District Council of Barunga West v Hand
[2014] SASCFC 90
•6 August 2014
SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
DISTRICT COUNCIL OF BARUNGA WEST v HAND
[2014] SASCFC 90
Judgment of The Full Court
(The Honourable Justice Gray, The Honourable Justice Peek and The Honourable Justice Nicholson)
6 August 2014
EMPLOYMENT LAW - EFFECT OF INDUSTRIAL AWARDS, AGREEMENTS OR LEGISLATION ON EMPLOYMENT CONTRACT - PARTICULAR CASES
EMPLOYMENT LAW - CONTRACT OF SERVICE - TERMS OF CONTRACT - IMPLIED TERMS
EMPLOYMENT LAW - THE CONTRACT OF SERVICE AND RIGHTS, DUTIES AND LIABILITIES AS BETWEEN EMPLOYER AND EMPLOYEE - DURATION AND TERMINATION OF EMPLOYMENT - TERMINABLE ON REASONABLE NOTICE
EMPLOYMENT LAW - TERMINATION AND BREACH OF CONTRACT - GROUNDS - MISCONDUCT - GENERALLY
The respondent, Mr Hand, was employed by the appellant, the District Council of Barunga West, as its Chief Executive Officer from early 1997 pursuant to a verbal contract of indeterminate duration. During 2012 it became evident that Mr Hand’s relationship with the Mayor had broken down. Mr Hand proposed that he should retire as CEO in late 2014. On 14 November 2012, Mr Hand was given notice of the termination of his employment to take effect on and from 31 August 2013 (approximately nine and a half months notice). Mr Hand commenced an action in this Court claiming, inter alia, that the purported termination of employment was not in conformity with the requirements of s97 of the Local Government Act 1999 (SA) and invalid. He sought reinstatement as CEO, or alternatively damages. The Council contended, inter alia, that in any event it had been entitled to terminate Mr Hand’s employment upon five weeks notice in accordance with the terms of the relevant industrial award, being the South Australian Municipal Salaried Officers Award. In the alternative, the Council contended that the length of the notice, in fact provided, was reasonable at common law. The Council also argued that, in any event, it had been entitled to summarily dismiss Mr Hand for misconduct and failing to carry out his duties as CEO satisfactorily. The Judge found, inter alia, that Mr Hand’s employment contract was not covered by an award and that the contract of employment contained an implied term allowing termination, without cause, upon the giving of reasonable notice and that this was permitted notwithstanding the requirements of s97 of the Local Government Act 1999. His Honour also found that the Council had no entitlement to summarily dismiss Mr Hand. Finally, the Judge found that the notice of nine and a half months was not reasonable, and that a reasonable notice period was 12 months. Mr Hand was awarded damages for the shortfall in notice, in the amount of $27,884, and was awarded his costs on a party and party basis.
On appeal the Council argued that the Judge erred in finding: that Mr Hand’s employment was not covered by the Award; that it had been necessary to imply a term of reasonable notice into his contract; that the Council had not been entitled to summarily dismiss Mr Hand; and that, given the amount of damages ultimately recovered by Mr Hand, in failing to find that Mr Hand was not entitled to costs following the proper application of Rule 263(2)(h) of the Supreme Court Rules 2006 and s40(2) of the Supreme Court Act 2006. By way of cross-appeal Mr Hand asserted that the Council had, in fact, terminated Mr Hand’s employment for cause in breach of s97 of the Local Government Act 1999 which constitutes a code with respect to the termination for cause of a person employed as a Council CEO. On the appeal, and in the event that the Council was required to give reasonable notice, the Judge’s finding that this required 12 months notice to be given was not challenged. There was also no challenge to the Judge’s assessment of damages in this event.
Held, dismissing both the appeal and the cross-appeal (Nicholson J; Gray J and Peek J agreeing):
1. Mr Hand’s employment as CEO with the Council was not governed by any award.
2. The Council did not terminate Mr Hand’s employment summarily (for cause) but only purported to terminate without cause and upon giving appropriate notice and therefore the question of whether s97 of the Local Government Act 1999 constitutes a code with respect to termination for cause did not arise.
3. On the proper construction of the parties’ contract the Council was entitled to terminate Mr Hand’s contract on the basis of an implied term requiring reasonable notice notwithstanding s97 of the Local Government Act 1999.
4. The Judge’s finding that the Council had no entitlement to summarily dismiss Mr Hand was open on the evidence and should not be disturbed.
5. The Council was entitled to give its notice of termination whilst Mr Hand was on long service leave, such that the period of long service leave enjoyed by Mr Hand properly formed part of the period of notice given.
6. Notwithstanding the terms of Rule 263(2)(h) of the Supreme Court Rules 2006 and s40(2) of the Supreme Court Act 1935, the Judge’s discretion to award the costs of the trial in favour of Mr Hand did not miscarry.
Local Government Act 1934 s7, s14; Local Government Act 1999 s97, s99; Fair Work Act 1994 (SA) s90, s91, s94, s96; Supreme Court Act 1935 s40; Supreme Court Rules r263; Municipal Officers (South Australia) Award 1991; South Australian Municipal Salaried Officers Award 2006; Statutory Interpretation in Australia DC Pearce and RS Geddes, 6th ed 2006, LexisNexis Butterworths at [8.7]; Macken’s Law of Employment Sappideen, O’Grady and Warburton, 6th edition, Law Book Co, 2009 at [10.95], [7.100], referred to.
Hand v District Council of Barunga West [2013] SASC 182; Russell v Trustees of the Roman Catholic Church of the Archdiocese of Sydney (2007) 167 IR 121; Byrne v Australian Airlines Ltd (1995) 185 CLR 410; Wheeler v State of South Australia [2012] SASCFC 111; Brennan v Kangaroo Island Council [2013] SASCFC 151; BP Refinery (Western Port) Pty Ltd v Shire of Hastings (1977) 180 CLR 266; Westen v Union Des Assurances De Paris (No 2) (1996) 88 IR 268; Re Journalists (Metropolitan Daily Newspapers) Award (1959) 4 FLR 164; Australian Institute of Marine and Power Engineers v Australian Coastal Shipping Commission (1972) 146 CAR 468; Boston Deep Sea Fishing & Ice Co v Ansell (1888) 39 Ch D 339; Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359; Sunbird Plaza v Maloney (1988) 166 CLR 245; Lane v Arrowcrest Group Pty Ltd (1990) 27 FCR 427; Lane v Fasciale (1995) 5 VIR 508; Robe River Iron Associates v The Construction, Mining Energy, Timber Yards, Saw Mills and Woodworkers, Union of Australia (WA Branch) (1995) 75 WAIG 813; Concut Pty Ltd v Worrell (2000) 75 ALJR 312; In Re Coal Mining Industry (Miners) Award 1954 New South Wales [1959] 1 FLR 327; In Re Municipal Council of Sydney v Harvey (1932) AR (NSW) 180; Ramsey v Annesley College (No 2) [2013] SASC 145; Australian Education Union (SA) v Grieve [2000] SASC 430; White v State of South Australia (No 2) [2010] SASC 185, (2010) 270 LSJS 264; Calderbank v Calderbank [1975] 3 All ER 333; Morris v McEwen & Anor [2005] SASR 284, considered.
DISTRICT COUNCIL OF BARUNGA WEST v HAND
[2014] SASCFC 90Full Court: Gray, Peek and Nicholson JJ
GRAY J.
I have had the opportunity to read the draft reasons of Nicholson J. I agree with, and do not wish to add to, those reasons. I agree with the orders that Nicholson J has proposed.
PEEK J.
I agree with the orders proposed by Nicholson J and with his reasons.
NICHOLSON J.
Introduction
In these reasons I will refer to the appellant and cross-respondent to the appeal (the defendant at trial) as the Council and to the respondent and cross-appellant to the appeal (the plaintiff at trial) as Mr Hand.
For many years prior to and as at 14 November 2012, Mr Hand was employed by the Council as its chief executive officer (CEO). On that date, Mr Hand was given a notice of termination of his employment, to take effect on and from 31 August 2013, a period of notice of approximately nine and a half months.
Whilst a substantial period of notice was in fact given, the Council, by its defence at trial, maintained that it was entitled to terminate the employment relationship at will (that is, without any need to show cause) upon the giving of five weeks notice in accordance with the provisions of clause 3.2.1 of the South Australian Municipal Salaried Officers Award operational on and from 1 December 2006, as amended thereafter from time to time (the 2006 Award).[1] The Council also maintains that, after giving its notice of termination, it became aware that Mr Hand had engaged in various acts of misconduct such as would have justified summary dismissal, that is, dismissal without the need to give any notice at all. As such, so the Council argued, the termination of Mr Hand’s employment was justified in any event and the nine and a half months notice was, on any analysis, more than adequate. In the further alternative, the Council maintained that the employment could be terminated upon the giving of reasonable notice and that nine and a half months constituted reasonable notice.
[1] The terms of the 2006 Award are behind tab PW-1 in the Case Book (on appeal) vol IV.
Mr Hand, at trial, contended that the 2006 Award did not apply to his employment as CEO, that the Council purported to terminate for cause and that the only bases on which his employment could have been terminated for cause were those set out in s97(1) of the Local Government Act 1999,[2] none of which were applicable in the circumstances. As such, the Council was in breach of the requirements of s97(1)[3] rendering the notice void and the termination unlawful. Mr Hand sought a declaration that he remained CEO of the Council or, in the alternative, damages for wrongful dismissal. Any such damages should be assessed on the basis of all salary and benefits foregone between the date of termination (31 August 2013) and the time at which Mr Hand expected to (voluntarily) retire.
[2] During the hearing of the appeal the Court’s attention was directed to provisions of the Local Government Act 1934 and the Local Government Act 1999.
[3] Section 97 is in the following terms:
97—Vacancy in office
(1) A chief executive officer's appointment may be terminated by the council—
(a)on the ground that the chief executive officer—
(i) has been guilty of misconduct; or
(ii) has been convicted of an indictable offence punishable by imprisonment; or
(iii) has become bankrupt or has applied to take the benefit of a law for the relief of insolvent debtors; or
(iv) has, for any other reason, failed to carry out duties of the office satisfactorily or to any performance standards specified by the council or in any contract relating to his or her appointment; or
(v) has breached in any other manner any contract relating to his or her appointment; or
(b)on a ground or in circumstances specified in any contract relating to his or her appointment.
(2) A chief executive officer's appointment is terminated if the chief executive officer—
(a)resigns by notice in writing to the principal member of the council; or
(b)completes a term of office and is not reappointed; or
(c)is sentenced to imprisonment for an offence.
(3) Neither subsection (1)(a)(ii) nor subsection (2)(c) applies until the period for appealing against the conviction has expired or, if there is an appeal, until the appeal is determined.
Mr Hand denied that he had engaged in any acts of misconduct that would justify summary dismissal pursuant to s97(1) or otherwise. Whilst not pleaded, Mr Hand maintained that in the event the Council had been entitled to terminate upon the giving of reasonable notice, in all the circumstances, something more than nine and a half months notice was required as “reasonable”. Mr Hand also contended that because six months or so of the “notice” was served whilst he was on long service leave he had been given only approximately three months or so of actual notice.
The trial Judge made the following findings:
(i)the 2006 Award did not apply to the contract of employment;[4]
(ii)the contract of employment contained an implied term to the effect that the contract could be terminated, without cause, upon the giving of reasonable notice;[5]
(iii)section 97 of the Local Government Act does not operate to exclude or prevent the implication of a term into Mr Hand’s contract allowing termination on reasonable notice;[6]
(iv) the Council had failed to establish any relevant misconduct on the part of Mr Hand and had no entitlement to summarily dismiss him pursuant to s97(1)(a) of the Local Government Act;[7]
(v)the Council was always entitled to terminate the contract of employment by giving reasonable notice;[8] and
(vi)in the circumstances, reasonable notice amounted to 12 months and not nine and a half months.[9]
[4] Hand v District Council of Barunga West [2013] SASC 182 (Trial Judgment) at [60]-[61].
[5] Trial Judgment at [62].
[6] Trial Judgment at [65]-[92].
[7] Trial Judgment at [96]-[97].
[8] Trial Judgment at [96], [102].
[9] Trial Judgment at [103]-[109].
Mr Hand’s salary, at the time of termination, was $124,283 per annum. The Judge assessed damages in the amount of $27,884 based on two months and two weeks notice not provided and an allowance of one further week for annual and long service leave that would have accrued during that period of further notice. On the appeal, neither party challenged the mathematics of this assessment. In addition, if Mr Hand was entitled to “reasonable notice” as his Honour found, neither party now challenges the finding that this required 12 months notice,[10] in which case the nine and a half months notice as given, would be insufficient.
[10] There is no ground of appeal to this effect in either the Notice of Appeal or the Cross-Appeal and see the Council’s concession at appeal transcript (8 May 2014) T4.15.
Issues raised on the Council’s appeal and Mr Hand’s cross-appeal
The issues raised by the appeal and the cross-appeal can be summarised as follows.
(i)Ignoring for the present any potentially applicable statutory or award provisions, what were the terms of the contract of employment, concerning the Council’s right to terminate without cause, at the time the Council gave its notice?
(ii)Was Mr Hand’s employment governed by the 2006 Award (or any other award)?
(iii)If the 2006 Award (or any other award) applied, did clause 3.2.1 (or any cognate provision) apply so as to permit the Council to terminate on five weeks notice?
(iv)If the 2006 Award applied, did the contract of employment, nevertheless, contain an (overriding) implied term requiring reasonable notice for termination without cause on the basis, inter alia, that the 2006 Award only prescribed minimum standards subject to any agreement to the contrary, express or implied, by the parties?
(v)Does s97 operate as a code with respect to a Council’s right to terminate for cause so as to preclude any termination for cause not falling within the terms of s97?
(vi)If so, did the Council, in fact, terminate for cause, being a cause outside those permitted by s97 thus rendering the termination unlawful?
(vii)In any event, was Mr Hand guilty of misconduct on any of the bases pleaded by the Council?
(viii)If so, did any such misconduct fall within s97(1)(a) of the Local Government Act 1999 so as to justify the Council’s act of termination, in any event, and making the question of notice – five weeks, nine and a half months or reasonable notice – irrelevant?
(ix)Did the Council, in fact, only give significantly less than nine and a half months notice given that, for a substantial portion of the period given, Mr Hand was on long services leave?
(x)Even if the Judge’s decision were to be upheld on appeal, the Council also challenges the costs orders made with respect to the trial.
Nature and terms of the contract of employment particularly with respect to termination without cause (issue (i))
The evidence at trial was given upon affidavit. The primary evidence bearing on the question of the nature of Mr Hand’s contract of employment was that of Mr Hand himself in his affidavit affirmed 19 March 2013.[11] The information provided in that affidavit as to the manner by which Mr Hand assumed the role of CEO was not challenged by the Council and formed part of the factual basis upon which the trial was conducted. Paragraphs 1 to 10 of that affidavit are in the following terms.
[11] Case Book (on appeal) vol II.
I am the Plaintiff and am 59 years of age.
I commenced employment in Local Government at the Corporation of Prospect in December 1973 then moved to the District Council of Morgan in January 1975. I then commenced employment with the District Council of Port Broughton on 10 October 1978 in the position of District Clerk.
In May 1997 the District Council of Port Broughton amalgamated with the District Council of Bute becoming the District Council of Barunga West, the Defendant (“the Council”).
After the amalgamation I was appointed Chief Executive Officer of the Council with the title of District Manager. On 10 November 2009 my title was changed to that of Chief Executive Officer.
My employment in Local Government has been continuous since December 1973.
As the Chief Executive Officer of the Council my employment was and is subject to the provisions of the Local Government Act 1999 (“the Act”).
Since my appointment as Chief Executive Officer with the Council I have at no time had a written contract of employment.
Since my appointment as Chief Executive Officer with the Council I have at all times carried out the duties of Chief Executive Officer.
My current remuneration and benefits in the position of Chief Executive Officer for the Council are:
9.1salary of $124,283 per annum;
9.2superannuation of 9.3%;
9.3fully maintained motor vehicle for both work and private use;
9.4mobile phone;
9.5home telephone rental and up to $1,200 per annum for call charges;
9.6home internet of $480 per annum; and
9.7membership fee for Local Government Managers’ Association of approximately $400 per annum.
The Council has provided me with a fully maintained motor vehicle since 1985 and has provided me with a mobile phone for about the last twenty (20) years.
Mr Hand’s progress to the role of CEO of the Council can be mapped out a little more precisely. After some years in local government, Mr Hand assumed the role of District Clerk with the District Council of Port Broughton on 10 October 1978. It is unclear on the evidence whether or not this position of “District Clerk” was, in effect, the senior executive officer of the Port Broughton Council. In any event, by proclamation dated 6 February 1997 (operational from 3 May 1997) made by the then Governor pursuant to s7 and s14 of the Local Government Act 1934, the District Council of Bute and the District Council of Port Broughton were amalgamated to form a single council.[12] By that same proclamation: Mr Hand was appointed as CEO of the new Council;[13] it was declared that all persons who were officers of or employees of the District Council of Bute or the District Council of Port Broughton immediately before amalgamation were to become officers and employees of the new Council;[14] and it was declared that the transfers of employment thus effected were to be “without prejudice to any officer’s or employee’s salary, wage, superannuation benefits, accrued and accruing rights as to recreation leave, sick leave and long service leave and other conditions of employment (other than status).”[15]
[12] The South Australian Government Gazette, 6 February 1997 at p822.
[13] Paragraph 14 of the proclamation, South Australian Government Gazette, 6 February 1997 at p823.
[14] Proclamation, paragraph 16.
[15] Proclamation, paragraph 17.
Mr Hand’s evidence is not specifically directed to nor of much assistance with respect to the conventional questions of formation of the contract of employment, the terms of the contract of employment as initially entered into, the terms of any variations agreed to from time to time or the circumstances in which and manner by which any variations might have been agreed to by the parties. However, it is common ground that Mr Hand’s contract of employment, as it developed over time, was essentially oral and not in writing. That is not to say that there may not have been written communications between Mr Hand and his employer from time to time setting out or confirming particular aspects of the employment. If there were any such written communications, none are in evidence before the Court.
Nevertheless, it is again common ground that there were no dealings between the parties in writing concerning the issue of termination of the employment (with or without cause) and there is no evidence before the Court of any oral negotiations or agreement reached as to any entitlement of Mr Hand’s employer, from time to time, to terminate the employment (with or without cause).
In these circumstances, I conclude that, absent any relevant legislative or award provision, Mr Hand’s contract of employment, as at immediately prior to the amalgamation, would have contained an implied term that his employer could terminate his employment without cause but upon the giving of reasonable notice.[16] Where a contract of employment is one of indefinite duration, as here, and in the absence of any express term or legislative provision concerning the question, a term will be implied at common law that either party can terminate the contract, without cause, upon the giving of reasonable notice to the other.[17] Hereinafter, I will refer to this as the “reasonable notice implied term”.
[16] I am ignoring for present purposes whether or not other terms relating to termination for cause (summary dismissal) might also have formed a part of the contract either at common law or by virtue of statute or an award.
[17] Russell v Trustees of the Roman Catholic Church of the Archdiocese of Sydney (2007) 167 IR 121 at 159; Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 429 (Brennan CJ, Dawson and Toohey JJ).
Again, absent any relevant legislative or award provision, Mr Hand’s contract of employment at the time he became CEO of the Council (May 1997) would still have contained the reasonable notice implied term. Any such term, originally part of Mr Hand’s contractual arrangements with the District Council of Port Broughton, would be preserved by paragraph 17 of the Governor’s proclamation (quoted above).
In the alternative, if the proper analysis is that Mr Hand is deemed to have entered into a new contract in May of 1997 with the new (amalgamated) Council upon assuming the role of CEO of that new (amalgamated) Council,[18] the same analysis would apply. That is, on the evidence before the Court and absent any relevant legislative or award provision, any such new contract must be construed as containing the reasonable notice implied term.
[18] It is unnecessary to form a final view on this issue. However, the amalgamated Council is to be seen as a new legal entity separate from the Council of Port Broughton, Mr Hand’s previous employer. In these circumstances one available analysis is that there has been a form of novation by law such that a new contract came into being between the new party (the Council) and Mr Hand rather than some form of assignment at law of the original contract.
I have reviewed the provisions of both the Local Government Act 1934 (in force as at May 1997 when Mr Hand became CEO of the Council) and the Local Government Act 1999 applicable to the role of the Chief Executive Officer of a council.
I do not see nor has either party drawn the Court’s attention to any provision in the 1934 Act that would disturb the analysis to this point. As far as the 1999 Act is concerned the only provision that might operate so as to disturb the analysis to this point is s97.
In essence, the Council’s case is that there is no room to imply a term of reasonable notice because the parties’ employment relationship is subject to the 2006 Award (or some earlier award) which specifically provides for, on the facts of this case, a period of five weeks notice where the employment is terminated without cause. However, the Council acknowledges that if it cannot rely on the notice provisions in the 2006 Award, its entitlement to dismiss without cause was dependent on the giving of reasonable notice in accordance with the implied term analysis.[19]
[19] See the “Appellant’s Submissions” document at fn 28 at [24] and at [67] and the Appeal Transcript (8 May 2014) at T3.26-4.3. This is subject to the Council’s alternative position that it was always entitled to support or justify its termination of Mr Hand’s employment on the basis of proved misconduct in which case no notice was required.
Mr Hand disputes the applicability of the 2006 Award (or any other award). His primary case by way of cross-appeal is that: the Council, in fact, purported to terminate for cause; that s97 operates as a code with respect to termination for cause; that on its proper construction and application to the facts the Council had no right to terminate Mr Hand’s employment at all; thus giving Mr Hand an entitlement to damages at large (as outlined above). In the alternative (by way of notice of alternative contention) Mr Hand seeks to support the Judge’s decision based on the reasonable notice implied term analysis. I will consider issues concerning s97 later in these reasons but before doing so I turn to consider issue (ii) above.
Was Mr Hand’s employment governed by the 2006 Award (or any other award) (issue (ii))?
From 27 November 1991 until 1 December 2006 the only award that might potentially have applied to Mr Hand’s employment was the Municipal Officers (South Australia) Award 1991 (as at 27 November 1991) as amended, from time to time, throughout that period (the “Earlier Award(s)”). This period covered by the Earlier Award(s) spans Mr Hand’s time as District Clerk with the District Council of Port Broughton, as District Manager of the Council and as CEO of the Council. On and from 1 December 2006 the only award of potential application to Mr Hand’s contract of employment has been the 2006 Award.
There may have been an award or awards predating the Earlier Award(s) (that is, predating 27 November 1991) of potential application to Mr Hand’s contract of employment as District Clerk with the District Council of Port Broughton. However, no award or awards in existence prior to 27 November 1991 (if any) are before the Court.
The case was conducted before the Judge solely on the basis that if any award applied, it was the 2006 Award. This was the only award the terms of which were before the Judge and the only award with respect to which the parties made submissions. During the hearing of the appeal the Council asked the Court to receive on the appeal and to have regard to the Earlier Award(s). Given that Mr Hand’s engagement as CEO of the Council (taking effect as at 3 May 1997) predated the 2006 award, the Council was concerned that the Earlier Award(s) might be seen as relevant or applicable to the contract of employment such that the notice provision concerning termination without cause contained in the Earlier Award(s), rather than the notice provision in the 2006 Award, would apply.
Three versions of the Earlier Award(s) (said to be operative at different times) were exhibited to an affidavit of the Council’s solicitor[20] and further affidavit evidence, written submissions and oral submissions were received by the Court from both parties on the question of whether or not it should receive and have regard to the Earlier Award(s). Its reception was opposed by Mr Hand. The Court reserved its position pending the hearing of full argument on all matters relevant to the appeal.
[20] Affidavit of Lincoln Knowles Smith sworn 7 May 2014 with exhibit LKS-1 being Municipal Officers (South Australia) Award 1991 as at 27 November 1991 (The “27 November 1991 version”); exhibit LKS-2 being Municipal Officers (South Australia) Award 1991 as at 28 May 1998 (the “28 May 1998 version”); and exhibit LKS-3 being the Municipal Officers (South Australia) Award 1998 as at 20 November 1998 (the “20 November 1998 version”).
I do not see this as a matter to be determined in accordance with the rules governing the reception of fresh evidence on an appeal. Employment awards are creatures of statute and constitute part of the legal framework within which a contract of employment (to which an award is pertinent) exists. Ordinarily, a Court would not ignore or step outside the proper legal framework within which a dispute arises. The questions of whether or not the Earlier Award(s) should be received and whether or not argument as to their relevance, in the circumstances of this case, should be permitted, really raise the issue of whether or not the Council seeks to agitate at the appeal a point that was not argued or considered at the trial.
The position concerning the taking of new points on appeal is well established. I adopt, with respect, the following summary by White J in Wheeler v State of South Australia.[21]
Generally, appellate courts are reluctant to permit new points to be taken on appeal. Other than in exceptional circumstances, litigants are not permitted to raise for the first time on appeal a matter which, had it been taken at first instance, could have been met by further evidence. However, when the issue raised for the first time on appeal is one of law, and it is plain that the other party could not have adduced any further evidence relating to the matter had the point been taken in the court below, the issue may, and often will, be considered. Lord Watson stated the position in this respect in Connecticut Fire Insurance Co v Kavanagh:
When a question of law is raised for the first time in a court of last resort, upon the construction of a document, or upon facts either admitted or proved beyond controversy, it is not only competent but expedient, in the interests of justice, to entertain the plea. The expediency of adopting that course may be doubted, when the plea cannot be disposed of without deciding nice questions of fact, in considering which the Court of ultimate review is placed in a much less advantageous position than the Courts below. But their Lordships have no hesitation in holding that the course ought not, in any case, to be followed, unless the Court is satisfied that the evidence upon which they are asked to decide establishes beyond doubt that the facts, if fully investigated, would have supported the new plea.
The High Court referred to this passage with approval in Suttor v Gundowda Pty Ltd.
[21] [2012] SASCFC 111 at [48] (citations omitted). Sulan and Nicholson JJ agreed with the reasons of White J.
The Council’s late reliance on the Earlier Award(s) invokes the question of the law to be applied to the factual basis of the parties’ dispute concerning the terms of the employment contract. Counsel for Mr Hand has not pointed to any prejudice that his client would suffer in the event that the Court were to have regard, to the extent relevant, to the Earlier Award(s). If it were to be established that the Earlier Award(s) were material to Mr Hand’s terms of employment with the Council, I would be inclined to receive the material. However, in my view, the only potentially applicable Award is the 2006 Award. Furthermore, I take the view that the Earlier Award(s), like the 2006 Award, on their proper construction do not apply to the employment of Mr Hand as CEO of the Council.
I turn first to consider the applicability or otherwise of the 2006 Award. It is to be kept in mind that in the absence of an agreement between the parties, the rights and obligations under an award operate separately from the contract of employment and derive their force from the Act under which the award is made, in this case, the Fair Work Act 1994 (SA).[22] The following provisions of the Fair Work Act 1994 are pertinent.
[22] Brennan v Kangaroo Island Council [2013] SASCFC 151 at [25] (Parker J with whom Vanstone and Anderson JJ agreed); Byrne v Australian Airlines Ltd (1995) 185 CLR 410.
(i)Section 90(1) provides:
The Commission may make an award about remuneration and other industrial matters.
The Commission referred to is the Industrial Relations Commission of South Australia.[23] The 2006 Award is an Award of the Industrial Relations Commission of South Australia published pursuant to the provisions of the Fair Work Act 1994.
(ii)Section 91(1) provides:
An award of the Commission is binding on all persons expressed to be bound by the award.
(iii)Section 94 provides:
An award prevails over a contract of employment to the extent that the award is more beneficial to the employee than the contract.
[23] Section 4(1).
The scope of and parties bound by the 2006 Award are as set out in clauses 1.6.1 to 1.6.4 which provide:
1.6.1This award is binding on the industry of the occupations of:
All salaried officers employed by any municipal corporation or any corporation or district council in the State of South Australia including subsidiaries or regional subsidiaries established pursuant to the Local Government Act, or any Animal and Plant Control Board in a:
· Clerical
· Administrative
· Professional
· Managerial
· Community service
· Recreational
· Regulatory
· Child care
· Environmental, or
· Technical (including overseers, foremen and other supervisory officers)
capacity whose duties, responsibilities and work description are contained within the terms of this Award.
1.6.2The Amalgamated ASU (SA) State Union (ASU) and its members in all respects.
1.6.3The Association of Professional Engineers, Scientists and Managers South Australian Branch (APESMA) in relation to its members employed by Councils as Professional Engineers.
1.6.4The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) in relation to its members employed as technical officers and who fit within the traditional coverage and rules of the AMWU.
There is no evidence before the Court to the effect that Mr Hand was a member of any of the employee unions or associations referred to in clauses 1.6.2, 1.6.3 or 1.6.4. Mr Hand can only have fallen within that part of clause 1.6.1 that requires him to have been a salaried officer employed by the Council in one of the capacities listed (the categories of “Administrative” and “Managerial” apply). However, for clause 1.6.1 to apply such that the 2006 Award is invoked, Mr Hall has to have been an employed salaried officer,[24]
whose duties, responsibilities and work description are contained within the terms of this Award.
[24] “Officer” is defined in clause 1.4.8 as having “the same meaning as employee”.
In addition, the notice of termination provision relied upon by the Council (clause 3.2.1[25]) commences as follows:
In order to terminate the employment of an employee the employer must give to the employee the period of notice specified in the table below... .
The word “employee” is defined as meaning “an employee who is remunerated by salary and whose duties, responsibilities and work description are contained within the terms of this Award.”[26] In other words, whether one were to focus simply on whether the Award applied to Mr Hand’s employment or on whether the notice of termination provision (clause 3.2.1) applied to Mr Hand’s employment, the same criterion would need to be satisfied – are Mr Hand’s duties, responsibilities and work description (as CEO) contained within the terms of the Award?
[25] The provisions of clause 3.2.1 are (in part) as follows:
3.2.1 Notice of termination of employer
3.2.1.1In order to terminate the employment of an employee the employer must give to the employee the period of notice specified in the table below:
Period of continuous notice Period of notice 1 year or less 1 week Over 1 year and up to the completion of 3 years 2 weeks Over 3 years and up to the completion of 5 years 3 weeks Over 5 years of completed service 4 weeks 3.2.1.2In addition to the notice in 3.2.1.1, employees over 45 years of age at the time of the giving of the notice with not less than two years continuous service, are entitled to an additional week’s notice.
3.2.1.3...
3.2.1.4...
3.2.1.5The period of notice in this clause does not apply:
(a)In the case of dismissal for serious misconduct;
(b)...;
(c)...;
(d)...; or
(e)... .
3.2.1.6...
It is common ground that if clause 3.2.1 were found to apply in the circumstances of this case and having regard to the nature and duration of Mr Hand’s employment and his age, a period of notice of five weeks would have been appropriate.
[26] Clause 1.4.5.
The 2006 Award is structured as follows: Part 1 (clauses 1.1 to 1.7) deals with the application and operation of the award; Part 2 (clauses 2.1 to 2.5) deals with consultation and dispute resolution; Part 3 (clauses 3.1 to 3.2) deals with various types of employment relationships such as probation, casual employment, part time employment and so on and also deals with questions of termination of employment; Part 4 (clauses 4.1 to 4.6) deals with rates of pay and related matters; Part 5 (clauses 5.1 to 5.7) deals with hours of work including shift work, overtime, meal breaks and the like; Part 6 (clauses 6.1 to 6.9) deals with various types of leave; and Part 7 (clauses 7.1 to 7.5) deals with miscellaneous matters. All of the provisions just referred to are expressed in general terms in that they refer to the rights of an employee, being an employee whose employment is captured by the 2006 Award. Apart from a few exceptions, no specific types of employment or job descriptions are referred to.
The 2006 Award also embraces a classification (of employment) process and to this end it contains, immediately after Part 7, a series of schedules. The purpose of the classification process is, in essence, to ensure that all employees, no matter the type of work engaged in, are treated consistently, insofar as is practicable, particularly with respect to salary structure. Clause S1.1.1 (the opening provision of Schedule 1) provides:
The aim of the classification process is to ensure as far as practicable, that work features, responsibilities, skills, knowledge, experience and qualifications are evaluated in comparable terms irrespective of discipline. The salary structure encompasses General Officers and Senior Officers.
Schedule 1 contains a number of provisions dealing with the process of classification itself. Schedule 2 sets out minimum rates of pay for the nine levels pursuant to which General Officers are classified.[27] Schedule 2 also includes a very detailed description of the functions, skills and responsibilities to be expected of an employee (with respect to any discipline of work) classified under each of the nine levels.
[27] These minimum rates of pay are expressed to commence on or after 1 July 2012. Clause S1.2.1.1 (set out below) refers to eight distinctive levels within the structure of General Officer. However, Schedule 2 in fact contains nine – levels one to eight with the addition of level 1A. This appears to have been a later addition. The page containing clause S1.2.1.1 records at the top an operational date of 01:12:2006 whereas Schedule 2 which discloses the nine levels (including level 1A) records as its operational date, 01:07:2012.
Schedule 3 is headed “Senior Officers Stream”. It provides for minimum rates of pay referable to the 12 levels within this structure. Like Schedule 2, Schedule 3 sets out in quite some detail the functions, skills and responsibilities to be expected of a Senior Officer according to their classification. However, this time, this material is classified according to four Bands. Each Band contains a number of the 12 salary levels. The relevance of the Bands will become apparent after further attention is given to the nature of the classification process and, in particular, the provisions of Schedule 1. There are three other Schedules (Schedules 4, 5 and 6) but these deal with unrelated matters not material to the proper construction or understanding of the classification system under Schedules 1, 2 and 3.
It is convenient now to set out in full the material terms of Schedule 1.
SCHEDULE 1 – CLASSIFICATION
OPDATE 01:12:2006 on and from
CLAUSE S1.1 INTRODUCTION
S1.1.1The aim of the classification process is to ensure as far as practicable, that work features, responsibilities, skills, knowledge, experience and qualifications are evaluated in comparable terms irrespective of discipline. The salary structure encompasses General Officers and Senior Officers.
S1.1.2The first step in establishing the most appropriate classification for a position involves the gathering and documenting of information about the position and describing it in a form which can be used to compare the job with the classification criteria. The quality and extent of the information gathered is very important in this process, as it will be used to determine the appropriate classification for the position.
S1.1.3Based on the information gathered, a job description should be prepared specifying the responsibilities, duties, skills knowledge and/or experience required in the position.
S1.1.4After the job description is complete a systematic comparison with the classification criteria needs to be undertaken. This assessment is used to determine the appropriate classification of the position.
S1.1.5All officers (other than CEO’s and Senior Officers) are classified according to the General Officer structure, whilst CEO’s and Senior Officers are classified under the Senior Officers Stream.
CLAUSE S1.2 CLASSIFICATION
S1.2.1General Officers
S1.2.1.1To facilitate the ready and precise classification of all occupations, classification criteria have been developed describing the General Features, General Responsibilities, Specific Responsibilities, and Skills Knowledge, Experience and Qualifications and/or Training. There are eight distinctive levels within the structure.
S1.2.1.2When classifying a position all aspects of the job must be considered against the total Award criteria the classification level. The total responsibilities of the position must be compared with the total responsibilities of the level, rather than comparison with selected parts.
S1.2.1.3The job description should be tested against more than one level for appropriateness.
S1.2.2Senior Officer – Chief Executive Officers
S1.2.2.1All Chief Executive Officers are graded in accordance with the determination of a Local Government Classification Committee in a manner which effectively establishes appropriate relativity between Chief Executive Officer positions having regard to Council revenue, population and staffing establishment. The Committee reviews classifications of CEO’s biennially and formerly advises Council regarding the appropriate Award classification.
S1.2.2.2The Local Government Classification Committee will comprise two representatives of the Local Government Association and two representatives of the Australian Services Union as determined by those organisations.
S1.2.2.3The Council shall adopt the salaries prescribed for the appropriate level unless by agreement with the CEO, alternative arrangements are negotiated, with the basis for the agreement being the first salary point for the appropriate level.
S1.2.2.4By agreement between the Council and CEO, further remuneration (as part of the salary package) may be negotiated subject to the adoption of mutually agreed performance indicators and/or other processes agreed between the Council and Chief Executive Officer.
S1.2.2.5A Chief Executive Officer shall be paid not less than $1030 per annum or 2.5% (whichever is the greater) above the base rate of the relevant Council’s next highest paid officer who is classified pursuant to this Award.
S1.2.2.6Reasonable out-of-pocket expenses which are incurred by a Chief Executive Officer in attending social and/or official functions when required to do so by Council, shall be provided by the Council, or
S1.2.2.7In lieu of out-of-pocket expenses the Council and the Chief Executive Officer concerned may agree upon a fixed amount per annum.
S1.2.3Senior Officer
S1.2.3.1Positions within this structure exceed the classification levels of the General Officer structure and are generally characterised by managerial responsibility, high accountability and a high degree of personal ability. The Stream consists of 4 management bands based on the Chief Executive Officer salary.
S1.2.3.2The structure shall consist of 4 management bands:
Band 4 shall encompass 2 levels below the level afforded to the CEO
Band 3 shall fall 1 level below Band 4
Band 2 shall fall 1 level below Band 3
Band 1 shall fall 1 level below Band 2
This formula shall apply to all employers with the exception of a Council where the CEO is classified at Level 10 or above, in which case Band 4 shall encompass 3 levels below the level afforded to the CEO.
S1.2.3.3The Council shall adopt the salaries prescribed for the appropriate level unless by agreement with the Senior Officer, alternative arrangements are negotiated, with the basis for the agreement being the first salary point for the appropriate level. By agreement between the Council and Senior Officer, further remuneration (as part of a salary package) may be negotiated subject to the adoption of mutually agreed performance indicators and/or other processes agreed between the Council and Senior Officer.
CLAUSE S1.3 PROGRESSION THROUGH THE LEVELS
S1.3.1At the conclusion of each twelve month period following appointment to a classification an officer shall be eligible for incremental progression within each salary level subject to the following:
S1.3.1.1Where the employer adopts and implements a formal, structured performance appraisal scheme progression from the first salary increment to the top increment within a classification level shall be by annual incremental advancement subject to the officer having given “satisfactory service” for the prior twelve months employment.
S1.3.1.2The appraisal scheme for the purpose of determining “satisfactory service” for progression should contain the following features:
(a)the scheme is underpinned by principles which ensure equity and procedural fairness to employees.
(b)foundation in a current and accurate job description.
(c)individual training plans where through the application of the appraisal scheme the need for additional training becomes apparent.
(d)appraisal will take place in sufficient time (at least 6 months prior) to allow improved performance to qualify for an annual increment.
(e)any dispute over the appraisal and/or progression shall be dealt with in accordance with the dispute settling procedure.
S1.3.1.3If the employer does not have a formal structured staff appraisal scheme, increments will occur automatically on an annual basis.
S1.3.2Senior Officer, Additional Aspects Of Salary Progression through the Levels
S1.3.2.1The employer and a Senior Officer may agree upon an additional annual amount in lieu of incremental advancement which would be paid to the Senior Officer providing that performance standards are achieved.
S1.3.2.2The means for establishing the performance indicators to be used for the purposes of assessing the Senior Officer’s performance, shall be agreed between the Senior Officer and the Council.
CLAUSE S1.4 STUDY LEAVE FOR CLASSIFICATION PROGRESSION
S1.4.1The employer may approve an employee’s application for study leave (either wholly or in part) in order for the employee to obtain a qualification that is necessary to enable the employee to progress through the award classification structure.
S1.4.2Such leave shall require approval by the employer, whether paid or not, if taken during normal working hours.
Schedule 1 adopts a bifurcated approach to the classification of Chief Executive Officers on the one hand and all other Senior Officers and General Officers on the other hand for the purpose of determining salary structure. As far as General Officers and Senior Officers (but excluding Chief Executive Officers) are concerned, the classification of a particular position is determined by comparing the various duties and responsibilities of an employee in that position with the duties and responsibilities relevant to each classification level as set out in Schedule 2 (General Officers) and Schedule 3 (Senior Officers).
For example, the level 2 classification for General Officers, as provided for in Schedule 2, describes a range of requirements to be expected of a person filling a position with that classification level under the following headings: Activities/Functions; Complexity of Task Level of Autonomy; Initiative and Judgment; Problem Solving; Provision of Advice/Support/Assistance; Time Management and Organisational Skills; General Responsibilities; Where Prime Responsibility Lies in a Technical Field; Where the Prime Responsibility is in the Works Area; Where Prime Responsibility is in Libraries; Where Prime Responsibility is in a Recreation Complex (Aquatic or Non-Aquatic); Where the Prime Responsibility is in the Local Animal and Plant Control Board; Where the Prime Responsibility is in a “Professional” Field; Where Prime Responsibility is in Clerical/Secretarial/Administrative; Where Prime Responsibility is in Child Care; Where Prime Responsibility is in Environmental Services; Where the Prime Responsibility is in Community Services; Requirements of the Job; and Progression. By way of illustration, the various requirements provided for under the heading “Where Prime Responsibility is in Clerical/Secretarial/ Administrative” are as follows:
Provide secretarial and/or administrative support and could include:-
·operating a computer, word processor and/or other business software and peripheral equipment
·utilising basic computing concepts and initiating corrective action at an elementary level
·utilising the functions of systems and be proficient in their use
·performing tasks of a sensitive nature
·provision of more than routine information
·operate a desktop publisher at a routine/basic level
·utilise basic skills in oral and written communication with clients and other members of the public
·receive and account for monies and assist clients/ratepayers.
By way of further example only, Band 2 in Schedule 3 contains classification criteria for Senior Officers under the following headings: Function; Advice; Skills, Knowledge/Experience; Judgment; Authority and Accountability; and Organisational Relationships. By way of illustration, the criteria provided for under the heading “Skills, Knowledge/Experience” are as follows:
·Ability to implement financial/program management techniques relevant to the work area
·Well developed liaison and communication skills and the ability to negotiate or communicate, under limited direction, on behalf of the organisation with client or other outside bodies
·Sound human resource management skills
·Management skills and abilities necessary to undertake the allocation and monitoring of human, financial and technical resources to ensure achievement of objectives.
Importantly, under the final heading “Organisation Relationships” for each Senior Officers Band (Schedule 3) the final dot point is “report to a more senior officer or the CEO” in the cases of Bands 1 and 2; “may report direct to the CEO” in the case of Band 3; and “will report direct to CEO” in the case of Band 4. This feature of Schedule 3, on its own, is a strong indication that the elaborately described position criteria for each of the four Bands pursuant to which Senior Officers are to be classified do not refer to or apply to the Chief Executive Officer of a council.
Clause S1.2.2 of Schedule 1 (set out above) specifically addresses the manner by which Chief Executive Officers are graded or classified for the purposes of salary level. However, the classification is not based on the detailed requirements or criteria for the grading (under the four Bands) of Senior Officers as set out in Schedule 3. Instead, and in accordance with clause S1.2.2.1, all Chief Executive Officers are graded in accordance with the determination of a Local Government Classification Committee. The expectation here is that this will enable, insofar as is practicable, an “appropriate relativity between Chief Executive Officer positions having regard to Council revenue, population and staffing establishment.” Once the Committee has made its determinations, each council will be advised as to the appropriate award classification for its Chief Executive Officer.
The end result is that each Chief Executive Officer will thereby be assigned a salary within the 12 levels of salary provided for in Schedule 3 for the Senior Officers Stream (clause S1.2.2.3). This is, in a sense, a starting point. Each council and its Chief Executive Officer is free to negotiate additional remuneration and other terms or conditions.
It can be seen that Chief Executive Officers are classified by comparison with one another and not by direct reference to their respective duties and responsibilities. They are classified for salary purposes by reference to a comparison of councils according to revenue, population and staffing establishment. The various duties and responsibilities and other position criteria set out in Schedule 3 are irrelevant to this process.
The inclusion of Chief Executive Officers in the 2006 Award classification process serves another function. By positioning a Chief Executive Officer’s salary within one of the 12 levels of salary provided for in Schedule 3 with respect to the Senior Officers stream, appropriate relativities can be maintained between the Chief Executive Officer of a council and the various Senior Officers under their supervision (see clause S1.2.3.2 set out above). In other words, whilst Chief Executive Officers are included within the classification process for Senior Officers, to the limited extent just described, they are, in fact, treated differently from Senior Officers. However, the system permits Senior Officers to be classified, for remuneration purposes, in relation to Chief Executive Officers.
I return to the fundamental criterion that must be satisfied before the 2006 Award will be found to apply to an employment relationship and before the notice of termination provision (clause 3.2.1) will be found to apply to an employment relationship: are the duties, responsibilities and work description (of the employee in question) contained within the terms of the 2006 Award? Insofar as a Chief Executive Officer is concerned, the answer to this question is “no”. Nowhere in the 2006 Award are the “duties, responsibilities and work description” of a Chief Executive Officer set out. This is to be compared with the duties, responsibilities and work description of both General Officers and Senior Officers (not including Chief Executive Officers) which are set out at great length. Indeed, if one wishes to know what the duties, responsibilities and work description of a Chief Executive Officer of a council are one needs to go, inter alia, to s99 of the Local Government Act 1999 which provides as follows:
99—Role of chief executive officer
(1)The functions of the chief executive officer include—
(a) to ensure that the policies and lawful decisions of the council are implemented in a timely and efficient manner;
(b) to undertake responsibility for the day-to-day operations and affairs of the council;
(c) to provide advice and reports to the council on the exercise and performance of its powers and functions under this or any other Act;
(d) to co-ordinate proposals for consideration by the council for developing objectives, policies and programs for the area;
(e) to provide information to the council to assist the council to assess performance against its strategic management plans;
(f) to ensure that timely and accurate information about council policies and programs is regularly provided to the council's community, and to ensure that appropriate and prompt responses are given to specific requests for information made to the council;
(g) to ensure that the assets and resources of the council are properly managed and maintained;
(h) to ensure that records required under this or another Act are properly kept and maintained;
(i) to give effect to the principles of human resource management prescribed by this Act and to apply proper management practices;
(j) to exercise, perform or discharge other powers, functions or duties conferred on the chief executive officer by or under this or other Acts, and to perform other functions lawfully directed by the council.
(2)The chief executive officer must consult with the council (to a reasonable degree) when determining, or changing to a significant degree—
(a) the organisational structure for the staff of the council; or
(b) the processes, terms or conditions that are to apply to the appointment of senior executive officers; or
(c) the appraisal scheme that is to apply to senior executive officers.
For these reasons, I agree with the finding of the Judge that the 2006 Award and, a fortiori, the clause 3.2.1 notice provisions within it, did not apply to the contract of employment between the Council and Mr Hand.
I turn to briefly consider the applicability or otherwise of the Earlier Award(s). Section 96 of the Fair Work Act 1994 provides:
An award continues in operation, subject to its terms, and subject to amendment or revocation, until superseded by a later award.
Section 97 provides:
The variation or rescission of an award does not affect –
(a) legal proceedings previously commenced under or in relation to the award; or
(b) rights existing at the time of the variation or rescission.
In endeavouring to understand the ambit of the preservation of “legal proceedings previously commenced” and “existing rights”, as provided for by s97, a difficult question of statutory construction arises from the fact that s96 speaks of an Award continuing in operation subject to “amendment” or “revocation” until “superseded” by a later award, whereas s97 uses the terms “variation” and “rescission”. It is not immediately apparent that s97 necessarily will apply in all of the circumstances contemplated by s96.
Nevertheless, s96 would appear to govern the present question. Each of the three forms of the Earlier Award(s) contains a “supersession” clause. Clause A5.1 of both the 27 November 1991 version and the 28 May 1998 version each provides, insofar as is material:
This award supersedes the Municipal Officers (South Australia) Salaries Award 1981 [and various other awards].
Clause 1.7.1 of the 20 November 1998 version provides:
This Award wholly supersedes the Municipal Officers (South Australia) Award, 1991 in respect of the employers and organisations respondent to this Award but no right, obligation or liability accrued or incurred under that Award or variations to it shall be affected by such supersession.
The 2006 Award contains in its index a reference to clause 1.7 “supersession”. However, in the printed version of the 2006 Award clause 1.7 appears to have been omitted. The Council after making further enquiries, as requested by the Court, was unable to produce a version of the 2006 Award containing a clause 1.7.
In the circumstances, I need look no further than s96 and s97 of the Fair Work Act. The supersession clauses that are in existence are in terms consistent with the legislative effect of these two sections. I am satisfied that the 2006 Award also operated to supersede the Earlier Award(s) and that it was the only award of potential application to Mr Hand’s employment with the Council as at the date of the Council’s termination notice.
Mr Hand’s “other conditions of employment” as at the time he became CEO of the Council (3 May 1997) were expressly preserved by force of the proclamation pursuant to which he was appointed. One of those terms was the reasonable notice implied term subject to the effect, if any, of the Earlier Award(s) in particular the 27 November 1991 version.[28]
[28] The application dates of the other two versions post-date the date of and effective date of the proclamation.
However, at no time did the 27 November 1991 version (or any of its provisions) form part of Mr Hand’s contract with the Council or any progenitor council. Whilst in force, and in the absence of agreement to the contrary, any rights and obligations under this version of the award operated not as terms of but separately from the contract of employment. Once this version of the award was superseded by another, any award rights and obligations fell and were replaced by a different set, subject to the preservation of accrued rights. Even if the 27 November 1991 version or any other version of the Earlier Award(s), on their proper construction, operated to preclude any reliance by the parties on the reasonable notice implied term, that effect or operation ceased once the Earlier Awards were superseded by the 2006 Award.
In any event, whilst the Earlier Award(s), in some respects, use different language to describe the parties bound, they also are to be construed as not covering the Chief Executive Officer of a Council other than to the extent that they purport to regulate the salary of a Chief Executive Officer.
I do not stay to record, in support of this conclusion, an analysis of the language used, similar to the lengthy analysis of the 2006 Award earlier given. It is unnecessary because, as I have indicated, in my view the only potentially relevant award is the 2006 Award, it having superseded the Earlier Awards. Furthermore, counsel for the Council conceded, in my view rightly, during the appeal that there were no material differences in wording such that similar arguments and principles of construction would apply. The effect of the concession was that, if the argument based on the construction of the 2006 Award were to be decided against the Council, the same would follow with respect to the construction of the Earlier Award(s).[29]
If the 2006 Award (or any other award) applied, did clause 3.2.1 (or any cognate position) apply so as to permit the Council to terminate on five weeks notice (issue (iii))?
[29] Appeal Transcript T25.30-26.4.
Given my finding that Mr Hand’s employment as CEO was not governed by any award including the 2006 Award, it is not necessary to answer this question. Nevertheless, and in the event that the 2006 Award were to be applicable, clause 3.2.1 would confer on the Council a power to terminate Mr Hand’s employment, without cause, but upon the giving of five weeks notice as required by that provision. However, whether or not clause 3.2.1 would have applied in the circumstances would turn not just on whether the 2006 Award itself is applicable (as just discussed) but also upon the answer to issue (iv) next considered.
If the 2006 Award applied, did the contract of employment, nevertheless, contain an (overriding) implied term requiring reasonable notice for termination without cause (issue (iv))?
Again, this does not now need to be answered. However, there is a recent decision of a differently constituted Full Court of this State substantially[30] on the point. In Brennan v Kangaroo Island Council[31] it was common ground that the appellant’s employment with the respondent Council, as Deputy Chief Executive Officer, was covered by or subject to the South Australian Municipal Salaried Officers Award (that is, the 2006 Award) in the form that award took at the time the appellant’s employment was terminated (on the basis of positional redundancy) in April 2012. The respondent Council provided payment, in lieu of notice, purportedly in accordance with the requirements of clause 3.2.1 of the 2006 Award. The amount in fact paid by the Council had been incorrectly calculated and was adjusted by the Judge. As Parker J explained:[32]
At the time the appellant’s employment was terminated she had more than three years and less than five years completed service. On that basis the Council made payment in lieu of three weeks notice in accordance with cl 3.2.1.1 of the Award. As the appellant was aged over 43 years and had more than two years continuous service, the trial judge ordered that the Council pay to her a sum in lieu of an additional one weeks notice.
[30] Strictly, when considering whether or not a term is to be implied into a contract, ad hoc, each case will turn on its own facts.
[31] [2013] SASCFC 151, Parker J (with whose reasons Vanstone and Anderson JJ agreed).
[32] Brennan at [13] (footnote omitted).
Both at the trial and on appeal, the appellant argued that notwithstanding the apparent applicability of clause 3.2.1 of the 2006 Award, her contract of employment also contained the reasonable notice implied term. According to the Judge, in the circumstances, reasonable notice would have amounted to six months, in the event that the employment contract contained such a term.
Counsel for the appellant in Brennan raised a number of arguments all directed to the contention that because the Fair Work Act and awards made under that Act (such as the 2006 Award) only set minimum standards for employment, a finding that the contract of employment contained the more generous reasonable notice implied term was not necessarily precluded.[33] Similar arguments were put on behalf of Mr Hand during the hearing of this appeal.
[33] Brennan at [20]-[24].
The Full Court in Brennan examined this question at some length and had regard to a number of the relevant authorities.[34] Parker J noted that the requirements for the implication of a term into a contract based upon the presumed or imputed intention of the parties remain those as summarised by the Privy Council in BP Refinery (Western Port) Pty Ltd v Shire of Hastings.[35]
(1)it[36] 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.
[34] Including Byrne v Australian Airlines Ltd (1995) 185 CLR 410, Westen v Union Des Assurances De Paris (No 2) (1996) 88 IR 268 and BP Refinery (Western Port) Pty Ltd v Shire of Hastings (1977) 180 CLR 266.
[35] (1977) 180 CLR 266 at 283.
[36] If I were to cavil with Parker J’s description of the requirements, it should be noted that his Honour’s description of the first requirement (Brennan at [28]) – “[the implication] must be reasonable and equitable” is not strictly correct. It is the proposed implied term itself that must be seen as “reasonable and equitable” not the act or process of implying such a term, that is, not the fact of its implication.
The Full Court in Brennan determined, on the facts before it, that a term requiring the giving of reasonable notice was not to be implied in the appellant’s employment contract.
[T]he implication of an obligation to give reasonable notice was not necessary to give business efficacy to the appellant’s employment contract. The existence of the award provision, albeit that it operated outside the contract, had the result that the employment arrangement was effective without any need to imply an obligation to give reasonable notice, ie there was no gap that needed to be filled. Furthermore, because of the existence of the award provision it could not be said that the implication of such a term would have been accepted by the contracting parties as a matter so obvious as to “go without saying”.[37]
Thus, the Full Court found that the proposed implication of such a term failed the second and the third requirements as summarised by the Privy Council in BP Refinery (Western Port) Pty Ltd.
[37] At [34].
This determination by the Full Court was central to and formed part of the ratio of the decision in Brennan. As I understand the position, the point is presently the subject of an application for special leave to appeal to the High Court which has not yet been determined. I have not formed a concluded view as to the correctness or otherwise of the decision in Brennan and in the circumstances it is not necessary to do so.
Does s97 of the Local Government Act 1999 operate as a code with respect to a council’s right to terminate for cause so as to preclude any termination for cause not falling within the terms of s97 (issue (v))?
Section 97 of the Local Government Act 1999 is in the following terms.
(1)A chief executive officer's appointment may be terminated by the council—
(a) on the ground that the chief executive officer—
(i)has been guilty of misconduct; or
(ii)has been convicted of an indictable offence punishable by imprisonment; or
(iii)has become bankrupt or has applied to take the benefit of a law for the relief of insolvent debtors; or
(iv)has, for any other reason, failed to carry out duties of the office satisfactorily or to any performance standards specified by the council or in any contract relating to his or her appointment; or
(v)has breached in any other manner any contract relating to his or her appointment; or
(b) on a ground or in circumstances specified in any contract relating to his or her appointment.
(2)A chief executive officer's appointment is terminated if the chief executive officer—
(a) resigns by notice in writing to the principal member of the council; or
(b) completes a term of office and is not reappointed; or
(c) is sentenced to imprisonment for an offence.
(3)Neither subsection (1)(a)(ii) nor subsection (2)(c) applies until the period for appealing against the conviction has expired or, if there is an appeal, until the appeal is determined.
Mr Hand contends that the terms of s97 are exhaustive of the grounds upon which a council may terminate the employment of a Chief Executive Officer for cause. The argument of Mr Hand under this heading, as outlined in the notice of cross-appeal[38] and in the written “Outline of Respondent and Cross-appellant”,[39] is a little difficult to unravel. As best I apprehend it, it relies upon two primary contentions. The first is, notwithstanding that the Council provided nine and a half months notice, its termination of Mr Hand’s employment was, in fact, summary; that is, for cause and not at will (without cause) upon the giving of appropriate notice. The second primary contention is that s97 is a code as to the entitlement of a council to summarily terminate the employment of a Chief Executive Officer for cause and the purported reason (cause) given by the Council for the termination fell outside those permitted by s97.
[38] Case Book (on appeal) vol I at p103.
[39] At [67]-[80].
As best I understand Mr Hand’s argument, the terms of s97 do not stand in the way of a council terminating the employment of a Chief Executive Officer at will, that is, without cause, upon the giving of the appropriate notice where such an entitlement exists. However, here the Council purported to terminate for cause in circumstances where the cause relied upon was not one embraced by s97. Accordingly, so the argument goes, the termination was unlawful.
I accept for the sake of the argument that each of the bases for termination set out in s97(1)(a) and (b) can be characterised as matters of “cause” in the sense that they all relate to either the behaviour or status of the Chief Executive Officer concerned or particular circumstances which would fall within a contractual right to terminate. However, s97 does not expressly address the circumstances in which a council might be entitled to terminate the employment of a Chief Executive Officer without cause upon the giving of an award based, a contractually agreed or a reasonable period of notice. I take the view that s97 is simply not directed to the availability or otherwise of such grounds.
In any event, I would construe s97(1)(b) as embracing an entitlement to terminate without cause in reliance on a contractual right whether based on an express or an implied term, including the reasonable notice implied term. In my view, the phrase “specified in any contract”, given a practical and sensible construction, is to be read in the sense of “provided for in any contract” so as to embrace not just express terms but any such implied term. One would expect the words of the statute to be in very clear terms if it was the intention of the legislature to oust an agreed (even if only by implication) position between the parties. Furthermore, it is difficult to see how a justifiable distinction can be drawn between an oral contract of employment where a reasonable notice term is expressly agreed to (and therefore, “specified”) and an oral contract of employment where such a term is not expressly agreed to but is to be implied because it satisfies the five criteria summarised in BP Refinery (Western Port) Pty Ltd (and therefore, not “specified”).
In short, the capacity to terminate in accordance with the reasonable notice implied term remains available notwithstanding the terms of s97.
Like the Judge, I incline to the view that s97 is not a code in any sense[40] but it is unnecessary to form a final view on that issue. Even if it were to be a comprehensive statement as to the availability of a Council’s right to terminate for cause, Mr Hand’s cross-appeal, in this respect, will fail unless it is established that the Council did, in fact, terminate for cause being a cause that fell outside those provided for in s97 (the first primary contention identified above). In my view, that is not what happened.
Did the Council, in fact, terminate for cause, being a cause outside those permitted by s97 (issue (vi))?
[40] Strictly, a codifying act (or provision) collects all relevant statute and case law on a topic and restates it as a complete statement of the law on the topic. Often the term “code” is used more loosely by way of arguing that a particular act or provision, on its proper construction, deals with a topic to the exclusion of any other source of law, in the sense of “covering the field”, see generally DC Pearce and RS Geddes, Statutory Interpretation in Australia, 6th ed 2006, LexisNexis Butterworths at [8.7].
It will be helpful at this stage to retrace some matters of fact concerning and surrounding the Council’s purported termination of Mr Hand’s employment. These matters were summarised by the Judge[41] in a manner that does not appear to be disputed by either party and that is supported by the evidence at trial.
[41] Trial Judgment at [22]-[32].
At a council meeting on 29 June 2012, [Mr Hand] proposed that due to a breakdown in the relationship between himself and the Mayor, he retire as CEO. His proposal was that he would take annual and long service leave from December 2012 to June 2013, return to work in July 2013, and work until retirement in November/December 2014. [Mr Hand] also put an alternate proposal, by which he would take his accrued leave from 1 December 2012 to the end of 2013, and then retire.
At a meeting of the [Council] on 4 July 2012, the [Council] resolved to offer [Mr Hand] a voluntary redundancy package of six months’ salary inclusive of superannuation. The offer was contingent upon [Mr Hand] agreeing to end his employment by 31 July 2012. On 5 July 2012 the offer was communicated to [Mr Hand] on behalf of the [Council] by Mr Wallace, an Industrial Relations Advisor employed at the Local Government Association.
On 6 July 2012, [Mr Hand] rejected the [Council’s] offer and stated that he would continue as CEO until November/December 2014.
On 18 July 2012, the [Council] resolved to give [Mr Hand] 60 days’ notice to commence 39 weeks of long service leave on 16 September 2012. The [Council] again offered [Mr Hand] a six month voluntary redundancy package with an effective termination date of 1 December 2012. If the [Council] accepted that package, the direction to take long service leave would be withdrawn. The direction and offer were communicated to [Mr Hand] by Mr Wallace. At about this time [Mr Hand] instructed a solicitor.
On 6 August 2012, [Mr Hand] informed the [Council] that he did not accept the [Council’s] offer of voluntary redundancy. He requested that, prior to the [Council] making any decision in relation to his situation, he be given an opportunity to address the members of the [Council] in person.
On 17 August 2012, the [Council] informed [Mr Hand] that, given [Mr Hand’s] response of 6 August 2012, any further discussion of voluntary redundancy was moot.
On 16 September 2012, [Mr Hand] commenced 39 weeks of long service leave as directed by the [Council].
On 13 November 2012, the [Council] resolved to provide [Mr Hand] with notice of termination. Termination was to take effect on 31 August 2013.
On 14 November 2012, [Mr Hand] was given notice of termination as per the resolution of the previous day. [Mr Hand] was informed that the reasons for his termination would be discussed on his return from leave.
On 5 December 2012 and again on 21 December 2012, [Mr Hand’s] solicitor wrote to Mr Wallace requesting a copy of the minutes of the meeting on 13 November 2012 and written reasons for [Mr Hand’s] termination.
On 28[42] December 2012, Mr Wallace wrote to [Mr Hand] informing him that the [Council] had terminated his employment due to the breakdown in the relationship between he and the Mayor.
[42] This would appear to be a typographical error; the letter in question is dated 21 December 2012.
The notice of termination provided to Mr Hand by letter dated 14 November 2012 was in the following terms (omitting formal parts).[43]
Dear Nigel,
RE: Notice of Termination of Employment as Chief Executive Officer of the District Council of Barunga West
At a special meeting held on Wednesday 13 November 2012, Council resolved to terminate your employment as Chief Executive Officer as at 31 August 2013. As you are on Long Service Leave until June 2013, I will discuss the reasons for termination on your return.
Yours sincerely
[signed: Rob Wallace, Industrial Relations Officer, Local Government Association]
It will be recalled, from the summary of facts set out above, that Mr Hand commenced 39 weeks of long service leave on 16 September 2012. As a consequence, whilst the Council provided approximately nine and a half months notice of termination (13 November 2012 until 31 August 2013) only approximately three months of this notice was to operate after the conclusion of Mr Hand’s long service leave and whilst he was, presumably, to undertake normal working duties. The question of whether or not the Council, in fact or in law, provided approximately nine and a half months notice of the termination of employment or only approximately three months notice is dealt with later in these reasons.
[43] Case Book (on appeal) vol II at tab NAH-17, p47.
In addition, Mr Wallace, at the request of Mr Hand, provided the solicitor whom by then had been engaged by Mr Hand, with a copy of the notice of termination. The email from Mr Wallace to Mr Hand’s solicitor, Andrew Clare, dated 14 November 2012 was in the following terms (omitting formal parts).[44]
Subject: RE: Nigel Hand and District Council of Barunga West
Attachments: Nigel Hand.doc
Hi Andrew,
Council resolved to (sic) last night to provide Nigel with notice of termination of employment to take effect on 31 August 2013.
As per Nigel’s instructions, I provide you with the correspondence but I will also provide Nigel with a posted copy to his home address.
It is disappointing we have not been able to resolve Nigel’s concerns in an amicable way. I understand Nigel has certain legal rights he may wish to pursue but I am also willing to continue to work towards an amicable resolution if that is Nigel’s wish.
Regards – Rob Wallace
No form of resolution was put before the Judge. In neither the letter of termination provided to Mr Hand nor the email directed to Mr Clare is a reason given for the termination.
[44] Case Book (on appeal) vol II at tab NAH-17, p46.
In these circumstances, the Council has not shown that, given a choice between summary dismissal with zero weeks notice (with all that might subsequently entail in terms of the likelihood of provoking future disputation) and doing what the Council thought to be the right thing by giving Mr Hand substantial (nine and a half months) notice, the Council would have acted any differently. In these circumstances, the award of damages as determined by the Judge is justifiable even if there had been an entitlement by the Council to terminate summarily.
For these reasons it is unnecessary to consider at any length the Council’s allegations of misconduct and I propose to do so only briefly.
According to the Council’s second defence[66] the Council alleged that Mr Hand during his employment:
(i)failed to maintain accurate leave records or follow proper process;
(ii) misled the defendant as to his leave accruals;
(iii)failed to complete accurate time records and claimed salary for time not worked.
By way of particulars it is pleaded:
[Mr Hand] claimed that throughout his employment he had never taken long service leave and had only ever cashed out 76 hours of long service leave The [Council’s] records show that [Mr Hand] either took or cashed 342 hours long service leave entitlements.
On one work day during the week prior to 16 September 2012, [Mr Hand] left work during work hours to attend a private business. The [Council] records show that [Mr Hand] claimed his salary for this day.
[66] Case Book (on appeal) vol I, p13-15 at [1]-[4].
The Council does not go on to plead that any of these matters constituted a breach of the employment contract or gave rise to an entitlement, under s97, to terminate the employment. Furthermore, the Council pleads in paragraph 2 of the second defence that “the following preliminary issues, special defences and material facts [are] relied upon” and lists three matters. None of these matters puts Mr Hand fairly on notice that, in reliance on the alleged conduct of Mr Hand referred to above, the Council was entitled under s97 to terminate the employment for cause. Indeed, the Council specifically asserts that it was entitled to terminate Mr Hand’s employment by providing the five weeks notice or, in the alternative, by providing reasonable notice at common law.
Nevertheless, in the second reply by the plaintiff[67] the Council’s factual allegations of misconduct are addressed in the following terms.
4.1the allegations are untrue and incapable of giving rise to misconduct justifying dismissal and are not relied upon to justify termination in any event;
4.2the allegations are malicious and made to advance the self-interest of Mr Dolling, the mayor, and Mr Ward, being a person seeking to take over [Mr Hand’s] position as Chief Executive Officer;
4.3in the alternative, the allegations were known to the [Council] (or should have been known) prior to the decision to terminate and were not relied upon;
4.4in the further alternative, the allegations are inconsistent with the specific reason given for termination of employment and inconsistent with the provision of eight months notice of termination;
4.5alternatively, the [Council] has condoned any conduct which it now seeks to rely upon by failing to take action within a reasonable period of time whilst at the same time requiring [Mr Hand] to carry out his duties, comply with directions as to the taking of leave and stating that [Mr Hand] will be returning to work in June 2013.
[67] Case Book (on appeal) vol I, p17-19.
Section 97(1) of the Local Government Act 1999 allows for a Chief Executive Officer’s appointment to be terminated in the following (material) circumstances:
(a) on the ground that the Chief Executive Officer –
(i) has been guilty of misconduct; or
(iv) has, for any other reason, failed to carry out duties of the office satisfactorily or to any performance standards specified by the Council or in any contract relating to his or her appointment; or
(v) has breached in any other manner any contract relating to his or her appointment; or …
In dealing with this issue the Judge made the following findings and observations concerning the evidence.[68]
(i)The evidence does not establish that Mr Hand knowingly misrepresented the amount of leave he had taken. His evidence was that he relied upon his payroll records. He said that it was the duty of other employees to manage long service and leave entitlements.
(ii)Mr Hand’s conduct in failing to adequately record the taking of leave as cash was, in the circumstances, “trifling”. This is especially so when one considers the fact that the recording procedures of the defendant have changed over the period Mr Hand had been the Chief Executive Officer. Indeed, for the purposes of this trial, employees of the Council were required to collect Mr Hand’s leave records, a process which proved difficult due to the Council’s recording procedures.
(iii)The complaint that Mr Hand had taken extended lunch breaks on some occasions is “trivial”. Mr Hand’s evidence was that although he occasionally took longer lunch breaks than that noted in his timesheets, he made up for this time.
(iv)The complaint that Mr Hand was not always present at the Council premises on Friday is also “trivial”. There was evidence that Mr Hand attended meetings on Fridays. In any case, the conduct of Mr Hand as to his lunch breaks and work on Fridays, if it were serious, would have been apparent to the Council. Mr Hand has never received any warnings, nor had the Council ever required Mr Hand to engage in any other disciplinary procedures.
[68] Trial Judgment at [96].
As to the issue in (i) above, the Judge’s finding that it had not been shown that Mr Hand knowingly misrepresented the position was open on the evidence and there is no reason to disturb it. As to the issues in (ii), (iii) and (iv) above, my understanding of the Judge’s use of the words “trifling” and “trivial” in the context of his Honour’s remarks is that, in his Honour’s view, any such failures by Mr Hand did not constitute misconduct of sufficient gravity to permit summary dismissal pursuant to s97 or on any other ground. I agree with that position.
His Honour found[69] that:
The [Council] has failed to establish that [Mr Hand] was engaged in misconduct. The [Council] has failed to establish that [Mr Hand] failed to satisfactorily carry out his duties, failed to meet performance standards, or breached his contract. Thus, even if the grounds in s97(1)(a) justifies summary dismissal, those grounds have not been made out. The common law right to summary dismissal requires more serious conduct by the employee than that required by s97(1)(a). It follows that the common law right did not arise in this case.
[69] Trial Judgment at [97].
On my review of the evidence and the parties’ submissions, the Judge’s conclusions on this topic were open on the evidence. I would not disturb them.
Did the Council give less than nine and a half months notice because of the time spent on long service leave (issue (ix))?
The termination notice was given on 14 November 2012 whilst Mr Hand was on long service leave, he having commenced 39 weeks of long service leave on 16 September 2012. That leave finished sometime in June 2013 and the period of notice resulting in the termination of employment expired on 31 August 2013. As a consequence, a portion of the nine and a half months period of notice given by the Council was “consumed” by Mr Hand whilst he was on long service leave.
Late in the argument on the appeal and prompted by questions from the bench, the issue arose as to whether or not Mr Hand had truly been given nine and a half months notice of termination or something significantly less. The issue was not argued or otherwise dealt with at the trial. It appears to have been raised in Mr Hand’s notice of cross-appeal (paragraph 7.2 and prayer for relief 3) but delphically and only in the context of Mr Hand’s grounds of appeal and argument concerning s97 of the Local Government Act 1999 which argument ultimately failed. The argument that 12 months “reasonable notice” required a full 12 months notice excluding time spent on leave was not dealt with in either party’s written submissions and, as I say, came up very late and only upon questioning from the bench. I am not persuaded that this matter did form part of Mr Hand’s notice of cross-appeal apart from being consequential on the cross-appeal succeeding with respect to the s97 point.
In any event, I agree with the submission put by counsel for the Council. It is important not to confuse the giving of notice of termination with payment in lieu of notice. In the former situation the employee is required to fulfil normal duties and is entitled to enjoy normal incidents of employment whilst the notice period is worked out. The purpose of notice is just that – to provide time for an employee to put in place alternative arrangements for the period after the employment is to come to an end. It is not intended to provide windfall or extra remuneration for employment not undertaken. Payment in lieu of notice, where adopted, may have this latter effect. But this is not what happened in this case. Mr Hand was given nine and a half months (and was entitled to 12 months) notice of when his paid employment was to end. It is unfortunate that he was on long service leave at the time. Had he not been, he may have been financially better off after the employment came to be terminated (31 August 2013) subject to any entitlement he may have had to cash out unused long service leave and subject to any taxation issues.
However, this does not mean that he had not been in receipt of nine and a half months notice that his employment was to terminate as at 31 August 2013. Furthermore, had the Council given the full 12 months notice, as it was obliged to do, it still would have commenced 14 November 2012. The Judge was right to quantify the damages on the basis that approximately nine and a half of the required 12 months notice had been given.
The Court was not directed to any authority directly on point and no such authority has otherwise come to my attention. Such authority as there is typically arises in the context of the construction of specific award provisions dealing with matters such as sick leave, annual leave and long service leave. In these cases, the proper construction of the award provision in question will be essential to the question of whether or not a notice of termination can expire during or otherwise incorporate a period of leave.
For example, In Re Coal Mining Industry (Miners) Award 1954 New South Wales[70] a Full Bench of the Commonwealth Industrial Court[71] held that on the proper construction of the relevant award a notice of termination of employment given by the employer would run whether the notice was given whilst an employee was away from work because the employee was sick and unable to work or if that state of affairs arose after the notice of termination had been given but before it expired.[72] On expiry of any such notice of termination the employment would come to an end with the effect that any sick leave entitlement then being enjoyed but not exhausted by the employee would also come to an end.
[70] [1959] 1 FLR 327.
[71] Spicer CJ, Dunphy and Morgan JJ.
[72] At 333.
In Re Coal Mining dealt with a notice of termination expiring during a period whilst an employee was on sick leave and also concerned the terms of a particular award provision; as such, it is of no direct assistance in the present case. Nevertheless, the Full Bench did discuss a number of other authorities, albeit, cases which also concerned particular award provisions. One such case was In Re Municipal Council of Sydney v Harvey[73] where Cantor J, apparently,[74] held that the dismissal of an employee in whom a right to long service leave on full pay had become vested could not take effect until after the expiration of the period of leave to which he had become entitled. The Full Bench in In Re Coal Mining distinguished this case (and others) and expressly reserved its position as to whether this case (and others) had been correctly decided. For present purposes, it would appear, that In Re Municipal Council of Sydney, in any event, went no further than deciding (on the facts of that case) that a termination notice could not take effect during a period that the employee was enjoying long service leave but only “after the expiration of the period of leave to which [the employee had] become entitled”. The case does not go so far as to say that any period of notice cannot commence until after the expiration of the long service leave then being enjoyed.
[73] (1932) AR (NSW) 180.
[74] My consideration of this case has been confined to its discussion by the Full Bench in In Re Coal Mining at 334.
In any event, the facts and the law (award provisions) to be applied in In Re Coal Mining and the cases discussed therein are far removed from the present matter and can be of only, at best, quite limited assistance. The question in the present case is whether the reasonable notice implied term which is included in the parties’ contract at common law permitted the period of reasonable notice to commence during and to expire after a period of long service leave then being enjoyed. For the reasons earlier given, I see no basis upon which that cannot be so. There is no question of Mr Hand being deprived of his long service leave entitlement. He enjoyed full pay whilst on leave from his employment duties in accordance with his entitlement under the rules of long service leave.
The costs order made with respect to the trial (issue (x))
For the reasons given to this point I would dismiss both the substantive appeal and the cross-appeal. Nevertheless, the Council submits that even were this to be the result of the substantive appeal the Judge, in any event, erred at trial when awarding Mr Hand costs on a party and party basis.
The costs order was made on the basis that Mr Hand succeeded in establishing that the Council had breached its contract and in obtaining an order for damages in the amount of $27,884.[75]
[75] Hand v District Council of Barunga West [2013] SASC 195 at [5].
The Council submits that given the amount of damages awarded, and by reference to s40(2) of the Supreme Court Act 1935 and Rule 263(2)(h) of the Supreme Court Rules, the exercise by his Honour of the discretion as to costs miscarried. It will be helpful if I set out the two provisions relied on.
Section 40(2) of the Supreme Court Act 1935 is as follows.
40—Power of court with regard to costs
…
(2)If—
(a) an action for the recovery of damages or any other monetary sum is brought in the court; and
(b) the action might have been brought in the District Court; and
(c) the plaintiff recovers less than an amount fixed by the rules for the purposes of this paragraph,
no order for costs will be made in favour of the plaintiff unless the court is of the opinion that it is just, in the circumstances of the case, that the plaintiff should recover the whole or part of the costs of action.
Rule 263(2)(h) of the Supreme Court Rules is as follows.
263—Court's discretion as to costs
(1)As a general rule, costs follow the event.
(2)The general rule is, however, subject to specific rules to the contrary1 and also to the following exceptions (which apply subject to the Court's order to the contrary)—
. . . .
(h) in an action founded on a claim for damages or any other monetary sum (other than a motor accident claim or a claim for defamation), general costs of action are not to be awarded in favour of the successful plaintiff unless the amount awarded exceeds $75 000.
Example—
1 For example, the special provisions as to costs where a party fails to accept an offer of settlement and the amount obtained by judgment does not exceed the amount of the offer (see rule 188).
The Council submits that the Judge’s order was consistent with the general rule approach that “costs follow the event”. However, Mr Hand’s action could have been brought in the District Court and Mr Hand recovered significantly less than the prescribed amount ($75,000). Accordingly, Mr Hand is not entitled to an order for costs in his favour “subject to the Court’s order to the contrary” (Rule 263) and will only be entitled to such an order to the contrary if “the Court is of the opinion that it is just in the circumstances of the case...” (s40(2)).
The Council submits that the $27,884 in damages awarded by the Judge in this matter fell within the jurisdiction of the Magistrates Court. And, that there is no reason why these proceedings could not have been issued in the District Court, which has exactly the same powers as this Court with respect to monetary and injunctive relief. On this basis, the Council submits that s40(2) and Rule 263 should have been applied to preclude an award of costs in Mr Hand’s favour.
The Council accepts that the Judge has an unfettered discretion as to costs. However, given that both s40(2) and Rule 263(2)(h) were enlivened, the Council submits his Honour ought to have commenced his analysis with a presumption against a costs order. If that were not the case, these provisions, aimed at discouraging litigation from being unnecessarily initiated in this Court, would be rendered futile. His Honour ought to have then considered whether any particular circumstances of the matter necessitated a departure from that starting position, that is, whether there existed any reasons to displace the presumption against a costs order being made. The Council submits that the Judge did not identify any adequate reasons.
The Council also relies on an offer made by it on 10 October 2012.[76] The Council offered to pay Mr Hand $80,000 plus accrued entitlements. Mr Hand would have been better off if he had accepted that offer rather than instituting proceedings in this Court. The Council also relies on a second offer made during the course of the trial to pay Mr Hand an additional 17 weeks salary over and above long service leave and other entitlements.
[76] Exhibit NAH33, Second Affidavit of Nigel Hand, Case Book (on appeal) vol III.
Counsel for Mr Hand submits that he was entitled to initiate proceedings in this Court. Mr Hand had been employed with the Council since May 1997. His local government service was a central feature of his life. The one aspect of the proceedings which was of upmost importance to Mr Hand was the vindication of his reputation following the criticisms directed towards him regarding his performance and conduct during his tenure with the Council. Mr Hand was therefore justified in seeking vindication with respect to those criticisms by a judgment of a superior court. He was unlikely to receive the same level of public vindication with a judgment from a lower court.
Counsel for Mr Hand also relied on the unfettered discretion of the Judge with respect to costs. Whilst the amount of damages awarded is one factor to consider, his Honour was entitled to have regard to broader issues in exercising the discretion. Mr Hand also submits that the Council failed to demonstrate a sufficient basis on which to overturn his Honour’s exercise of the discretion which appears, on its face, to have been rationally exercised.
I accept the appellant’s contention that s40(2) of the Supreme Court Act and Rule 263(2)(h) had prima facie application to the trial proceedings. Nevertheless, I agree with and adopt the following observation by Blue J in Ramsey v Annesley College (No 2).[77]
The Court has a general discretion to depart from the prima facie effect of section 40(2) of the Act and Rule 263(2)(h) of the Rules. Without fettering the breadth of the discretion, the following factors are relevant:
1.the nature of the actions;
2.the complexity of the factual and legal issues;
3.the profile of the parties and publicity associated with the matter;
4.the amount recovered.[78]
[77] [2013] SASC 145 at [33] (footnote in the original).
[78] Australian Education Union (SA) v Grieve [2000] SASC 430 at [12] per Williams J; White v State of South Australia (No 2) [2010] SASC 185, (2010) 270 LSJS 264 at [13] and [18] per Anderson J.
This action was legally and factually complex and perhaps more so than it first may have appeared. As the arguments on appeal and these reasons indicate, a number of difficult questions of law arose for consideration at the trial and the factual basis upon which those questions of law were to be determined was not easy to ascertain. Given that, at least initially, injunctive and declaratory relief was being sought, I am satisfied that it was appropriate for the plaintiff to commence the proceedings in either the District or the Supreme Court. In addition, on the plaintiff’s case substantial damages well in excess of $100,000 were sought. The Council has not suffered any prejudice, at least, in relation to the amount of any adverse costs order it might suffer by reason of the fact that the proceedings were conducted in the Supreme Court rather than the District Court.
Furthermore, one of the more important and difficult issues to be determined, that is, whether the 2006 Award applied to Mr Hand as a Chief Executive Officer of a Council, was a matter of some significance not just to the parties but generally. Another factor that needs to be taken into account is that, again as the dispute between the parties developed, Mr Hand was subjected to quite severe criticism by the Council in respect of aspects of his performance as a senior local government officer. Whilst these criticisms did not directly allege, they did smack of dishonesty. In my view, it was not unreasonable of Mr Hand to seek public vindication, in this respect, by a decision from this Court in preference to the level of public vindication he might expect to receive as the result of a decision of a lower court.
It will only be in relatively unusual circumstances that a plaintiff who has offended against the requirements of s40(2) and Rule 263(2)(h) will be entitled to the usual costs order. The section and the rule are intended, inter alia, to ensure or promote the efficient use of the resources of parties and the courts. In the ordinary case, where the requirements of s40(2) and Rule 263(2)(h) are found to apply a party can expect the costs penalty to be imposed. Nevertheless, in this case, and after weighing the various considerations I have identified, I am satisfied that the Judge was justified in exercising the discretion to award Mr Hand his costs. I am satisfied that the justice of the case is such that Mr Hand should not be deprived of recovering his costs of action at trial simply on account of the fact that he recovered an amount less than $75,000.
The Council also relies on two offers to settle. The first was contained in an email to Mr Hand’s then solicitor dated 10 October 2012. The offer to pay $80,000 in addition to accrued entitlements was expressed to be “to encourage an early retirement”. This offer was made at a time prior to the commencement of litigation and indeed at a time prior to the Council issuing its notice of termination of employment (14 November 2012). The parties had been in negotiations concerning the terms upon which Mr Hand might retire from the Council. The second offer was made during the conduct of the trial. Neither of the offers were in a form or made at a time that would satisfy the requirements of an offer made pursuant to Rule 187 of the Supreme Court Rules so as to attract the advantages available under Rule 188 in the event that the offer were not accepted. In addition, neither of the offers can be said to be in the nature of a Calderbank offer[79] as that notion has been explained in this Court and, in particular, in Morris v McEwen & Anor.[80] In each case, the Council did not contend otherwise.
[79] Calderbank v Calderbank [1975] 3 All ER 333.
[80] [2005] SASC 284.
In any event, given the nature of the offers made and the timing of the offers made I am not satisfied that it was necessarily imprudent of Mr Hand (viewed prospectively) to have rejected each offer, at least, not so imprudent as should be seen as depriving Mr Hand of an entitlement to an ordinary costs order following his success at trial.
For these reasons, which add to or expand upon those given by the Judge, I am not satisfied that the Judge’s discretion as to costs at trial miscarried and I would refuse this ground of appeal as well.
Conclusion
I would dismiss both the appeal and the cross-appeal with the result that the Judge’s orders, including as to costs, should be affirmed. I would hear the parties on the question of the costs of the appeal.
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