme set up by ss 113 and 114 provided any award made "was not inconsistent with or contradictory of the specific provisions of those sections because the legislature had not indicated an intention to preclude the Commission from entering this field at all". 68 In Public Service Board (NSW) v Public Service Association (NSW); Re Steele (1987) 17 IR 286 the Industrial Commission in Court Session considered the question of whether it was inconsistent with the Public Service Act to make an award or order that affected the Public Service Board or department head when acting pursuant to s 112 and s 115(2) of that Act. Section 112 and s 115(2) were in substantially the same terms as s 50 and s 53 respectively, of the PSM Act. The Full Bench held that whilst the Commission had power to deal with transfers of officers employed under the Public Service Act that power was affected by the provisions of ss 112 and 115(2) of that Act. The Commission, therefore, was not at large to make an order or award that it might deem appropriate in relation to a transfer. However, where steps purported to be taken or proposed under ss 112 and 115(2) fell outside those sections because extraneous considerations were incorrectly taken into account or the actions of the Board or the department head might be vitiated for other reasons, an order or award could be made that deferred or prevented the transfer.

69 An important consideration in Public Service Association of New South Wales v Industrial Commission of New South Wales and in Steele was s 8 of the Public Service Act, which provided that: Unless otherwise expressly provided, nothing in this Act affects the Industrial Arbitration Act 1940.

70 The PSM Act, in s 95, provides that the Industrial Relations Act 1996 is not affected by anything in the PSM Act. It may be concluded, therefore, that the reasoning and conclusions in both Public Service Association of New South Wales v Industrial Commission of New South Wales and Steele are directly relevant to the issue before us and support the conclusion that the PSM Act does not cover the field to the exclusion of the Industrial Relations Act. Provided in this case any orders made under s 106 are not inconsistent with or contradictory of the specific provisions of ss 50, 51, 52, 53 and 55 of the PSM Act, such orders are within jurisdiction.

71 It is clear that the orders made by Haylen J were not inconsistent with or contradictory of the relevant specific provisions of the PSM Act for the reasons given by his Honour. The appellant contended, however, that the PSM Act and the Displaced Persons Policy had to be regarded as a code or comprehensive scheme for the management of officers of the public service who have been displaced from their former positions as a result of re-organisation within their department or who are otherwise excess to requirements. It was submitted for the appellant that: The policy was instituted to provide a mechanism by which employees in the public sector, who became displaced, could be dealt with in a way which would emphasise retention in employment as the preferred option and to provide, as a last resort, where retention in the service was impracticable, the payment of severance benefits and other benefits. It provided benefits which were not available under the statutory provisions whilst at the same time reserving the right of the appellant to exercise its statutory powers. … The policy document states further that voluntarily redundancy focuses on the positions affected not individual employees, but recognises that the individual employees are affected and the policy seeks to assist them. In relation to voluntary redundancies, the document states that the circumstances that may lead to voluntary redundancy are expected to be where the parties agree that redeployment is not likely to be viable in a reasonable period of time. The parties referred to in the document are the relevant Minister, organisation, Workforce Management Centre and relevant unions. Individual employees are not parties to the agreement. Throughout the document the emphasis is on redeployment, with redundancy being considered only where redeployment is considered to be impracticable. "In considering whether redeployment is impracticable it is necessary that the organisation, Workforce Management Centre and the relevant unions consider it impractical to retrain the displaced employees for the purposes of redeployment and the knowledge and skills relevant to deleted positions/ jobs are not in demand by public organizations". The document also envisages that affected employees who are excess may be placed in a job lower in salary but are then entitled to salary maintenance for a period of 12 months, or such other period as approved by the public employment office. They may also be placed in a position/job with a slight differential in salary notwithstanding that they will receive a greater salary than in their former position (as a guide 5% or one grade) … The documentation forming the management of displaced employee's policy states that it is to be read in conformity with, in particular, Sections 50 to 53 of the PSM Act and it is those provisions which underpin the policy.

72 The Displaced Persons Policy clearly complements the relevant provisions of the PSM Act. Indeed, it is arguably essential in managing displaced officers. But it is not part of the PSM Act nor is it delegated legislation. In fact, it is largely an agreement apparently negotiated with relevant public sector unions. For the purposes of ss 105 and 106, as the appellant conceded, the Policy is an arrangement and, therefore, susceptible to the Commission's jurisdiction: See Legal and General Assurance Society Ltd v Stock (1993) 49 IR 464. That the Policy complemented the relevant provisions of the PSM Act does not mean it loses its character as an arrangement. That Mr Banas was not a party to the agreement that gave rise to the policy also does not alter its character.

73 In our opinion, provided any orders made under s 106 are not inconsistent with or contradictory of the relevant specific provisions of the PSM Act, such orders would not be beyond jurisdiction where they are directed to providing a remedy for a contract (using that term in the extended sense as defined in s 105 of the Act) that became unfair because of the conduct of a party in applying a policy designed to facilitate the intent of the statutory provisions, in this case ss 50, 51, 52, 53 and 55 of the PSM Act.

74 We agree with the submission of the respondent that Haylen J did not declare unfair any action taken "pursuant to" any statutory authority. Rather, the Department applied a "policy" that constituted part of an arrangement under which work was performed and in doing so his Honour found there was unfairness.

75 For the reasons given by Haylen J, we can see no inconsistency between his Honour's orders and the nominated sections of the PSM Act. Consequently, we do not consider his Honour erred in this respect.

76 Ground 2 of the appeal contended Haylen J was wrong in not, as a matter of discretion, dismissing the application for relief having regard to the nominated sections of the PSM Act. On its face, the Displaced Persons Policy, providing as it does the means for practically implementing the relevant provisions of the PSM Act, is fair. Indeed, its objective of keeping employees in employment rather than resorting to what might, in some quarters, be regarded as the easier solution of making persons immediately redundant, is to be applauded. We consider that it would only be in the most unusual of circumstances and after the strongest case had been made out that the Commission would be likely to find unfairness in the terms of the Policy.

77 However, what Haylen J was required to do was consider whether, in applying the Policy to an individual officer, the appellant conducted itself unfairly, thus making the contract unfair. The appellant submitted to the effect that actions undertaken pursuant to statutory authority could not, in the relevant sense, be unfair. We do not agree. Firstly, the conduct that Haylen J found to be unfair was not pursuant to statutory authority but rather purported to be in accordance with a separate, albeit complementary, policy designed to facilitate what certain industrial parties had agreed was the intent of the legislation. Secondly, the Policy was an arrangement susceptible to the Commission's jurisdiction and, pursuant to s 106(2) of the Industrial Relations Act, it was open to the trial judge to find that certain conduct towards an individual officer purported to have been taken in accordance with the Policy rendered a particular contract unfair.

78 We do not consider there was any error on the trial judge's part in this area.

Whether Workers Compensation Act precluded orders under s 106 - appeal grounds 3, 4, 5 and 6

79 Relying on King v State Bank of New South Wales (No 2) as to the Court's power to make orders under s 106 relating to stress, pain and suffering; Walker v Industrial Court of New South Wales and anor (1994) 53 IR 121 and the observations of Kirby P at 134 regarding the availability of multiple remedies; and Incitec Ltd and anor v Industrial Court of New South Wales and ors (1992) 45 IR 155 and, in particular, the decision of Gleeson CJ at 157-158 regarding special versus general statutory provisions, Haylen J considered that: 321 The orders that are proposed in this matter arise from contractual unconscionability or unfairness, treating the contract in the extended sense as defined in s 105 of the Act. It is the unfairness arising from the conduct of the respondent which gives rise to the two proposed primary orders for the payment of money. I am unable to accept the proposition that the provisions of the Workers Compensation Act identified by the respondent were intended to have the effect of impinging upon these orders proposed to be made under s 106 of the Industrial Relations Act.

80 The trial judge's decision to order nine months' pay to the respondent was based on his Honour's finding that the respondent's unpaid absence from February to December 1999 was caused by the appellant's unfair conduct, which in turn caused a psychological illness in the respondent. The amount of $12,500 for stress and suffering appears to be a figure determined in the exercise of his Honour's discretion, perhaps having regard to the decision of the Full Bench in King v State Bank of New South Wales (No 2).

81 Grounds 3, 4, 5 and 6 of the appeal went to those orders made by Haylen J for the appellant to pay $12,500 for stress and suffering arising in the course of the respondent's employment and to the order for nine months' pay for what the appellant described as economic loss resulting from the respondent's claimed work induced psychological illness. Mr Menzies QC summarised the appellant's contentions in respect of these four grounds as follows: 1 There is no jurisdiction in the Commission in Court Session to make orders in the form of payments as compensation for what would otherwise be common law damages and personal injury. 2 If the Full Bench were to find that such jurisdiction did exist then as a matter of discretion that jurisdiction should not be exercised because the trial judge's orders tended to frustrate or be in conflict with the statutory scheme for compensation for workplace injury under the Workers Compensation Act . That scheme, it was submitted, covered compensation for workplace injuries occasioned in circumstances of fault or in the absence of fault. It provided a hierarchy of courts to deal with both fault and non-fault claims and in respect of each prescribed and limited the compensation, whether in terms of weekly compensation or common law damages which an injured worker may recover. 3 If the Full Bench decided that as a matter of discretion it should exercise jurisdiction then the Full Bench should consider itself bound by the provisions of the Workers Compensation Act with respect to the issue of how damages ought be quantified which in this case the respondent was entitled to no order for damages.

82 As to the first of these contentions, it would appear that there were two limbs to the appellant's argument. The first was that the orders were not made "in connection with" the contract of employment and the second was that the orders were compensation for damages for personal injury and, accordingly, were not made within jurisdiction.

83 We deal first with the contention that the trial judge's orders were not made "in connection with" the contract of employment, noting that we have found that what his Honour partly avoided and in respect of which he made money orders was a contract in the extended sense as defined by s 105 of the Act. In our opinion, the money orders made were in connection with the contract declared partly void by his Honour and were, therefore, within jurisdiction. We consider that his Honour's application of the law to the facts of Mr Banas' medical condition, which on the evidence was brought on by work related anxiety and stress, was soundly based and involved no error on the part of the trial judge. At [297] his Honour found: Mr Banas' medical condition was clearly put as part of his case and he provided evidence in that regard including a medical history which seems to be consistent. The evidence was not seriously challenged. There is sufficient connection between the history given by Mr Banas, his medical condition and the findings of unfairness that I have made to leave me comfortably satisfied that the views expressed by Dr Napper, Dr Fischer and Dr Gapper are soundly based.

84 Haylen J found that the consensus of medical opinion was that the respondent's medical condition was brought on by work related anxiety and stress. His Honour found the appellant's conduct was unfair. The unfairness caused the respondent to become ill and in September 1998 he proceeded on sick leave. By December 1998 all of his outstanding leave entitlements were exhausted and apparently the appellant considered that from February 1999 the respondent was on unauthorised leave until voluntary redundancy was paid to him in December 1999. During his absence from work in April 1999, the appellant decided to have the respondent medically examined to determine whether he was fit to resume duties. He was referred to HealthQuest and a report was provided by Dr Gapper dated 27 April 1999. In this report, Dr Gapper advised Mr Banas not to return to work at the Corrective Services Department due to the risk of exacerbating his condition. It was noted by Dr Gapper that, while the respondent's symptoms were relatively mild, they did not preclude performing administrative work elsewhere. Redeployment outside the Corrective Services Department was advised. Redeployment of the respondent was not achieved and, following claims brought by the respondent in the Chief Industrial Magistrate's Court, the appellant reinstated an offer of voluntary redundancy. Subsequently, the respondent's employment with the appellant ceased in December 1999. The trial judge considered that an orders for nine months' pay to be paid to the respondent and an amount of $12,500 for stress and suffering were just in the circumstances of the case.

85 On the evidence, we consider it was open to Haylen J to conclude that the contract became unfair because of the conduct of the appellant; the respondent suffered a loss of income for a considerable period of time and stress and suffering because of an illness brought about by the appellant's conduct. This unfairness led his Honour to declare the respondent's contract partly void and in connection with that partial avoidance of the contract his Honour made two money orders under s 106(5) of the Act. There was no error in his Honour's reasoning, his finding as to the facts and his application of the law to the facts.

86 The second limb of the appellant's first contention was that the money orders made by Haylen J were compensation for damages for personal injury and, therefore, not within jurisdiction. It was contended for the appellant in this respect that the decision of the Full Bench in King v State Bank (No 2) that there was jurisdiction in the Commission in Court Session to order monetary compensation for "distress" arising from an unfair contract, was wrongly decided. In King v State Bank (No 2) the Full Bench observed at [110] to [112]: His Honour [ Marks J at first instance] found that it would not have been just "in the sense of being fair to both the applicant and the respondent" to order a monetary payment for the onset of the appellant's depression, as on the evidence, his Honour found that this depression came on prior to the appellant being made redundant. However, his Honour found "it is appropriate that the applicant be awarded some amount to compensate him for the distress which the deprivation of moneys which should in fairness have been paid to him caused him".

111 His Honour held that the deprivation of these monies caused the appellant "some resultant distress", but that such deprivation had not "exacerbated or aggravated the applicant's then existing condition of depression either on a short or long term basis".

112 The factor his Honour considered favoured the appellant so as to warrant the monetary order for distress, was that the respondent was, or ought to have been, aware of the applicant's financial position and the concerns and distress created by his lack of funds. It was the failure of the respondent to afford the appellant the timely payment of fair termination benefits in these circumstances which made it just for the appellant to be awarded some compensation for the additional distress. Marks J had awarded the applicant an amount of $15,000 for distress. The Full Bench determined that this amount should be reduced to $5,000.

87 We note that in King v State Bank (No 2) the Full Bench was dealing with a situation in which the respondent was not challenging generally the Commission's jurisdiction to make orders under s 106 that had regard to or took into account "distress" caused upon termination of employment; the respondent had limited its jurisdictional challenge to the facts of that case. The Full Bench commented at [102] that it considered the respondent's concession as to the Commission's jurisdiction "to make monetary orders under s 106 which have regard to or take into account "distress" caused upon termination [was] properly made."

88 Whilst the issue of the Commission's jurisdiction to make orders under s 106 that have regard to or take into account physical or mental injury or "stress and suffering" was not the subject of full debate in King v State Bank (No 2) and that the Full Bench's conclusions regarding this aspect of the Court's jurisdiction were somewhat tentative, there was nothing put by the appellant in the present proceedings that would lead us to take a different view. In this respect we note the interlocutory judgment of Hungerford J in Stonham v The Speaker of the Legislative Assembly of New South Wales (2000) 97 IR 325 and his Honour's tentative view that the "present state of the authorities on this aspect would seem to favour a view that power exists to entertain" a claim for stress and suffering. We also note the discussion on this issue in Pullen v R & C Products Pty Ltd (1994) 60 IR 183 at 215 to 216 where Marks J appears to accept there was jurisdiction to make money orders for distress although in that case his Honour declined to do so. 89 We consider that there was jurisdiction to make orders to compensate the respondent for a period of absence without pay brought about by his illness and for stress and suffering.

90 We turn to deal with the appellant's contention that the orders made by Haylen J tended to frustrate or be in conflict with the statutory scheme for compensation for workplace injury under the Workers Compensation Act and that as a matter of discretion the orders should not have been made.

91 The appellant referred in particular to ss 149, 151E(3) of the Workers Compensation Act. First, s 149 of that Act defines "damages" as any form of monetary compensation, subject to certain exclusions one of which is "a sum required or authorised to be paid under a State industrial instrument". Arguably, this exclusion means that a money order under s 106(5) is not damages for the purpose of the Workers Compensation Act.

92 Further, s 151E(3) of the Workers Compensation Act provides that: 3) This Division applies to an award of damages in respect of an injury caused by the negligence or other tort of the worker's employer even though the damages are recovered in an action for breach of contract or in any other action.

93 Mr Menzies QC, for the appellant, submitted that the respondent's claim could be categorised as a tort based claim arising out of a personal injury suffered by the respondent in the course of his employment caused by the employer's breach of its duty of care to provide a safe workplace.

94 The fact that a remedy might be available under a statute will not exclude a person from pursuing rights expressly conferred by another statute unless "those rights are expressly or by necessary implication, excluded by the alternative claim, or controlled an obligation to elect or by time limits, the beneficiary of the a statutory right can pursue any, or all, or no entitlements": Walker v Industrial Court of New South Wales (1994) 53 IR 121 at 134-135 per Kirby P.

95 Of course, Mr Menzies also contended that because the orders made by Haylen J tended to frustrate or be in conflict with the statutory scheme for compensation for workplace injury under the Workers Compensation Act, as a matter of discretion his Honour should not have made the orders. It seems to us, however, that having found what he considered to be a clear case of unfairness and that jurisdiction existed to make money orders that were just in the circumstances of the case, it would have been a curious, if not unjust, exercise of discretion by his Honour to refrain from providing the remedy that was available under the statute. However and in any event, the order made by his Honour was made in the exercise of his Honour's discretion and we do not consider the appellant has demonstrated that the exercise of discretion miscarried.

96 Haylen J was not concerned with whether the period of Mr Banas' unpaid absence brought about by illness and his stress and suffering were caused by "the negligence or other tort of the worker's employer". That was not the claim before him. Injury or loss caused by negligence or other tort would involve a consideration of a breach of a duty or a contravention of a right imposed or conferred by law. His Honour was concerned with the question of unfairness and, if it be found, just compensation. Part 5 of the Workers Compensation Act and Ch 2 Pt 9 of the Industrial Relations Act are concerned with quite different concepts and remedies.

97 The appellant's third contention was that if the Full Bench decided that as a matter of discretion it should exercise jurisdiction then the Full Bench should consider itself bound by the provisions of the Workers Compensation Act with respect to the issue of how damages ought be quantified. In this respect, the appellant referred to ss 11A, 66 and 151H of that Act and submitted that if those provisions were applied to this case the respondent would not be entitled to an order for damages.

98 For much the same reasons as those we expressed in relation to the appellant's second contention, we consider there was no error on the trial judge's part in not applying ss 11A, 66 and 151H of the Workers Compensation Act. The matter before Haylen J was not in the nature of a common law action for damages governed by the terms of Pt 5 of the Workers Compensation Act and his Honour was entitled to exercise his discretion in a manner consistent with his findings of unfairness and to order what he judged to be compensation that was just in the circumstances of the case. It would have been surprising indeed for his Honour to make the findings that he did in relation to unfairness and come to the conclusion that because the respondent may have been able to pursue a claim for damages because of an injury which may have been caused by the negligence or other tort of his employer and which may have resulted in no damages being awarded under the relevant provisions of the Workers Compensation Act that, in his Honour's discretion, no orders for compensation should be made under s 106(5) of the Industrial Relations Act.

99 Haylen J's order for the payment of nine months' salary is referenced to the period from March to December 1999 during which Mr Banas was not paid (see [322]). On 13 December 1999, however, the respondent received a redundancy package and training expenses as well as payment in respect of Job Search Leave for the period 5 July to 24 September 1999. On the face of it the period of nine months should have been discounted by the 12 weeks paid Job Search Leave. However, from 7 December 1998 to 27 April 1999 when Dr Gapper declared Mr Banas unfit to return to work in the Department of Corrective Services, the respondent was on a period on unpaid leave because he had exhausted all of his entitlements.

100 In relation to the nine months period, his Honour decided at [303]: 303 On the evidence, when Mr Banas took sick leave in September 1998 following his compulsory appointment to the Academy position, the Department applied the outstanding sick leave, then annual leave and, finally, extended leave available to him. He was apparently considered on unauthorised leave from February 1999 until voluntary redundancy was paid to him in December 1999. In view of the findings I have made in relation to the unfairness arising from the Department's conduct, Mr Banas should be paid a further sum being the equivalent of nine months' salary calculated by reference to his annual salary. In reaching this conclusion, I have given general rather than precise consideration to the various periods of leave available to Mr Banas and thereby discounted the full claim. We do not consider, in the circumstances, there is any basis to interfere with his Honour's orders relating to the payment of nine month's salary.

101 As to Haylen J's order for the payment of $12,500 for stress and suffering arising in the course of the respondent's employment, his Honour provides no reasons or explanation in his judgment as to how he arrived at that figure. The claim in the amended summons was for an amount of $40,000 to compensate for the depressive illness suffered by the respondent but no indication was provided as to how that amount was calculated.

102 In King v State Bank of New South Wales (No 2) at [114] the Full Bench stated: 114 Once it is recognised, as his Honour did, that "some degree of stress and financial hardship is likely to be meted out to any employee upon any termination" of employment, two considerations immediately follow when contemplating whether to award an amount pursuant to s 106(5) in this area and, if so, what amount is appropriate. First, unless a very careful approach is taken there is a tangible risk of double compensation. Second, the precise basis for the award must be specified to ensure that situation does not occur.

103 In the present case, we do not consider there was any question of double compensation because the money orders were made on two separate and distinct bases. What makes it difficult to assess whether the money order for stress and suffering was just in the circumstances of the case, however, is the lack of any indication by the trial judge as to how he arrived at the figure.

104 Nonetheless, we have decided that given the extent of stress and suffering to which the respondent was exposed and its duration, we do not propose to interfere with his Honour's order although we regard it as being at the high end of what was appropriate.

105 Finally, on this issue we wish to emphasise that claims for stress and suffering or claims under a similar rubric must be carefully scrutinised. As it was cautioned in King v State Bank of New South Wales (No 2) there needs to be "a very careful approach" taken to the assessment of compensation for unfairness arising under such labels as "stress and suffering" and the precise basis for the award must be specified.

106 Ground 7 of the appeal contended that Haylen J was wrong in finding that the contract between the appellant and respondent was unfair. It was submitted the appellant was doing nothing more than that which was permitted by statute, indeed, the appellant did not avail itself of all its statutory entitlements, which included, ultimately, dismissal, if voluntary redundancy was not taken up and if no other employment could be found. In those circumstances, that is, the appellant acting within its statutory power, its conduct, by definition, could never be categorised as unfair, it was submitted.

107 We do not consider that the unfairness found by Haylen J was as clear-cut as is Honour apparently did. Ultimately, we do not propose to interfere with his Honour's findings because we consider they were certainly open to him on the evidence and, of course, his Honour had the benefit of assessing the witnesses in the course of them giving evidence. We do consider, however, that the appellant could not be criticised for a policy designed to keep persons in employment and although there might be some delay incurred in arranging suitable placements for displaced officers, proper consideration has to be given to the size and nature of the bureaucracy and the processes that are required to be followed. In this case, however, the delay in resolving the issues associated with Mr Banas was unreasonable.

108 Nonetheless, we are compelled to make the observation that, to a not insignificant degree, Mr Banas contributed to the difficulties and feelings of stress that befell him. He believed, for instance, he had something of a right to voluntary redundancy on being displaced and that he considered the primary focus of the appellant should have been on making him redundant rather than finding him a new position. We do not consider any such right existed. But this belief led to a lack of cooperation, antagonism and unnecessary stridency on Mr Banas' part that was less than helpful and, in our opinion, prolonged the resolution of the matter.

109 As to the submission by the appellant that as it was acting within its statutory power, its conduct, by definition, could never be categorised as unfair, we do not agree. The appellant was purportedly acting in accordance with the displaced persons policy that had a separate existence from the statute. Haylen J was critical of the appellant's conduct in applying that policy, which emphasised fairness in dealing with displaced employees. His Honour found, amongst other things, that by its conduct the appellant's treatment of Mr Banas was inconsistent with the policy. These findings of his Honour were open to him on the evidence.

Whether suitable employment was found in a reasonable period - appeal ground 8

110 Ground 8 of the appeal was that his Honour's finding that it was unconscionable to retain an employee in a number of ad hoc positions and allocating project work for an extensive period when no suitable employment has been found was wrong, particularly having regard to Mr. Banas' circumstances. It was submitted that this finding contained two significant errors: (a) It was incorrect that suitable employment had not been found for Mr Banas; in fact he had been offered suitable employment on two occasions: (i) In February 1997 he was offered the position of Business Manager (Clerk, Grade 9/10) at the Corrective Services Academy; and (ii) In July 1997 he was invited to consider the position of Finance and Administration Manager, Security & Investigations Branch (Clerk, Grade 9/10) at Windsor. (b) His Honour defined "extensive period" to be three years commencing at a time when he became aware that his position was to be abolished and ending when voluntary redundancy was taken up by him in December 1999. He was offered voluntary redundancy first in June 1998. His Honour's finding defines three years as being not a reasonable period of time but does not define a reasonable period. In the circumstances, a period of 18 months was not unreasonable. During that period Mr Banas had been offered two alternative positions, one of which (the position at Windsor) had duties that were identical to the ones in the position that he had held. Additionally, he was offered a position at Treasury on a trial basis for six months, which position he rejected upon the bases that he did not wish to participate in a trial and did not wish to travel to the city from his home in Baulkham Hills. The respondent was the architect of the circumstances which gave rise to the period which elapsed before voluntary redundancy was taken up and in those circumstances it is inappropriate to first lay the blame for the time lapse at the feet of the Department and then to categorize that delay as unreasonable.

111 Haylen J accepted in relation to the Academy position that it was not suitable because it was administrative in nature and involved managing a substantially lesser budget than the position previously occupied by the respondent. His Honour also accepted that Mr Banas had legitimate reasons for declining the Windsor position. The trial judge took into account the following matters: (a) The evidence of Mr Batty that if Mr Banas took the Academy position his highly developed financial skills would diminish ([241]. (b) The Department could have directed Mr Banas to the Academy position or the Windsor position in February 1997 under s 50 of the PSM Act. If this had occurred, the respondent could have accepted the position, negotiated a change or resigned ([244]). (c) Senior managers in the making of the decision regarding the respondent's suitability for the Academy position had little understanding of the duties and responsibilities of his abolished position and the duties and responsibilities of the Academy position ([245]). (d) It was accepted by Mr Peters, the acting director of personnel services for the Department, that the Academy position had only one major financial component ([246]). (e) After the respondent's rejection of the Academy and Windsor positions, no steps were taken under the Policy to have the issue of suitability decided by the WMC. This, his Honour suggested, was because senior managers of the Department suspected that there was validity in the respondent's complaints (although we recognise this was mere speculation on his Honour's part) ([241]). (f) In relation to the Academy position Mr Crossley "was not too sure how Mr Banas would grapple with some aspects of the job". The job description for the Academy position required experience in marketing, "excellent" human resource skills and "excellent staff counselling, communication and negotiation skills" ([247]). (g) None of the senior managers appeared to have taken into account Mr Farrell's view, being the person to whom Mr Banas reported under the previous structure, that the special nature of the duties performed by Mr Banas were such that voluntary redundancy was the only feasible option - a conclusion reluctantly arrived at because of Mr Farrell's recognition of Mr Banas' competence and experience ([248]). (h) The evidence supported a conclusion that a decision was made in early 1997 by senior managers of the Department to manoeuvre Mr Banas into the Academy position over a period of time by simply ignoring his protests and at the same time avoiding having the issue of suitability determined by the WMC ([248]). (i) Mr Raue accepted that Mr Banas was not experienced in the type of responsibilities involved in the Academy position although he could perform the work: he recommended against the appointment of Mr Banas ([248]). (j) It was more than likely that by August 1997 the Department had agreed with the respondent that the Windsor position was not suitable and that the respondent had legitimate reasons for declining it ([251]). (k) The Windsor position in February 1997 was then only a prospective position. Assistant Commissioner Woodham in February 1997 had promised that there would be no country relocation or an appointment involving transport relocation. The position was outside the metropolitan area, would involve the respondent in considerably more travel and expense in getting to and from work. These were legitimate reasons recognised under the Policy for declining a position. The position was fashioned on a grade 5/6 position. ([240]; [249]).

112 The conclusions arrived at by Haylen J regarding the Academy and Windsor positions were reasonably open to him and there is no basis for interfering with those findings on appeal.

113 The other issue was the period over which Mr Banas was occupied in ad hoc positions and on project work and the appellant's submission that it was not unreasonable that the respondent was not offered voluntary redundancy until June 1998, some 18 months after his position was abolished.

114 In this respect we agree with the submissions for the respondent that it was reasonable to anticipate that an officer would not be left without meaningful work for a period of 18 months. That is especially the case where: (a) Despite the respondent's preference for voluntary redundancy he was prepared to take another position and actively inquired of a number of agencies regarding such positions. (b) From the outset the respondent's regional commander strongly recommended voluntary redundancy and Mr Batty and Assistant Commissioner Woodham indicated voluntary redundancy was a viable option as early as February 1997. (c) The Policy provided that redeployment was to be made wherever suitable and sufficient vacancies existed "in a reasonable period of time". (d) Where the "general rule of thumb" according to Mr Batty's evidence was that if redeployment had not been achieved within six months voluntary redundancy would be considered.

Suitability of the Windsor position - appeal ground 9

115 The ninth ground of appeal was that his Honour's finding that the position offered to the respondent at Windsor was anything other than identical to the respondent's former position was wrong. In this respect it was submitted that the job description of the abolished position and the job description of the proposed position at Windsor were identical. The proposed position, it was submitted did involve the administration of a smaller budget and the scale of work involved in the proposed position was smaller than that in the position abolished, but the work was the same; the nature of the work and the skills needed, were identical. It was submitted that his Honour identified a legitimate interest and reason why Mr Banas may not have wished to take the job and that was it was inconsistent with his desire to increase his financial skills. However, that was an irrelevant consideration when assessing, as his Honour was doing, the reasonableness and, therefore, the fairness of the appellant's conduct. The conduct of the Department was reasonable in all the circumstances, it was submitted.

116 It was submitted Haylen J criticised the Department for having failed, in February 1997, to have then required Mr Banas to take the position at Windsor. In other words, his Honour's criticism was that the Department should have ignored Mr Banas' own wishes and forced him to take the position. That proposition, it was submitted, was inconsistent with his Honour's criticism that the Department failed to take account of Mr Banas' wishes. The Department did take account of the respondent's wishes at that point because had it not done so he would have been in the position at Windsor by February of 1997. In those circumstances, it was submitted, it was difficult to see how that failure can be asserted as a criticism of the Department's conduct.

117 In relation to this last submission we agree with what the respondent has put; the submission misunderstands his Honour's criticism. The point was that if the Department had exercised its powers pursuant to s 50 of the PSM Act in February 1997 the respondent could have accepted the position, negotiated a change, or resigned. Had he resigned Mr Banas: [C]ould present himself to prospective employers as a person in good standing with senior management financial experience and continuity of service. By 1999, Mr Banas was not in such a position and had to present to a prospective employer as a person who had not worked for a year and who had spent another two years filling in his time by doing 'project' work.

118 Whilst it might have been the case that the job descriptions of the abolished position and the job description of the proposed position at Windsor were identical, the appellant acknowledged that the positions were qualitatively different: administration of a smaller budget; and, the scale of work involved in the proposed position was smaller than that in the position abolished. The work in the Windsor position was fashioned on a grade 5/6 position whereas the work in the abolished position had been grade 9/10. Understandably, Mr Banas regarded the position as a backward step. The fact that the position descriptions were identical was no basis for concluding that the Windsor position was necessarily suitable for Mr Banas. Haylen J articulated his reasons as to why he considered the Windsor position was not suitable and his Honour's conclusions in that respect were reasonably open to him.

119 The appellant rejected the notion that Haylen J was entitled to take into account the respondent's desire to maintain his financial skills. However, it was not explained why the appellant considered this to be an "irrelevant consideration". His Honour recognised this as a legitimate factor. Given the displaced persons policy and its emphasis on fairness, his Honour was entitled to take the respondent's interests into account.

Suitability of the Academy position - appeal ground 10

120 Ground 10 of the appeal was that his Honour's finding that the position of Business Manager, Corrective Services Academy was not a suitable position for the respondent was wrong. The appellant submitted that the primary objectives of the position the respondent held in the disbanded Central Region were managerial. The position offered to Mr Banas at the Academy was that of Business Manager, Clerk Grade 9/10. That position, it was submitted, was first discussed with Mr Banas at the meeting between he and the Assistant Commissioner Operations in February 1997. At that meeting Mr Banas raised a number of objections to him being transferred to that position including, "a perceived loss of status and that the skill mix was below the level of his previous position. He seemed to be only interested in a strict financial accounting position whereas we were looking at his suitability in a range of other positions of equivalent salary and grading". In cross-examination, it was submitted, Mr Banas conceded that the job was not below the level of his previous position but stated that he wanted to pursue a career in accounting/financial management.

121 On 5 March 1997 Mr Banas met with Mr Raue, the Director of the Academy to discuss the position of Business Manager, Clerk Grade 9/10 at the Academy and Mr Banas' suitability for that position. Mr Banas said to Mr Raue that: [T]he position was not in line with my qualifications, experience, or my development needs. I also advertised (sic - advised) him that I would have never considered a plane (sic - applying) for this type of job, as it was not in my area of expertise or interest.

122 Mr Raue considered Mr Banas was well qualified for the position and would be able to satisfactorily perform in the position given suitable staff development to enable him to perform that role but that according to Mr Raue: [Mr Banas] has a negative attitude to the position at the Academy and does not want to be allocated to it. He regards it as a demotion when comparing the financial responsibilities of his previous position with those of this position. He has focused on the financial management aspects of the position rather than the diverse range of responsibilities which it involves. Given this attitude and the importance of the position to the effective operation of the Academy it is my recommendation that he not be appointed to the position at this time.

123 It was submitted that given Mr Raue's assessment of Mr Banas' capacity to fulfil the position, it was not unreasonable to expect Mr Banas to take up that position. It is important to note, however, that Mr Raue did not give evidence in the proceedings.

124 It would appear that from the documentary evidence Mr Raue considered that Mr Banas was capable of filling the position given suitable staff development but because of Mr Banas' "attitude", which was negative and involved a focus on the financial management aspects of the position rather than the other responsibilities, Mr Raue recommended that Mr Banas not be appointed to the position.

125 We canvassed earlier the factors that influenced Haylen J in coming to the conclusion that the Academy position was not suitable. In weighing up the factors for and against whether Mr Banas should have taken up the Academy position, Haylen J was aware of Mr Raue's view concerning Mr Banas' ability to fill the role. His Honour was also aware of Mr Raue's apparent view about the respondent's negative attitude. Nonetheless, it was open to his Honour to conclude, on all of the material before him, the Academy position was not suitable.

Withdrawal of redundancy offer - appeal grounds 10, 11, 12 and 13

126 The appellant submitted that the finding that its withdrawal of an offer of redundancy was an extreme over-reaction was misconceived and wrong. The appellant submitted that the respondent reneged on an agreement by declining to take job search leave. It was for that reason that the offer of voluntary redundancy was withdrawn; job search leave was not part of the appellant's voluntary redundancy package. The appellant submitted that the circumstances were as follows: (a) An agreement was reached between the Department and the respondent that he would accept voluntary redundancy on terms that he would work up until 28 August 1998 and then commence Job Search Leave which entitled to payment for up to 12 weeks. Any compensation for damage he perceived the Department had caused him would be dealt with separately. (b) Mr. Banas reneged on that agreement when he became aware that the issue of compensation would not be concluded by the time he ended his service on 28 August 1998. He declined to leave his position and said he would continue to perform his duties. (c) Mr. Banas was informed that in as much as he refused to go on Job Search Leave, that the offer of voluntary redundancy was withdrawn. Two suitable positions were identified for him and he was requested to choose one of those positions within seven days, failing which one of them would be selected for him. (d) On 17 September it was determined that the most appropriate position for him was Business Manager at the academy and he was instructed to appear and take up that position.

127 It would seem from the evidence that Mr Banas was of the understanding that his claim for compensation would be dealt with before he proceeded on Job Search Leave on 31 August 1998. The appellant's understanding, however, was that the compensation claim was a separate issue that had no connection with proceeding on Job Search Leave and taking voluntary redundancy and the appellant considered that this was Mr Banas' understanding.

128 Based on Mr Banas' understanding of the position he refused to proceed on Job Search Leave because he had not received satisfactory advice regarding the compensation issue. In view of what the appellant considered to be a breach of good faith on Mr Banas' part to accept voluntary redundancy and proceed on Job Search Leave, the offer of voluntary redundancy was withdrawn.

129 There was a conflict in the evidence over whether proceeding on Job Search Leave was a condition of the offer of voluntary redundancy. Haylen J resolved the conflict in Mr Banas' favour, accepting Mr Banas' evidence that no one had informed him to this effect.

130 Ultimately, we do not consider it makes any difference to the outcome but we consider it to be a moot point as to whether the appellant's decision to withdraw the offer of voluntary redundancy in light of Mr Banas' refusal to proceed on Job Search Leave was an act of spite. Our view of the evidence is that the appellant genuinely believed Mr Banas had accepted an arrangement that involved accepting a voluntary redundancy package, that he was to proceed on Job Search Leave on the agreed date and that the claim for compensation would be dealt with at a later time, it having no connection with voluntary redundancy or the taking of the Leave.

131 The appellant's fault lay principally in its failure to explain to Mr Banas in unambiguous terms that his claim for compensation was not a matter that would be resolved by the time he proceeded on Job Search Leave and to explain to him the process by which that claim needed to be addressed. This should have been done given the history of the matter. We also consider the appellant's withdrawal of voluntary redundancy was an ill-considered move in the circumstances and was indicative of the fact that throughout this whole unfortunate episode Mr Banas was "not handled well".

132 The withdrawal of the voluntary redundancy had the effect of strengthening his Honour's view regarding the unfairness of the appellant's conduct towards Mr Banas. We do not consider his Honour erred in that respect.

133 We can discern no error in fact or law, nor can we find any error in the exercise of the trial judge's discretion in this matter.

134 We make the following orders: 1 Leave to appeal is granted. 2 The appeal is dismissed. 3 The appellant shall pay the respondent's costs of the appeal as agreed or, failing agreement, as assessed. ___________________________

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