Association of Professional Engineers Scientists and Managers Aust. (on behalf of Philip Edward Cross) and Deniliquin Council

[1994] IRCA 168

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY  N^O.  NI   253  of  1994

Between:  ASSOC. OF PROFESSIONAL ENGINEERS SCIENTISTS & MANAGERS AUST. (ON BEHALF OF PHILIP EDWARD CROSS)

Applicant

And:  DENILIQUIN COUNCIL
Respondent

Before:          Judicial Registrar Walker
Place:  Sydney
Date:               9 December 1994

REASONS FOR JUDGMENT

The applicant in this case represents Mr Philip Edward Cross who was, prior to an alleged redundancy by the respondent, employed as the Director of Works and Services on the Deniliquin Shire Council from the 22 April 1992 to the 19 April 1994.

The central issues in this case are whether there was a contract of employment between Mr Cross and the Deniliquin Shire Council and, if so was there a term incorporated into that agreement that on the introduction of the new Local government Act the contract would then become fixed for a five year period from that date and also as the reason for termination was attributed to redundancy, was it in the circumstances harsh unjust and unreasonable.

BACKGROUND.

Mr Cross has a honours degree in civil engineering and is also a qualified local government engineer.  He commenced work with Goulburn City Council on the 3 March 1966 as a cadet engineer and had worked his way up to the position of deputy engineer, acting from time to time as Director of Engineering when  that  person was absent.

In February 1992 Mr Cross saw an advertisement in the newspaper for the position of Director of Works and Services for the Deniliquin Municipal Council. He gave evidence that the position appealed to him because he saw it as a promotion and a chance to lead an engineering department.  He explained that the attraction to this position was the offer of a fixed term, performance-based contract for a period up to five years with the suitable applicant on the implementation of the proposed new local government legislation.  He considered this security of tenure to be of the utmost importance as he had two sons at high school and this period would enable them to complete their High School certificates in Deniliquin.

The advertisement is set out hereunder,

Deniliquin Municipal Council

DIRECTOR - WORKS & SERVICES

Applications are invited and will be received up until 5.00 pm on Wednesday 19 February 1992 , for the above mentioned position.

The Director of Works and Services is a member of the Councils senior management team and has responsibility for the Councils Works Staff, which is presently numbers 46.

Applicants should therefore be highly motivated professionals with management experience and must hold an Ordinance 4 Certificate as a Municipal Engineer. Experience in Town Planning would also be an advantage.    

Salary and other conditions of employment will be in accordance with the Local Government Senior Officers Award for a Grade 7.  Council and a motor vehicle will be provided  by the Council and will be available for full private use under its relevant policy.  A 19-day work roster is used and the Council has a policy for payment of part untaken sick leave (subject to a qualifying period).

The Council will be prepared to negotiate a fixed term performance based contract for a period of up to five years with a suitable applicant on implementation of the proposed new Local Government legislation.

Applicants should provide full details of personal particulars, qualifications and experience and copies only of recent references.

Deniliquin is a town of 8,000 people situated on the Edward River in the southern Riverina and offers a high level of facilities including four primary schools, a modern high school, a College of TAFE and excellent recreation clubs.  It is situated within easy distance by road from Melbourne, has a daily air service to Sydney and has direct connection by coach to all major centres.

A job description, and further details related to the appointment may be obtained from the undersigned on (058) 81 2444 (bh) or (058) 81 3503 (ah).

B.R. COCKAYNE,

Town Clerk/ General Manager.

Mr Cockayne gave evidence that he drafted the advertisement with the committee delegated for that purpose and had inserted the clause, “The Council will be prepared to negotiate a fixed term performance based contract for a period of up to five years with a suitable applicant on implementation of the proposed new Local Government Legislation”.  He explained that the reason for inserting this clause was that,

“I didn’t think we were attracting many and good enough applicants to previous positions we advertised and with the imminent local - then imminent - or it seemed imminent - Local Government Act which ultimately came in some time later I was concerned if we didn’t put such a clause in we wouldn’t get any - or we were unlikely to get many, if any, applicants so I recommended that to the committee and - that the clause be inserted and it was about the main thing I recall from that - those deliberations.”

Further into his evidence I asked Mr Cockayne the reason for the inclusion of this clause into the advertisement and  by way of explanation he said,

“Well, that time there were some - indefinite about what would actually end up but it was clear that there were going to be fixed term contracts and performance based contracts. I felt that if we didn’t indicate our willingness to enter into such a contract with the appointee that nobody would be inclined to apply, especially in view of we’d been having some difficulty in attracting suitable applicants for previous advertisements.”

I then asked him if it was an inducement to enter into a contract and Mr Cockayne replied,

“Well  my expectation was that it would lead to a contract.”

Later when asked if it was his view that whoever was successful at the interview, would at some time or other go onto a contract, and was that the reasoning behind the inclusion of the clause in the advertisement, Mr Cockayne, said yes.

THE INTERVIEW

On the 3 March 1992 Mr Cross attended an interview at the Council chambers at Deniliquin. The new Local Government Act was expected to come into effect in about mid 1992, some three or four months later, and Mr Cross gave evidence that he would have only been interested in moving to Deniliquin if he was offered the security of a fixed term contract,

“...why would I move from Goulburn where I’d been for 28 years to - Deniliquin for a period of six months, sell my home and have my children’s education disrupted?”

Mr Cross, who impressed me as a witness, stated further that ,

“... the indications were that because I was the successful applicant for the position of director of works and services, that a contract would follow when the new Act came through...  So in my belief of coming to Deniliquin, I would at least have had a minimum of five, perhaps six years employment.”

It was argued by the respondent that no such offer was made to Mr Cross and that when the new Local Government Act came into effect within an expected few months that he would have to re-apply and chance the selection process once again. What transpired over the next two years however culminated in Mr Cross being made redundant when a subsequent General Manager was appointed to the Council and the long awaited restructuring was implemented pursuant to the new legislation. The issue as to the alleged redundancy will be dealt with further on.

To substantiate the respondents claim several Council members who had produced affidavits in this matter were called to give evidence  of their version of the offer to Mr Cross.  The evidence given by all of these witnesses was most unsatisfactory and I must therefore rely heavily upon the evidence given by Mr Barry Cockayne. Mr Leatham, one of the Councillors to give evidence on behalf of the respondent was  asked  if the Council made a formal offer to Mr Cross.  He replied,

“ No, only - that I’ve seen is a verbal offer at the day of interview..”

When Mr Leatham was asked who made the offer to Mr Cross he replied,,

“Would be  Barry, I think.”

By this he no doubt meant Mr Barry Cockayne the General Manager was the person who made the offer to Mr Cross.

THE OFFER

From the evidence given by Mr Cockayne, there can be no doubt that he was satisfied that the offer made by Council to Mr Cross included a promise that Mr Cross would automatically be given a fixed term contract when the new Act came in.  When I asked Mr Cockayne if it was his understanding that the person selected at this interview would then go onto a contract when the new Act came in he explained that,

“....my expectation was that the Act would come in soon after these events, that we would then thrash out the details of a longer term contract, the terms and references of the fine details, if you like, and that would embody a longish term. “

He explained that the offer Council was making to Mr Cross included the five year performance based contract,

“... I took them back to the advertisement and said all of the conditions and after they reaffirmed that I said, including the one about the clause about the contract, yes, yes, but it was not something I felt they considered at great length, but it was certainly included in their resolution”

Mr Cockayne was asked by Counsel if the successful applicant at the first stage would be the successful applicant at the second stage. He replied,

“Yes, I didn’t really expect a second stage of advertisement, though”

On the 9 March 1992 Mr Cross was sent a formal offer by letter for the position of Director of Works and Services, as set out below,

Reference is made to your interview in Deniliquin on Wednesday 4th March for the abovementioned position and to our subsequent telephone conversation and confirmation is hereby given of the Council’s offer to appoint you to the position of Director of Works and Services on its staff.

In resolving to make this offer to you, the Council resolved to request that on your acceptance of the appointment to the position you give consideration to undertaking a course in town planning which would ultimately lead to a qualification in that area.

The offer of the appointment is to be subject to:-

(a)         The local government Seniors Officers Award.

(b)The general terms and conditions as set out in the relevant advertisement and job description as provided for the position (refer attached copies).

(c)The provision of motor vehicle of a Berlina or equivalent standard under the conditions as detailed in the Council’s standard form of Industrial Agreement (see sample copy attached).

(d)Your formal acceptance of the offer.

As with all staff positions on this Council, you will therefore be eligible to receive an additional allowance of $52 per annum after two months period of satisfactory service and for payment of untaken sick leave in accordance with the Council’s Industrial Agreement (providing for payment of 25% after 10 years and 50% after 15 years).

It would be appreciated therefore if you could confirm at your earliest convenience your acceptance of this offer and for you to make arrangements to commence duties as soon as reasonably possible.

As indicated in our telephone discussions, I convey the Council’s warmest regards in relation to your appointment and look forward to a mutually satisfying involvement with you in Local Government in Deniliquin.

Yours faithfully

B.R. COCKAYNE

Town Clerk /General Manager.

THE ACCEPTANCE

Mr Cross made a formal acceptance by way of letter dated 11 March 1992 in accordance with the formal offer of appointment.  His final paragraph of his acceptance was in the following  terms,

“May I take this opportunity to thank both you and your Council for the courtesy shown to me and I look forward to a rewarding and challenging career in Deniliquin.”

From this paragraph it is obvious that Mr Cross is not accepting an interim contract pending the introduction of the Local Government Act. He states that he was looking forward to a rewarding and challenging career not to a further interview in six months time .

THE CAREER

Mr Cross commenced his employment with Deniliquin Council on the 22 April 1992, and from all accounts he carried out the position of Director of Works and Services in a professional and efficient manner.  He gave evidence, which was not in any way challenged by the respondent that, 

“Over the period of two years that I’d been with Council I had received nothing but praise from all of the Council on numerous occasions, virtually every Council meeting on a monthly basis.  Things I did implement new work practices that were changed, new ways that we were doing things on a very professional basis.  Council was quite pleased with the services that I had to offer. They got value for money, I worked considerably long hours to ensure that work was done on a professional basis, there were obvious signs of improvements on the town of things that I and the staff had achieved in the two years that I’d been there and there is nothing on my file to indicate that Council were unhappy with the services that I was providing.”

As the Director of Works and Services, Mr Cross was in control of a budget of six million dollars, two thirds of the total of the Councils budget and staff in excess of fourty.  There were two other Directors under the control of the General Manager, the Director of Corporate Services, and the Director of Environmental and Development Services. This latter Director was in charge of two staff, including the Dog catcher.

THE RESTRUCTURE

In July 1993 the long awaited Local Government Act was finally introduced and in October of 1993 Deniliquin Council advertised the vacant General Managers position. On the 29 November 1993, Mr Neil David Armstrong was appointed as the new General Manager. Mr Cross had now served one year and seven months as the Director of Works and Services, without formal confirmation of the five year fixed term contract. It appeared that the Council was more concerned with filling the General Managers position, and when that position was filled, failed to honour their promise to Mr Cross. This of course is understandable in the light of the delay in the new Act being implemented and the departure of Mr Cockayne, the person who would have arranged the formalities.

On the 27 January 1994 the new General Manager, Mr Armstrong summoned Mr Cross to attend his office to discuss changes to management. No notice had been given to Mr Cross as to these changes and he became very concerned when he discovered that some of his duties had been transferred away from his control. However, of most concern was that he was now referred to as the “Acting” Director of Works and Services, even though he had been appointed to the position on merit and had been promised a five year fixed term on the introduction of the Local Government Act. Mr Cross was then formally notified by memorandum as set out hereunder,

Interim Management Arrangements

Dear Philip,

As per our discussions today, as from Monday 31 January 1994, the new interim arrangements concerning your acting capacity as “Director of Works & Services is confirmed at the same rate as you have been acting on to date, and with the same entitlements as per your old Award.

Acting as General Manager in my absence will not be automatic, but will be my decision based on the requirements at the time.

As already mentioned in discussions with you in my office and at “CMG”, I will notify you as to permanent management arrangements after my discussions with Council, sometime towards the end of March this year.

I anticipate permanent management structure to be in place by 30 June 1994.

I look forward to your co-operation in these matters as we progress through our restructuring process.

Although he was very concerned as to this proposal Mr Cross said he continued on, safe in the knowledge that he would be appointed to his position in due course. He gave evidence that Mr Armstrong had not indicated to him that he would be made redundant however Mr Armstrong did mention that he could not justify a Director having a staff of two including a dog catcher. This gave Mr Cross the impression that the other Directors work may be amalgamated into his position if in the future any further changes came about.

In March 1994 Mr Armstrong had submitted to Council for their approval, three options for a restructure of the Councils management. Proposal “A” was the old structure under which Mr Cross was originally employed, proposal “B” consisted of a structure whereby Mr Armstrong was the sole manager and structure “C” was called , “The Preferred New Structure”, which in effect  absorbed into Mr Cross’  old position, the Director of Health & Building which in substance was only responsible for two staff members, including the dog catcher. The Council approved Mr Armstrongs preferred new structure “C” and Mr Cross was notified by letter of the 25 March that  advertisements would appear in the newspapers on the 29 March 1994 and that he would need to apply. He was also asked if he would act in his current position until a permanent appointment was finalised.

On receiving this letter Mr Cross approached Mr Armstrong and served him with a letter requesting the Council to officially formalise the original offer.  No reply was ever received by Mr Cross to his letter and Mr Armstrong gave evidence,

“I could not find a contract that had been entered into and I referred it to our lawyers.”

Mr Cross had no option, he thought, but to apply for his advertised position and he still remained confident that he would be thereafter confirmed in the position.  No discussions had been held with Mr Cross by Mr Armstrong or the Council concerning the possibility of redundancy.

Mr Cross attended the interview on the 18 April 1994 and was informed that he had been unsuccessful and that Mr Terry O’Connor the  Director in charge of the  two staff, including the dog catcher was the successful candidate. He was also told that he was now redundant. Mr Cross was asked if he was surprised by this decision, he replied that he was devastated. He explained that Mr O’Connor was not a qualified Engineer and that he had little managerial experience because of  only having two staff members to control and a very small budget while he had over forty staff and a budget of $6 million. The restructured position was basically the same position that he had applied for and had been appointed to on merit two years before with the exception of some supervisory duties tacked on the end. Having examined the new statements of duties I am satisfied that the position was in fact substantially the same as the duties Mr Cross was undertaking before the  interim management restructure.

On the  24 October 1994 the Council advertised for the services of a qualified engineer. Mr Cross was advised by his Union to apply for this position pending the hearing of these proceedings and on the 28 November 1994 the applicant filed a Notice of Motion seeking to restrain the respondent from filling the position pending the hearing of this case. I granted this injunction on the 28 November 1994 and extended it until I handed down this judgment.  Although Mr Cross submitted an application for this position he failed to  obtain an interview.

THE LOCAL GOVERNMENT ACT 1993 No. 30.

The contents of the Local Government Act was common knowledge some time before its introduction and in fact Mr Cockayne had advised the selection committee that had interviewed and offered Mr Cross his original contract on its provisions. The advertisement referred to a, “fixed term performance based contract for a period of up to five years”.

Section 338 of the Local Government Act 1993 is as follows, 34

(1)The general manager and other senior staff  of the council are to be employed under contracts that are performance-based.

(2)The term of a contract must be not less than 12 months or more than 5 years (including any option for renewal )

Part 5 of the Act relates to other provisions concerning staff and  Section 348 sets the provisions as to advertising of staff positions. 348.

(1)When it is proposed to make an appointment to a position within the organisation structure of the council, the position must be advertised in a manner sufficient to enable suitably qualified persons to apply for the position.

(2)If the position is a senior staff position, the requirement of this section is satisfied if the position is advertised at least twice in a daily newspaper circulating throughout the state.

(3)This section does not apply to:

(a)the re-appointment, under a new contract, of a senior staff member whose contract has expired........ (emphasis added)

Under Schedule 7 of the Local Government Act, Part 6, sets out provisions as to how councils are to be staffed and clause 39 thereunder is headed, “Employment of existing employees as senior staff - advertising requirements”. The relevant parts of clause 39 are set out below,

(39)(1)     This clause applies to the appointment to the general manager’s position, or to any other senior staff position in Council’s organisation structure, of a person who, immediately before the appointed day, held a position on the staff of the Council to which the person was appointed within 3 years before the appointed day and continues to hold the position immediately before the appointment........ ...

(3)The requirements of Part 5 of Chapter 11 that relate to advertising do not apply to an appointment to which this clause applies, if the Council by resolution declares that:

(a)the position is part of an organisation structure that is not, as far as senior management positions are concerned, substantially different from the structure existing before the appointed day and

(b)there has been no substantial change in the duties or responsibilities of the position concerned; and

(c)the position was advertised in a manner that, if section 348 had been in force at the time the position was advertised, would have complied with that section; and

(d)the person appointed held a similar position at the appointed day under an appointment made on a merit basis  (emphasis added)

Under this legislation the Council could have simple complied with their original contract with Mr Cross without any need to re-advertise the position. There  had been no real changes made to the position and the duties and responsibilities were essentially the same and the original advertisement would have complied with section 348, as Mr Cross had been appointed on merit.

FINDINGS

I am satisfied that there was a contract between the Deniliquin Municipal Council and Mr Cross, a term of which was that on the implementation of the new Local Government Act Mr Cross would go onto a fixed term contract for a period of five years. Mr Cockayne corroborated Mr Cross’s version as to the offer made by council to him and despite the argument by the respondent that the contract is uncertain as it is subject to the new Act coming in , I remain unconvinced. There was no uncertainty of the new Act coming in, it was only the exact date that was unknown and any breach of this fundamental term would only occur when in fact the Act became law. The word “negotiate” in the contract, can simply mean , “enter into”, and taking into account the circumstances surrounding the contract and the evidence of the parties I am satisfied that this contract was not therefore a contract to negotiate a contract at a future date but rather a promise that on the date of the new Local Government Act Mr Cross would automatically be given a fixed term of employment for a period of five years. Damages for breach of this term can be calculated and Mr Cross claimed such an amount in his application in the sum of $350,000.00, “which is the value of a 5 year contract”.

I find that the Council’s claim that Mr Cross was terminated on the ground of redundancy to be harsh, unjust and unreasonable, as the redundancy came about after he failed to be selected for an alleged new position. If he was to be redundant he would have been so when the new position was created  back on the 23 March 1994 and he should have been consulted and given notice by the General Manager.  What happened of course was that he was asked  in the letter of the 25 March 1994,

“if you would act in your current position until the matter of permanent appointments are finalised.”

Mr Cross gave evidence that at no time had Mr Armstrong or the Council indicated to him that he would become redundant and he was led to believe that the new position would be his.

In matter No. VI 656 of 1994, Hunt v. STR Tech Engineering P/L determined by Judicial Registrar Ryan on the 23 September 1994,  there was consideration given as to termination by redundancy and in that case although he was satisfied there had been a genuine redundancy he nevertheless found the termination harsh, unjust and unreasonable. Reference was made to a decision of the Employee Relations Commission of Victoria in full session on the 22 July 1993, where at page 10 it was stated,

“In approaching matters alleging that a dismissal is harsh unjust or unreasonable, it is not enough for an employer to establish that the circumstances are one of a genuine redundancy. The dismissal must be tested against substantive and procedural fairness. It is insufficient for an employer to raise the aegis of a genuine redundancy as a wand against the Commission intervening where the circumstances in which the redundancy was imposed are otherwise harsh unjust or unreasonable. The obligation to consult, to provide adequate notice and to apply objective selection criteria in determining which employee is to be made redundant are factors in determining whether a dismissal was harsh unjust or unreasonable. the concept of “industrial fair play” is to be observed by both parties to the contract of employment and the need to make employees redundant does not absolve employers from the general principle. A failure by an employer to ensure that these principles are followed may lead to a finding characterising a dismissal as harsh unjust or unreasonable and to consequential orders. The fact that an employer has complied with the strict notice and severance payment provisions of the standards established in the Termination Change and redundancy cases (1984) 8 IR 34;(1984) 9 IR 115; 2 VIR 36) will not necessarily dissuade the Commission from intervening to provide a remedy where a dismissal on the grounds of redundancy comes within the statutory criteria of s.42(1) of the Employee Relations Act 1992.”

THE COURT ORDERS

1. That the applicant be re-instated by the respondent to the position occupied by him immediately prior to the termination or to a position which is substantially the same as that occupied by him prior to the termination.

2. That the Council formalise the fixed term performance based five year contract, at the same rate and conditions as applied to the applicant at the date of termination and that such period commence from  the date of termination.

3. That the period between the date of termination and the date of this decision be treated as continuous employment of  Mr Cross by the respondent for all purposes.

____________________________________________________

I certify this and the preceding eleven (11) pages are a true copy of the Reasons for Judgment of Judicial Registrar Walker.

Associate:  Jeynelle Moffat

_________________
Date:  24 January 1995

Representative for the Applicant:          Mr Philip Edward Cross

Assoc. of Professional Engineers Scientists & Managers Aust.

Mr G J De Courcey

Representative for the Respondent:     Deniliquin Council
  Shires Association of NSW
  Mr John McConnell