Commonwealth of Australia v Lawless No. Scciv-03-763

COMMONWEALTH OF AUSTRALIA v LAWLESS
[2003] SASC 293
Magistrates Appeal: Civil

PERRY J. (ex tempore) This is an appeal from rulings made on preliminary points of law argued before a magistrate sitting in the civil jurisdiction of the Magistrates Court at Adelaide.
On 6 August 2002 the respondent, Anthony Lawless, filed a claim in the Magistrates Court against the appellant, the Commonwealth of Australia (“the Commonwealth”), claiming $10,000 damages for alleged wrongful termination by the Commonwealth of his employment by Centrelink.
In its defence the Commonwealth asserted that Mr Lawless’s employment was governed by certain provisions of the Public Service Act 1999 (Cth), and that on a proper construction of those provisions, or alternatively on a proper construction of the contract of employment, Mr Lawless’s employment was lawfully terminated.
Further, the Commonwealth relied upon the Centrelink Development Agreement 1999 to 2002, an agreement certified by the Australian Industrial Relations Commission under the Workplace Relations Act 1996 (Cth), pursuant to which the Commonwealth asserted that Mr Lawless was barred from instituting proceedings in the Magistrates Court and was limited to a right of review under the Workplace Relations Act.
The Commonwealth denied any liability for damages.
The point which the Commonwealth raised with respect to the Workplace Relations Act has been abandoned, and it does not need further to be addressed.
The parties jointly requested a pre-trial determination of the issues raised in three paragraphs of the defence. I will in due course refer to those paragraphs.
On 31 January 2003 the magistrate gave a decision in which she effectively ruled against the Commonwealth on the relevant issues. She published reasons on that date.
The parties then sought further clarification of the reasons. In response to that request, the magistrate published further reasons on 5 June 2003. In practical terms, she adhered to her earlier ruling.
The Commonwealth has appealed to this Court against the decision of the magistrate which finds expression in the two separately delivered reasons to which I have referred.
It is convenient if I refer at this stage to some matters of background.
It is common ground that Mr Lawless was employed by the Commonwealth for the period from 27 November 2000 to 7 June 2002.
Mr Lawless’s initial engagement was confirmed by letter to Centrelink dated 27 November 2000. That letter confirms that the employment offered to Mr Lawless was for a term from that date to 8 June 2001, and was within the meaning of s 22(2)(b) of the Public Service Act, non-ongoing employment. I will refer later to the significance of that expression.
The letter also stipulated:
“You should note that it is possible for Centrelink to terminate your services within this period if:
·the reason for which you were employed no longer exists;
·..........”
On 7 May 2001 Centrelink wrote a further letter extending Mr Lawless’s employment to 7 June 2002. The extension as evidenced by that letter confirmed that the ongoing employment of Mr Lawless was extended for that period pursuant to s 22(5) of the Public Service Act.
That letter confirmed the stipulation made with respect to the earlier period of Mr Lawless’s employment, namely that Centrelink might terminate Mr Lawless’s services “... if the reason for which you were employed no longer exists”.
Both letters confirmed that the reason for the employment was to answer what was described as a “temporary demand” for employees to undertake customer service work and general clerical duties.
In purporting to terminate Mr Lawless’s employment on 20 December 2001, Centrelink terminated it before the expiry of the extended term of employment. The basis for the early termination was said by Centrelink to be that the reason for which Mr Lawless was employed no longer existed.
As I have said, the issues which were by agreement of the parties submitted to the magistrates for pre-trial determination were the issues raised by three paragraphs of the defence. They were paragraphs 5, 6 and 8.
Before referring to those paragraphs, I will refer to the relevant sections of the Public Service Act.
Section 22 relevantly provides:
“(1)An Agency Head, on behalf of the Commonwealth, may engage persons as employees for the purposes of the Agency.
(2)The engagement of an APS employee (including an engagement under section 72) must be:
(a)     as an ongoing APS employee; or
(b)    for a specified term or for the duration of a specified task; or
(c)    for duties that are irregular or intermittent.
(3)the usual basis for engagement is as an ongoing APS employee.
(4)The regulations may limit the circumstances in which persons may be engaged as mentioned in paragraph 2(b) or (c).
(5)An engagement for a specified term may be extended, subject to any limitations prescribed by the regulations.
(6)..........”
Section 29 provides:
“(1)An Agency Head may at any time, by notice in writing, terminate the employment of an APS employee in the Agency.
Note: The Workplace Relations Act 1996 has rules and entitlements that apply to termination of employment.
(2)For an ongoing APS employee, the notice must specify the ground or grounds that are relied on for the termination.
(3)For an ongoing APS employee, the following are the only grounds for termination:
(a)     the employee is excess to the requirements of the Agency;
(b)    the employee lacks, or has lost, an essential qualification for performing his or her duties;
(c)    non-performance, or unsatisfactory performance, of duties;
(d)    inability to perform duties because of physical or mental incapacity;
(e)    failure to satisfactorily complete an entry-level training course;
(f)     failure to meet a condition imposed under subsection 22(6);
(g)    breach of the Code of Conduct;
(h_    any other ground prescribed by the regulations.
(4)The regulations may prescribe grounds or procedures applicable to the termination of the engagement of non-ongoing APS employees.
(5)Subsection (4) does not, by implication, limit the grounds for termination for a non-ongoing APS employee.”
Paragraph 5 of the defence pleads as follows:
“In answer to the whole of the Particulars of Claim, the defendant asserts that section 29 of the Act confers on an agency head an unfettered right to terminate the employment of a non-ongoing employee such as the plaintiff for any reason. Accordingly, to the extent any contract came into existence between the plaintiff and the defendant which circumscribed the circumstances in which the plaintiff’s employment could be terminated, that contract is, to the extent to which it purported to circumscribe the circumstances in which the plaintiff’s employment could be terminated, inconsistent with the Act and therefore void.”
Paragraph 6 provides:
“Further, the defendant asserts that the plaintiff’s employment was lawfully terminated pursuant to section 29 of the Act.”
Paragraph 8 is irrelevant, as that raises the issue of the Workplace Relations Act which is no longer pursued.
In the reasons published by the magistrate on 31 January 2003 she came to the following conclusion as to paragraphs 5 and 6 of the defence:
“25As to paragraphs 5 and 6 of the defence, I find that to the extent that any contract came into existence between the plaintiff and the defendant which circumscribed the circumstances in which the plaintiff’s employment could be terminated, that contract is, to the extent which it purports to circumscribe the circumstances in which the plaintiff’s employment could be terminated, inconsistent with the Public Service Act 1999 (Cth) and therefore void. However, such provisions are severable and do not derogate from the fixed term nature of the contract. See Thomas Brown & Sons Limited v Fazal Deen (1962) 108 CLR 391 at 411; Stenhouse Limited v Phillips (1974) AC 391 at 403.”
She held further that in consequence of that finding, s 29 of the Public Service Act:
“Does not avoid the consequences in damages for termination of employment if the termination is in breach of provisions of the contract.”
Effectively, the magistrate found in favour of the Commonwealth in terms of paragraph 5 of the defence which was filed, but on the hearing of the appeal, the Commonwealth appealed against the finding.
In her further reasons delivered on 5 June 2003, the magistrate held that:
“Section 29 of the Public Service Act is a comprehensive code in relation to the engagement, employment and termination of ACS employees.”
In her reasons of 5 June 2003 the magistrate specifically held that the grounds of determination set out in the advice of extension of engagement, which commenced with the ground that the reason for which Mr Lawless was employed no longer existed and extended to five other grounds, were inconsistent with s 29 of the Public Service Act, and were “invalid or void”.
But she held that they were severable.
So that in the net result, on her ruling, the Commonwealth would be left with a fixed term contract. If it terminated it prematurely, it would be exposed to potential liability in damages.
Not surprisingly, when confronted with findings to that effect, Mr Lawless shifted the grounds upon which he brought his case. Rather than arguing, as he had foreshadowed in paragraph 4 of the statement of claim, that the Commonwealth was in breach of the contract because there was in fact a continuing need or demand for service work and general clerical duties, and the termination of his employment was therefore wrongful, the plaintiff instead embraced the concept which finds expression in the conclusions ultimately reached by the magistrate to which I have referred.
In my view, and with great respect to the magistrate, her reasoning and her conclusions are wrong.
Although she correctly recognised that s 29 distinguishes between ongoing employees and employees engaged for the specific term or for a specified task, as the contract was for a specific term or a specified task, there was no reason why grounds for termination could not be specified in the contract of employment.
In expressing that view I have taken into account the argument put by Mr Stanley, who appeared for the respondent on the hearing of the appeal, that on a proper construction of s 22, when read with s 29, it was not open to specify in a contract of employment for a non-ongoing employee anything other than the term of the employment or the duration of a specified task. If grounds were specified, they could not be relied upon as justifying the early termination of employment, which on his argument would inevitably be wrongful if it occurred within the term of the contract.
Reading the two sections together and particularly having regard to s 29(4) and s 29(5), it seems to me that the ability of the parties to set out the terms of the employment of a non-ongoing employee is at large. Grounds may be set out which either reflect the provisions of s 29(3) which applies to ongoing employees, or they may be quite different problems.
So that although the grounds set out in the contract in question bear similarities to s 29(3), they did not alter the nature of the contract, which remains a contract for a specified term or for the duration of a specified task, and more particularly, it was a contract for non-ongoing employment within the meaning of the statutory provisions.
In this case, the agency was entitled to exercise the right of termination under s 29(1). But as a number of authorities have said, the right to termination did not insulate the Commonwealth from liability for damages for breach of contract if in fact the termination was otherwise in breach of the contract of employment. In that respect I refer in particular to two unreported decisions of the Supreme Court of the ACT: National Gallery of Australia v Jane Douglas[1] and Bryant v Defence Housing Authority.[2]
[1] [1999] ACTSC 79, 22 July 1999, Higgins J.
[2] [2002] ACTSC 43, 24 May 2002, Miles CJ.
Before parting with the matter, I should refer to an argument put by Mr Stanley that the appeal in this matter was incompetent, as the magistrate had only made a ruling which could not provide the basis for an appeal.
This is a surprising submission, given that the parties had agreed to the formulation of specific points to be determined by the magistrate ahead of the trial, in the hope that the answer to those points might either shorten the trial or render a trial unnecessary.
Mr Stanley accepts that it was open to the parties to formulate points for the magistrate to address ahead of the trial. In following that procedure, the magistrate was proceeding with a course similar to the procedure provided for in Rule 72 of the Supreme Court Rules.
It is true that the questions were not formulated in writing, but simply formulated by reference to the three paragraphs in the defence to which I have referred. Neither did the outcome of her rulings find expression in a sealed judgment, as would be the case in this Court.
However, there is in the Magistrates Court file a signed endorsement, that is, an endorsement signed by the magistrate, confirming the delivery of her rulings on each of the two dates in question.
Having regard to the manner in which the files in the Magistrates Court are maintained, it seems to me that those two endorsements made within the file constitute rulings on the points which she was asked to address at that stage.
Furthermore, having regard to the amplitude of the appeal provisions under s 40 of the Magistrates Court Act, and bearing in mind the definition of the words “judgment” in s 3 of that Act, it seems to me that the rulings made were clearly rulings from which an appeal properly lies in this Court.
In reaching that view, I have acknowledged that there may sometimes be rulings made incidentally during the course of the trial, such as rulings on admissibility of evidence or the like, which do not amount to an appealable order or direction.
But in this case, the ruling, albeit delivered in two instalments, seems to me to be a ruling which clearly determines points raised by the parties for the magistrate’s consideration at that stage. As such, they constitute an order which may properly be made the subject of an appeal to this Court.
Having regard to my reasons, the correct answer to the issues raised in paragraphs 5 and 6 of the defence of the Commonwealth should have been as follows:
(a)Section 29(1) of the Public Service Act (1999) (Cth) confers on an agency head an unfettered right to terminate the employment of a non-ongoing employee, but there is no provision in s 29 or elsewhere in the Act which limits the grounds upon which the employment of a non-ongoing employee may be terminated.
(b)The employment of a non-ongoing employee may be terminated in accordance with the relevant provisions of the contract of employment.
(c)The provisions in the contract of employment applicable to Mr Lawless were not inconsistent with the Act.
Having regard to those answers, it seems to me that this matter should now go to trial on the issues raised in paragraph 4 of the statement of claim and paragraph 7 of the defence. Indeed, the issues raised in those two paragraphs would seem now to be the only live issues in the case.
The appeal is allowed.
The answers given by the magistrate to the points raised for preliminary consideration by her are quashed, and the answers set out by me above are to be substituted.
[AFTER HEARING COUNSEL AS TO COSTS]
PERRY J: There will be no order as to the costs of and incidental to the appeal and the hearing before me.
JUDGMENT CITATIONS
LISTED IN ORDER OF APPEARANCE IN JUDGMENT
1. [1999] ACTSC 79, 22 July 1999, Higgins J.
2. [2002] ACTSC 43, 24 May 2002, Miles CJ.

[2003] SASC 293

25 August 2003