State of New South Wales v NSW Nurses' Association

Court of Appeal (NSW)|2012-05-08|Before: Bathurst CJ, Basten JA, Hoeben JA, Boland J, Walton J, Haylen J

The applicant's submissions 18In its written submissions the applicant accepted that the Industrial Court had jurisdiction under s 154 of the Act to make binding declarations of right in relation to the existence and content of a contract between the applicant and the nurses and that the declarations made by the Full Court which were referred to in subpars (a) and (b) of par [5] above fell within this category. Ultimately, senior counsel for the applicant seemed to concede that the declarations referred to in subpars (d) and (e) of par [5], when considered in isolation from subpar (f), were declarations which the Full Court was entitled to make. It is not clear that this concession was that the declarations accurately reflected the legal position that existed as between the applicant and nurses at the time the declarations were made or that they were erroneous but made within jurisdiction. The concession made was inconsistent with the written submissions of the applicant made in pars [26]-[28] so far as they related to declarations in subpars (d) and (e). 19In its written submissions the applicant contended that the declarations in subpars (d), (e) and (f) did not reflect the terms of the contract as declared in par (b) and were bad in law. It submitted that the orders did not in any way reflect the terms of the contract found to exist. In particular, it emphasised that declaration (f) extended the entitlement to payment under the contract to beyond 9 October 2009, which exceeded the limits of the contract found. 20In his submissions at the hearing senior counsel for the applicant emphasised that the terms of the contract required the relevant nurses to terminate employment on 9 October (unless an alternative date was agreed) and that if there was no performance on that date by reason of the conduct of the applicant, that would give the nurses a right to damages but not a right to have a redundancy payment calculated by reference to another termination date. He submitted that the declaration in subpar (f) in effect involved rewriting the contract, submitting that all the nurses who did not terminate employment by the nominated date were entitled to were damages for loss of the bargain.

The first respondent's submissions 21In its written submissions, the first respondent pointed to the fact that it had written to the applicant on 2 October 2009 indicating that it was investigating the position which had arisen by reason of the applicant's withdrawal of the offers of voluntary redundancy and stating that during the period of contractual examination any work performed by nurses did not constitute "a rejection of the contract already entered into". It further pointed to the fact that a number of individual employees wrote saying the continuation in employment was without prejudice to their contractual rights. 22It submitted that the Full Court did nothing more than make declarations as to the existence of a contract and the rights of the parties under that contract. It contended that the majority of the Full Court had decided that in the circumstances where there was a withdrawal of the offer, the nurses were excused from actual performance of the contract and it was sufficient that they were ready to perform. It stated that in these circumstances the contentions of the applicant were no more than a submission that the Full Court misconceived the terms of the contract or erred in its interpretation of rights arising under it. This, it said, was an error within jurisdiction. 23It also contended that the declarations made by the Full Court were correct in any event. It said that it was not disputed that the letters withdrawing the offers of voluntary redundancy amounted to an unequivocal indication by the applicant that it would not perform its part of the bargain by paying redundancy payment if the employees terminated their employment. It said that in those circumstances, the nurses were put to an election and that the majority of the Full Court were correct in finding that the nurses declined to accept the repudiation, kept the contract on foot and were ready to perform their part of the contract by terminating their services but only on receipt of the redundancy package. 24At the hearing counsel for the first respondent submitted that the entitlement to a redundancy payment arose only on termination of employment. He contended that although there had been anticipatory breach of the contract by the applicant, there would be no actual breach until the relevant nurses terminated employment and there was a refusal to pay the redundancy amount. He contended that the contract on its proper construction obliged the applicant to pay the redundancy package irrespective of the date of termination, with the exception of the additional payments said in the letter of 27 August to be payable if employment was terminated within the time nominated by the employer (the additional voluntary redundancy acceptance payment) (see par [2] above). 25The first respondent also submitted that so far as declaration (f) was concerned, even if there was jurisdictional error in making that declaration, the balance of the declarations could be severed.

Consideration 26The parties agreed that the effect of s 179 of the Act was that the decision of the Full Court and that of Marks J could only be quashed if jurisdictional error was established and that certiorari would not be granted for error of law on the face of the record. 27The parties also agreed that s 154 of the Act entitled the Industrial Court to make declarations of right in respect of matters over which the Industrial Court had jurisdiction, including the hearing and determination of industrial matters as defined in s 6 of the Act (s 146(1)(c)). The parties also accepted that the jurisdiction was limited to a declaration of existing rights and could not be used as a substitution for the award-making power in s 10 of the Act or as a substitution for the conciliation and arbitration powers in Ch 3 of the Act. 28In the present case there was no dispute that the Full Court had power to make declarations (a) and (b) (see [5] above). However, it should be noted in this context that the thrust of the applicant's submissions was that the nurses who remained in employment following the withdrawal of the voluntary offer and the passing of their respective termination dates in effect had accepted the repudiation of the contract by the applicant and were left with a claim for damages. If that is correct then it follows that the contract, at least so far as it was executory, had terminated: McDonald v Dennys Lascelles [1933] HCA 25; (1933) 48 CLR 457 at 476-477. The declarations in subpars (a) and (b) (see [5] above) are inconsistent with that principle. However, that point was not taken by the applicant on appeal. 29Declarations (c) was also not challenged. It seems to me that as a matter of power, a Court having jurisdiction such as that conferred by s 154 of the Act (or its equivalent provision in s 75 of the Supreme Court Act 1979), would have power to make such a declaration: Forster v Jododex Australia Pty Limited [1972] HCA 61; (1972) 127 CLR 421 at 435-436, 437-438. Whether it is appropriate to make such a declaration as a matter of discretion may be doubted: Neeta (Epping) Pty Limited v Phillips [1974] HCA 18; (1974) 131 CLR 286 at 307, but that is not in issue in the present case. 30In considering whether the Full Court was in error in making declarations (d)-(f), it is first necessary to have regard to the terms of the contract. The majority of the Full Court assumed as a matter of construction that the agreement reached required payment on the date the nurse in question was made redundant or otherwise left their employment other than for cause (having regard to the terms of declaration (e)), irrespective of whether that date was the nominated date for terminating employment. It is implicit in the Full Court's conclusions that the agreement to terminate employment on the nominated date was not a pre-condition to the entitlement to the redundancy payment but a term, albeit an essential term, which need not be complied with for the purpose of a claim for non-performance whether by damages for breach or wrongful repudiation, or for the purpose of an action for specific performance where, as here, the other party elected to keep the contract on foot: Peter Turnbull supra at 246-247, 250-251; Foran v Wight supra at 394-396, 420-421. On this construction, if the innocent party elected to keep the contract on foot, in those circumstances he or she was absolved from what Brennan J described in Foran v Wight supra at 420 as the temporal obligation (namely, to retire on the nominated dated) but not from the substantive obligation (namely, to accept voluntary redundancy) in order to obtain the benefit of the contractual promise. 31The alternative construction is that the contract made retirement on the nominated date a pre-condition to the entitlement to receive the payment. If that is the correct construction, a failure to retire on that date would mean that the nurse in question who had not fulfilled the pre-condition would not be entitled to receive the redundancy payment. However, in the present case, because the applicant had intimated that performance was useless, the nurse would remain entitled to damage for non-performance: see in particular Foran v Wight supra at 394-396 per Mason J and Peter Turnbull supra at 250-251 per Kitto J. These damages may or may not be equal in amount to the redundancy payment provided for in the contract. 32In the present case I am of the opinion that the latter construction is to be preferred. The agreement does not seem to me to contemplate what might be called a general variation of the conditions of employment but rather an offer of redundancy at a particular time, having regard to the conditions which then existed. That is consistent with the statement of the letter of offers that the positions of the relevant nurses were in excess of the staffing required, the acknowledgement in the acceptance letters of the last day of service and the condition that certain monies were to be refunded if employment was resumed in the NSW Public Sector. 33In these circumstances, in my opinion, the Full Bench erred in its construction of the contract. It follows that declarations (d)-(f) should not have been made, except in respect of those nurses who had retired on the nominated date. 34The question remains whether the error was a jurisdictional error. 35In Kirk v Industrial Relations Commission of NSW [2010] HCA 1; (2010) 239 CLR 531, the High Court reaffirmed, and expanded on, the explanation of jurisdictional error provided by the Court in Craig v South Australia (1995) 184 CLR 163 at 177-180. The Court in Kirk summarised what had been said in Craig as follows (at [72], citations omitted): "[72]First, the Court stated, as a general description of what is jurisdictional error by an inferior court, that an inferior court falls into jurisdictional error 'if it mistakenly asserts or denies the existence of jurisdiction or if it misapprehends or disregards the nature or limits of its functions or powers in a case where it correctly recognises that jurisdiction does exist' (emphasis added). Secondly, the Court pointed out that jurisdictional error 'is at its most obvious where the inferior court purports to act wholly or partly outside the general area of its jurisdiction in the sense of entertaining a matter or making a decision or order of a kind which wholly or partly lies outside the theoretical limits of its functions and powers' (emphasis added). (The reference to 'theoretical limits' should not distract attention from the need to focus upon the limits of the body's functions and powers. Those limits are real and are to be identified from the relevant statute establishing the body and regulating its work.) Thirdly, the Court amplified what was said about an inferior court acting beyond jurisdiction by entertaining a matter outside the limits of the inferior court's functions or powers by giving three examples: (a)the absence of a jurisdictional fact; (b)disregard of a matter that the relevant statute requires be taken to account as a condition of jurisdiction (or the converse case of taking account of a matter required to be ignored); and (c)misconstruction of the relevant statute thereby misconceiving the nature of the function which the inferior court is performing or the extent of its powers in the circumstances of the particular case. The Court said of this last example that 'the line between jurisdictional error and mere error in the exercise of jurisdiction may be particularly difficult to discern' and gave as examples of such difficulties R v Dunphy; Ex parte Maynes, R v Gray; Ex parte Marsh and Public Service Association (SA) v Federated Clerks' Union." 36In Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission and Others [2000] HCA 47; (2000) 203 CLR 194 at [31], Gleeson CJ, Gaudron and Hayne JJ held that the Australian Industrial Relations Commission would only have committed jurisdictional error if it had: " ... misconceived its role or if, in terms used by Jordan CJ in Ex parte Hebburn Ltd; Re Kearsley Shire Council, it 'misunder[stood] the nature of [its] jurisdiction...or 'misconceive[d] its duty' or '[failed] to apply itself to the question which [s 45 of the Act] prescribes' ... or '[misunderstood] the nature of the opinion which it [was] to form'." 37In the present case it seems to me that the Full Court was acting within jurisdiction in determining the contractual rights and liabilities of the parties in relation to the contract entered into by them. The declarations made were based on a particular construction of the contract which I have found to be erroneous. However, no misconception by the Full Court of its role or disregard of the limits of its functions or powers occurred. It did not, as the applicant would contend, seek to rewrite the contract. Rather, it preferred an erroneous construction. This was an error within jurisdiction. 38In Re Australian Workers' Union; Ex parte Construction Forestry Mining and Energy Union [2002] FCAFC 150; (2002) 120 FCR 527, the Full Federal Court held that a misconstruction by the Australian Industrial Relations Commission of the eligibility rules of the relevant organisation would not constitute a jurisdictional error. The Court held (at [48]): "[48]An error in construing the pre-existing eligibility rules and the alteration when ascertaining who were the relevant employees would be an error within jurisdiction at least as long as it was apparent that the decision-maker ... understood the task required by the subsection and addressed the pre-existing eligibility rules and the alternation in determining who were the relevant employees and applied accepted principles of construction in ascertaining the meaning of the rules." 39The same may be said of the approach of the Full Bench in the present case. 40It follows that the application should be dismissed with costs. 41BASTEN JA: I agree that the application should be dismissed with costs, for the reasons given by Bathurst CJ. 42HOEBEN JA: I agree with the orders proposed by Bathurst CJ for the reasons he has expressed.

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The judgment of Marks J 8Marks J held that a contract came into existence between the applicant and the nurses concerned upon acceptance of the offer of voluntary redundancy, on the terms contained in the letters of offer and acceptance. He found that the applicant, by purporting to withdraw its offer of voluntary redundancy, had repudiated its obligations under the contract. He then stated, in reliance on decisions of the High Court in Peter Turnbull & Co Pty Limited v Mundus Trading Co (Australasia) Pty Limited [1954] HCA 25; (1954) 90 CLR 235 and Foran v Wight [1989] HCA 51; (1989) 168 CLR 385, that as the applicant had intimated that performance by the nurses of their part of the contract, namely ceasing employment, would be useless, they were absolved from such performance and were entitled to regard the contract as continuing on foot. 9In that context Marks J held he had jurisdiction to make declarations under s 154 of the Act. He held that the jurisdiction extended to making declarations in respect of the functions of the Industrial Court, which included industrial disputes and that the issue in question was an industrial dispute. 10In those circumstances Marks J reached the following conclusions (at [78]-[79]): "[78]There is no reason why, in my opinion, the Commission could not make a recommendation that the voluntary redundancy package be paid to the relevant employees upon termination of employment or give a direction to this effect as contemplated by s 136(1)(a)... [79]... The Court is empowered, if appropriate, to make binding declarations of right in relation to whether, in all the circumstances, the respondent should be required to pay to the relevant employees a voluntary redundancy package upon termination of their employment with the respondent. Expressed in this way, these proceedings do not concern the establishment of contractual agreements, the establishment of minimum conditions of employment or the circumstances in which redundancy payments might otherwise become payable, as asserted by the respondent. Nor is the Court engaged in a process in which it is ordering the termination of employment of employees or granting redundancy payments to persons still in employment whose employment positions are not redundant, as contended for by the respondent." 11Although his Honour had treated the matter as a contractual dispute in those portions of his judgment which led up to the paragraphs I have cited above, it is by no means clear whether or not in the paragraphs cited he was relying on the contract to reach his conclusion or on the Industrial Court's general power to resolve industrial disputes. This matter need not be resolved. The declarations made by Marks J having been set aside by the Full Court, it is only necessary to consider whether his declarations revealed jurisdictional error if those replacing them, made by the Full Court, are set aside. Because I have concluded that the declarations made by the Full Court should not be set aside, those made by Marks J will not be revived.

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