Byrne v Australian Airlines Ltd
Case
•
[1995] HCA 24
•3 May 1995
No judgment structure available for this case.
HIGH COURT OF AUSTRALIA
BRENNAN CJ, DAWSON, TOOHEY, McHUGH AND GUMMOW JJ
GEORGE ALBERT BYRNE and GEORGE MORTIMER FREW v AUSTRALIAN AIRLINES LIMITED
(1995) 131 ALR 422
11 October 1995
Headnote
Hearing
CANBERRA, 2 and 3 May 1995
#DATE 11:10:1995
Counsel for the Appellants: B.J. Gross QC and
B.D. Hodgkinson
Solicitors for the Appellants: Carroll and O'Dea
Counsel for the Respondents: D.F. Jackson QC and
F. Parry
Solicitors for the Respondents: Freehill Hollingdale
and Page
Orders
1. Appeal dismissed.
2. (a) Respondent's application for special leave to cross-appeal
granted. Cross-appeal allowed.
(b) Paragraphs one, two, three and four of the order of the Full
Court of the Federal Court set aside.
(c) Remit the matter to the Full Court of the Federal Court for
reconsideration in the light of this Court's reasons for
judgment.
3. No order as to costs.
Decisions
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:
"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."
Each appellant sought an order under s 178 of the Industrial Relations Act 1988 (Cth) ("the Act") for the imposition of a penalty and an order under s 356 for the payment of the penalty to him. The maximum penalty available in each case was $1,000. Invoking the accrued jurisdiction of the Federal Court, the appellants also sought damages for breach of contract and for breach of statutory duty.
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.
...
170DE(1) An employer must not terminate an employee's employment unless 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.
(2) A reason is not valid if, having regard to the employee's capacity and conduct and those operational requirements, the termination is harsh, unjust or unreasonable. This subsection does not limit the cases where a reason may be taken not to be valid."
The remedies which the Industrial Relations Court of Australia might grant under s 170EE in respect of such wrongful termination of employment included "an order that the employer pay compensation to the employee"(58). However, s 170EE was repealed by s 8 of the Industrial Relations Amendment Act (No 2) 1994 (Cth), with effect from 30 June 1994, and a new s 170EE was inserted. This contains detailed provisions by which the amount of compensation is to be assessed, including the specification of upper limits(59). Thus, in some cases, there would remain the possibility of a higher award of damages for breach of contract of the nature contended for by the present appellants.
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.
"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) 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) 36 FCR 20; Wheeler v Philip Morris Ltd (1989) 97 ALR 282 and Lane v Arrowcrest Group Pty Ltd (1990) 27 FCR 427; 99 ALR 45.
2 (1920) 28 CLR 66.
3 Mallinson v Scottish Investment Co Ltd (1920) 28 CLR 66 at 72.
4 (1898) 2 QB 402.
5 (1938) 59 CLR 417.
6 True v Amalgamated Collieries of WA Ltd (1940) AC 537.
7 Amalgamated Collieries of WA Ltd v True (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 (1957) AC 555 at 576; Liverpool City Council v Irwin (1977) AC 239; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 345-346.
10 (1938) 59 CLR 417 at 423.
11 (1969) 122 CLR 237 at 246.
12 (1914) 18 CLR 691.
13 Josephson v Walker (1914) 18 CLR 691 at 700.
14 See Kilminster v Sun Newspapers Ltd (1931) 46 CLR 284.
15 (1977) 180 CLR 266 at 283.
16 See Hospital Products Ltd v United States Surgical Corporation (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) 160 CLR 226 at 236.
20 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 at 237.
21 (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) 116 CLR 397 at 404, 405.
24 (1937) 56 CLR 464 at 477-478.
25 O'Connor v SP Bray Ltd (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) 43 CLR 472 at 484.
28 (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) 72 CLR 435 at 471.
32 See also Turner v Australasian Coal and Shale Employees Federation (1984) 55 ALR 635 at 647-648 and Siagian v Sanel Pty Ltd (1994) 122 ALR 333 at 342-345.
33 Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at 454.
34 (1907) 5 CLR 174 at 185.
35 (1923) 33 CLR 229 at 237, 248, 249, 252, 253.
36 Automatic Fire Sprinklers Pty Ltd v Watson (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) 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) 72 CLR 435 at 454.
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) 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) 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) 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) 28 CLR 66.
52 (1938) 59 CLR 417 at 431 per Dixon J.
53 (1969) 122 CLR 237 at 246.
54 (1994) 47 FCR 300 at 334-337.
55 (1994) 47 FCR 300 at 306-307.
56 (1946) 72 CLR 435.
57 (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) 92 CLR 113 at 122-123 (PC).
61 Attorney-General for NSW v Perpetual Trustee Co (Ltd) (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) 160 CLR 226 at 236-238.
72 Liverpool City Council v Irwin (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) 144 CLR 596 at 605-606; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 351-352, 404; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 65-66, 95, 117-118, 121; Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414 at 435; Adelaide Corporation v Jennings Industries Ltd (1985) 156 CLR 274 at 281-282; Hawkins v Clayton (1988) 164 CLR 539 at 571-573.
75 (1979) 144 CLR 596.
76 (1982) 149 CLR 337.
77 (1985) 156 CLR 274.
78 (1994) 47 FCR 300 at 361.
79 Hospital Products Ltd v United States Surgical Corporation (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) 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) 37 CLR 466 at 497; Ex parte McLean (1930) 43 CLR 472 at 483-485.
88 (1940) AC 537.
89 (1931) 46 CLR 284.
90 Metal Trades Industry Association v Amalgamated Metal Workers' and Shipwrights' Union (1983) 152 CLR 632 at 642.
91 (1977) 138 CLR 399.
92 (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) 17 CLR 261 at 273.
94 Kilminster v Sun Newspapers Ltd (1931) 46 CLR 284.
95 (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) 45 CLR 359 at 378.
99 (1994) 47 FCR 300 at 361-364.
100 (1994) 47 FCR 300 at 365.
101 (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) 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) 60 CLR 55 at 67, 77; Kaye v Attorney-General for Tasmania (1956) 94 CLR 193 at 198, 203; Marks v The Commonwealth (1964) 111 CLR 549 at 587; Director-General of Education v Suttling (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) 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) 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) 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) 72 CLR 435.
124 (1994) 47 FCR 300 at 310.
125 (1994) 47 FCR 300 at 365.
126 (1946) 72 CLR 435 at 469.
127 The recent decisions are collected in Siagian v Sanel Pty Ltd (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) 72 CLR 435 at 472
129 (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) 97 CLR 177 at 182-183.
132 Proprietors of the Daily News Ltd v Australian Journalists' Association (1920) 27 CLR 532 at 537.
133 Doe d Murray v Bridges (1831) 1 B and Ad 847 at 859 (109 ER 1001 at 1005-1006); Deputy Federal Commissioner of Taxation v Brown (1958) 100 CLR 32 at 42; Houston v Dewi Thomas Pty Ltd (1967) VR 300 at 305-306; Lonrho Ltd v Shell Petroleum (No 2) (1982) AC 173 at 185-186.
134 (1914) 18 CLR 691.
135 (1914) 18 CLR 691 at 697, 701-702.
136 Re Cram; Ex parte NSW Colliery Proprietors' Association Ltd (1987) 163 CLR 117 at 133-134.
137 Re Boyne Smelters Ltd; Ex parte Federation of Industrial Manufacturing and Engineering Employees of Australia (1993) 177 CLR 446 at 454-455.
138 (1994) 47 FCR 300 at 349.
139 cf R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141.
140 cf Willocks v Anderson (1971) 124 CLR 293 at 297-298.
141 Collins v Charles Marshall Pty Ltd (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) 34 CLR 363 at 371-372.
144 (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) 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) 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) 162 CLR 514 at 518. See also Brennan v Comcare (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) 139 CLR 54; Cliffs International Inc v Federal Commissioner of Taxation (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) 116 CLR 397.
155 (1934) 34 SR(NSW) 593 at 596.
156 (1967) 116 CLR 397 at 405.
157 (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) 97 CLR 36 at 54-55.
161 (1994) 47 FCR 300 at 317.
162 (1994) 47 FCR 300 at 347.
163 (1994) 47 FCR 300 at 313.
164 (1994) 47 FCR 300 at 328-329.
165 (1994) 47 FCR 300 at 328-329.
166 (1994) 47 FCR 300 at 332.
167 Maxwell v Murphy (1957) 96 CLR 261 at 285-287; McKain v RW Miller and Co (SA) Pty Ltd (1991) 174 CLR 1 at 19-20, 40, 48-50.
168 Australian Broadcasting Tribunal v Bond (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) 36 FCR 20 at 28.
Citations
Byrne v Australian Airlines Ltd [1995] HCA 24
Most Recent Citation
Andrews v Kocalidis [2010] VCC 982
Citations to this Decision
324
Cases Cited
0
Statutory Material Cited
0
Cited Sections