Award provisions do not become contractual terms and cannot found an action for damages for breach of contract or breach of statutory duty. Remedies for breach of award provisions are confined to those provided by the statute.
Later decisions that cite Byrne v Australian Airlines Ltd
Decisions cited by Byrne v Australian Airlines Ltd
GEORGE ALBERT BYRNE and GEORGE MORTIMER FREW v AUSTRALIAN AIRLINES LIMITED
No. S132 of 1994 and No. S133 of 1994
FC 95/037
Number of pages - 52
[1995] HCA 24; (1995) 131 ALR 422
(1995) 69 ALJR 797
(1995) 185 CLR 410
HIGH COURT OF AUSTRALIA
BRENNAN CJ(1), DAWSON(1), TOOHEY(1), McHUGH(2) AND GUMMOW(2) JJ
HEARING
CANBERRA, 2 and 3 May 1995ORDER
1. Appeal dismissed.DECISION
BRENNAN CJ, DAWSON AND TOOHEY JJ. The appellants were employed by the respondent as baggage handlers at Sydney airport. On 28 March 1989, they were dismissed from their employment for pilfering. They sought relief in the Federal Court, claiming that their dismissal was harsh, unjust or unreasonable and, for that reason, in breach of cl 11(a) of the Transport Workers (Airlines) Award 1988. That clause provided:
2. The trial judge found that the respondent's conduct in terminating the
appellants' employment was not harsh, unjust or unreasonable
and dismissed the
claims. On appeal, the Full Court found to the contrary, but held that the
appellants were not entitled to damages
for breach of contract or breach of
statutory duty(1). The matters were remitted to the trial judge to deal with
the claims in relation
to penalty. The appellants now appeal to this Court
against the rejection by the Full Court of their claims for damages.
3. The appellants' right to damages for breach of contract arose because, it
was said, cl 11(a) became a term of the contract of
employment. According to
the appellants' argument, this occurred, first, because the provision was
"imported" into the contract
by force of the award, independently of the
intention of the parties. Next, the argument ran, such a term was an implied
term of
the agreement between parties. Then, it was said, cl 11(a) embodied a
"crystallised custom" of the industry in which the parties
were engaged and
for that reason became a term of the contract. The appellants also claimed
damages for breach of a statutory duty
said to be imposed by cl 11(a). The
appellants further argued that even if cl 11(a) did not become a term of the
contract, the purported
termination of their employment was in breach of that
clause and for that reason was illegal and void. The consequence was, it was
said, that the contract was left on foot, but repudiated by the respondent so
that the appellants were able to accept the repudiation
and claim damages for
its breach.
"Imported" Term
4. In putting the first argument the appellants relied upon Mallinson v
Scottish Australian Investment Co Ltd(2). In that case,
an employee sought to
recover in the New South Wales District Court the difference between the award
rate which bound his employer
and the lesser amount which he had been paid.
This Court held that the District Court had jurisdiction to entertain the
claim, which
was by way of action of debt pursuant to an obligation created by
statute. The Court said(3):
"The new right created in the employee by the (Conciliation and Arbitration
Act 1904 (Cth)) operating on the award made under it
is to receive from his
employer wages at a rate not less than the minimum rate fixed by the award.
This is apparent from the terms
of sec 40(1)(b) of the Act, which provides
that the Court by its award may prescribe a minimum rate of 'wages or
remuneration.' It
is important to observe that the alteration which the
(Conciliation and Arbitration) Court is thus empowered to make in the rights
and liabilities of the parties is not an alteration in the character of the
payment but in its amount. The amount is still to be
paid as 'wages or
remuneration,' and this necessarily imports that the employee shall have a
right to receive, and if necessary to
recover, from the employer payment of
the amount calculated according to the rate fixed by the award. The right
conferred being
a right to receive from a designated person a liquidated sum
of money, the question is whether the Act contains provision forbidding
the
recovery by appropriate legal proceedings of the amount payable."
The Court went on to determine that the provision of a penalty for breach of
the award and the power given to the court imposing
the penalty to order it to
be paid to the employee were not inconsistent with a right of recovery in a
civil action.
5. There is, in our view, nothing in Mallinson to suggest that the award's
prescription of a minimum rate of pay became a term of
the contract of
employment. The award effected an alteration in the rights and obligations of
the parties to the contract, but it
did so by force of the Conciliation and
Arbitration Act. The debt which arose as a consequence was a debt which owed
its origin
to the statute and not to the contract. That is why the Court
examined the Conciliation and Arbitration Act in order to determine
whether it
contained anything inconsistent with recovery by way of civil action. It is
also why the Court referred to Groves v Wimborne(4),
a case which involved a
cause of action for damages for breach of statutory duty. A similar
examination of the statute was undertaken
in that case to ascertain whether
the penalty provided was inconsistent with an action for damages for breach of
the statutory duty.
6. In Amalgamated Collieries of WA Ltd v True(5), the respondent was employed
by the appellant as a miner. The contract of employment,
though oral,
contained an express term that the respondent be paid at tonnage rates, and
not at day rates, upon the terms and conditions
of an award made under the
Industrial Arbitration Act 1912 (WA). The respondent sued for payment at full
tonnage rates. In this
Court it was held by a majority that his action was
barred by s 176 of that Act, which declared that he was entitled to payment of
an amount in accordance with the award, but provided that any action to
recover such amount must be commenced within twelve months
from the time when
the cause of action arose. The decision was reversed in the Privy Council(6)
where it was held that the respondent
was able to sue upon the contract
without resort to s 176 and so was not bound by the limitation which it
imposed.
7. The appellants relied upon the observations of Dixon J, who was in the
majority in this Court, in the following passage(7):
"The right to payment of award wages is really a term imported by statute
into the contract of employment, and imported independently
of the intention
of the parties. ... The distinction between express promise and obligation
imputed by statute relates only to
the juristic source of the obligation. It
does not touch the character of the sum sued for nor the purpose of the
proceeding."
8. However, we do not understand Dixon J to be saying in that passage that "a
term imported by statute into the contract of employment"
loses its statutory
character and becomes incorporated in the contract as one of its terms. On
the contrary, he recognises the distinction
between an obligation originating
in a statute and an obligation arising from a contract. In his view, the
distinction was not of
importance in that case, but it is crucial in the
present one. No doubt there are terms which are incorporated by statute in
contracts
of a particular kind so that the ordinary remedies for breach of
contract are available in relation to them(8). And apart from statute,
a term
may be implied by law as an incident of a particular class of contract(9), but
we do not understand the appellants to be submitting
that any such implication
arises here. They rely upon the statutory force given to the award and say
that, because the relationship
between the parties is contractual, the
provisions of the award - or at least some of them including cl 11(a) in this
case - become
terms of the contract enforceable by the use of contractual
remedies as well as the remedies provided by statute.
9. A right to the payment of award rates is imported by statute into the
employment relationship, which is contractual in origin,
and, express promise
apart, it is only in that sense that it can be said that award rates are
imported into the contract of employment.
The award regulates what would
otherwise be governed by the contract. But award rates are imported as a
statutory right imposing
a statutory obligation to pay them. The importation
of the statutory right into the employment relationship does not change the
character of the right. As Latham CJ points out in his judgment in
Amalgamated Collieries of WA Ltd v True(10), the legal relations
between the
parties are in that situation determined in part by the contract and in part
by the award. And as the judgment of the
Privy Council in that case suggests,
a provision in an award may also be made a term of the contract by agreement
between the parties,
but that is only to emphasise the distinction between an
obligation imported by statute and one arising by agreement.
10. This distinction was not adverted to in a passage in R v Gough; Ex parte
Meat and Allied Trades Federation of Australia(11)
where, in speaking of a
clause in an award relating to the termination of employment, Windeyer J
said:
"the first paragraph of the clause would create new rights as between master
and servant superimposed on the common law incidents
of their relationship.
It seems therefore that an action for wrongful dismissal or for a refusal of
employment might be brought at
common law by an employee based upon a
non-compliance with the clause. Certainly proceedings could be instituted in
the Industrial
Court, or proceedings for a penalty taken in one of the courts
mentioned in s 119 of the Act."
However, that passage is obiter and the view which is expressed is somewhat
tentative. Windeyer J does not specify the basis upon
which any action at
common law might be brought. In particular, he does not appear to have turned
his mind to the way, if any, in
which a term of the contract of employment
corresponding to the clause of the award might arise such that its breach
would found
an action for damages. The correct view, in our opinion, is that
reflected by the remarks of Isaacs J in Josephson v Walker(12),
a case in
which an employee claimed the unpaid balance of wages due under an award.
Isaacs J said(13):
"And the unpaid balance is claimed as due by virtue, not of a common law
contract, but of the statutory obligation which subsists
notwithstanding any
agreement to the contrary - no man being capable under the Statute of
contracting himself out of his rights or
obligations in this respect. The
right claimed is a new right. It is a right which was unknown before to the
law: a right to receive
from an employer more than was bargained for."
11. In a system of industrial regulation where some, but not all, of the
incidents of an employment relationship are determined
by award, it is plainly
unnecessary that the contract of employment should provide for those matters
already covered by the award.
The contract may provide additional benefits,
but cannot derogate from the terms and conditions imposed by the award(14)
and, as
we have said, the award operates with statutory force to secure those
terms and conditions. Neither from the point of view of the
employer nor the
employee is there any need to convert those statutory rights and obligations
to contractual rights and obligations.
There is, therefore, an insuperable
obstacle in the way of the appellants' second argument that the terms of an
award such as cl
11(a) are implied terms of the contract of employment.
Implied Term
12. The implication which the appellants seek to make is based upon the
presumed or imputed intention of the parties. In that context,
the remarks of
the majority in the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire
of Hastings(15) are frequently called
in aid: "(1) (the implication) must be
reasonable and equitable; (2) it must be necessary to give business efficacy
to the contract,
so that no term will be implied if the contract is effective
without it; (3) it must be so obvious that 'it goes without saying';
(4) it
must be capable of clear expression; (5) it must not contradict any express
term of the contract". In laying down those criteria,
it was recognised that
there was a degree of overlap. Further, as Deane J has observed(16), the
cases in which the criteria in BP
Refinery (Westernport) Pty Ltd v Shire of
Hastings have been applied in this Court are cases in which there was a formal
contract,
complete on its face. He pointed out that a rigid approach should
be avoided in cases, such as the present, where there is no formal
contract.
In those cases the actual terms of the contract must first be inferred before
any question of implication arises. That
is to say, it is necessary to arrive
at some conclusion as to the actual intention of the parties before
considering any presumed
or imputed intention. And the test to be then
applied was in a later case formulated by Deane J in these terms(17):
"The most that can be said consistently with the need for some degree of
flexibility is that, in a case where it is apparent that
the parties have not
attempted to spell out the full terms of their contract, a court should imply
a term by reference to the imputed
intention of the parties if, but only if,
it can be seen that the implication of the particular term is necessary for
the reasonable
or effective operation of a contract of that nature in the
circumstances of the case. That general statement of principle is subject
to
the qualification that a term may be implied in a contract by established
mercantile usage or professional practice or by a past
course of dealing
between the parties."
13. That is, we think, the appropriate test to apply in this case and the
answer must be that it is not necessary to imply a term
in the form of cl
11(a) for the reasonable or effective operation of the contract of employment
in all the circumstances. In the
absence of any provision in the award and of
any express provision in the contract of employment the law would regard it as
a legal
incident of the contract that it should be terminable upon reasonable
notice or summarily for serious breach. Clause 11(a) may alter
that position,
but there is no reason to presume that any alteration was intended by the
parties to form a term of their contract,
nor any reason to impute such an
intention to them. Plainly, the fact that the inclusion of such a term would,
if it were breached,
support an action for damages by the employee is no
ground for saying that the term is necessary for the reasonable or effective
operation of the contract. The contract is capable of operating reasonably
and effectively in the absence of such a term and in
the presence of an award
provision offering limited remedies in the event of breach. The argument that
cl 11(a) constituted an implied
term of the contract of employment should be
rejected.
"Crystallised Custom"
14. The term "crystallised custom", upon which the appellants base their
third argument, appears to have been coined by Professor
Otto Kahn-Freund(18)
to explain how, in the United Kingdom, the terms of collective bargains
between employers and unions might become
terms of individual contracts of
employment between employers and employees. The legal basis of the theory
propounded by Kahn-Freund
must lie in the recognition by the law of contract
of implied terms based upon custom or usage. It is there that the appellants'
argument strikes immediate difficulty. Whatever may, as a matter of implied
agreement, flow from collective bargains into individual
contracts of
employment, a term of an award derives its force, not from agreement between
the parties, but from statute. That being
so, if a contract of employment is
made in reliance upon a provision of an award, it is not a reliance which
requires the provision
to be made a term of the contract because it already
has statutory force. It is not something "so well known and acquiesced in
that
everyone making a contract in that situation can reasonably be presumed
to have imported that term into the contract"(19). The existence
of a custom
or usage that will justify the implication of a term into a contract is a
question of fact and there must be evidence
of its acceptance such that it is
"reasonable to assume that the parties contracted on the basis of the custom,
and that it is therefore
reasonable to import such a term into the
contract"(20). Just as there can be no implied or presumed intention of the
parties in
this case to include a provision of an award as a term of their
contracts of employment, there can be no assumption that they contracted
upon
the basis of the inclusion of an award provision. There would be no need for
them to do so because the award operates of its
own force. Whatever may be
the situation with the terms of collective bargains, which at least involve a
measure of agreement albeit
not with individual employees, there can in our
view be no basis for treating a provision of an award as a "crystallised
custom"
and implying a term to its effect into a contract of employment.
Breach of Statutory Duty
15. Nor do we think that the appellants succeed in establishing the existence
of a cause of action for damages for breach of statutory
duty consequent upon
a breach of cl 11(a). Clearly Mallinson v Scottish Australian Investment Co
Ltd(21) is no authority for the
existence of such a cause of action. In that
case the nature of the cause of action which was held to arise was that of
debt, the
obligation giving rise to the debt being statutorily created. Debt
is a form of action for a liquidated sum and not for damages(22).
16. A cause of action for damages for breach of statutory duty arises where a
statute which imposes an obligation for the protection
or benefit of a
particular class of persons is, upon its proper construction, intended to
provide a ground of civil liability when
the breach of the obligation causes
injury or damage of a kind against which the statute was designed to afford
protection(23).
The question is one of the construction of the statute,
although as Dixon J pointed out in O'Connor v SP Bray Ltd(24), an examination
of the statute "will rarely yield a necessary implication positively giving a
civil remedy". One generalisation that can be made
is that where the persons
upon whom the statutory obligation is imposed are under an existing common law
duty of care towards the
persons whom the statute is intended to benefit or
protect, the statutory prescription of a higher or more specific standard of
care
may, in the absence of any indication of a contrary intention, properly
be construed as creating a private right(25). Thus it is
that Factories and
Shops Acts and other legislation designed to protect the health and safety of
employees in the workplace have
been held to impose duties the breach of which
gives rise to a right to sue for damages(26).
17. The legislation in this case, the Industrial Relations Act 1988 as it
stood at the relevant time, is of a very different kind.
There have been
significant amendments to the Act in the meantime,
but it is convenient here
to speak of it (as it existed) in the
present tense. The principal object of
the Act is expressed in s
3 to be the promotion of industrial harmony and
co-operation among
the parties involved in industrial relations in Australia
by the
doing of a number of things which include the provision of a framework
for the prevention and settlement of industrial disputes by
conciliation and
arbitration in a manner which minimises the disruptive
effects of industrial
disputes on the Australian community
as a whole. The function of making
awards is vested in the Industrial
Relations Commission by s 111 and in
exercising that function
the Commission is required under s 90 to take into
account the public
interest and, for that purpose, to have regard to the
objects
of the Act and the likely effects on the economy of any award it is
considering or proposing to make, with special reference to the
likely effects
on the level of employment and on inflation. The
Act does not prescribe the
content of the awards which the Commission
is empowered to make in the
settlement of industrial disputes.
18. Having regard to the public aims of the legislation, its scope and
purpose is not such as to disclose any intention to benefit
or protect
employees or any other class of persons by conferring on them a right of
action at common law for breach of an award obligation.
However, in pursuit
of those aims the Act does provide for the enforcement of awards thereby
giving them statutory force. The appellants'
argument tended to focus upon
the award itself rather than the Act. But an award is not a statute(27) and if
a duty imposed by an
award is to be regarded as a statutory duty enforceable
by way of a civil action for damages, then the necessary intention that it
should be so regarded must ultimately be found in the Act and not the award.
The Act discloses no such intention and, indeed, cannot
do so in the absence
of any specification of the duties which might be imposed by an award. On the
other hand, the Act can and does
disclose a contrary intention in providing a
means for the enforcement of awards which does not contemplate the existence
of private
rights enforceable by way of an action for damages.
19. Section 178 imposes a penalty for the breach of an award which might be
sued for and recovered by, amongst others, a party to
the award or a member of
an organisation who is affected by the breach. Under s 356 a court that
imposes a penalty may order that
it be paid to a particular organisation or
person. Section 178 also provides that where, in a proceeding against an
employer under
the section, it appears to the court concerned that an employee
of the employer has not been paid an amount to which the employee
is entitled
under an award, the court may order the employer to pay to the employee the
amount of the underpayment. And s 179 provides
that an employee entitled to
the benefit of an award may sue for wages and other payments due under it.
The maximum penalty which
may be imposed for a breach of an award is the
relatively modest sum of $1,000 which, when regard is had to the fact that a
court
may order it to be paid to a member of an organisation affected by the
breach, is plainly inconsistent with a right to unlimited
compensation by way
of damages. So also is the express provision for the recovery of underpayments
and of wages under awards inconsistent
with a right to sue for damages for
breach of an award.
20. Even if it were permissible (and we do not think that it is) to seek the
creation of a statutory duty giving rise to private
rights in the award itself
without regard to the Act, we do not think that as a matter of construction
they would emerge. Awards
are made in settlement of industrial disputes and
represent the degree of compromise necessary to effect such settlements. They
are required to be made having regard to the objects of the Act which, as we
have observed, extend beyond the interests of the parties
to the dispute. The
obligations which awards impose are various and are not wholly for the
protection or benefit of any one class
of persons, be they employers or
employees or the organisations which represent them. In those circumstances,
as a matter of construction,
awards cannot in our view be regarded as
conferring private rights enforceable by way of an action for damages. When
regard is had
to the enforcement mechanism provided by the Act, the situation
is even plainer.
Automatic Fire Sprinklers Pty Ltd v Watson(28)
21. The appellants' final argument was of a different kind. They contended
that, even if they had no claim for damages based upon
the breach of cl 11(a)
as a term of their contracts of employment or as imposing a statutory duty,
nevertheless the purported termination
of those contracts, being in breach of
cl 11(a), was illegal and void. The appellants were entitled in those
circumstances, so the
argument ran, to treat their dismissal as a repudiation
of the contracts, to accept it as putting an end to them and to sue for
damages.
In support of that argument, the appellants referred to the decision
of this Court in Automatic Fire Sprinklers Pty Ltd v Watson.
22. In that case, a war-time regulation(29) provided that an employer
carrying on a protected undertaking should not, without the
permission in
writing of the Director-General of Man Power or of a person authorised by him,
terminate the employment of a person
employed in the undertaking. The
appellants employed the respondent in such an undertaking and purported to
dismiss him without
obtaining the permission of the Director-General.
Contravention of the regulation was an offence against the National Security
Act
1939-1943 (Cth). The Court (Rich, Dixon, McTiernan and Williams JJ;
Latham CJ and Starke J dissenting) held that the purported dismissal
was
ineffectual in law to terminate the respondent's employment. But the decision
of the majority was arrived at by the application
of two English decisions(30)
concerning legislation which was thought not to be materially different from
the Australian regulation.
Dixon J said(31):
"I am afraid that, but for the guidance of authority, I should have regarded
the Regulations as attempting to prevent the unpermitted
discharge of a man
from employment only by penalising it and not as making the relationship
legally infrangible. But I think that
we should apply the two decisions I
have mentioned to the Man Power Regulations."
23. In speaking of "the relationship", Dixon J had in mind the relationship
of employer and employee as distinct from the contract
of employment. It does
not appear to have been doubted in this country that a wrongful dismissal
terminates the employment relationship
notwithstanding that the contract of
employment may continue until the employee accepts the repudiation constituted
by the wrongful
dismissal and puts an end to the contract. That was accepted
by both the majority and minority in Automatic Fire Sprinklers Pty
Ltd v
Watson(32). As Latham CJ said(33):
"An employer terminates the employment of a servant when he dismisses him,
though, as I say hereafter, such a dismissal does not
put an end to the
contract between the parties. An argument that a dismissal because wrongful
was a nullity was raised and rejected
in both Williamson's Case(34) and Lucy's
Case(35)."
And as Dixon J said(36):
"there is nothing in the general law preventing the wrongful dismissal of a
servant operating to discharge him from service, notwithstanding
that he
declines to accept the dismissal as absolving him from further performance but
keeps the contract open and remains ready
and willing to serve".
24. In England, the position was for a time not so clear, although the view
taken in Australia appears now to be accepted there(37).
Of course, even if
an employee who is wrongfully dismissed chooses to keep the contract of
employment on foot, he or she cannot
claim remuneration in respect of any
period after the wrongful dismissal because the right to receive remuneration
for services is
dependent upon the services having been rendered(38). The
employee is also under a duty to mitigate any damage(39). Moreover, a
court
will not, save in exceptional circumstances, order specific performance of a
contract of personal service. The possible continuation
of the contract of
employment after a wrongful dismissal will, therefore, ordinarily be of no
real significance(40) as it will for
all practical purposes be at an end.
25. There is no reason to doubt that in the present case the dismissal of the
appellants by the respondent rightly or wrongly put
an end to the employment
relationship. In Automatic Fire Sprinklers Pty Ltd v Watson the majority felt
constrained by authority
to say that the regulation in question prevented that
from happening. We are bound to say that we prefer the reasoning of the
minority
to the contrary on the point. As Latham CJ said(41): "the fact that
a statute prohibits the doing of an act under a penalty does
not show that the
act cannot be done". Indeed, as Mason J said in Yango Pastoral Company Pty
Ltd v First Chicago Australia Ltd(42):
"There is much to be said for the view that once a statutory penalty has
been provided for an offence the rule (role?) of the common
law in determining
the legal consequences of commission of the offence is thereby diminished".
Short of a law deeming an employment relationship to exist when it does not,
the question whether or not it continues to exist seems
to us to be a question
of fact.
26. But even if the decision of the majority in Automatic Fire Sprinklers Pty
Ltd v Watson be correct, there is sufficient distinction
between the
regulation in that case and cl 11(a) to reach a different conclusion here.
The regulation directly prohibited the termination
of the employment without
the required permission. Clause 11(a), on the other hand, merely provides
that the termination shall not
be harsh, unjust or unreasonable. That does
not suggest that failure to observe the requirements of the clause renders a
de facto
termination a nullity. Moreover, cl 11(f) makes cl 41 of the award
applicable. Clause 41 provides a procedure to be followed for
the settlement
of disputes or claims arising under cl 11. Again, that does not suggest that
termination of employment in breach
of cl 11(a) is to be regarded as a
nullity. In our view, cl 11(a) cannot be read in the way in which the
majority in Automatic Fire
Sprinklers Pty Ltd v Watson read the regulation in
that case, which was to render the termination of employment in breach of its
terms a nullity.
27. Termination of employment in breach of cl 11(a) is, of course, a breach
of the award, but since cl 11(a) is not, unless made
so, a term of the
contract, it is not a breach of contract. It is a different question whether
a dismissal, if wrongful, otherwise
amounts to a breach of contract sounding
in damages. In the absence of anything to the contrary and putting to one
side the provision
in the award for notice, at common law a contract of
employment for no set term is to be regarded as containing an implied term
that
the employer give reasonable notice of termination except in
circumstances justifying summary dismissal(43). Clause 11(d) of the
award
prescribes periods of notice varying according to the length of service and
the age of the employee. If that provision were
not to preclude the
implication of a term that reasonable notice be given, it might provide
evidence of what constitutes reasonable
notice at common law. Upon the basis
of such an implied term, the appellants might possibly have been able to mount
a claim for
damages for wrongful dismissal because of the failure to give them
the appropriate notice(44). But it is unnecessary for the purposes
of these
appeals to determine the point.
28. The claim which the appellants advance is not a claim for wrongful
dismissal based upon a failure to give reasonable notice.
It is a claim for
damages for loss of employment for, it would seem, an indefinite period, based
upon the inability of their employer,
because of cl 11(a), to terminate the
employment relationship. There is, of course, an immediate difficulty because
the claim is
also based upon the appellants' acceptance of the respondent's
repudiation of the contract and that would have brought the contract
to an
end. However, for the reasons which we have given, cl 11(a) did not preclude
the termination of that relationship even if the
termination amounted to a
breach of the clause, and the claim for damages upon that basis must fail.
Cross-Appeals
29. In the Full Court a majority held that the termination of the appellants'
employment was unreasonable because they had been
denied procedural fairness.
The majority were of the view that there was undue delay in bringing to the
appellants' attention a video
said to be evidence of the involvement of the
appellants in pilfering. They were also of the view that the nature of the
appellants'
alleged misconduct was inadequately specified and that another
member of the appellants' loading team ought to have been interviewed.
In
reaching their conclusion, the majority did not consider whether the trial
judge was correct or in error in reaching his decision
that there was
sufficient evidence to establish the appellants' misconduct.
30. The respondent seeks special leave to cross-appeal against the finding in
the Full Court that the dismissal of the appellants
was unreasonable. The
ground advanced by the respondent is that, whilst the adoption of an unfair
procedure may render a dismissal
harsh, unjust or unreasonable, whether it
does so or not must depend upon the whole of the circumstances. The
respondent contends
that, having failed to consider whether the evidence
established that the appellants had been involved in pilfering, the majority
in the Full Court were in no position to determine whether the procedure
adopted resulted in their dismissal being unreasonable.
In our view that
contention is plainly correct.
31. Save for the prescription of periods of notice, cl 11 does not require
the adoption of any particular procedure for the dismissal
of an employee.
However, it is clear that the use of an unfair procedure may result in a
dismissal being harsh, unjust or unreasonable.
For example, the failure to
afford an employee the opportunity to explain apparent misconduct where there
is an innocent explanation
available would result in the dismissal of the
employee being in breach of cl 11(a)(45). On the other hand, if an employer
were
to observe the actual misconduct of an employee in circumstances which
allowed no innocent explanation, a summary dismissal might
not be in breach of
cl 11(a). And facts which existed at the time of a dismissal, but which come
to light only subsequently, might
justify the dismissal when otherwise it
would be harsh, unjust or unreasonable(46).
32. It was not, therefore, a permissible approach for the Full Court to reach
a conclusion adverse to the respondent based upon
the procedure employed in
dismissing the appellants without considering whether the trial judge was
correct in reaching the conclusion
that there was sufficient evidence to
establish that the appellants were involved in the misconduct alleged against
them. Special
leave to cross-appeal should be granted and each of the
cross-appeals allowed. The matters should be remitted to a Full Court of
the
Federal Court to be reconsidered in the light of this Court's reasons. The
appeals should be dismissed.
McHUGH AND GUMMOW JJ These appeals, which are brought from the Full Court of the Federal Court of Australia, were heard together.
2. Each appellant had been employed by the respondent to handle, load, stow
and unload cargo and baggage at Sydney airport. The
appellant in the first
matter, Mr Byrne, had been employed by the respondent for about 20 years and
the appellant in the second matter,
Mr Frew, had been employed for about 25
years. They were dismissed on 28 March 1989.
3. The appellants had been paid wages by the respondent pursuant to the
Transport Workers (Airlines) Award 1988 ("the Award") and
its predecessors.
The earlier awards had been made pursuant to the Conciliation and Arbitration
Act 1904 (Cth) ("the 1904 Act").
The Award also was made whilst this statute
was still in force. With the commencement on 1 March 1989 of the Industrial
Relations
Act 1988 (Cth) ("the 1988 Act"), the Award continued as if it had
been made under the 1988 Act. This result was achieved by s 7 of the
Industrial Relations (Consequential Provisions) Act 1988 (Cth). Clause 11(a)
had been inserted in the Award as a sequel to the Termination, Change and
Redundancy Case(47), decided by the
Australian Conciliation and Arbitration
Commission on 2 August 1984.
4. In the Federal Court there were no findings as to any express terms of the
relevant contracts of employment, save what is implicit
in the general
findings of fact. The appeal was argued on the footing that, except for the
term contended for by the appellants,
the contracts had those incidents
otherwise implied by the general law.
The issues in the Federal Court
5. After their dismissal, both Mr Byrne and Mr Frew commenced proceedings in
the Federal Court and their applications were heard
together. They sought
imposition of a penalty pursuant to s 178 of the 1988 Act and an order under s
356 of the 1988 Act that the
penalty be paid to them rather than into the
Consolidated Revenue Fund.
6. The appellants asserted that the termination of their employment was in
breach of a term of the Award identified by them as "Cl
11(a)". Clause 11 is
headed "TERMINATION OF EMPLOYMENT" and sub-cll (a) and (b) are headed "Unfair
dismissals". The text of sub-cll
(a) and (b) is as follows:
"(a) Termination of employment by an employer shall not be harsh, unjust or
unreasonable.
For the purposes of this clause, termination of employment shall include
terminations with or without notice.
(b) Without limiting the above, except where a distinction, exclusion or
preference is based on the inherent requirements of a particular
position,
termination on the ground of race, colour, sex, marital status, family
responsibilities, pregnancy, religion, political
opinion, national extraction
and social origin shall constitute a harsh, unjust or unreasonable termination
of employment."
It will be necessary later in these reasons to refer to other provisions of
the Award.
7. The appellants also sought damages on claims brought in the accrued
jurisdiction of the Federal Court. Each appellant contended
that cl 11(a) had
become a term of his contract and that the termination of his employment was
in breach of contract because it was
"harsh and/or unjust and/or
unreasonable". Each appellant further claimed that (i) in terminating the
contract of employment, the
respondent had been in breach of a statutory duty
created by the 1988 Act which sounded in damages for contravention of cl 11(a)
and (ii) cl 11(a) rendered void at general law the purported termination by
the respondent of the contracts of employment with the
appellants, giving rise
to actions for breach of contract at the suit of the appellants. There was no
common law claim for wrongful
dismissal.
8. At no stage in the litigation has anything turned upon the circumstance
that the employment of the appellants antedated the commencement
of the Award
and the insertion of cl 11(a). In so far as the appellants submit that cl
11(a) had contractual force, this is on the
apparent footing that it applied
as a variation of pre-existing terms of their employment.
9. The appellants submitted that the requirement that termination be not
harsh, unjust or unreasonable carried with it an obligation
on the part of the
respondent to afford them procedural fairness by giving them an opportunity to
be heard in reply to any charges
put against them, before terminating their
services. They contended that the failure to observe that requirement had the
result
that the termination was harsh, unjust or unreasonable with the
consequence that the dismissal was wrongful, thereby entitling the
appellants
to damages.
10. The primary judge (Hill J) concluded that the appellants had not
succeeded in showing that the termination of their employment
was harsh,
unjust or unreasonable. It followed that their claims failed and that it was
unnecessary to reach any considered conclusion
on the questions of penalty and
damages. The applications were dismissed.
11. The appeals to the Full Court were heard by a five member Bench(48). It
was held by the whole Court that the orders of the primary
judge dismissing
the applications should be set aside and in place thereof a declaration be
made that, in terminating the employment
of the appellants, the respondent had
acted in breach of the provisions of cl 11(a). The proceedings were remitted
for the purpose
of dealing with any claim by the appellants for penalty for
breach of the Award and any other issue in connection therewith.
12. However, by majority (Keely, Beaumont and Heerey JJ; Black CJ and Gray J
dissenting), the Full Court held that there was no
implied term in the
contract of employment which reproduced cl 11(a). That question involved
distinct sub-issues. Keely, Beaumont
and Heerey JJ (Gray J dissenting) held
that the terms of cl 11(a) were not implied in the terms of employment as a
matter of business
efficacy. Black CJ would have returned the matters to the
trial judge to make findings of fact relevant to the determination of
whether
such an implication ad hoc should be found. Black CJ, Keely, Beaumont and
Heerey JJ (Gray J dissenting) also held that the
terms of the clause were not
imported into the contracts as a matter of law and independently of the
intentions of the parties.
13. In reaching that latter conclusion, the majority did not follow the
decision of the Full Court in Gregory v Philip Morris Ltd(49).
In that case,
the appellant contended that there was imported into the terms of his
employment contract a provision inserted in
1985 into the Metal Industry Award
1984. This provision was in the same terms as cl 11(a) and (b) of the Award
which applies in
this case. In their joint judgment, Wilcox and Ryan JJ(50)
said that, whilst there was no evidence of any express agreement for
the
incorporation of the terms of the award, there were two bases upon which it
might be said that the contract of employment included
the terms of the
relevant award, as in force from time to time. One such basis was that an
agreement to that effect ought to be
implied as necessary to give business
efficacy to the contract. Their Honours also said:
"It has long been recognized that an employee is entitled to sue at law to
recover the moneys payable to him or her under an award,
notwithstanding that
no independent express agreement has been made about those moneys: see
Mallinson v Scottish Australian Investment
Co Ltd(51). As we understand it,
that is because the award provision imports a term into the contract of
employment independently
of the intention of the parties: see Amalgamated
Collieries of WA Ltd v True(52). Similarly, Windeyer J in R v Gough; Ex parte
Meat and Allied Trades Federation of Australia(53) described the award
provision as operating to 'create new rights as between master
and servant
superimposed on the common law incidents of their relationship'."
14. In their joint judgment in the present case, Beaumont and Heerey JJ(54)
made a detailed analysis of the three authorities referred
to in this passage.
Their Honours concluded that, properly understood in the relevant statutory
contexts, those authorities did not
support any such general proposition. The
authorities also were discussed by Black CJ, who reached the same
conclusion(55). In
this Court, the appellants did not seriously dispute the
accuracy of these analyses. It is sufficient to say here that what Black
CJ,
Beaumont and Heerey JJ said upon the matter was correct. However, before this
Court the appellants still pressed the general
proposition as to implication
as a matter of law independently of the intentions of the parties.
15. Two further holdings of the Full Court are important for present
purposes. The first of these (Keely, Beaumont and Heerey JJ;
Black CJ and Gray
J dissenting) was that, on its proper construction, the Award did not make the
contract of employment legally "infrangible",
or unbreakable. Their Honours
accordingly rejected the appellants' submission that the purported termination
by the respondent was
void, thereby entitling the appellants to accept the
repudiation and sue for damages. This issue involved consideration of
Automatic
Fire Sprinklers Pty Ltd v Watson(56).
16. Finally, Keely, Beaumont and Heerey JJ dealt with the statutory duties
issue. They rejected the submission that, upon its proper
construction, the
1988 Act conferred a right to damages for breach of the terms of an award.
The other members of the Full Court
did not consider this issue.
17. The result in the Full Court was that, whilst the appellants succeeded in
their claim that the termination of their employment
had been in breach of the
Award, they failed in their claims in the accrued jurisdiction for damages.
18. It should be noted that the majority in the Full Court decided that the
termination of the employment had been in contravention
of the Award on the
footing that the dismissal procedure followed by the respondent had been
unreasonable. The employees also had
submitted that the employer had acted
unreasonably in what their Honours described as "a substantive sense"(57).
However, they expressed
no opinion on that aspect of the matter. In
particular, their Honours did not enter upon the challenge to the findings of
fact made
by the primary judge which had been adverse to the appellants. Hill
J had considered himself bound by Gregory v Philip Morris Ltd
to hold that cl
11(a) was a term of the contract of employment but had held, on the facts,
that the termination had been neither
in breach of the Award nor in breach of
contract.
19. In argument before this Court the issue arose whether, on the hypothesis
that cl 11(a) was not a contractual term and none of
the other claims in the
accrued jurisdiction were made out, the remaining issues in the litigation
concerning the liability of the
respondent to penalties under the 1988 Act
could satisfactorily be resolved in this Court in the absence of consideration
by the
Full Court of the findings of fact by the primary judge.
20. We should refer briefly to those findings of fact by the primary judge.
21. On 11 October 1988, Mr Byrne, Mr Frew and Mr Brosnan had been members of
a team allocated to handle luggage to be loaded for
a flight from Sydney to
Adelaide and then Perth. The evidence included a video-tape of the loading
operation. After viewing the
video-tape and hearing the evidence of the
appellants and of Mr Brosnan, the primary judge found that Mr Brosnan had been
searching
through customer baggage with the purpose of stealing items from it,
that Mr Byrne was involved in those activities in the sense
that he had full
knowledge of what Mr Brosnan was doing and had aided him in carrying out that
activity, and that Mr Frew also was
involved in Mr Brosnan's activities, in
the sense that he knew of them and assisted in them being carried out.
22. Hill J held that each appellant had been given the opportunity to put his
side of the story and that their failure to provide
an innocent explanation
resulted in there being reasonable grounds for the respondent to conclude that
each appellant had been participating
in criminal acts. A belief, reasonably
held, that the appellants were involved in the pilfering of baggage justified
their peremptory
dismissal. His Honour added:
"Length of service with the Airline, a matter treated by the award itself as
relevant in calculating the period of notice required
in the event of a
dismissal on notice (not being a summary dismissal), could not, once
involvement in pilfering was established,
have acted as a justification to
prevent dismissal."
23. In this Court, the contentions of the appellants before the Full Court
were reagitated, in some instances, with embellishments
and additions.
24. The respondent contests the holding by the Full Court that the dismissal
procedure had been unreasonable. It seeks special
leave, in each proceeding,
to cross-appeal. That leave should be granted. The respondent also submits
that the Full Court erred
in not considering whether, in all the circumstances
of the case, including the findings by Hill J as to the complicity of the
appellants
in pilfering, the termination was in breach of the Award. The
submission is that the Full Court did not deal adequately with the
question of
breach of the Award because it had dealt only with the "procedural" aspects of
the dismissal of the appellants and had
not given weight to the "substantive"
aspect of the matter, the dismissal for involvement in the pilfering of
luggage.
Recent legislation
25. Since the institution of this litigation the 1988 Act has been relevantly
amended on several occasions. However, the issues
in the present dispute may
remain of some general importance.
26. Sections 170DC and 170DE were inserted by s 21 of the Industrial
Relations Reform Act 1993 (Cth). They state:
"170DC An employer must not terminate an employee's employment for reasons
related to the employee's conduct or performance unless:
(a) the employee has been given the opportunity to defend himself or herself
against the allegations made; or
(b) the employer could not reasonably be expected to give the employee that
opportunity.
...there is a valid reason, or valid reasons, connected with the employee's capacity or conduct or based on the operational requirements of the undertaking, establishment or service.
170DE(1) An employer must not terminate an employee's employment unless
The significance of the issues in this Court
27. The evolution in the common law as to the relationship of employment has
been seen as a classic illustration of the shift from
status (that of master
and servant) to that of contract (between employer and employee)(60). Dixon J
referred to fluctuations in
the extent to which terms and conditions of
employment were "left to free contract" and to the changes in the social and
economic
purposes to which the employment relationship has been put(61). This
case concerns the impact of what, to some extent, is the status
conferred upon
workers by awards under the 1904 Act and the 1988 Act, upon the particular
contracts of employment under which individual
workers may be engaged.
28. The issues in this Court, in addition to those agitated in the Federal
Court, included what was said to be the effect of "custom"
arising from the
operation of the industrial relations system in Australia, particularly at
federal level. This is indicative of
the general thrust of the submissions
for the appellants. This is to give to the provisions of the Award, in
particular cl 11(a),
a "normative effect" upon the relationship between
employer and employee beyond that which is given to it by the federal statute
in conjunction with s 109 of the Constitution. The result sought to be
achieved is recognition and enforcement of a right to damages to supplement
the penalty for breach of the
Award. The means relied upon involves the
ingestion of cl 11(a) by the law of contract. The appellants also rely upon
the principles
governing the recovery of damages for breach of statutory
obligation.
29. The appellants sought support for their submissions as to Australian law
from developments in labour law in the United Kingdom.
But these reflect the
particular industrial relations system of that country. It hardly needs to be
stated that social conditions,
the history of labour relations, and the
relevant legislative schemes differ significantly. The differences between
the Australian
system(62) and the changing face of labour law in Britain are
exemplified in the writings of Professor Sir Otto Kahn-Freund. He
identified
a process by which labour conflict leads to collective bargaining, which in
turn leads to collective agreements. Out
of these agreements, whatever be
their legal status(63), grow norms of conduct codifying existing and laying
down new industrial
customs. The collective standards thus evolved are of two
broad types. There are standards which govern the behaviour of groups
and
there are those designed to regulate the conduct of individual employers and
individual employees. Kahn-Freund emphasised that(64):
"(t)his 'rule-making' character is inherent in the collective bargaining
process, quite irrespective of the degree of legal effect
which the state
attaches to the rules made in the autonomous sphere."
It is true that, since these words were written, there have been legislative
changes in Britain and Australia. However, the Australian
system of state
supported and legislatively-based dispute prevention and resolution, not
merely by contractual bargaining but by
conciliation, arbitration and an award
structure, remains significantly different.
30. Consistently with the views expressed by Kahn-Freund, the tenor of the
submissions for the appellants may reflect the trend
of common law decisions
in England. But many of the recent English cases concern the powers of
tribunals under the Employment Protection
(Consolidation) Act 1978 (UK)(65) .
This required the employer to give the employee a written statement containing
specified particulars
of the terms of employment (s 1), and provided that in
default thereof the employee might obtain from a tribunal a determination
of
what particulars "ought" to have been given (s 11). In Mears v Safecar
Security Ltd(66), the Court of Appeal held that the tribunal
was required to
approach the search for the missing term or terms by considering "all the
facts and circumstances, including the
subsequent conduct of the parties".
The relevant facts and circumstances might include the provisions of
collective agreements made
by trade unions and employers' associations.
31. The conceptual difficulties which have arisen in England are highlighted
in remarks of Hobhouse J in Alexander v Standard Telephones
and Cables
Ltd(67):
"The so-called 'normative effect' by which it can be inferred that
provisions of collective agreements have become part of individual
contracts
of employment is now well recognised in employment law (see, for example,
Harvey on Industrial Relations and Employment
Law, vol 2 (at 35)). However,
serious difficulties still arise because the principle still has to be one of
incorporation into the
individual contracts of employment and the extraction
of a recognisable contractual intent as between the individual employee and
his employer. The mere existence of collective agreements which are relevant
to the employee and his employment does not include
a contractual intent (see
for example per Ackner LJ, Robertson v British Gas (1983) IRLR 302). The
contractual intent has to be
found in the individual contract of employment
and very often the evidence will not be sufficient to establish such an intent
in
a manner which satisfies accepted contractual criteria and satisfies
ordinary criteria of certainty."
32. It also is to be borne in mind that provisions such as cl 11(a) of the
Award have antecedents in State legislation. In particular,
s 26(2) of the
Industrial Code 1967 (SA) provided:
"If a question arises as to whether the dismissal of an employee was harsh,
unjust and unreasonable, the President (of the Industrial
Commission of South
Australia) may, except where the employee has a right of appeal or review
under any other Act or law in relation
to the dismissal, determine the matter,
and may, if he thinks fit, direct the employer to re-employ such employee."
(emphasis added)
33. This provision was replaced by s 15(1)(e) of the Industrial Conciliation
and Arbitration Act 1972 (SA) ("the 1972 South Australian
Act"). Jurisdiction
was conferred on the South Australian Industrial Court to hear and determine
any question as to whether "the
dismissal" from his or her employment of an
employee was "harsh, unjust or unreasonable" and empowered the Court to direct
the employer
to re-employ the employee. Later in these reasons it will be
appropriate to refer to some of the decisions construing the South
Australian
statute. It will be noted that the earlier phrase, "harsh, unjust and
unreasonable", became "harsh, unjust or unreasonable",
which is also the
language of cl 11(a) of the Award(68).
34. The statement in the majority judgment in Gregory v Philip Morris
Ltd(69), that what was before the Court was a "novel award
prescription" whose
application had not then been considered by the courts, thus requires
qualification.
35. We turn to consider the contractual issues.
Implied term
36. In this Court, the appellants submitted that their contracts of
employment contained terms to the effect of cl 11(a) of the
Award. The
submission was put on three bases:
(a) the contracts were "employment contracts", a class of contract whose
inherent nature required, as a matter of law, inclusion
of an obligation upon
the employer in the terms of cl 11(a);
(b) the contracts included an implied term to the effect of cl 11(a) as a
matter of business efficacy and the presumed intention
of the parties in the
circumstances of the case; and
(c) there was a "crystallised custom" in the industry in which the appellants
were employed that the employer would terminate employment
only in accordance
with cl 11(a) or such a custom of the "labour market" to adhere to award
restrictions on the power of employers
to terminate employment.
Custom
37. We consider first the foundation for an implied term in custom. The
phrase "crystallised custom" appears to have its origin
in the writings of
Professor Sir Otto Kahn-Freund(70). The term "crystallised" adds nothing to
the principles which determine when
the existence of a custom or usage will
justify the implication of a term into a contract. The phrase "custom or
usage" includes
terms implied by established mercantile usage or professional
practice.
38. The matter was considered in the joint judgment of five members of this
Court in Con-Stan Industries of Australia Pty Ltd v
Norwich Winterthur
Insurance (Australia) Ltd(71). The question is always whether the general
notoriety of the custom makes it reasonable
to assume that the parties
contracted with reference to the custom so that it is therefore reasonable to
import such a term into
the contract. Where there is such an established
usage, "the courts are spelling out what both parties know and would, if
asked,
unhesitatingly agree to be part of the bargain"(72). Because the
importation of the term rests on the presumed intention of the
parties, it
must yield to the actual intention embodied in express terms of the contract,
whether the contract be written or oral.
39. Further, whilst it is not essential that the custom be universally
accepted, it must be so well known and acquiesced in that
persons making a
contract in that situation reasonably can be presumed to have imported it into
their contract. It is here that
there arises an immediate difficulty for the
appellants in this case.
40. The difficulty is that, apart from the inferences that may be drawn from
the existence of the Award and the apparent common
ground that the Award bound
the respondent and the employment of the appellants was subject to the Award,
there is lacking evidence
of a custom whereby, as between persons in the
position of the respondent and the appellants, the provisions of cl 11(a) of
the Award
were carried into their contracts of employment. Still less is
there evidence that such a custom was, at any relevant time, so well
known and
acquiesced in that all parties of the relevant description can reasonably be
presumed thereafter to contract on the footing
that cl 11(a) became a term,
and to modify existing contracts so as to include it.
41. No doubt the existence of the award structure provided for in the 1904
Act and the 1988 Act may be treated as common knowledge,
at all relevant
times, of the parties to this litigation. But it would be another matter to
assume on the evidence in this case
that the terms of awards which dealt with
termination of employment were to be given contractual force. The submission
as to "crystallised
custom" fails at the threshold.
Business efficacy
42. We turn now to consider the submission that cl 11(a) was implied as a
term from the particular circumstances of the case and
to give effect to some
apparent underlying intention of the parties about providing business
efficacy. Reliance here was placed upon
the well-known statement of the Privy
Council in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council(73).
This has been approved
and applied in numerous decisions in this Court(74).
The Privy Council specified five conditions which, whilst they might overlap,
must be satisfied before a court may imply a term in a contract which the
parties had not thought fit to express. First, the term
must be "reasonable
and equitable"; secondly, it must be necessary to give "business efficacy to
the contract" so that no term will
be implied if the contract is effective
without it; thirdly, the term must be so obvious that "it goes without
saying"; fourthly,
it must be "capable of clear expression"; and, finally, it
must not contradict any express term.
43. In BP itself and in other cases such as Secured Income Real Estate
(Australia) Ltd v St Martins Investments Pty Ltd(75), Codelfa
Construction Pty
Ltd v State Rail Authority of NSW(76) and Adelaide Corporation v Jennings
Industries Ltd(77), the question was whether
a term should be implied in a
formal written contract which was complete upon its face.
44. That is not the present case. We have referred to the exiguous nature of
the evidence as to the form taken by, and the express
terms of, the contract
of employment between the respondent and the appellants. There are two
consequences.
45. First, this species of implication is concerned with the circumstances of
the particular case. The primary judge and Black
CJ and Gray J in the Full
Court referred to the need to prove facts leading to the implication of a term
of this nature. Gray J
said(78):
"(T)his Full Court does not know what all of the express terms of the
contracts were. It does not know whether they were adequate
to make the
contracts of employment efficacious or whether any of them would contradict
the proposed implied term. An examination
of the facts surrounding the
creation of each contract of employment might lead to a different result for
one appellant from the
other."
46. Secondly, where the contract is not in writing and is oral or partly oral
or it appears that the parties themselves did not
reduce their agreement to a
complete written form, caution is required against an automatic or rigid
application of the cumulative
criteria identified in BP. We should proceed on
the footing that the present case is to be approached in this way.
47. In such situations, the first task is to consider the evidence and find
the relevant express terms. Some terms may be inferred
from the evidence of a
course of dealing between the parties. It may be apparent that the parties
have not spelled out all the terms
of their contract, but have left some or
most of them to be inferred or implied. Some terms may be implied by
established custom
or usage, as described above. Other terms may satisfy the
criterion of being so obvious that they go without saying, in the sense
that
if the subject had been raised the parties to the contract would have replied
"of course"(79). If the contract has not been
reduced to complete written
form, the question is whether the implication of the particular term is
necessary for the reasonable
or effective operation of the contract in the
circumstances of the case; only where this can be seen to be true will the
term be
implied(80).
48. The contractual term propounded by the appellants would operate in a
partisan fashion. It would favour the interests of the
employee at the
expense of those of the employer. Further, in the operation sought to be
given the term by the appellants, so as
to require procedural regularity or
fairness, the term also would qualify what otherwise has been understood to be
the general law
of the employment contract.
49. In Pillai v Singapore City Council(81), their Lordships of the Judicial
Committee said that the relationship of master and servant
"gives rise to no
application of the principle of audi alteram partem on dismissal". They
referred(82) to what had been said by
Lord Reid in Ridge v Baldwin(83).
There, after pointing out that dismissal of an employee might not be warranted
by the terms of
the particular contract, Lord Reid continued:
"(T)he question in a pure case of master and servant does not at all depend
on whether the master has heard the servant in his
own defence: it depends on
whether the facts emerging at the trial prove breach of contract."
Ridge v Baldwin is, of course, a classic authority on the subject of
procedural fairness in administrative law. But the decision
was that the
chief constable was an office-holder under s 191 of the Municipal Corporations
Act 1882 (UK) and the statutory power
of dismissal carried with it an
obligation of procedural fairness(84). Likewise, Marlborough Harbour Board v
Goulden(85), a decision
relied upon by the appellants, was a case concerning
the exercise of a statutory power of dismissal of an office-holder. The
expression
of opinion by the New Zealand Court of Appeal(86), that in private
contracts of employment not subject to the Industrial Relations
Act 1973 (NZ),
the common law "may come to recognise" a duty on the employer to act "in a
fair and reasonable manner" before dismissal
on the ground of possible
dishonesty, does not take matters very far.
50. It is true that, in this country, what one might call the overall
relationship between employer and employee includes the effect
which by
statute must be given to a relevant award made under the federal or a State
system. In the case of the present Award, s
149 specifies the persons bound
by an award and s 152 engages s 109 of the Constitution to resolve
inconsistencies between federal and State laws, including awards made by a
State industrial authority(87).
51. There is no reason why an employee might not be engaged upon terms and
conditions including some or all of the terms of an award
under the
legislation. True v Amalgamated Collieries of WA Ltd(88) was such a case. The
worker sued for wages to which he was entitled
in the same amount both under
the State award and under the express terms of his contract. There was no
issue as to whether the
terms of the award had become an implied term of the
contract.
52. Again, in Kilminster v Sun Newspapers Ltd(89), it was held that the
provisions of an award under the 1904 Act that employment
should not be
terminated unless a prescribed period of notice be given did not interfere
with the contractual rights of the parties
with respect to longer notice. In
this way, the Award may be said to assume that relations between those bound
by it are ordinarily
governed by the common law(90).
53. But these considerations do not, as a matter of imputed intention of the
parties to a particular employment contract, render
it any more likely that
the importation into the contract of a provision such as cl 11(a) of the Award
was so obvious that it went
without saying, or that it was necessary for the
reasonable or effective operation of the contract.
54. That, if anything, the contrary is the case is illustrated by remarks of
Gibbs J in Australian Broadcasting Commission v Industrial
Court (SA)(91).
The question there was whether, if s 15(1)(e) of the 1972 South Australian Act
empowered the Industrial Court to
order re-employment of employees or
temporary employees of the Australian Broadcasting Commission, it was
inconsistent with certain
provisions of the Broadcasting and Television Act
1942 (Cth). In the course of his analysis of s 15(1)(e), Gibbs J said(92):
"(The South Australian Full Court) held ... that s 15(1)(e) is part of the
general law regulating the terms and conditions of employment
of employees,
either because the provisions of that paragraph can be interpreted 'as
superadding a statutory adjunct to a contract
of employment within its terms'
or because it creates a quasi-contractual right which, as part of the ordinary
civil law of the State,
is enforceable against the Commission until federal
legislation excludes it. With all respect, this is to give to the provisions
of s 15(1)(e) a character which in truth they do not bear. Those provisions
do not require a new term to be implied in every contract
of employment. They
do not give a quasi-contractual right to every employee. They confer
jurisdiction and power upon the Industrial
Court to make orders of the kind
therein described. The jurisdiction is not limited to cases in which the
dismissal has been in breach
of contract or otherwise wrongful. ... In other
words s 15(1)(e) is not a part of the State law regarding contracts of
employment".
(emphasis added)
55. Before answering the question whether cl 11(a) is to be implied in the
contracts of employment between the respondent and the
appellants as being so
obvious that it goes without saying, it is first necessary to consider the
part played by cl 11(a) in the
scheme established by the Award.
56. Clause 11(f) provides that, subject to s 5 of the 1904 Act (creating
certain offences in relation to dismissal and threatened
dismissal and related
matters) and ss 119, 122 and 123 (dealing with the enforcement of awards) any
dispute or claim arising under
cl 11 shall be dealt with in accordance with cl
41. Clause 41 is headed "SETTLEMENT OF DISPUTES OR CLAIMS". It requires any
dispute
or claim to be discussed first by the aggrieved employee with his or
her supervisor, then between the accredited union representative
and an
appropriate officer of the employer, then by the Branch Secretary or other
appropriate official of the union and the appropriate
representative of the
employer, and then between a representative of the employer and the federal
body of the union. If the matter
is still not settled, it is submitted to a
member of the Australian Conciliation and Arbitration Commission whose
decision shall,
subject to any appeal in accordance with the 1904 Act, be
final and be accepted by the parties. Clause 41 further provides that,
until
the matter is determined, work shall continue as instructed by the employer.
57. Upon their face, cll 11 and 41 of the Award do not require a new term to
be implied in every relevant contract of employment,
any more than did s
15(1)(e) of the 1972 South Australian Act.
58. Clause 11(a) is not a free-standing provision in the Award. It is an
integral part of a regime which, at the same time, establishes
a norm by which
an unfair dismissal is to be assessed, and provides for the resolution of
disputes as to such dismissals and for
the enforcement of the Award by the
recovery of penalties. Why should cl 11(a) be severed from that context and
given a further
and distinct operation as a contractual term?
59. Further, there is force in the following remarks of Jenkinson J in
Gregory v Philip Morris Ltd(93):
"It could not in my opinion be predicated in respect of the implication
proposed that, if the parties had been asked at the time
the contract was made
whether the provisions of the award as they should from time to time exist
were to be terms of their contract,
each would have unhesitatingly responded
in the affirmative. The evidence, no less than what one may be permitted
judicially to
know, is consistent with each party's believing that some of the
matters with respect to which the award made provision, or might
in the future
make provision, could be regulated by agreement between employer and union
representatives of the employer's workers
to the greater advantage of that
party than that party might expect to gain from the contractual adoption of
whatever provision an
award applying indifferently to many kinds of industrial
enterprises might from time to time contain. Since the provisions of the
award as from time to time varied would bind the parties without their
agreement, and since the parties would remain free to agree
that the appellant
should have more than the award prescribed(94), why should it be thought
likely that the appellant would have
responded affirmatively, when he entered
into the contract of employment, to a question whether his freedom should be
fettered by
a term of the kind suggested?"
60. In the present case, Beaumont and Heerey JJ(95) dealt with this
particular question of implication by saying that, whilst the
employee might
have agreed that the terms of cl 11(a) be expressly included in the contract
of employment, the employer in all probability
would be of the contrary view.
There is much to be said for their Honours' hypothesis that the employer would
indicate that, whilst
bound by the terms of the Award and so subject to the
penalties prescribed by the legislation for breach, it would not accept cl
11(a) as a term of the contract. In the event of breach, the employer would
be liable not only to the penalty but also to pay damages
in contract.
61. In contracts of this nature, apparently lacking written formality and
detailed specificity, it still is necessary to show that
the term in question
would have been accepted by the contracting parties as a matter so obvious
that it would go without saying.
That cannot be postulated here.
62. Nor could it be said that the implication into the contract of employment
of a term to the effect of cl 11(a) of the Award would
be necessary for their
reasonable or effective operation. In the absence of such a contractual
provision, there would remain unaffected
the entitlement of the employer at
general law to terminate at will on giving reasonable notice and to dismiss
summarily for misconduct.
That this would be the case was accepted in the
submissions of both sides to this Court. Thus, there would be no "gap" which
it
was necessary to fill by a provision such as cl 11(a).
63. Accordingly, we accept the submissions for the respondent that the term
for which the appellants contend is not to be implied
as a matter of business
efficacy in its contracts of employment with the appellants.
Implications independent of intention
64. The two species of term considered above, if indeed they be distinct, are
concerned with giving effect to what is taken to have
been the intentions of
the parties. The expression "implied term" suggests imposition in the way in
which statutes such as the Trade Practices Act 1974 (Cth)(96) imply conditions
or warranties in contracts of a particular description, which may not be
excluded or modified. The sense
of the matter would have been better served
by general adoption of the expression - apparently coined by Sir John
Salmond(97) and
used by Dixon J(98) - "tacit term" to identify the latent
unexpressed intentions of the parties.
65. The third type of term upon which the appellants rely is of a different
nature. In the Full Federal Court Gray J alone accepted
the submission, in
turn based upon Gregory, that cl 11(a) was a term of the contract of
employment imported independently of the
intention of the parties. His Honour
referred to a number of incidents of the employment relationship which are
imposed not by implication
in the sense discussed above, but by law and as a
matter of policy(99). His Honour concluded(100):
"This Court should hold that cl 11(a) became a term of the contract of
employment of each of the appellants, independently of the
intention of the
parties to that contract. The term cannot be excluded by express agreement,
because the law regards it as a proper
incident of an employment contract and
because its origin is in the Act. Such a decision would not carry with it any
principle that
all terms of all awards are to be imported into the contracts
of employment of those whose conditions of employment are prescribed
by the
relevant awards. The importation of some award terms will be inappropriate."
66. On the other hand, Beaumont and Heerey JJ approached the matter on the
footing that, if cl 11(a) was to be imported into the
employment contracts
independently of the intention of the parties, this result could flow only
from the terms of the Award itself,
and the relevant legislation. Their
Honours concluded(101):
"The award creates rights and obligations, and the Act confers remedies in
the case of breach, both independently of the agreement
of the parties and the
common law of contract."
67. What, then, is involved in the proposition that a contractual term is
implied as a matter of law rather than as the assumed
intention of the
parties?
68. There is at least one basic distinction. It is that, as indicated above,
terms implied by the application of what one might
call the business efficacy
test are terms unique to the particular contract in question, depending upon
the form of the contract,
the express terms and the surrounding circumstances.
By contrast, terms implied by law are, in general, implied in all contracts
of
a particular class or which answer a given description(102).
69. Further, as Hope JA pointed out in Castlemaine Tooheys v Carlton and
United Breweries(103):
"Although the distinction between the two classes of implication has not
been and perhaps is still not universally appreciated,
classes of contract in
respect of which terms will be implied by law, and the terms which will be
implied, have in many cases been
long established. Typical classes are
contracts between master and servant, for the sale of goods, for the provision
of work and
materials and between landlord and tenant(104). However, the
classes of contracts in which the law will imply terms are not closed;
the
difficult question is to determine what test should be applied before the
courts imply such a term for the first time."
70. Some implied terms are perhaps more usefully identified as rules of
construction applied to the express terms of the contract,
particularly to the
written terms thereof. Thus, in Secured Income Real Estate(105), Mason J
described as a "rule of construction"
the proposition of Lord Blackburn in
Mackay v Dick(106):
"I think I may safely say, as a general rule, that where in a written
contract it appears that both parties have agreed that something
shall be
done, which cannot effectually be done unless both concur in doing it, the
construction of the contract is that each agrees
to do all that is necessary
to be done on his part for the carrying out of that thing, though there may be
no express words to that
effect. What is the part of each must depend on
circumstances."
In the same case (which was an appeal from Scotland), Lord Watson(107)
identified the principle as a legal doctrine borrowed from
the civil law and
recognized as such in Scotland. Further, in Southern Foundries (1926) Ltd v
Shirlaw(108), Lord Atkin said:
"Personally I should not so much base the law on an implied term, as on a
positive rule of the law of contract that conduct of
either promiser or
promisee which can be said to amount to himself 'of his own motion' bringing
about the impossibility of performance
is in itself a breach."
71. However, the more modern and better view is that these rules of
construction are not rules of law so much as terms implied,
in the sense of
attributed to the contractual intent of the parties, unless the contrary
appears on a proper construction of their
bargain(109). There is force in the
suggestion that what now would be classified as terms implied by law in
particular classes of
case had their origin as implications based on the
intention of the parties, but thereafter became so much a part of the common
understanding
as to be imported into all transactions of the particular
description. The matter is put as follows in Halsbury(110):
"Perhaps the truth is that the ambiguous terminology enables the courts in
the first instance to imply terms on the basis of the
intention of the parties
... but later there comes a time when the particular implied term has become
so much a part of common practice
that the courts begin to import it into all
transactions of that type as a matter of course; and the result is a rule of
law of the
type considered in this paragraph."
This understanding of the matter is consistent with the proposition that terms
of this kind, although treated as implied by law,
may be excluded by express
provision made by the parties and also as a result of inconsistency with terms
of the contract(111).
The result is that, even if treated as rules of law,
they only apply in the absence of an expression of contrary intent.
72. The reference by Gray J in the passage set out above to the implied
condition he favoured being insusceptible of exclusion by
express agreement is
at odds with the weight of authority. It may reflect what a writer with a
civilian and common law training
has identified as the distinction familiar in
continental Europe between "imperative" norms of the law of contract,
applicable to
all contracts, and "optional" norms, where the intention of the
parties is determinative(112). His Honour gave as a reason against
exclusion
the "origin" of cl 11(a) in the Act, but that poses the somewhat different
issue, to be considered next, of the impact
of the statute upon general law
rights and obligations.
73. Many of the terms now said to be implied by law in various categories of
case reflect the concern of the courts that, unless
such a term be implied,
the enjoyment of the rights conferred by the contract would or could be
rendered nugatory, worthless, or,
perhaps, be seriously undermined(113).
Hence, the reference in the decisions to "necessity".
74. For example, it is established that the mere relationship of landlord and
tenant implies a covenant for quiet enjoyment. The
reason for this appears to
be that, originally, the common law courts would not recognize the tenant as
having any estate in the
demised land and would not reinstate the tenant if
ejected by the landlord; the remedy in covenant remedied the position of the
tenant
who otherwise, if ejected, would have been without recourse(114).
75. This notion of "necessity" has been crucial in the modern cases in which
the courts have implied for the first time a new term
as a matter of law.
76. Codelfa establishes that the doctrine of frustration is concerned with
the termination of the contract by operation of law in
particular
circumstances, rather than by the operation of an implied condition. In the
course of dealing with implied terms, Mason
J stated(115):
"Of course, I am speaking of an implied term necessary to give business
efficacy to a particular contract, not of the implied term
which is a legal
incident of a particular class of contract, of which Liverpool City Council v
Irwin(116) is an example. The difference
between the two categories of
implied term was mentioned by Viscount Simonds in Lister v Romford Ice and
Cold Storage Co Ltd(117),
where he referred to the search for the second
category of implied term as being based 'upon more general considerations', a
comment
endorsed by Lord Wilberforce in Irwin(118)."
77. In Liverpool City Council v Irwin, the House of Lords considered the
obligations to its tenants of the lessor of a 15 storey
tower block. The
lessor was a public body charged by statute with the duty of providing housing
for members of the public, selected
because of their need, at rents subsidised
by the general body of ratepayers. The matter was approached by identifying
the rights
conferred upon the tenants and then considering that activity by
the lessor which would be necessary to avoid the impairment of the
essentials
of the grant to the tenant. Lord Wilberforce said(119):
"In my opinion such obligation should be read into the contract as the
nature of the contract itself implicitly requires, no more,
no less: a test,
in other words, of necessity. The relationship accepted by the corporation is
that of landlord and tenant: the
tenant accepts obligations accordingly, in
relation inter alia to the stairs, the lifts and the chutes. All these are
not just facilities,
or conveniences provided at discretion: they are
essentials of the tenancy without which life in the dwellings, as a tenant, is
not possible. To leave the landlord free of contractual obligation as regards
these matters, and subject only to administrative
or political pressure, is,
in my opinion, inconsistent totally with the nature of this relationship. The
subject matter of the lease
(high rise blocks) and the relationship created by
the tenancy demand, of their nature, some contractual obligation on the
landlord."
78. A similar approach subsequently was taken by the House of Lords in Scally
v Southern Health Board(120). In this case, the appellants
were medical
practitioners whose terms of employment with Northern Ireland health boards
had been negotiated by representatives of
their professional bodies. They
brought actions against their employers alleging, among other things, breach
of contract in respect
of failure of their employers to inform them of certain
rights which they had enjoyed but which had been exercisable only within
a
particular period. Lord Bridge of Harwich(121) identified the issue as
follows:
"The problem is a novel one which could not arise in the classical
contractual situation in which all the contractual terms, having
been agreed
between the parties, must, ex hypothesi, have been known to both parties. But
in the modern world it is increasingly
common for individuals to enter into
contracts, particularly contracts of employment, on complex terms which have
been settled in
the course of negotiations between representative bodies or
organisations and many details of which the individual employee cannot
be
expected to know unless they are drawn to his attention. The instant case
presents an example of this phenomenon arising in the
context of the statutory
provisions which regulate the operation of the health services in Northern
Ireland."
79. The question was whether the law would imply into the contract of
employment an obligation on the employer to notify the employees
of the rights
in question. Was the term a "necessary incident of a definable category of
contractual relationship"? The House posed
this question and answered it in
the affirmative(122). Their Lordships held that, where a contract of
employment, negotiated between
employers and a representative body, contained
a particular term conferring upon the employee a valuable right contingent
upon his
or her acting as required to obtain the benefit, of which the
employee could not be expected to be aware unless the term was brought
to the
attention of the employee, there was an implied obligation on the employer to
take reasonable steps to publicise the term.
80. In the present appeal, the appellants relied upon this concept of
necessity. Their submission was that employment contracts
were a
well-recognised "class" of contract. That was conceded by the respondent. So
also was the proposition that the law imported
various incidents into the
relationship of employment, one of them being the entitlement of the employer
to terminate the employment
at will on giving reasonable notice and to dismiss
summarily for misconduct. It was then submitted that the existence of the
Award,
and in particular cl 11(a), "required" reformulation of that incident
of the relationship by importing, in terms, the provisions
of cl 11(a).
81. However, there is no "necessity" for such a step in the sense in which
that term was applied in cases such as Irwin and Scally.
The contract of
employment is not, from the viewpoint of the employee, rendered nugatory if
the existing provisions thereof remain,
as a matter of contract, to operate
concurrently with the regime established by the Award and deriving its
authority from statute.
82. There is nothing to suggest that the contracts of employment were not
workable and effective before the introduction into awards
of provisions such
as cl 11(a). This is not a case where a provision such as cl 11(a) is
necessary lest the contract be deprived
of its substance, seriously undermined
or drastically devalued in an important respect.
83. As we have indicated, it is a distinct question whether the regime
established by the Award has, by force of its statutory authority,
a
particular impact upon the terms of the contract of employment. To this we
now turn.
Automatic Fire Sprinklers Pty Ltd v Watson(123)
84. The appellants relied upon the reasoning in Automatic Fire Sprinklers Pty
Ltd v Watson as support for the proposition that cl
11(a) operated to render
ineffective the termination by the respondent of the contract of employment of
the appellants with the result
that there was a repudiation thereof by the
respondent. The submission is that this entitled the appellants either to
accept the
repudiation and sue for damages or else to treat the contract as
continuing and to sue for unpaid remuneration. The proposition
based upon
Automatic Fire Sprinklers was accepted by the Chief Justice and Gray J. It
was rejected by Keely J and by Beaumont and
Heerey JJ in their joint judgment.
The appellants rely upon what was said by Black CJ and Gray J.
85. Black CJ said(124):
"Given the nature and importance of the subject matter (in cl 11(a)), the
words 'termination ... shall not be' should not be read
as leaving untouched
the employer's power to dismiss an employee. It can hardly have been intended
that in such an important matter,
in respect of which the award provisions
were making fundamental changes, an employer should retain its previous power
to bring the
employment relationship to an end in circumstances that were
harsh, unjust or unreasonable, and that the employee's position was
to be
protected only by the liability of the employer to a penalty of not more than
$1,000."
Gray J said of cl 11(a)(125):
"Its effect is to prohibit a termination of employment which would be in
breach of it. ... (A)n employer bound by a clause such
as cl 11(a) cannot
validly terminate a contract of employment by an act which would be illegal,
in the sense of being prohibited
by that clause. The purported dismissal of
each of the appellants was therefore ineffective."
86. In these judgments, reference was made to Automatic Fire Sprinklers. That
case (in which an appeal from the New South Wales
Full Court was dismissed)
turned upon the construction of regulations made under the National Security
Act 1939 (Cth) ("the Security
Act"). Section 5 thereof conferred upon the
Governor-General wide powers to make regulations for securing the public
safety and
defence of the Commonwealth and s 10 made it an offence against the
statute to contravene or fail to comply with any provision of
any such
regulation. The National Security (Man Power) Regulations ("the Regulations")
forbade, in a protected undertaking, the
termination by the employer of the
employment of an employee, and the termination or change by the employee of
employment, in either
case without the permission of the Director-General of
Man Power.
87. The precise issue, identified by Dixon J(126), was whether the
Regulations made it impossible that the de facto discharge of
the respondent
from his employment by the appellant should operate to disentitle him to
salary for the period during which he continued
to proffer his services after
that de facto discharge. The conclusion was that the respondent was entitled
to his salary or remuneration
for the period in question. This was because,
on their proper construction, the Regulations made ineffectual any attempt by
an employer,
contrary to their provisions, to discharge an employee who
remained ready and willing to serve. The result was that the relationship
continued with consequent liability on the part of the employer for wages for
any period for which the employee offered his services.
88. This made it unnecessary to determine the other principal issues,
although there was some discussion of it by four members of
the Bench. These
were the legal effect of the respondent's refusal to accept his dismissal,
discharge of the contract of employment
by unilateral breach by the employer
and the distinction (if any) between the contract of employment and the
employment relationship
or status. The outcome of the present appeal will be
such as not to call for further consideration here of these matters(127).
89. It will be apparent that there is nothing in Automatic Fire Sprinklers
which is of any immediate assistance for these appeals,
other than by the
presentation of an analogy by reference to which the present issues of
construction may be resolved.
90. However, the analogy is far from close. First, reg 14 stated that an
employer carrying on a protected occupation "shall not",
save with the
specified permission, "terminate the employment in the undertaking of any
person employed therein", whereas cl 11(a)
of the Award operates upon the fact
or circumstance of termination, stating that the termination of employment by
an employer shall
not be harsh, unjust or unreasonable. Secondly, the
presence of the offence provision in s 10 of the Security Act, the offence
being
constituted by the act of termination of employment without permission,
made more readily applicable the common law principle that
a transaction made
illegal by statute is void. This matter was adverted to by McTiernan J(128)
and Williams J(129) in the High Court
and by Jordan CJ in the Full Court(130).
With reference to authority, Jordan CJ had said:
"It is well established that if the doing of an act is prohibited by statute
(and the same applies to a valid statutory regulation),
in the absence of some
indication of intention to the contrary, the act, if purported to be done, is
illegal and void".
The third point is suggested by the second. It is that Automatic Fire
Sprinklers was concerned with the impact upon common law rights
and
obligations of statute and delegated legislation. The present case is
concerned with the operation and effect of the Award,
which draws its legal
efficacy from the rather special provisions of the 1904 Act and now the 1988
Act. Of itself, the Award could
not answer the description of a law of the
Commonwealth(131). It is well established that the Award is made part of the
law, not
by its own force but by force of its adoption by the statute, which
makes the directions contained in it "binding and enforceable
in law"(132).
91. The intention of Parliament as expressed in the relevant provisions of
the legislation is directed to awards at large, without
distinguishing between
them, and the issue becomes one of determining what is involved in the use of
the term "binding" in those
provisions.
92. Section 61 of the 1904 Act and s 149 of the 1988 Act specify those
parties, successors and members of organisations upon whom
an award is
"binding"; this includes organisations and persons on whom the award is
binding as a common rule. Also, the legislative
provisions to which we have
referred as attracting the operation of s 109 of the Constitution, together
with the provisions dealing with compliance (Pt VIII of the 1988 Act and Pt VI
of the 1904 Act), provide for penalties
and other remedies for contraventions
of awards.
93. Counsel for the respondent referred to the long line of authority
propounding the general rule that, where a statute creates
an obligation and
enforces performance in the specified manner, performance is not to be
enforced in any other manner(133). In Josephson
v Walker(134), this Court
applied that reasoning to the construction of the Industrial Arbitration Act
1912 (NSW). Section 49 of
that statute created procedures for enforcement of
obligations imposed on employers by an award. The Court held an action did
not
otherwise lie at general law for recovery by the employee of the
difference between wages paid under the contract of employment and
those
payable under an award. This was because the legislation did not make the
statutory rate of wages part of the contract of
employment; rather, a new
right was created with an inseparable new remedy. Their Honours pointed
out(135) that, upon an examination
of the particular statute, it might be
found that the legislative intention was different. Thus the intention, as
one would expect,
was that of the Parliament not of the body making the award,
in that case the New South Wales Court of Industrial Arbitration.
94. An award made under the present statute or its predecessor by the
relevant arbitral body is given binding effect pursuant to
the provisions we
have mentioned, in respect of matters which, whilst they arise out of or are
connected with the relationship of
employer and employee, include much that is
outside the contract of service, its incidents and the work done under
it(136). The concept
of "industrial dispute", central to the system
established by the legislation, is concerned not with the relationship of
individual
employer and individual employee or former employee, so much as
with a more general relationship inhering in the subject-matter of
the
dispute, such that it can be identified as involving the collective
relationship between employers and employees as such(137).
95. Section 2(d) of the 1904 Act stated that one of the "chief objects" of
the statute was to provide for "the observance and enforcement
of agreements
and awards made for the prevention or settlement of industrial disputes". At
the time of the events giving rise to
the present proceedings, s 3(e) of the
1988 Act was to like effect. Section 178(1) provided for the imposition of a
pecuniary penalty
for breach of an award, sub-s (6) thereof made provision for
an order for payment to an employee of the amount of any underpayment
of an
amount to which an employee was entitled under an award, and s 179 empowered
an employee to sue for any amount unpaid pursuant
to an award. Further, as was
done in the present litigation, the employee might seek an order under s 356
that the penalty imposed
under s 178 be paid to the employee. Contravention
by an organisation of an award could lead to cancellation or suspension of an
award by the Australian Industrial Relations Commission and, as the statute
then stood, s 311 prescribed penalties for wilful contravention
of an award.
96. These matters are consistent with the proposition that, in making an
award "binding", the legislature was concerned to oblige
those subjected to
the award to observe its terms under the sanctions for which the statute
itself provided rather than to leave
it to the arbitral body dealing with the
industrial dispute to make an award, breach of a term of which would render
legally ineffective
that which otherwise would have been an exercise of
contractual power held by a party bound by the award.
97. The submission that the present case is one in which the exercise of the
contractual power of dismissal was controlled by the
Award so as to render the
steps taken by the respondent a repudiation of contract meets the same fate if
primary significance be
attached to the terms of the Award itself. We have
referred to the internal dispute resolution procedures established by cll
11(f)
and 41 of the Award. As Beaumont and Heerey JJ pointed out in the
present case(138), it would be an impractical intention to impute
to the
award-maker that the validity, as distinct from the lawfulness, of a
termination of employment would have to await the outcome
of proceedings for
breach of an award. Their Honours said that it did not seem a sensible
intention that, in the meantime, the employee
and employer should have to
organise their affairs without knowing whether the termination was valid or
totally without legal effect.
98. The submissions by the appellants under this head should fail.
Breach of statutory duty
99. The submission here is not that liability arises from contract but in
damages for breach of a duty imposed upon the respondent
to observe cl 11(a)
of the Award. Nevertheless, the two submissions are closely connected.
100. The appellants submitted that it would be but a small step to attribute
to the Parliament an intention that those provisions
of the Award which are
clearly inserted for the benefit of employees as a class of persons are to be
enforceable by action for damages
at the instance of any member of that class.
101. The result would have to be that there was "arising under" a law "made
by the Parliament", in the sense of s 76(ii) of the Constitution, a new
species of "matter"(139). However, where a question arises as to the creation
of new rights and liabilities which will engage
Ch III of the Constitution, it
is to be expected that the Parliament will clearly state its will(140). That
consideration is significant in a case such as
this. Further, in this regard,
it is to be remembered that the Award itself is not a law of the
Commonwealth(141).
102. These considerations make it difficult in Australia to accept the
suggestion(142), made with reference to the judgment of Isaacs
J in Cofield v
Waterloo Case Co Ltd(143), that the action upon the statute may be an example
of the doctrine of the "equity of the
statute" whereby, in allowing a civil
remedy, the common law courts render more effective the legislative will. In
any event, modern
authority does not proceed on this basis.
103. In cases arising in the United Kingdom and under the laws of the States,
the issue often is presented as whether the legislature
"intended" that a
breach of the statute in question - and here the significance of the
particular status of an award will be apparent
- gives rise to a civil remedy
for damages in addition to those remedies conferred by the statute. We were
referred to R v Deputy
Governor of Parkhurst Prison; Ex parte Hague(144).
There, the House of Lords rejected the submission that, if the plaintiff
belonged
to a class which the statutory provision was intended to protect and
the breach had caused the plaintiff damage of a kind against
which the
provision was intended to give protection, any breach of statutory duty
causing injury and unaccompanied by a statutory
remedy or penalty would afford
the injured person a cause of action. Rather, their Lordships affirmed that
"the fundamental question"
was whether the legislature intended to confer on
the plaintiff a cause of action for beach of statutory duty.
104. However, in O'Connor v SP Bray Ltd(145), Dixon J said:
"The difficulty is that in such a case the legislature has in fact expressed
no intention upon the subject, and an interpretation
of the statute, according
to ordinary canons of construction, will rarely yield a necessary implication
positively giving a civil
remedy. As an examination of the decided cases will
show, an intention to give, or not to give, a private right has more often
than
not been ascribed to the legislature as a result of presumptions or by
reference to matters governing the policy of the provision
rather than the
meaning of the instrument. Sometimes it almost appears that a complexion is
given to the statute upon very general
considerations without either the
authority of any general rule of law or the application of any definite rule
of construction."
In Australia, the proposition that the courts give effect to "the intention of
the legislature" tends to disguise the compromises
between contradictory
positions which may be involved in obtaining the passage of legislation,
particularly through a bicameral and
federal legislature. To plumb the intent
of the particular body which enacted the law in question may be an illusory
quest(146).
Moreover, even a collective intention may fail to be translated
into the statutory text. The task of the court, aided by such provisions
as s
15AB of the Acts Interpretation Act 1901 (Cth), is to give effect to the will
of the legislature but as it has been expressed in the law and by ascertaining
the meaning of
the terms of the law(147).
105. References which are still made in modern decisions to the intention of
the legislature as to the conferring of private rights
of action for breach of
statutory duty are better understood in the light of the course of decision in
the last century. Many of
the statutes which fell for construction by the
courts were private Acts for the laying down of railways, water and gas
supplies
and other elements of modern infrastructure. A private Act partook
of the nature of a compact, as a contract between the promoters,
or the
portion of the public directly interested in it, and the legislature(148).
That brought with it notions of intention and also
the operation of the
principle described by Maxwell(149). After stating that statutes which
invested private persons or bodies,
for their own benefit or profit, with
privileges and powers interfering with the rights of others, were to be
construed more strictly
than other enactments, Maxwell continued:
"The Courts take notice that they are obtained on the petitions framed by
their promoters, and are in effect contracts between
those persons and the
Legislature, or the public. Their language is therefore treated as the
language of their promoters, who asked
the Legislature to confer exceptional
powers on them; and when doubt arises as to the construction of the language
... (t)he benefit
of the doubt is to be given to those who might be prejudiced
by the exercise of the powers which the enactment grants, and against
those
who claim to exercise them."
These notions were relied upon by Lord Macnaghten, delivering the advice of
the Privy Council, in deciding that no individual customer
of the Consumers'
Gas Company of Toronto had a right of action against the company for
non-compliance with provisions of its statute(150).
Earlier, in Atkinson v
Newcastle Waterworks Co(151), Lord Cairns LC emphasised the limited purview of
the legislature in enacting
a private legislative bargain with "a body of
undertakers" as to the manner in which it would keep up public works. Learned
writers(152)
have shown how the Lord Chancellor's remarks later were
translated, in leading cases such as Groves v Lord Wimborne(153), into the
broader proposition as to legislative intention which is repeated in some
modern authorities.
106. In this Court, an effort was made in Sovar v Henry Lane Pty Ltd(154) to
restore the subject to a principled basis. Kitto J
referred with approval to
the judgment of Jordan CJ in Martin v Western District of the Australasian
Coal and Shale Employees' Federation
Workers' Industrial Union of Australia
(Mining Department)(155) and said(156):
"The intention that such a private right shall exist is not, as some
observations made in the Supreme Court in this case may be
thought to suggest,
conjured up by judges to give effect to their own ideas of policy and then
'imputed' to the legislature. The
legitimate endeavour of the courts is to
determine what inference really arises, on a balance of considerations, from
the nature,
scope and terms of the statute, including the nature of the evil
against which it is directed, the nature of the conduct prescribed,
the
pre-existing state of the law, and, generally, the whole range of
circumstances relevant upon a question of statutory interpretation".
107. How then does the present case stand? We have referred to the
provisions in s 2 of the 1904 Act and s 3 of the 1988 Act which
specify that
one of the chief objects of the legislation is to provide for observance and
enforcement of agreements and awards made
for the prevention or settlement of
industrial disputes. Those sections also manifest a concern with the
prevention and settlement
of industrial disputes by processes of conciliation
and arbitration with the minimum of legal form and technicality. Detailed
provisions,
which we have described, were made to promote compliance with
awards and orders and these included what one might describe as personal
remedies for the recovery of money.
108. The modern legislation is in a different form to the 1904 Act as it
stood at the time of Mallinson v Scottish Australian Investment
Co Ltd(157).
Then there was no express provision giving the employee a means of enforcing
payment of wages which the statute, operating
on the award, entitled the
employee to receive from the employer. Section 49A which first conferred such
a right upon the employee
was added by s 40 of the Conciliation and
Arbitration Act 1928 (Cth)(158). The Act in its earlier form, as Jordan CJ
pointed out
in Martin(159), thus had displayed characteristics pointing to
the
existence of a private right of action to recover benefits imperfectly
bestowed by it.
109. The existence of rights conferred by the legislation to recover payments
due under awards and the power of the court to order
payment of penalties tend
against the proposition that, from the nature, scope and terms of the
legislation, there arises the further
inference that damages are recoverable.
110. We have referred to the rather special juristic nature of the Award.
Even where the duty in question is created by delegated
legislation in the
form of regulations made under power conferred on the Executive by statute,
there is an added difficulty in discerning
the existence of a civil sanction
for breach. The question then, as Fullagar J pointed out in Darling Island
Stevedoring and Lighterage
Co Ltd v Long(160) is whether the statute gives
power to create by regulation duties enforceable by action at the suit of a
person
injured by breach thereof. If the statute does not expressly confer on
the Executive a power by regulation to create an action for
damages at the
suit of any person injured by breach of the substantive provisions of the
regulations, it must be difficult to construe
the statute and the delegated
legislation as impliedly bringing about that result. This must be so, perhaps
a fortiori, where the
silent statute operates upon an award made by an
arbitral body established by the statute.
111. These considerations provide further support for the conclusion on this
issue which was reached by the majority in the Full
Federal Court. After
referring to Mallinson, Keely J(161) stated that, in any event, in his
opinion, the legislation disclosed no
intention to benefit employees as a
class as distinct from employers as a class. Beaumont and Heerey JJ concluded
their examination
of the point as follows(162):
"(S)ince awards will always operate alongside employment contracts, or in a
contractual milieu, there is logic in imputing to the
legislature the
assumption that it is a matter for employer and employee to agree whether
award provisions are to be expressly incorporated
into the contract - as for
example occurred in True - and thus create contractual remedies in case of
breach. Absent such agreement,
the statute provides the remedy.
112. The very fact that the statute provides for awards which (for the
reasons already advanced) do not become part of employment
contracts, is a
ground for thinking that one cannot impute to the legislature an intention to
confer (irrespective of the intention
of the parties) a right which is,
practically speaking, equivalent to the right which would exist if the award
were part of such
contracts."
113. The submissions for the appellants on this branch of the appeals fail.
114. It remains to consider the issues concerned with the actions brought to
recover not damages but penalties.
Clause 11(a) of the Award
115. The issue here is whether the terminations of employment of the
appellants were in breach of the Award. Hill J found there
had been no
breach. In the Full Federal Court, on this issue, Keely J agreed with the
reasons of Beaumont and Heerey JJ(163). Their
Honours commenced their
treatment of the matter(164) by noting three main arguments advanced on behalf
of the appellants.
116. One was that the dismissal procedure was unfair. Earlier in these
reasons we have summarised the findings by Hill J of the
facts which led up to
the dismissals of the appellants. These took place at a meeting on 28 March
1989, with Miss Foisy, the Employee
Relations Manager of the respondent at
Sydney Airport. Miss Foisy called in the appellants, together with a
representative of their
union, the Transport Workers Union. Hill J found
that, at the outset, she outlined to them that the respondent was considering
termination
of the services of the appellants for breach of trust. There was
some, limited, reference to the video. Reference was made to the
involvement
of the appellants in passenger baggage theft and the men were invited to give
an explanation. Miss Foisy then sent the
appellants out of the room with the
union representative to confer. His Honour found that it was probable that
Miss Foisy did not
see the men together at any time. When the men returned
again individually, Miss Foisy asked whether there was any reason why their
services should be retained. At some stage, one of the appellants, Mr Frew,
referred to his 26 years of employment. No explanation
on the substantive
matter of baggage pilfering was forthcoming and Miss Foisy then told each man
that his service was to be terminated.
Some reference was made to lack of
trust and probably the word "mistrust" was used.
117. In their joint judgment, Beaumont and Heerey JJ went on(165) to refer to
two further arguments advanced on behalf of the appellants.
One was that the
conduct of the appellants as revealed on the video should have been perceived
as equivocal and inconclusive as an
indication of dishonesty. The other was
that, in allowing for his observations with respect to the credit of the
appellants and
of Mr Brosnan (whose role in the alleged pilfering is mentioned
earlier in these reasons), Hill J had addressed the wrong issue.
The question
to be decided was not whether, on an opinion formed by evidence given at the
trial, the appellants were guilty of misconduct
but whether, on the material
available on 28 March, the respondent had terminated their employment harshly,
unjustly or unreasonably.
118. Their Honours held that the way in which the respondent went about
terminating the employment of the appellants should have
led the primary judge
to conclude that, in each case, the termination was at least "unreasonable".
They said it may also have been
"harsh" or "unjust" but expressed no opinion
on that point. Their Honours referred to the time taken to bring the video to
the attention
of the appellants (more than five months) and to the failure of
the respondent to indicate to the appellants in a way that would
be clear to
them the misconduct on their part of which complaint was made. Further it had
been unreasonable on the part of the respondent
not to interview the remaining
member of the loading team, Mr Harvey.
119. Beaumont and Heerey JJ concluded that, for those reasons, a breach of cl
11 had been established. This is because "in a procedural
sense" the
respondent had acted unreasonably(166). Their Honours continued:
"As has been noted, the appellants further submitted that the respondent
also acted unreasonably in a substantive sense, that is
to say, they contended
that on the evidence before his Honour there should have been a finding that
in fact the appellants had not
been guilty of any wrongdoing in relation to
the loading of the aircraft; or, at any rate, that the employer had not
established
this to be the case. It is not necessary that we deal with this
alternative argument and we express no opinion on this aspect of
the matter."
120. The hearing of the appeals in the Full Federal Court occupied three
days. In this Court, we were told that a significant part
of this time was
taken up with an analysis of the evidence before the primary judge, in support
of the submission that Hill J should
have found that in fact the appellants
had not been guilty of any wrongdoing. But, as will be apparent, the Full
Court did not enter
into that matter when allowing the appeal on this branch
of the case. The appellants sought, before this Court, to support the holding
in the Full Court as to breach of the Award on the footing that all aspects of
the matter had been dealt with at the intermediate
appellate level. Plainly
that is not the case.
121. It is also apparent that the majority had proceeded on the footing that
termination of employment might be unreasonable, within
the meaning of cl
11(a), by reason of "procedural" deficiencies without the need to go further
into "substantive" aspects of the
matter.
122. Unless that construction of the Award is to be upheld, there is
substance in the cross-appeals by the respondent that the Full
Court reversed
the finding in its favour that there had been no breach of the Award without
determining the necessary question whether
the primary judge had erred in
finding that there had been dishonest conduct in the handling of luggage.
123. If the cross-appeals succeed, it will be necessary to return the matter
to the Full Court, not necessarily constituted with
the same membership, for
determination of the challenge to the factual findings by the primary judge.
124. Against this background, it is necessary first to consider questions of
construction of the Award.
125. On the one hand there are indications in the Award of the desire to
provide a measure of security from arbitrary dismissal
and, on the other, an
acknowledgment that protection is confined within provisions which are
predicated on the possibility of fair
dismissal. The Award does not proceed
on any evident footing that there is a right to a hearing or other procedural
fairness required
in all cases before there is a termination of employment.
This is apparent from cl 11(d) which is headed "Notice of termination by
employer". Sub-clause (i) specifies the giving of particular periods of
notice, varying with the period of continuous service. Sub-clause
(v)
states:
"The period of notice in this clause shall not apply in the case of
dismissal for conduct that justifies instant dismissal, including
malingering,
inefficiency or neglect of duty, or in the case of casual employees or
employees engaged for a specific period of time
or for a specific task or
tasks."
126. Clause 11(a) itself provides:
"(T)ermination of employment shall include terminations with or without
notice".
127. Clause 39 contains certain protections in cases of redundancy including
requirements as to period of notice. Notwithstanding
the periods prescribed
by cl 11(d)(i), to which we have referred, an employee with at least one
year's completed service must be
given the longer periods of notice (specified
in cl 39(f)) before termination for redundancy. However, these provisions are
stated
by cl 39(v)(i) not to apply "where employment is terminated as a
consequence of misconduct on the part of the employee".
128. Clause 11(b) is aimed at the situation where the termination of
employment brought about by the dismissal, rather than the
steps leading up to
the dismissal, or lack of them, is harsh, unjust or unreasonable. A dismissal
with notice may be harsh, unjust
or unreasonable because it is based on a
ground defined as such by cl 11(b). This refers to such matters as
termination "on the
ground of" race, colour, sex and marital status. It may
be that the termination is harsh but not unjust or unreasonable, unjust
but
not harsh or unreasonable, or unreasonable but not harsh or unjust. In many
cases the concepts will overlap. Thus, the one
termination of employment may
be unjust because the employee was not guilty of the misconduct on which the
employer acted, may be
unreasonable because it was decided upon inferences
which could not reasonably have been drawn from the material before the
employer,
and may be harsh in its consequences for the personal and economic
situation of the employee or because it is disproportionate to
the gravity of
the misconduct in respect of which the employer acted.
129. The distinction between procedure and substance is elusive. This is so
even in those fields of private international law,
the statute law dealing
with limitations of actions and the effect of repeal upon accrued rights, and
the Statute of Frauds, where
it has an entrenched operation(167). In our
view, it is unhelpful and contrary to the tenor of the Award to introduce it
into cl
11(a).
130. That is not to say that the steps taken, or not taken, before
termination may not in a given case be relevant to consideration
of whether
the state of affairs that was produced was harsh, unjust or unreasonable.
Thus, it has been said that a decision which
is the product of unfair
procedures may be arbitrary, irrational or unreasonable(168). But the
question under cl 11(a) is whether,
in all the circumstances, the termination
of employment disobeyed the injunction that it not be harsh, unjust or
unreasonable. That
is not answered by imposing a disjunction between
procedure and substance. It is important that matters not be decided simply by
looking to the first issue before there is seen to be any need to enter upon
the second.
131. Some assistance and support for the conclusions we have reached is
provided by decisions of the South Australian courts upon
the legislation of
that State, and also of the Federal Court in proceedings upon Awards with like
provisions to cl 11(a). The decisions
are as follows:
(i) The Supreme Court of South Australia held that the State legislation did
more than provide an extra remedy for a dismissal that
was wrongful at common
law. In R v The Industrial Court of South Australia; Ex parte General
Motors-Holdens Pty Ltd(169), Bray CJ
said(170):
"I think that the sub-section (15(1)(e) of the Industrial Conciliation and
Arbitration Act 1972 (SA)) is designed to apply to all
dismissals, whether
wrongful or lawful at common law. A lawful dismissal, in appropriate
circumstances, can, I think, be legitimately
categorised as harsh and
unreasonable, and probably it could even be called unjust. Conversely, some
wrongful dismissals, as when
by excusable mistake a notice is given slightly
short of the necessary week, might deserve none of these adjectives. The
criterion
is not lawful or wrongful dismissal, but harsh, unjust or
unreasonable dismissal."
(ii) Hocking v Public Service Association of South Australia Inc(171)
indicates that the task of the Industrial Court under the South
Australian
legislation was to determine whether, in all the circumstances of the case,
the employee had demonstrated that the dismissal
was harsh, unjust or
unreasonable so that, whilst the method adopted in carrying out the dismissal,
as distinct from the dismissal
itself, might be said to be unjust or
unreasonable, that would not be the end of the matter. An example was
given(172) of a dismissal
on the strength of a rumour without there first
having been an investigation but where, after the dismissal, the employer
ascertained
facts which proved that the rumour relied upon was correct; the
dismissal would not have been harsh, unjust or unreasonable.
(iii) In Lane v Arrowcrest Group Pty Ltd(173), von Doussa J considered the
example of the dismissal of an accountant who held a position
of trust where
it was discovered after the dismissal that the accountant had been
systematically embezzling money from the employer.
His Honour said it would be
astonishing if the employer could not resist an allegation that the dismissal
was harsh, unjust or unreasonable,
within the meaning of the relevant award,
by pointing to those facts discovered after the dismissal, so long as they
concerned circumstances
in existence when the decision was made. His Honour
concluded:
"Whether the decision can be so justified will depend on all the
circumstances. A circumstance, likely to favour the decision
to dismiss,
would be that fraud or dishonesty of the employee had caused or contributed to
the employer's state of ignorance. A
circumstance likely to weigh against the
decision would be that the employer had failed to make reasonable inquiries
which would
have brought existing facts to its knowledge before the dismissal
occurred."
(iv) In Bostik (Aust) Pty Ltd v Gorgevski (No 1)(174), a decision of the Full
Federal Court, Sheppard and Heerey JJ said of the phrase
"harsh, unjust or
unreasonable" as it appeared in the Manufacturing Grocers Award 1985:
132. "These are ordinary non-technical words which are intended to apply to
an infinite variety of situations where employment is
terminated. We do not
think any redefinition or paraphrase of the expression is desirable. We agree
with the learned trial judge's
view that a court must decide whether the
decision of the employer to dismiss was, viewed objectively, harsh, unjust or
unreasonable.
Relevant to this are the circumstances which led to the decision
to dismiss and also the effect of that decision on the employer.
Any harsh
effect on the individual employee is clearly relevant but of course not
conclusive. Other matters have to be considered
such as the gravity of the
employee's misconduct."
133. The above propositions should be accepted as applicable to the present
appeals. However, it should be emphasised that the
present task is to
construe the Award and that nothing now said necessarily determines the
meaning of the phrase "harsh, unjust or
unreasonable" in any other setting.
134. The propositions we have set out support the submissions for the
respondent that it was necessary for the Full Court to look
at the whole of
the relevant circumstances which were taken into account by the primary judge
in determining that there had been
no breach of the Award; and, in particular,
that it was an error to reverse that ultimate holding purely for reasons
associated with
what are identified as procedural defects in the steps taken
by the respondent to dismiss the appellants.
135. Procedures adopted in carrying out the termination might properly be
taken into account in determining whether the termination
thus produced was
harsh, unjust or unreasonable. The submissions for the respondent in the
present appeals appeared to concede this.
But the burden of the respondent's
submissions is that there was error in determining the issue without regard to
the very material
circumstance of the finding of the primary judge as to the
complicity of the appellants in pilfering.
136. Those submissions should be accepted. This means that the primary judge
was bound to consider whether, on the evidence given
at the trial, the
respondent could resist the allegation of breach of cl 11(a), provided that
the evidence concerned circumstances
in existence when the decision to
terminate employment was made. A further consequence is that it remains for
the Full Court to
determine whether Hill J erred in his findings of fact as to
complicity in pilfering. If those findings were upheld it would be very
difficult to see how the dismissal of the appellants could be regarded as
harsh, unjust or unreasonable.
Conclusions
137. Each appeal should be dismissed. Special leave should be granted in
respect of each cross-appeal. On each cross-appeal, orders
1-4 of the Full
Court of the Federal Court made 7 February 1994 should be set aside, and the
matter remitted to the Federal Court
for determination, conformably with the
reasons of this Court, of the remaining issues on the appeal to that Court.
Footnotes:
1 The decision, Byrne v Australian Airlines Ltd [1994] FCA 888; (1994) 47 FCR 300; 120 ALR
274, overruled a previous decision of the Full Court
of the Federal Court in
Gregory v Philip Morris
Ltd (1988) 80 ALR 455. The latter case had been
applied in Bostik v Gorgevski [1992] FCA 209; (1992)
36 FCR 20; Wheeler v Philip Morris Ltd
[1989] FCA 230; (1989) 97 ALR 282 and Lane v Arrowcrest Group Pty Ltd (1990) 27 FCR 427; 99
ALR 45.
2 [1920] HCA 51; (1920) 28 CLR 66.
3 Mallinson v Scottish Investment Co Ltd [1920] HCA 51; (1920) 28 CLR 66 at 72.
4 (1898) 2 QB 402.
5 [1938] HCA 19; (1938) 59 CLR 417.
6 True v Amalgamated Collieries of WA Ltd (1940) AC 537.
7 Amalgamated Collieries of WA Ltd v True [1938] HCA 19; (1938) 59 CLR 417 at 431.
8 For example, the Sale of Goods Acts.
9 See Lister v Romford Ice and Cold Storage Co Ltd [1956] UKHL 6; (1957) AC 555 at 576;
Liverpool City Council v Irwin [1976] UKHL
1[1976] UKHL 1; ; (1977) AC 239; Codelfa Construction
Pty Ltd v
State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 at 345-346.
10 [1938] HCA 19; (1938) 59 CLR 417 at 423.
11 [1969] HCA 71; (1969) 122 CLR 237 at 246.
12 [1914] HCA 68; (1914) 18 CLR 691.
13 Josephson v Walker [1914] HCA 68; (1914) 18 CLR 691 at 700.
14 See Kilminster v Sun Newspapers Ltd [1931] HCA 37; (1931) 46 CLR 284.
15 (1977) 180 CLR 266 at 283.
16 See Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156
CLR 41 at 121.
17 See Hawkins v Clayton (1988) 164 CLR 539 at 573.
18 Davies and Freedland, Kahn-Freund's Labour and the Law, 3rd ed (1983) at
166-184.
19 See Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur
Insurance (Australia) Ltd [1986] HCA 14; (1986) 160 CLR 226
at 236.
20 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance
(Australia) Ltd [1986] HCA 14; (1986) 160 CLR 226 at
237.
21 [1920] HCA 51; (1920) 28 CLR 66.
22 See Maitland, The Forms of Action at Common Law, (1936) at 51.
23 See Sovar v Henry Lane Pty Ltd [1967] HCA 31; (1967) 116 CLR 397 at 404, 405.
24 [1937] HCA 18; (1937) 56 CLR 464 at 477-478.
25 O'Connor v SP Bray Ltd [1937] HCA 18; (1937) 56 CLR 464 at 478.
26 See, eg, Groves v Wimborne (1898) 2 QB 402; cf R v Dep Gov of Parkhurst;
Ex parte Hague (1992) 1 AC 146.
27 See Ex parte McLean [1930] HCA 12; (1930) 43 CLR 472 at 484.
28 [1946] HCA 25; (1946) 72 CLR 435.
29 National Security (Man Power) Regulations (SR 1942 No 34; 1944 No 175),
reg 14(1).
30 George v Mitchell and King Ltd (1943) 59 TLR 153; Woolley v Allen Fairhead
and Sons Ltd (1946) 62 TLR 294.
31 Automatic Fire Sprinklers Pty Ltd v Watson [1946] HCA 25; (1946) 72 CLR 435 at 471.
32 See also Turner v Australasian Coal and Shale Employees Federation [1984] FCA 275; (1984)
55 ALR 635 at 647-648 and Siagian v Sanel Pty Ltd [1994] IRCA 2; (1994)
122 ALR 333 at
342-345.
33 Automatic Fire Sprinklers Pty Ltd v Watson [1946] HCA 25; (1946) 72 CLR 435 at 454.
34 [1907] HCA 60; (1907) 5 CLR 174 at 185.
35 [1923] HCA 32; (1923) 33 CLR 229 at 237, 248, 249, 252, 253.
36 Automatic Fire Sprinklers Pty Ltd v Watson [1946] HCA 25; (1946) 72 CLR 435 at 469.
37 See Gunton v Richmond-upon-Thames LBC (1981) Ch 448.
38 See Automatic Fire Sprinklers Pty Ltd v Watson [1946] HCA 25; (1946) 72 CLR 435 at 465;
Gunton v Richmond-upon-Thames LBC (1981)
1 Ch 448 at
468.
39 Gunton v Richmond-upon-Thames LBC (1981) Ch 448 at 468.
40 However, cf Hill v CA Parsons Ltd (1972) Ch 305; Thomas Marshall (Exports)
Ltd v Guinle (1979) Ch 227.
41 Automatic Fire Sprinklers Pty Ltd v Watson [1946] HCA 25; (1946) 72 CLR 435 at 454.
42 [1978] HCA 42; (1978) 139 CLR 410 at 429.
43 Richardson v Koefod (1969) 3 All ER 1264 and Thorpe v South Australian
National Football League (1974) 10 SASR 17 at 29.
44 See Addis v Gramophone Co Ltd [1909] UKHL 1; (1909) AC 488 at 490-491 and Gunton v
Richmond-upon-Thames LBC (1981) Ch 448 at 469.
45 Gregory v Philip Morris Ltd (1988) 80 ALR 455 at 471 and 473 per Wilcox
and Ryan JJ; and Wheeler v Philip Morris Ltd [1989] FCA 230; (1989) 97
ALR 282 at 306-307 per
Gray J.
46 See Lane v Arrowcrest Group Pty Ltd (1990) 27 FCR 427 at 456; 99 ALR 45 at
74-75.
47 (1984) 8 IR 34.
48 [1994] FCA 888; (1994) 47 FCR 300; Black CJ, Keely, Beaumont, Gray and Heerey JJ.
49 (1988) 80 ALR 455.
50 (1988) 80 ALR 455 at 478-479. Jenkinson J dissented on these issues.
51 [1920] HCA 51; (1920) 28 CLR 66.
52 [1938] HCA 19; (1938) 59 CLR 417 at 431 per Dixon J.
53 [1969] HCA 71; (1969) 122 CLR 237 at 246.
54 [1994] FCA 888; (1994) 47 FCR 300 at 334-337.
55 [1994] FCA 888; (1994) 47 FCR 300 at 306-307.
56 [1946] HCA 25; (1946) 72 CLR 435.
57 [1994] FCA 888; (1994) 47 FCR 300 at 332.
58 s 170EE(2).
59 s 170EE(3), (4).
60 Attorney-General for New South Wales v Perpetual Trustee Company (Ltd)
[1955] HCA 9; (1955) 92 CLR 113 at 122-123 (PC).
61 Attorney-General for NSW v Perpetual Trustee Co (Ltd) [1952] HCA 2; (1952) 85 CLR 237 at
248.
62 The origins and objectives of the Australian system were explained by
Higgins J in his article, "A New Province for Law and Order
- Industrial Peace
Through Minimum Wage and Arbitration", (1915) 29 Harvard Law Review 13.
63 It is now provided by s 179 of the Trade Union and Labour Relations
(Consolidation) Act 1992 (UK) that, as between the collective
parties, a
collective agreement is conclusively presumed not to have been intended to be
"a legally enforceable contract" unless
it be in writing and contain a
provision to that effect, in which case it is conclusively presumed to have
been intended by the parties
to be a legally enforceable contract.
64 Selected Writings, (1978) at 46. See also his articles "Legislation
Through Adjudication. The Legal Aspect of Fair Wages Clauses
and Recognised
Conditions", (1948) 11 Modern Law Review 269, 429; "Blackstone's Neglected
Child: The Contract of Employment", (1977)
93 Law Quarterly Review 508.
65 This legislation has been frequently amended, more recently by the Trade
Union and Labour Relations (Consolidation) Act 1992
(UK) and the Trade Unions
Reform and Employment Rights Act 1993 (UK).
66 (1983) QB 54 at 80.
67 (1991) IRLR 286 at 292.
68 Sections 8 and 21 of the Industrial Conciliation and Arbitration Act
Amendment Act 1984 (SA) removed s 15(1)(e) and inserted
s 31 which referred
not to "the dismissal" but to the "decision to dismiss". The Industrial
Relations Act 1972 (SA) was repealed
by the Industrial and Employee Relations
Act 1994 (SA). Part 6 (ss 105-111) of the 1994 statute is headed "Unfair
Dismissal" and
provides for applications to the Industrial Relations
Commission of South Australia which must determine whether on the balance of
probabilities "the dismissal was harsh, unjust or unreasonable"; in deciding
that question, the Commission is obliged to have regard
to rules and
procedures for termination prescribed by or under Sched 8 of the Act and to
the Convention concerning Termination of
Employment at the Initiative of the
Employer, set out in Sched 7. See also s 34(5) of the Industrial Relations Act
1979 (Vic), inserted
by s 4 of the Industrial Relations (Further Amendment)
Act 1983 (Vic).
69 (1988) 80 ALR 455 at 478.
70 In his essay "Legal Framework", Flanders and Clegg (eds), The System of
Industrial Relations in Great Britain, (1954) at 58.
See also Hepple and
Fredman, Labour Law and Industrial Relations in Great Britain, 2nd ed (1986),
paras 151-152.
71 [1986] HCA 14; (1986) 160 CLR 226 at 236-238.
72 Liverpool City Council v Irwin [1976] UKHL 1[1976] UKHL 1; ; (1977) AC 239 at 253.
73 (1977) 180 CLR 266 at 283.
74 These include Secured Income Real Estate (Australia) Ltd v St Martins
Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596
at 605-606; Codelfa
Construction Pty
Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 at 351-352, 404; Hospital
Products Ltd v United States Surgical
Corporation [1984] HCA 64; (1984) 156 CLR 41 at 65-66,
95, 117-118, 121; Moorgate Tobacco
Co Ltd v Philip Morris Ltd (No 2) [1984] HCA 73; (1984)
156 CLR 414 at
435; Adelaide Corporation v Jennings Industries Ltd [1985]
HCA 7; (1985) 156
CLR 274 at 281-282; Hawkins v Clayton (1988) 164 CLR 539 at 571-573.
75 [1979] HCA 51; (1979) 144 CLR 596.
76 [1982] HCA 24; (1982) 149 CLR 337.
77 [1985] HCA 7; (1985) 156 CLR 274.
78 [1994] FCA 888; (1994) 47 FCR 300 at 361.
79 Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR
41 at 121.
80 Hawkins v Clayton (1988) 164 CLR 539 at 573.
81 (1968) 1 WLR 1278 at 1284. See also Heatley v Tasmanian Racing and Gaming
Commission [1977] HCA 39; (1977) 137 CLR 487 at 511.
82 (1968) 1 WLR 1278 at 1282.
83 (1964) AC 40 at 65.
84 (1964) AC 40 at 79, 122-123, 132.
85 (1985) 2 NZLR 378.
86 (1985) 2 NZLR 378 at 383.
87 Clyde Engineering Co Ltd v Cowburn [1926] HCA 6; (1926) 37 CLR 466 at 497; Ex parte
McLean [1930] HCA 12; (1930) 43 CLR 472
at 483-485.
88 (1940) AC 537.
89 [1931] HCA 37; (1931) 46 CLR 284.
90 Metal Trades Industry Association v Amalgamated Metal Workers' and
Shipwrights' Union [1983] HCA 28; (1983) 152 CLR 632 at 642.
91 [1977] HCA 51; (1977) 138 CLR 399.
92 [1977] HCA 51; (1977) 138 CLR 399 at 403.
93 (1988) 80 ALR 455 at 459. See also Australian Agricultural Co v Federated
Engine-Drivers and Firemen's Association of Australasia
[1913] HCA 41; (1913) 17 CLR 261 at
273.
94 Kilminster v Sun Newspapers Ltd [1931] HCA 37; (1931) 46 CLR 284.
95 [1994] FCA 888; (1994) 47 FCR 300 at 343.
96 For example, ss 66-74.
97 Salmond and Winfield, Principles of the Law of Contracts, (1927) at 47.
98 Shepherd v Felt and Textiles of Australia Ltd [1931] HCA 21; (1931) 45 CLR 359 at 378.
99 [1994] FCA 888; (1994) 47 FCR 300 at 361-364.
100 [1994] FCA 888; (1994) 47 FCR 300 at 365.
101 [1994] FCA 888; (1994) 47 FCR 300 at 342.
102 Esso Australia Resources Ltd v Plowman (1995) 69 ALJR 404 at 412; 128 ALR
391 at 401-402.
103 (1987) 10 NSWLR 468 at 487.
104 A more detailed description was given by Professor Glanville Williams in
his article "Language and the Law", which was published
in four parts: (1945)
61 Law Quarterly Review 71, 179, 283, 384 at 403:
"Examples of such terms 'implied' into contracts by rules of law are the
implied conditions of reasonable fitness and merchantable
quality on a
contract of sale of goods, the rule that payment and delivery of goods are
concurrent conditions, the implied warranty
of seaworthiness, the implied
condition on the letting of a furnished house that it is reasonably fit for
habitation, the implied
promise by one who agrees to build a house that the
house will be reasonably fit for habitation, the implied promise by a servant
not to disclose secret processes, not to hand over to a rival written work
completed for the master, and not, while still in his
master's employment, to
solicit the master's customers to transfer their custom to himself, the
implied promise by an employer (in
some cases) to furnish work, the implied
duty of care in the carriage of passengers and in looking after bailed goods,
and the implied
promise by a banker not to disclose the state of his
customer's account."
105 [1979] HCA 51; (1979) 144 CLR 596 at 607-608.
106 (1881) 6 App Cas 251 at 263.
107 (1881) 6 App Cas 251 at 270.
108 (1940) AC 701 at 717.
109 Cheall v Association of Professional Executive Clerical and Computer
Staff (1983) 2 AC 180 at 188-189; Thompson v ASDA-MFI Group
Plc (1988) Ch 241
at 266.
110 Halsbury's Laws of England, 4th ed, vol 9, par 354, fn 27.
111 Castlemaine Tooheys (1987) 10 NSWLR 468 at 490-493; Devefi v Mateffy
Pearl Nagy (1993) 113 ALR 225 at 240-241; Glanville Williams,
"Language and
the Law", (1945) 61 Law Quarterly Review 71, 179, 283, 384 at 404. The common
law as to the engagement of Crown servants
has been treated as apparently in a
special position. Not only is any appointment as a Crown servant, however
subordinate, terminable
at will unless otherwise provided by legislation
(Ryder v Foley (1906) 4 CLR 422 at 433-434, 449; Fletcher v Nott
[1938] HCA 25; (1938) 60 CLR
55
at 67, 77; Kaye v Attorney-General for Tasmania [1956] HCA 3; (1956) 94 CLR 193 at 198,
203; Marks
v The Commonwealth [1964] HCA 45; (1964) 111 CLR 549 at 587;
Director-General of
Education v Suttling [1987] HCA 3; (1987) 162
CLR 427 at 437; Kodeeswaran v Attorney-General
of Ceylon (1970) AC 1111 at 1118),
but it seems that the Crown cannot
deprive
itself
of that right, even though it has purported to fetter it in the
particular terms
of engagement of the servant: Sir
Douglas Logan,
"A Civil
Servant and his Pay", (1945) 61 Law Quarterly Review 240 at 255, 262;
cf
Ansett Transport Industries (Operations)
Pty Ltd
v The Commonwealth [1977] HCA 71; (1977) 139
CLR 54 at 74-76.
112 Kahn-Freund, "A Note On Status and Contract In British Labour Law",
(1967) 30 Modern Law Review 635 at 641-642.
113 Nullagine Investments Pty Ltd v Western Australian Club Inc [1993] HCA 45; (1993) 177
CLR 635 at 647-648, 659.
114 Norton, A Treatise on Deeds, 2nd ed (1928) at 547, where the authorities
are collected.
115 [1982] HCA 24; (1982) 149 CLR 337 at 345.
116 (1977) AC 239.
117 (1957) AC 555 at 576.
118 (1977) AC 239 at 255.
119 (1977) AC 239 at 254.
120 (1992) 1 AC 294. See also the Privy Council decision in Tai Hing Ltd v
Liu Chong Hing Bank (1986) AC 80 at 104-107, dealing
with the contract between
banker and customer.
121 (1992) 1 AC 294 at 304.
122 (1992) 1 AC 294 at 307.
123 [1946] HCA 25; (1946) 72 CLR 435.
124 [1994] FCA 888; (1994) 47 FCR 300 at 310.
125 [1994] FCA 888; (1994) 47 FCR 300 at 365.
126 [1946] HCA 25; (1946) 72 CLR 435 at 469.
127 The recent decisions are collected in Siagian v Sanel Pty Ltd [1994] IRCA 2; (1994) 122
ALR 333 at 342-345. What the author identifies as
the "elective" and
"automatic" theories of termination of contracts
of employment are analysed,
with some reference to Automatic
Fire Sprinklers and to the important question
of the availability of
equitable relief in such cases by McMullen, "A
Synthesis of
the Mode of Termination of Contracts of Employment", (1982) 41
Cambridge
Law Journal 110 at 111-133.
128 [1946] HCA 25; (1946) 72 CLR 435 at 472
129 [1946] HCA 25; (1946) 72 CLR 435 at 478.
130 Watson v Automatic Fire Sprinklers Pty Ltd (1946) 46 SR(NSW) 336 at 343.
131 TA Robinson and Sons Pty Ltd v Haylor [1957] HCA 76; (1957) 97 CLR 177 at 182-183.
132 Proprietors of the Daily News Ltd v Australian Journalists' Association
[1920] HCA 43; (1920) 27 CLR 532 at 537.
133 Doe d Murray v Bridges (1831) 1 B and Ad 847 at 859 [1831] EngR 57; (109 ER 1001 at
1005-1006); Deputy Federal Commissioner of Taxation v Brown
[1958] HCA 2; (1958) 100 CLR 32
at 42; Houston v Dewi Thomas Pty Ltd [1967] VicRp 33; (1967) VR 300 at 305-306; Lonrho Ltd v
Shell Petroleum (No
2) (1982) AC 173
at 185-186.
134 [1914] HCA 68; (1914) 18 CLR 691.
135 [1914] HCA 68; (1914) 18 CLR 691 at 697, 701-702.
136 Re Cram; Ex parte NSW Colliery Proprietors' Association Ltd [1987] HCA 28; (1987) 163
CLR 117 at 133-134.
137 Re Boyne Smelters Ltd; Ex parte Federation of Industrial Manufacturing
and Engineering Employees of Australia [1993] HCA 75; (1993) 177 CLR
446 at 454-455.
138 [1994] FCA 888; (1994) 47 FCR 300 at 349.
139 cf R v Commonwealth Court of Conciliation and Arbitration; Ex parte
Barrett [1945] HCA 50; (1945) 70 CLR 141.
140 cf Willocks v Anderson [1971] HCA 28; (1971) 124 CLR 293 at 297-298.
141 Collins v Charles Marshall Pty Ltd [1955] HCA 44; (1955) 92 CLR 529 at 540.
142 Fricke, "The Juridical Nature of the Action Upon the Statute", (1960) 76
Law Quarterly Review 240 at 254-255.
143 [1924] HCA 18; (1924) 34 CLR 363 at 371-372.
144 [1990] UKHL 8; (1992) 1 AC 58 at 159, 168-171. See also Scally v Southern Health Board
(1992) 1 AC 294 at 297 and X (Minors)
v Bedfordshire
CC
[1995] UKHL 9; (1995) 3 WLR 152 at
166; 3 All ER 353 at 364; but cf Lonhro Ltd v Shell Petroleum (No 2) (1982)
AC
173 at 185, where Lord Diplock
asked whether "upon the true construction of
the Act it is apparent that the obligation or prohibition
was imposed for the
benefit
or protection of a particular class of individuals, as in the case of
the Factories Acts and similar
legislation".
145 [1937] HCA 18; (1937) 56 CLR 464 at 477-478.
146 cf Pennsylvania v Union Gas Co (1989) 491 US 1 at 29-30.
147 Re Bolton; Ex parte Beane [1987] HCA 12; (1987) 162 CLR 514 at 518. See also Brennan v
Comcare [1994] FCA 1147; (1994) 50 FCR 555 at 572-575.
148 Bennion, Statutory Interpretation, 2nd ed (1992) at 631. The modern
Australian counterpart is legislation which adopts or otherwise
gives effect
to agreements between governments or public authorities and trading or
financial corporations, often in connection with
asset sales or resource
development; see, for example, the agreements analysed in Ansett Transport
Industries (Operations) Pty Ltd
v The Commonwealth [1977] HCA 71; (1977) 139 CLR 54; Cliffs
International Inc v Federal Commissioner of Taxation
[1979] HCA 8; (1979) 142 CLR 140 at
170-171;
and Westpac Banking Corporation v Commissioner of Stamp Duties (1994)
2 Qd R 212.
149 On the Interpretation of Statutes, 1st ed (1875) at 268-269.
150 Johnston and Toronto Type Foundry Company v Consumers' Gas Company of
Toronto (1898) AC 447 at 454-455. See also Martin v Western
District of the
Australasian Coal and Shale Employees' Federation Workers' Industrial Union of
Australia (Mining Department) (1934)
34 SR(NSW) 593 at 597; Barton v Moorhouse
(1935) AC 300 at 306-307.
151 (1877) 2 Ex D 441 at 448
152 Fricke, "The Juridical Nature of the Action upon the Statute", (1960) 76
Law Quarterly Review 240 at 259-260; Finn, "A Road
Not Taken: The Boyce
Plaintiff and Lord Cairns' Act", (1983) 57 Australian Law Journal 493 at 497.
153 (1898) 2 QB 402 at 407.
154 [1967] HCA 31; (1967) 116 CLR 397.
155 (1934) 34 SR(NSW) 593 at 596.
156 [1967] HCA 31; (1967) 116 CLR 397 at 405.
157 [1920] HCA 51; (1920) 28 CLR 66.
158 Section 49A was renumbered as s 63 by the Conciliation and Arbitration
Act 1947 and as s 123 by the Conciliation and Arbitration
Act 1956. The
comparable provision in the 1988 Act is s 179.
159 (1934) 34 SR(NSW) 593 at 597.
160 [1957] HCA 26; (1957) 97 CLR 36 at 54-55.
161 [1994] FCA 888; (1994) 47 FCR 300 at 317.
162 [1994] FCA 888; (1994) 47 FCR 300 at 347.
163 [1994] FCA 888; (1994) 47 FCR 300 at 313.
164 [1994] FCA 888; (1994) 47 FCR 300 at 328-329.
165 [1994] FCA 888; (1994) 47 FCR 300 at 328-329.
166 [1994] FCA 888; (1994) 47 FCR 300 at 332.
167 Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261 at 285-287; McKain v RW Miller and Co
(SA) Pty Ltd [1991] HCA 56; (1991)
174 CLR 1 at 19-20, 40, 48-50.
168 Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at 367.
169 (1975) 10 SASR 582.
170 (1975) 10 SASR 582 at 586, applied in R v Industrial Court; Ex parte Mount
Gunson Mines Pty Ltd (1982) 30 SASR 504 at 505.
171 (1978) 45 SAIR 637.
172 (1978) 45 SAIR 637 at 658.
173 (1990) 27 FCR 427 at 456.
174 [1992] FCA 209; (1992) 36 FCR 20 at 28.