Ford, Clements,Ware and Calleja v Airservices Australia

[1998] IRCA 10

INDUSTRIAL RELATIONS COURT OF AUSTRALIA

INDUSTRIAL LAW - application for penalty pursuant to s 178 Workplace Relations Act 1996 (Cth) (formerly s 178 Industrial Relations Act 1988 (Cth) ) for breach of awards - respondent restructured operations and introduced new classification structure - whether applicants were excess to respondent’s requirements - whether applicants retrenched - NO POINT OF PRINCIPLE

CONTRACT - whether breach of contract - whether misrepresentation - whether wrongful dismissal - NO POINT OF PRINCIPLE

TRADE PRACTICES ACT - whether misleading and deceptive conduct - NO POINT OF PRINCIPLE

PRACTICE AND PROCEDURE - no case submission - principles to be applied

Workplace Relations Act 1996 (Cth) s 178, 179
Industrial Relations Act 1988 (Cth) s 178
Civil Aviation Act 1988 (Cth)
Public Service Act 1922 (Cth)

Australian Public Service Redeployment and Retirement (Redundancy) Award 1987 cll 6, 7
Civil Aviation Authority Award 1990 cl 38

J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) (1992) 111 ALR 377, followed

RONALD FORD, PAUL ANDREW CLEMENTS, JAMES WARE and EDWARD CALLEJA v AIRSERVICES AUSTRALIA

VI 1816 of 1995

MARSHALL J
MELBOURNE
27 MARCH 1998

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VI 1816  of   1995

BETWEEN:

RONALD FORD
FIRST APPLICANT

PAUL ANDREW CLEMENTS
SECOND APPLICANT

JAMES WARE
THIRD APPLICANT

EDWARD CALLEJA
FOURTH APPLICANT

AND:

AIRSERVICES AUSTRALIA
RESPONDENT

JUDGE:

MARSHALL J

DATE OF ORDER:

27 MARCH 1998

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1. The application be dismissed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VI 1816 of 1995

BETWEEN:

RONALD FORD
FIRST APPLICANT

PAUL ANDREW CLEMENTS
SECOND APPLICANT

JAMES WARE
THIRD APPLICANT

EDWARD CALLEJA
FOURTH APPLICANT

AND:

AIRSERVICES AUSTRALIA
RESPONDENT

JUDGE:	MARSHALL J
DATE:	27 MARCH 1998
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

In this matter the applicants seek the imposition of penalties upon the respondent pursuant to s 178 Workplace Relations Act 1996 (Cth) (“the Act”), formerly s 178 Industrial Relations Act 1988 (Cth). It is alleged that the respondent acted in breach of cll 6 and 7 of the Australian Public Service Redeployment and Retirement (Redundancy) Award 1987 (“APS Award”) and cl 38 of the Civil Aviation Authority Award 1990 (“CAA Award”).  The applicants also seek declarations as to their entitlement to a voluntary retirement payment pursuant to cl 38 of the CAA Award.  In the accrued jurisdiction of the Court damages are sought for misrepresentation, breach of contract, wrongful dismissal and misleading and deceptive conduct.

The hearing commenced in February 1997.  Five days had been allocated to the matter after the Court was informed at a directions hearing that the matter would conclude within that time.  The estimate was an unrealistic one.  The matter was adjourned after four days of hearing in February 1997 to August 1997, however, it was unable to proceed then due to availability difficulties with one counsel.  The matter had to be adjourned again until February 1998.  This “saga” illustrates the importance of the Court being given realistic estimates at directions hearings regarding the length of trials to enhance the efficiency of case management.

At the conclusion of the applicants’ case, the respondent informed the Court of its desire to present a no-case submission.  The Court was asked to rule upon whether it should put the respondent to its election concerning the evidence.  The no case submission, as foreshadowed, only dealt with the applicant’s allegations of award breach and not their claimed relief in the accrued jurisdiction of the Court.   The respondent informed the Court that, if not put to its election to call evidence, it would save one to two days hearing time in the matter.  The Court formed the view that the interests of justice would be best served by putting the respondent to its election.   The saving of two days Court time, if the no-case submission succeeded, did not, in my view, outweigh the potential difficulties which would arise if following a successful appeal against a first instance judgment the matter had to be re-litigated in the Court before a single judge.   In so deciding, I had regard to the principles concerning the question of election as set out in the judgment of French J in J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) (1992) 111 ALR 377, especially his Honour’s observation that “the Australian authorities plainly favour a flexible approach to the question of election” and that the ruling made “will depend on the just and convenient disposition of the litigation.”

After I put the respondent to its election, it then opened its case and presented its evidence.

FACTUAL BACKGROUND

(a)       The Applicants

(i)        Ronald Ford

Mr Ford commenced employment with the Department of Civil Aviation (“the Department”) as a Communications Officer on 30 June 1964.  He was then 24 years of age.  In 1968 the work he performed received the new classification label of “Flight Service Officer” (“FSO”).  Mr Ford rose through the FSO grades to become an Acting FSO Band 5 in November 1989.  Earlier, on 15 June 1988, the Civil Aviation Act 1988 (Cth) came into force. It corporatised the Department and created a new Civil Aviation Authority (“CAA”). At all material times thereafter the CAA, to which the respondent is a successor, was Mr Ford’s employer.

Whilst employed by the CAA and its predecessor, apart from between 1970 and 1972, Mr Ford was a member of the Professional Radio and Electronics Institute of Australia (“PREIA”), an organisation of employees registered under the Act. In 1988 and 1989 he was a workplace delegate for the PREIA. He resigned from the PREIA when he ceased to be employed by the CAA.

In May 1990 Mr Ford applied for a position in a restructure of the Air Traffic Services division of the CAA’s operations.  The new system contained a five band structure.  The circumstances of the restructure and its significance in this proceeding are discussed later in these reasons for judgment under the sub-heading “The Respondent”.

Mr Ford applied for positions in Band four and Band five.  On 23 October 1990 a list of those officers “placed” in the new structure was published.  Mr Ford was not included in that list.  Earlier, on 28 September 1990, Mr Ford had written to his supervisor expressing a wish to seek “early retirement” from the CAA, effective 30 November 1990.  Following the publication of the list of placed officers on 23 October 1990, Mr Ford confirmed that he would seek early retirement and brought his retirement date forward to 8 November 1990.  He retired from the CAA on that day and was paid an “early-retirement benefit” of approximately $47 000.  The early retirement benefit was available to FSOs who had attained 50 years of age and had accumulated ten years service in flight service.  Mr Ford had attained the age of 50 on 28 February 1990.

(ii)       Wallace Clements

Mr Clements died during the course of the proceedings.  The Court substituted his son as the second applicant, however for ease of reference, I will refer to Mr Wallace Clements as the second applicant.

Mr Clements commenced employment with the Department in 1965.  In 1988 he was appointed to the position of FSO Grade 4 at Tullamarine Airport.  In May 1990, Mr Clements applied for positions in the new CAA structure.  Mr Clements applied for positions in Band 5.  In October 1990 Mr Clements was advised that he had not been placed in the new structure.  Mr Clements continued to be employed by the CAA after October 1990.  On 28 February 1991, Mr Clements applied for early retirement, effective from 20 March 1991.  For ten weeks prior to 6 March 1991, Mr Clements was on sick leave.  He returned from sick leave on 6 March 1991 and retired from the CAA on 21 March 1991.  He was a member of the PREIA until his retirement.  He was fifty-five years of age on retirement.

(iii)      James Ware

Mr Ware commenced employment with the Department on 10 October 1960.  As at May 1990 he was a Band 5 - Supervisor at Tullamarine.  He was a member of the PREIA whilst employed by the CAA.  He retired from the CAA on 11 October 1990.  In May 1990, he had applied to be placed in the new structure.  His application became academic after his retirement.  He had heard “rumours” that he was not going to be placed in the new structure.  He expressed his intention to retire on 17 September 1990, effective 11 October 1990.  He had considered the prospect of taking early retirement from 3 May 1990.  He was fifty-three years of age on retirement.  He was a member of the PREIA throughout his employment with the CAA.

(iiii)     Edward Calleja

Mr Calleja commenced employment with the Department on 22 November 1954.  By 1989 he was engaged as an FSO Band 5.  In May 1990 he applied for positions within Band 4 and Band 5 in the new structure.  On 3 May 1990 he had been advised by the pay section of the CAA that he was eligible for early retirement.  On 22 May 1990 he gave notice of his intention to retire on 5 December 1991.  He later varied that date to 2 January 1992.  In October 1990, due to hearing difficulties,  he was found unfit to hold a licence which was necessary for the performance of duties as an FSO.  His licence was reinstated in early 1991.  He had not been placed in the new structure but performed clerical duties around the office without salary change.  On 29 April 1991 Mr Calleja decided to bring forward his early retirement to 4 July 1991.  From 30 May 1991 until 3 July 1991 he was on sick leave.  From 1956 until 1987 he was a member of the PREIA.

(b)       The Respondent

The CAA and its predecessor, the Department, provided a system of air traffic control concentrated around metropolitan airports.  The CAA also provided a system known as “flight service”.  Flight service was designed to provide communication and information monitoring and supervision of flights, generally between major centres.  Although the CAA was established in July 1988, its staff continued to be employed pursuant to the Public Service Act 1922 (Cth) until 1 July 1990 when the staff became employees of the CAA.

The Department commissioned a report known as the Ratner Report in 1987.  The Report is dated April 1987.  It recommended integration of flight service and air traffic control operations.  It was apprehended by affected employees at the time that such integration may necessitate a downsizing of the affected workforce.  However, ultimately integration did not occur.  A review of the classification structure within flight service occurred in 1988.  The result was the production of a document by the CAA in June 1988 entitled “Flight Service Towards 2000”.  At that time, agreement had been reached between the PREIA and the CAA on the need for a more flexible structure consequent upon a new strategy for integration and modernisation of the airways system, known as “IMAS”.  The IMAS strategy envisaged a reduced need for flight service officers due to  the introduction of new technology.

In 1989 a new interim 5 band structure was introduced in flight service.  There was a consequent need for the CAA to determine the number of positions that would be required when the new structure was finalised.  Finalisation of the structure was effected in October 1990.

The “Flight Service Towards 2000” document recommended that for promotion purposes, order of merit of FSOs be maintained.  This occurred in 1988 and 1989.  It was also used to translate most existing officers in 1989 into the new interim structure.  Each applicant was ranked highly in the order of merit produced in 1989.

The CAA issued an Administrative Circular (No 20/90) on 10 May 1990.  The circular announced the commencement of a “placement exercise” and gave 1 June 1990 as the closing date for applications for positions in the new structure.  A three member committee known as the Joint Placement Advisory Committee (“JPAC”) was given the responsibility of assessing the applications and deciding which employees would be placed in the new structure.  JPAC reported on 22 October 1990.  Several employees were not placed by JPAC.  Some, like the applicants, took early retirement, while some others were ultimately given positions in the flight service when some “placed” employees did not take up work in the position which they were placed by JPAC.  Those in that later category include a Mr Boydle who was an FSO Band 4 and a Mr McMahon who was an FSO Band 5.

JPAC and MR FORD

Mr Ford testified that by late September 1990 he believed he would not be placed by JPAC.  He said that he believed that he was likely to be dismissed, so he decided to apply for early retirement, in the knowledge that he was able to amend his proposed retirement date.  He testified that there were strong rumours that early retirement was “something brought in to get rid of aged people, people up near 50s, as quickly as possible”.

Mr Ford said that his manager, Mr Milton, telephoned him at home on 24 October 1990 and advised him that he had not been placed by JPAC.  Under cross-examination by Mr Green, counsel for the respondent, Mr Ford gave the following evidence about that telephone conversation:

“Mr Milton was aware I put in my application for early retirement.  Mr Milton rang me at home on my day off with the JPAC results and asked me if I wanted to discuss it.  I said it’s immaterial because I have put in for early retirement, and I’ll talk to you at work tomorrow.”

Mr Ford testified that the following exchange occurred between he and Mr Milton the next day:

FORD:  “What going to happen to me?”
           MILTON:      “You sit there for a short while and who knows.”

Mr Ford agreed with Mr Green that he didn’t tell anyone at the CAA that his clear preference was to stay.  He also admitted that he was not told by anyone at the CAA that he did not have a job or was redundant.  His real complaint was that if he knew that he may have qualified for a redundancy payment in 1991 he would not have taken early retirement in 1990.  Mr Ford conceded that the JPAC report said nothing about him being surplus to the CAA’s requirements but he believed that to be the effect of his not being placed by JPAC.  At all material times, Mr Ford knew that the compulsory retirement age was sixty.

Mr Milton testified that JPAC did not consider whether any employee of the CAA would be made redundant.  As part of the JPAC exercise Mr Milton was required to assess each FSO employed at Tullamarine against set selection criteria for each position.  Mr Milton had commenced his duties as Flight Service Manager in late 1990.  He did not recall the content of his conversations with Mr Ford immediately after the JPAC report was published.  I find it more probable than not that Mr Milton used the words attributed to him by Mr Ford’s evidence regarding the discussion at work on 25 October 1990.  However, it is not surprising that Mr Milton would have taken the attitude that Mr Ford would do office work until he retired, given that Mr Milton expected Mr Ford to retire in November 1990, having regard to Mr Ford informing him the evening before that “it’s immaterial because I have put in for early retirement” (Emphasis supplied).

I find it highly unlikely that Mr Milton would have told Mr Ford, as Mr Milton suggested he might have, that some people who had been placed would not take up their Band 5 positions and he could continue as a Band 5.  It is possible that he said something of that kind to Mr Clements or Mr Calleja but not Mr Ford.

Mr Milton testified that some persons, who were not placed by JPAC, were subsequently placed in band positions.  He referred to a Mr Boydle (Band 5) and Mr McMahon (Band 4).

Mr Milton described JPAC in the following way:

“It was a joint body set up between PREIA, (CAA) and ... the Public Service Commission, to make determinations on a final placement exercise relating to the award restructuring exercise of 1989 based on assessments that were made by the various people - myself and others ...”

It was his role to prepare the assessments for the Victoria-Tasmania region of the CAA as he was the most senior officer in flight service in that region.  He testified that he approached his task as “a fresh exercise” and did not have regard to previously published orders of merit.  Even though he did not see the JPAC exercise as involving a “spill of all positions”, he understood how that could be perceived to be the effect of it.

I accept Mr Milton’s evidence that he did not exhort Mr Ford into early retirement.  I believe that Mr Ford was set upon the early retirement course before the JPAC report was published and his intentions were confirmed upon the publication of that report.

JPAC and MR CALLEJA

Mr Calleja testified that he decided to take early retirement as at 22 May 1990 as he had “come to the conclusion that flight service would no longer be there by the time [he] reached retirement”.  He said that he had no subsequent change of heart about early retirement.  He conceded that he decided to take early retirement before JPAC’s results were published although it was open to him to work until he was sixty.  He agreed with Mr Green that no-one in the CAA had told him that he was excess to the CAA’s requirements.

I accept Mr Milton’s evidence that Mr Calleja did not approach him in early 1991 to ask about a redundancy package.  No “redundancy package” existed until an invitation was issued to all the CAA staff on 16 September 1991 to volunteer to be made redundant.  Negotiations between the PREIA, other organisations and the CAA did not commence until May 1991, by which time Mr Calleja had left the employ of the CAA.

I do not accept that Mr Calleja was pressured to take early retirement after JPAC’s findings were published.  In particular, I find that Mr McGearey, one of Mr Calleja’s superiors, did not say that Mr Calleja was an “embarrassment” doing clerical work instead of FSO work, although I accept that Mr McGearey might have said that the situation was embarrassing.

JPAC and MR CLEMENTS

Mr Clements testified that, when he was told he had not been placed by JPAC, he believed that the CAA had decided to “get rid” of him.  On return from sick leave on 16 November 1990, Mr Clements continued to perform his job as FSO Band 5, until he took further sick leave in January 1991.

Mr Clements testified that whilst on sick leave on 20 February 1991, he was telephoned by Mr Milton, who asked him when he was coming back to work and if he had thought of early retirement.  Mr Clements was unable to be rostered for operational duties for his scheduled return to work on 6 March 1991 and was rostered for clerical duties.  The rosters had been prepared by Mr McGearey in advance of his knowledge about the timing of Mr Clements’ return from sick leave.

Mr Clements discovered on 24 February 1991 that he would not be rostered on operational duties on his return.  On 26 February 1991 he ascertained from Mr Milton that he would be performing clerical duties during the period of that roster.  He believed that would be a “sham job” so on 28 February 1991 he applied for early retirement effective 21 March 1991.  He ceased employment with the CAA on that later day.

Mr Clements testified that he “reluctantly” applied for early retirement after ascertaining from Ms Inglis of the CAA pay office, that he was not entitled to redundancy.

I do not accept that Mr Milton or anyone else in the CAA was attempting to get rid of Mr Clements after JPAC’s findings were published.  But for his decision to retire, Mr Clements might have been ultimately placed in Band 5 as was Mr McMahon.

Mr Clements agreed with Mr Green that, had he not taken sick leave in early 1991, he would have been continually rostered on FSO Band 5 duties.

JPAC AND MR WARE

As is clear from the discussion earlier in these reasons concerning Mr Ware’s circumstances, Mr Ware had resigned prior to the JPAC Report and was therefore not affected by it.

An objective analysis of the evidence suggests that Mr Ware was not “pushed” but “jumped” on the basis of unsubstantiated rumours.  He was never declared to be in excess.  He was a highly regarded FSO and may well have been placed by JPAC had he not resigned prior to its report being published.  Alternatively, as occurred with Mr Boydle and Mr McMahon, he may have ultimately been placed if not initially placed.

THE AWARDS

The applicants allege the CAA has breached the APS Award and the CAA Award.  The APS Award bound the CAA, as a successor to the Department, from 13 July 1987 until 3 August 1990 when it was superseded by the CAA Award.  The CAA Award bound the CAA from 3 August 1990 onwards.

The application, as amended, alleges that cll 6 and 7 of the APS Award were breached by the CAA in relation to the applicants.  Those clauses of the APS Award deal with redundancy.  Clause 6 places an obligation on the CAA to consult with relevant industrial organisations, such as the PREIA, “where it appears (to the executive officer of the CAA) that an officer is likely to be excess to (the CAA’s) requirements.”  It was never in the contemplation of anyone in the CAA, other than perhaps the applicants themselves on the basis of unfounded rumours, that the applicants would be in excess to the CAA’s requirements.  Although I concede that such rumours were fuelled by certain exaggerated statements made in public by the then CAA Chairman, Mr Dick Smith, which may have been observed by one or some of the applicants.  I find that cl 6 of the APS Award was not breached by the CAA.

Clause 7 of the APS Award is headed “Voluntary Retirement”.  It has no relevance to the circumstances of the applicants who were not retrenched.  I find that the CAA did not breach cl 7 of the APS Award.

The applicants allege that the CAA breached cl 38 of the CAA Award.  The foundation for the operation of cl 38 is a finding by the CAA that an employee is excess to its requirements.  No such finding was made by the CAA in relation to any applicant.  Further, no applicant answered the description of “excess employee”, as defined in cl 38(b) of the CAA Award.  I find that CAA did not breach cl 38 of the CAA Award.  There was no question of the applicants being made redundant, they voluntarily applied for early retirement.

It follows that I also dismiss the claims by the applicants for a voluntary retirement payment pursuant to cl 38 of the CAA Award. I also dismiss the applicants’ claims for payment pursuant to s 179 of the Act.

THE COMMON LAW  AND THE TRADE PRACTICES CLAIMS

Mr Howells, counsel for the applicants, contended that the applicants were entitled to damages for misrepresentation, breach of contract, wrongful dismissal and misleading and deceptive conduct.

Mr Howells submitted that the CAA owed a duty of care to the applicants to be frank with them regarding the proximity of a new enhanced redundancy benefit contained in a Memorandum of Understanding (“MOU”) between the CAA  and the relevant unions.  Mr Howells submitted that the applicants should have been told about these developments “in at least December 1990”.

I reject Mr Howells’ submission.  I accept the evidence of Mr Grant, the General Manager of the respondent - corporate and employee relations, that it was not until February 1991 that the CAA Board agreed to negotiate a new redundancy package with the relevant unions.  Senator Cook, then Minister for Industrial Relations, did not give the CAA permission to commence negotiations with the relevant unions “on a revised package” until 29 May 1991.  The MOU was not finalised until mid-July 1991 and not formally approved until 23 August 1991.  Staff were not invited to volunteer to leave the CAA pursuant to the MOU until 16 September 1991, and the first “departures” did not take place until 4 November 1991, well after the applicants had resigned from the CAA.

In so far as the applicants inquired of officers of the CAA, including Mr Milton, concerning redundancy, I do not believe that the evidence supports any finding that they were misled.  I accept the submission of Mr Green that they acted, in perceived self-interest, to take early retirement.  If they wished to leave the service of the CAA, that was their only alternative at the time, or in the foreseeable future.  That was the truth of the matter however difficult it may have been for the applicants to face up to it.  It was bitter for them to realise that, in hindsight, they would have been better off to delay their retirement until November 1991.  However, none of those considerations makes the CAA liable for damages, for misrepresentation or misleading and deceptive conduct.  This is because no such conduct occurred.

The claim for damages for beach of contract is misplaced.  I do not accept that there was any breach of any of the applicants’ employment contracts by the CAA.  The claim for wrongful dismissal is devoid of merit.  The applicants were not dismissed.  On the contrary, each of them initiated the termination of his employment.

ORDER

The order of the Court is that the application be dismissed.

I certify that this and the preceding twelve (12) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall

Associate:

Dated:            27 March 1998

Counsel for the Applicant:	Mr Stephen J Howells
Solicitor for the Applicant:	Mason Sier Turnbull
Counsel for the Respondent:	Mr Nicholas Green
Solicitor for the Respondent:	Deacons Graham & James
Date of Hearing:	17, 18, 19, 21 February 1997 9 - 13 February 1998
Date of Judgment:	27 March 1998