State of New South Wales v Banas - [2004] NSWIRComm 255 - NSWIRComm 2004 case summary — Zoe

NSWNSWIRComm

State of New South Wales v Banas

[2004] NSWIRComm 255

Industrial Relations Commission (NSW)|2004-09-08|Before: Wright J, Walton J, Boland J, Mr P, Mr J, Haylen J

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Court

Industrial Relations Commission (NSW)

Decision date

2004-09-08

Before

Wright J, Walton J, Boland J, Mr P, Mr J

Catchwords

08/10/2004 DATE OF JUDGMENT: 09/03/2004

Source

Original judgment source is linked above.

Catchwords

08/10/2004 DATE OF JUDGMENT: 09/03/2004

Judgment (154 paragraphs)

[1]

Industrial Relations Commission of New South Wales in Court Session

[2]

CITATION : State of New South Wales v Banas [2004] NSWIRComm 255 APPELLANT State of New South Wales PARTIES : RESPONDENT Josef Banas FILE NUMBER: IRC 6147 of 2003 CORAM: Wright J President; Walton J Vice-President; Boland J Appeal - Application for leave to appeal and appeal - Unfair contract - Redundancy in the public sector - Relationship between ss 50, 51, 52, 53 and 55 of Public Sector Management Act 1988 and s 106 of Industrial Relations Act 1996 - Whether provisions of Part 5 of Workers Compensation Act 1987 preclude relief being granted under s 106 of Industrial Relations Act 1996 for personal injury - Stress and suffering - Exercise of discretion - Appeal dismissed CATCHWORDS : Unfair Contract - Appeal - Application for leave to appeal and appeal - Redundancy in the public sector - Relationship between ss 50, 51, 52, 53 and 55 of Public Sector Management Act 1988 and s 106 of Industrial Relations Act 1996 - Whether provisions of Part 5 of Workers Compensation Act 1987 preclude relief being granted under s 106 of Industrial Relations Act 1996 for personal injury - Stress and suffering - Exercise of discretion - Appeal dismissed Industrial Relations Act 1996 s 106 Public Service Act 1979 s 113 s 114 (repealed) LEGISLATION CITED : Public Sector Management Act 1988 s 50 s 51 s 52 s 53 s 55 s 95 (repealed) Supreme Court Act 1970 Supreme Court Rules 1970 Workers Compensation Act 1987 s 11A s 66 s 149 s 151E(3) s 151H Incitec Ltd and anor v Industrial Court of New South Wales and ors (1992) 45 IR 155 Jozef Banas v State of New South Wales [2003] NSWIRComm 317 King v State Bank of New South Wales (No 2) (2002) 126 IR 407 Legal and General Assurance Society Ltd v Stock (1993) 49 IR 464 CASES CITED : Public Service Association of New South Wales v Industrial Commission of New South Wales [1985] 1 NSWLR 627 Public Service Board (NSW) v Public Service Association (NSW), Re Steele [1987] 17 IR 286 Pullen v R & C Products Pty Ltd (1994) 60 IR 183 Stonham v The Speaker of the Legislative Assembly of New South Wales (2000) 97 IR 325 Walker v Industrial Court of New South Wales (1994) 53 IR 121 HEARING DATES: 08/09/2004; 08/10/2004 DATE OF JUDGMENT: 09/03/2004

[63]

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].

[72]

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.

[78]

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.

[81]

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.

[84]

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.

[126]

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.

[127]

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]).

State of New South Wales v Banas

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