Gregory v Philip Morris Ltd

[1987] FCA 406

Industrial law - award - job security - termination not

to be "harsh, unjust or unreasonable" - whether void for

uncertainty - whether purported dismissal in breach

effective to terminate contract	of employment - whether
dismissal in breach	- circumstances to be considered.

i	Employer and Employee - contract of employment - dismissal by reason of failure to belong to particular
unlon - whether new contract - whether express or
implied term that employee belong to particular union -
xhether collective agreement valid - whether terms of
collective agreement terms of contract - whether
obligation not to dismiss "unfairly or unreasonably"
void for uncertainty -whether purported dismissal in
breach effective to termlnate contract - whether
relationship of master and servant terminated if
contract remams - whether dismissal in breach.
Evidence - communications "without prejudice" - whether
agreement resulted.
Conciliation and Arbitration Act 1904, ss . 119, 122, 141
Industrial Relations Act 1979 (Vic.) ss . 47, 4 8 , 49,
50,51, 52, 53
Industrial Conciliation and Arbitration Act 1561-1975
(Qld.) S . 89(l)(f~
Industrial Conciliation and Arbitration Act 1972 (S.A.)
s.l5(l)(e)
Metal Industry Award 1984, cl. 6(d)(i)(l) and ( 2 1 , ()vi)
and (vii)

. RECINALD EDGAR GREGORY v. PHILIP MORRIS LIMITED

i :

l

No. 2 of 1587

I

Gray J.

MELBOURNE

2 2 JULY 1987 ~ ~

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IN THE FEDERAL COURT OF AUSTRALIA	)
) v. NO. 2 oz 1987

VICTORIA DISTRICT REGISTRY )

i )

INDUSTRIAL DIVISION )

!

I REGINALD ELGM GREGORY Applicant

-and-

PHILIP MORRIS LIMITED Respondent

MINUTES OF ORDER

COURT : Gray J.	..
I ' 8 -

: 22nd July 1987

PLACE : Melbourne

THE COURT ORDERS that the application is dismissed.

i

(m:  Settlement and entry of orders is dealt with by

0.36 of the Federal Court Rules.)

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IN THE FEDERAL COURT OF AUSTRALIA	)
) V. No. 2 of 1987

VICTORIA	DISTRICT	REGISTRY	)
1

DIVISION INDUSTRIAL 1

REGINALD EDGAR GREGORY Applicant

-and-

PHILIP MORRIS LIMITED Respondent

JUDGE: GRAY J .

U: 22nd July 1987.

REASONS FOR JUDGMENT

The applicant in this proceeding is a 48 year old

marr .led man with three dependent children. He is an electrician

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by trade. From January 1977, he was employed by the respondent

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in a position classified as electrician special class

The respondent is a company which manufactures !

cigarettes.	It	is a party to and bound by the Metal Industry
1984 ("the Award"), an award made under the Conciliation and Arbitration Act	1904	("the Act").

On 17th October 1986, the applicant was handed a letter

from the respondent ln the following terms:

"The Company has been informed, and it has

been confirmed, that you are no longer a.

member of the Electrical Trades Union of

Australia and as such you are in breach of a term and condition of your employment.

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The Company, accordingly, hereby terminates

I	your employment and enclosed herewith is a
cheque for 5 weeks' payment in lieu of notice,
in accordance with Clause 6(d) of the Metal
Industry Award, together with outstanding
entitlements, and a cheque representing your
termination benefit from PM(A)L the
Superannuation Fund."

I	The applicant also recelved cheques	for various sums, being his
I	entitlements under the Award and otherwise, on the basis that	he
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was entitled to five weeks' notice of dismissal.

In this proceeding, the applicant claims that the

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I purported dismlssal was in breach of cl. 6(d)(vi) of the Award.

i That clause 1s headed "Unfair dismissals", and provides:

I "Termination of employment by an employer

shall not be harsh, unjust or unreasonable.

For the purposes

of employment shall include terminations with of this clause, termination

or without notice. 'I

I

The applicant also claims, in reliance on what was said

:

! in Turner v. Australasian Coal & Shale EmDlovees' Federation

(1984) 6 F.C.R.	177, that the act of the respondent in handing
him the letter and the cheques was	meffective to terminate the

contract of repudiation of the contract employment, that if that act amounted to a

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he has never accepted the repudiation

as bringing the contract to an end, that the contract remains on

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foot, and that he	h .as been	and is ready and willing to perform
his obllgations under	lt.	In the alternative, the appllcant

claims that a second contract of employment came into existence

on 24th November 1986, as negotiations between the parties and their respective solicitors
and the restoration of the unlon membership of the applicant, and
that thls second contract has never been terminated effectively. a result of correspondence and

He seeks the imposltion of penalties for breaches of award in

purporting to dismlss him in contravention of the Award and

failing to pay him the sums required by the Award since that

time, an order for the payment of hls entltlements under the

Award, damages for breach of contract, a declaration that the !'

contract is still	on foot and an injunction restraining the
respondent from treating it as at	an end.

As to the alternative claim that a second contract came

into existence, the respondent has objected to the admission of
evidence of correspondence and telephone communications between

the parties and their legal advisers, claiming that they are

nature, dealing with negotiations in an attempt to settle a a "without prejudice"

privileged as being communications of

dispute likely to result in litigation, and that no concluded

agreement was reached. Because the question whether an agreement

was reached is important both to the admissibility of the
evidence and to the relief sought by the applicant, the evidence
was received subject to the objection, and I shall rule on the
objection in these reasons for judgment.

b 4.

It is necessary to deal with some of the circumstances

forming the background to the letter of dismissal. The

respondent employs approximately eighty to ninety metal tradesmen or fitters and trades assistants, all of whom are members of the

Amalgamated Metal Workers Union ("the AMWU"), and approximately

forty electricians and trades assistants who are members of the

Electrical Trades

Union maintenance employees include six carpenters, members of the	of Australia ("the ETU").	Other	!
-,
Amalgamated Society	of Carpenters and Joiners	("the ASC & S")	and

one painter, a member of the Operative Painters & Decorators

Union ( "the OPDU" 1. Between the AMWU and the ETU there was

maintained for many years what is called a "closed shop". This

expression has a meaning in the respondent's establishment, which

extends beyond membership by each employee of the appropriate trade union, the
particular closed shop involved an agreement between the two
unions to act together in their dealings with management, and its normal import. As well as involving

joint negotiation with the respondent by a committee on behalf of

all AMWU and ETU members.	Some years ago, the ASC & J and the
OPDU were also involved in the committee.

The applicant worked on day shift. In September 1982,

he was elected unopposed as shop steward by his fellow ETU

members. As shop steward, he was	a member of the closed shop
committee.	So also was Mr. John Karadeas, a day shift employee

who was a member of the AMW, and shop steward for its members.

!

5 .

There was in existence an agreement between the

respondent, the AMWZT and the ETU, entltled the Metal Trades

Agreement, and known	as the "local agreement". This agreement
first came into exlstence early in	1982, and was effective from

23rd November 1981. Its terms were negotiated by the closed shop

committee. Before the local agreement was made, or any variation

of it occurred, the results of negotiations were taken by the

closed shop committee to meetings of the relevant employees, and

adopted by them. On those occasions, it was usual to have a

meeting in the afternoon, attended by day shift employees about

to knock off, and by afternoon shift employees arriving before	!
their usual starting time, and a meeting early in the morning, attended mainly by night shift employees about to finish work. On the evidence, all employees who were working on a particular day attended one or other of these meetings.

The local agreement provided for various aspects of the

employment of AMWU and ETU members by the respondent. Among the

terms and conditions of employment the subject of it were wages

and benefits significantly above those provided for in the Award.

There were a150 two provisions of particular importance in the

present case. Clause	6 (a)	( ii) provided "Membership of the
appropriate Trade Union is	a condition of employment." Clause	2 2
laid down a	disputes procedure, and some provisions concerning	I .

stoppages and limitations. At the end of this provision was the

following term: "The Company agrees that during the term	of this
agreement there shall be no lock outs arising from internal

factors, and that	no employee should be unfairly	or unreasonable
(sic.	) dismissed.	"

In 1985, negotiations took place on variations to the local agreement. The outcome was recorded in a document signed

by Mr. Karadeas on behalf of the "U, the applicant on behalf of

the E!I'U,	and	a representative of the respondent, and dated 9th
August 1985.	The	terms negotiated were endorsed at meetings of
the respective unions, according to the system	outlmed	above.

One of the terms recorded was as follows:

"In march (sic.)/April 1987 the Company agrees

to discuss the redundancy of 10 employees or

l	more as determined at that time. At that time, a discussionlreview of wage parity will
be undertaken. 'I

The reference to	"wage parity" was explained in evidence as
involving an attempt by the closed shop commlttee to negotiate	a

1 ,. 2

uniform rate of	pay for all AMGJU	and ETU tradesmen employed by	, ,
>. ,

the respondent. As things stood in 1985, and as they stand at

present, an electrician special class earns approximately	$30.00
per week more than the lowest grade of electrician and	a fitter.
An electronlcs tradesman earns approximately	$60.00 per week more

than the lowest grade of electrician and a fitter. The purpose

of the wage parity claim was to lift all tradesmen to the same

rate as the electronics tradesmen.

There was some controversy about whether members of the €?TU employed by the respondent had been acquainted fully with the

ramificatlons of this proposed parity claim in	1985.	At all
events, Mr. Kevin	Rust, an	electronics tradesman employed by the

respondent, and a member of the closed shop committee

representing the afternoon shift, was opposed to the idea	of
parity. In about the middle of	1986, the issue began to assume
some importance to	ETU members. The applicant became aware of a
move to oust him as shop steward. On 11th August,	a meetlnq was
held.	The applicant was aware that the numbers at that meeting
were against him,	so he declared the position of shop steward

open. The meeting elected Mr. Rust as shop steward. It also

elected one Neil Cauqhey	as deputy shop steward. Mr. Caughey was
employed on day shift, and it was lntended that ETU members	on

day shift should have someone working on that shift to represent

them and to deal with their problems.

A further meeting of ETU members employed by the

respondent, held	a week or two later, resolved to split from the
closed shop committee. It was decided that the	ETU would deal
with the respondent separately from the	AMWU.

.;

Thereafter, the applicant inslsted on remaining on the	i
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closed shop committee himself and three other committee, and purported to represent on that

ETU members who supported his

position, Messrs. Ivor Wheeler, Kevin Barratt and Les Bogar.
On Show Day, 25th September, for by the ETU shop steward and deputy shop steward. A show of	a show of cards was called
cards was a procedure whereby the shop steward called on all members of the ETU to show their	“O.K.“ cards, to prove that they

were financial members of the union. The applicant as shop

steward had conducted regular shows of cards. Mr. Caughey asked

the applicant to show his card, and the applicant refused, saying

words to the effect of, “You show me yours and I‘ll show you

a.

mine". It was usual for an employee who was unable to prove his

financial membership of the FTU in such a show of cards to be

sent off the premises immediately, untll such time as he was able

to prove that he was a financial member. The applicant, however,

remained working until he left to attend a meeting at a motel, to

which further reference will be made.

As a result of the applicant's refusal to show his card, a stop work meeting O.K.

of W members was held. This meeting

resolved that all members of the ETU would stop work for the

remainder of that day and the whole of the next day, because a

person who-had not shown himself to be a financial member of the

ETU was on site. A stoppage of work occurred in accordance with this resolution.

Also on Show Day, the respondent arranged motel not far from its Moorabbin premises. a meeting at a

It was hoped that

representatives of the respondent, the AMWU and the ETU would be

able to sort out	the problems which had arisen from the	ETU
withdrawal from	the closed shop committee and the applicant's

continued membership of that committee.	The meeting was attended
by representatives of the respondent and of the	AMWU, and by the

applicant and representative of the E'2U Messrs. Wheeler, Barratt and Bogar. No

attended. As a result, the situation

was not resolved.

I-
l.

I

During the stoppage of work, the applicant and Messrs. Wheeler, Barratt and Bogar continued to work.	As a result, they
were labelled as	scabs, and other ETU members refused to work

with them. The respondent resolved this problem temporarily by

sending the applicant and Messrs. Wheeler, Barratt and Bogar to

work at its leaf bond store at Braeside. There was not enough

work at that store to keep four electricians occupied, but the

respondent was prepared to endeavour to employ them there, no	)I
doubt in the hope that the antagonism resulting from	their being

scabs members could do, on working with them, on the kinds of equipment
that could be issued to them, and on their entry to the fitters’ would die down. The AMWU members, who

labelled as supported the four at Braeside, placed bans on the work which

ETU

workshop. The effect of the last-mentioned ban was that ETU

members could only approach the respondent’s store through a

I

window used by production workers. Disputes concerning these

bans were notified to the Australian Conciliation & Arbitration

Commission, and	a member of the Commission endeavoured	to resolve
them.

In or about early October, Mr. Rust purported to lay

charges against the applicant under the rules of the W. By

letter dated 6th October 1986, the applicant was informed by	Mr.
Ron Luckman, the Secretary of the Victorian Branch	of the ETU, of

I the content of these charges, and that they would be heard by a

special meeting of the State Council on 15th October 1986 at 1.00

p.m. Charges were also lald agalnst Mr. Wheeler, Mr. Barratt and

Mr. Bogar. It charges, save to say that some of them arose out of incidents is unnecessary to state the content of the

i	which have been detailed above.
i
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l

On 15th October, the State Councll of the Victorian

I

! Branch of the ETU met. It dld not proceed with any charges

I	against Mr.	Bogar, on the ground that he had not received proper
1	,

notice of the charges dlrected against him. A discussion

I
!

I	occurred as to whether the charges against the remalning three
i	I	persons should be dealt with together. The State Council resolved
I	to deal with each person separately. The applicant, Mr. Wheeler
and Mr. Barratt then left the meeting and took no further part in
1	i
I	it, other than to deliver written submissions to the State
!	Council. The applicant's evidence was that they left because

1. i .'

they had expected to be dealt with together, and wished to i

i !

support each other at the meeting in relation to their separate

I

!	charges.
At to expel the applicant from membership, and to suspend Mr. the meeting, the State Council purportedly resolved
Wheeler and Mr. Barratt from membership.

l The applicant was informed of the decision of the State t I.

Council by telegram dated 15th October, which was waiting for him

!	I	when he returned home from work on 16th October, and subsequently
i
!	by registered letter. He first heard of the decision, however,

l

when he attended for work on the morning of 16th October, and was

I I

l	told by fellow employees of his expulsion. He was also told	of
I

the decision by the respondent's engineering manager, Mr. Hardy

Weller, later in the day.	Mr. Weller appeared to have a document
apparently signed by	Mr. Luckman, informing the respondent of the
decision.

I

On first hearing of his purported expulsion, the

i applicant was concerned that there would be some reaction from

the respondent. He had some dlscussion with Mr. Karadeas about

the course which he should take.	When he was called to an office
to see Mr.	Weller, he filled out and signed an application for

membership of the AMEIU. He did this because it was thought that

AMWU membership might assist him ln retaining his job with	the
respondent.
Present at the discussion with Mr. Heller was Egan, an electrical engineer employed by the respondent, Mr.	Mr. Andrew

Karadeas, Mr. Frank Edmonds, a member of the closed shop

committee, Mr. Wheeler and Mr. Barratt. Mr. Bogar may also have been present. Mr. Wheeler and Mr. Barratt had not been expelled

from membership at the ETU, but their membership had been

suspended. Discussion respondent would take. It was stated on behalf of the respondent took place as to what course the

i

that membership of the	AMWLT by electrlcians was not acceptable to
the respondent. Mr. Weller then said that the applicant,	Mr.

hTheeler and Mr. Barratt were to be suspended, and should leave

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and return the next day. The applicant remained at the plant and

travelled home with Mr. Karadeas at knock off time that day.

During the day, further dlscussions took place between management

and Mr. Karadeas and Mr. Edmonds about the future of the

applicant and the two suspended persons.

On 17th October, the applicant attended the funeral of a

relative in the morning. He then went to the respondent's

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premises and saw Mr. Weller and Mr. Egan. Mr. Weller then handed

him his dismissal letter, and the cheques	to which I have already
referred.

The appl cant consulted sol ,1c :ItorS. On 11th November

1986, he obtained a Rule to Show Cause against the members of the State Council of the Victorian Branch	of the ETU, seeking orders
pursuant to S . 141 of the Act.	The orders, if made, would have

required the members of the State Council to treat as null and

void the decision to expel the applicant, to refrain from giving

any effect to that decision, and to recognise the applicant as	a
member of the ETU.

On 24th November 1986, the State Council met again. As

a result of this meeting, Mr. Luckman wrote to the applicant on

!

the same day, in the following terms:

"I wish to advise that the State Council of

the Victorian Branch of the Electrical Trades Union of Australia at a Special meeting held 10.00 a.m.today resolved the following.	;.c'
. .,
State Council resolves on legal advice:-

1. That the letter from K. Rust to the State I .

Secretary dated 28th September, 1986 was

a preliminary step to the charging of R. Gregory, K. Barratt, I. Wheeler and L.

Bogar and that no charges were ever laid.

2.     That no charges being before the State

Council, its resolutions of 15th October,

1986 with respect to R. Gregory, K.

Barratt and I. Wheeler were and are

void and of no effect.

3 .    That the Secretary advise R. Gregory, K. Barratt, I. Ciheeler and L. Bogar accordingly.

Please find enclosed receipt for $11.50 for

membership dues received from	you on the 30th
October, 1986."

Since that time, the ETU has recognised the applicant as being a

financial member, and as having been a financial member

throughout the relevant period.

I

Mr. Luckman's letter of 24th November came attention of the applicant's solicitor to the

on the same day. The

applicant's solicitor then communicated its contents to the

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i	respondent's solicitor, and advised that the applicant would be
I
I	attending for work on the following morning. On the evening of 24th November, however, there was delivered to the applicant at
his home by courier a letter from the respondent's solicitors
l	which said, so far as is relevant presently:

I

i I

i	I	"In our client's letter to	you dated 17th
I	October, 1986,	you	were informed that your
l

I	employment by our client was terminated.
I
!	You are not permitted to enter the company's
,	premises at any time until further notice from
the company and in particular you will not be
!	permitted to enter the premises if you purport
to attend for work on 25th November, 1986, or
l
!
l
at any time thereafter unless permitted by the
company in writing. If you do enter the
l
I	premises, you will render yourself liable to be treated as a trespasser."

As a result, the applicant did not attend at the

respondent's premises on 25th November, and has not attended

there since. He has, however, remained ready and willing to

resume his employment	with the respondent should the opportunity
arise.

At this stage, it is convenient to deal with the issues

I I -

I	arising out of various communications between the parties and
I
l	their solicitors which were of a "without prejudice" nature.
i i
i	I
I	.

14.

!

Together with	the letter of dismissal, the applicant was also
handed a separate letter, dated 17th October	1986 and signed by

Mr. Henry Goldberg, the operatlons director of the respondent.

This letter was headed "WITHOUT PREJUDICE", and read:

"I refer to the matter of your termination and

advise that "without prejudice" to the

Company's legal rights in this matter, the

I	Company is prepared to re-employ you in your former position in the event that you are
reinstated as a member of the Electrical
Trades Union of Australia on or before 21 November, 1986. "

By a letter dated 20th October 1986, the solicitors who were then

acting for the applicant, and for Mr. Barrett and Mr. Wheeler,

wrote to the respondent, setting out a number of grounds on which

it was alleged that the applicant's dismissal and the suspension

of Messrs.

Barratt included the statement "We and Wheeler were invalid. That letter

are hereby instructed to demand that

you withdraw the notice of termination and reinstate Mr. Gregory

I forthwith. . . ' I .

I By letter dated 12th November 1986, headed "WITHOUT

PREJUDICE", the solicitors for the applicant wrote to the

solicitors for proceedings which had taken place before the Victorian Industrial the respondent. The letter referred to

i	Relations Commission, to a telephone discussion between the
I	solicitors, and to the Rule to Show Cause which had been obtained
I
l	by the applicant. It proceeded:

"Is your client prepared to -

1. Extend the deadline of 21 November next

which it has indicated 1 s the cut off time

for reinstatement?

2 . Provide us with an open letter stating

that it will reinstate	all of our clients if
the	Federal Court makes an order in their

favour pending the final hearing and

determination of their	application	andlor
pending the hearing of	the	appeal by the

National Executive of the ETU?

We look forward to hearing from	you at	the
earliest possible opportunity."

i

The reply to this letter was also marked "WITHOUT PREJUDICE". It

was dated 18th November 1986,and read as follows:

'We refer to your letter dated	12th November,
1986.

In relation to the matters raised in your

letter, in particular in paragraphs 1 and 2 ,

l ..

we	are instructed to inform	you	that the	I
not undertaking to your clients in respect of those matters.	prepared	to	give	any

company is

Our client will consider its position having regard to all circumstances and developments

in this matter. 'I

The applicant's Rule to Show Cause was returnable on

' . , .

19th November 1986. On that day, counsel appearing for the

respondents to that rule requested	an	adjournment until the
following week.	Such an	adjournment would have delayed the
outcome of that proceeding until	a date later than the date	! .:
l

l

specified in the respondent's "without prejudice" letter of 17th

October, namely 21st November.	Mr.	Maher of the applicant's
solicitors left the court room and telephoned Mr. Moore	of	the

j	:.'
,
I

' , 16.

i

respondent's solicitors. I accept that one or other of these

gentlemen stipulated that the telephone conversatlon was to be without prejudice. Mr. Maher explained that an adjournment of

I the proceeding against the members of the Fpu State Council was

being sought, and that this would take the matter beyond 21st

November. He asked Mr. Moore to obtain the respondent's

~ instructions as to whether or not that date remained critical.

Mr. Moore agreed to do this. A short time later, Mr. Maher again

telephoned Mr. Moore, who said that	he had obtained instructions
from the respondent, and that the date of	21st November was no

I
I

longer critical. The applicant's solicitors confirmed this

i

position by letter of the same date, hand delivered and marked

I

I "Without Prejudice". Among other things, that letter said:

"We note that your client's position regarding

our clients remains the same as specified in

it5 letters to our clients save that the

stipulated last date for reinstatement of Mr.

Gregory's union membership (21 November	1986)
is no longer critical."

I have already referred to correspondence which took place on 24th November. In the letter which was delivered to the

applicant by courier on the evening of that day, there was a

passage headed "Without Prejudice" which read:

"You will be aware that the company is presently

considering its position	as set out in our letter to
your solicitor dated	18th November, 1986 in the light of

current developments."

Evidence of the contents of the letters marked as

without prejudice, and of the telephone conversations between Mr.

i

17.   i

Maher and Mr.Moore, was objected to by Dr. Jessup, counsel for

the respondent, on the basis that those letters and conversations

I ,"

constituted negotiations between the parties wlth a view to

achieving settlement of a dispute. The contention of Mr.

Lawrence and Mr. Harris, counsel for the applicant, was that the

correspondence and conversations had resulted in a completed

agreement, and determine the point, it was necessary for the Court to examine therefore became admissible. In order to

the correspondence, and to receive evidence	of the conversations.	i.
See Tomlin v.	Standard Telephones	& Cables Ltd. C19691 1 W.L.R.

1378. If a concluded agreement did result, it can be proved means of evldence of the correspondence and the conversations. by

..

See Bentley v. Nelson C19637 W.A.R.	89.
The applicant's first argument on this issue was that, at the time when the letter dated 17th October was written,	no

dispute existed between the parties, and that the label "without

prejudice" on that letter was meaningless. It is true that the

addition of the words "without prejudice" to	a letter which is
not part of negotiations towards the settlement of	a dispute can
have no effect. See Bentley v. Nelson, cited above, at p. 93.

In the present case, however, there can be no doubt that, by its

"without prejudice" letter of 17th October, the respondent was

intending to open negotiations on what it saw as a potential

dispute arising from the dismissal of the applicant on the same day. In these circumstances, I have no doubt that the letter was

privileged from production in evidence, unless a concluded

agreement	resulted,	of	which	the	letter	itself	constituted
evidence.

The applicant's argument was that the letter of 17th

October amounted to an offer to reinstate the applicant if he

- .

succeeded in obtaining reinstatement as a member of the E T U on or I

before 21st November 1986. That offer was varied subsequently by removing from it the stipulation as to date. This variation was

I i i-

effected by means of the telephone conversations between Mr.

t '

Maher and Mr. Moore on 19th November. The applicant secured

reinstatement as a member of the ETU on 24th November, when	the
E T U State Council rescinded its decision to expel him. This reinstatement amounted to	an acceptance of the respondent's
varied offer, and	a completed agreement resulted.

This argument runs into several difficulties, which were

relied upon by Dr. Jessup. In the first place, the letter of

17th October not only bears a heading indicating that it is

"without prejudice", but it is expressed in the body of the

letter to be without prejudice to the respondent's legal rights.

Dr. Jessup argued that this expression made the letter no more

than an indication of the respondent's then state of mind, and

prevented it from amounting to an offer capable of acceptance by

conduct. In the second place, Dr. Jessup pointed to the letter from the applicant's then solicitors on 20th October 1986,

demanding the immediate withdrawal of the notice of termination

and the immediate reinstatement of the applicant. According to Dr. Jessup, if the letter of 17th October was an offer, the

letter of 20th October amounted to a counter-offer, and therefore

to a rejection of the offer. The third difficulty arose from the
letter of the respondent's solicitors, dated 18th November 1986.

0	19.
When read together with	the applicant's solicitors' letter dated

12th November, the letter of 18th November amounts to a clear

refusal to extend the deadline of 21st November, and to reinstate

the appllcant in the event that the Court made an interim order

in his favour, or pending the hearing of an internal appeal

within the ETU. The last sentence of the letter dated 18th

November, according to Dr. Jessup's argument, was a withdrawal of

any offer which might previously have been in existence.	It left
open to the respondent the right to make	a decision, depending

upon the outcome of events. Dr. Jessup's fourth argument was

that the conversations of 19th November, and the letter from the

applicant's solicitors of the same date must be construed in the

light of the earlier correspondence. Indeed, the letter from the

applicant's solicitors, in the passage which I have quoted,

recognised that the position of the respondent was	as specified
"in its letters".	In cross-examination, Mr. Maher conceded that
this reflected the second conversation he had with Mr. Moore	on
19th November, and that	the reference to previous letters in that
conversation was not confined to the letter of	17th October, 50

far as the applicant was concerned. , .

In my view, there was not open to the applicant on 24th

November 1986 an offer capable of acceptance by him by the act of
!

regaining his membership m	the E!I'U,	or by the communication of	l .I
that fact to the respondent.	In my	view, the form	of the

"without prejudlce" letter of 17th October is such as to indicate

that it did not amount to an offer, but merely to a statement of

preparedness to negotiate should the applicant regain his

membership of the ETU within the five week period commencing on

!	I
I

h 2 0 .

I
I

that date. The letter clearly stated that the respondent did not intend to give away its legal rights. Among its legal rlghts was

I	a right	to	refuse	to	employ	the	appllcant,	if	he	had	been
I

I	dismissed validly. If I am incorrect in that conclusion, and if
I
I	the letter did amount to an offer, that offer was rejected by the
I	letter of 20th October, and withdrawn or treated as non-existent
!
by the last paragraph of the letter of 18th November. It was not
revived by the conversations of 19th November, as those

I I !

conversations did not purport to affect what had taken place in

!:I

the previous correspondence.

I -,

For these reasons, without prejudice correspondence, and the conversations between I am of the view that evidence of the

I .

the parties solicitors was inadmissible, and that no concluded

! agreement came into existence as a result of it.

If the applicant’s claim is to succeed, it must

the basis that his original contract of employment was never
determined validly. Argument on this issue was directed in part

do so on

to establishing the precise terms of that contract, and in

particular whether it included a term that the applicant was

obliged to remain a member of the ETU throughout his employment,

and a term that the applicant was not to be dismissed unfairly or

unreasonably.

The first basis on which the respondent contended that

the applicant was bound by his contract of employment to remain a

member of the ETU was that this was an express term of his

!

contract from the very beginning. It was alleged that, in an

fi

interview at the time when he was first engaged, the applicant

was told that it was a condition	of his employment	that he remain
a member of the	ETU.	Three wltnesses gave evidence on this
aspect of the case, the applicant, Barbara Campbell. The applicant denied that anything was said at	Ms. Camllla Yates and	Ms.

his initial interview about membership of the ETU as a continuing

obligation. He recalled being interviewed, and knew Ms. Yates,

but said he was not interviewed by her, but by someone younger.

Ms. Yates and conducted interviews with prospective employees on behalf of the Ms. Campbell were the only two persons who

I

respondent at that time. Each gave evidence that her practice was

to enquire whether the new employee was a member of the

appropriate union, and to tell the employee that it was a

condition of employment that he or she remain a member. Neither	.-
b .
could remember an actual interview with the applicant.	t .
Dr. Jessup argued that evidence of the usual practice in interviewing should be preferred to the evidence of the applicant	i
.,I
that nothing was said on the particular occasion.	In my view, it
is highly probable that the applicant was asked whether	he was a

member of the ETU. At that time, he was, and no doubt would have

sald so. It is less likely, however, that an interviewer would have seen the need to emphasise the requirement of continuing

membership when told that a prospective employee was in fact a I .

member. There is no reason for me to disbelieve the evidence of

the applicant that nothing specific was said about continuing

membership. On the balance of probabilities, I find that

continued membership of the ETU was not a term of the applicant's

employment from the outset.

>. ', 2 2 .

*

Next. the respondent argued that the requirement that

the appllcant continue to be a member of the ETU became a term of

his contract of employment by variation. It was said that the applicant's participation in regular shows of cards, with the consequence that anyone who could not prove financial membership

of the appropriate union was sent away until such proof was

available, and	the applicant's state of mind	on 16th October
1986, which led to his attempt to retain his job by joining the	i	l
t ::
AMWJ, showed that there was an implied term of his contract employment that he be a member of the appropriate union.	of	I
I.

It	is	I
L .

by no means clear applicant's appreciation of the danger that either the shows of cards or the

of his dismissal because

of his purported expulsion from the EXU is evidence of an implied

term of his contract to this effect. Both of those facts are equally consistent with the desire of the employees and their

unions to maintain a closed shop by not working with anyone who

was not a

member respondent's unwillingness to attempt to force the employees to of the appropriate union, and with the

work with a non-unionist, in order to avoid industrial trouble,

as they are with the existence of a term of each contract of

employment that the employee was obliged to retain membership of

the appropriate union. They do not, therefore, constitute

evidence of an implied term.

The issue then arose whether the terms of the local

agreement that each employee be a member of the appropriate

union, and that no employee be dismissed unfairly or unreasonably

became terms of the applicant's contract of employment. A

I

7 -

I L -1.

-

I	threshhold questlon was whether the local agreement had any
I
effect at all, in the light of S . 47(6) of the Industrial
Relations Act 1979 (Vic.). It is convenient to set out the whole
l	of S . 47 of that statute:

Any recognized association of

employes may enter into an

I	I	industrial agreement with any other
I	recognized association of employes, or with any recognized association
i	of employers or any employer or
I
I	group of employer with respect to any industrial matter.
An agreement made pursuant to
I
I	sub-section (1) may be filed with
l	the registrar if the parties agree.
I
I	"he registrar shall refer to the
i	Commission every agreement so flled
I	and the Commission may approve any
!	such agreement.
I
Every agreement approved by the
i
i	Commission shall be registered.
I
!
I	The Commisslon, on the application
I	of the Minister, registrar, any
I	person bound by an award or a
person aggrieved or of its own
i
I	motion where Commission the
I
considers it advisable in the
I	public interest or for any other

reason to do so -

1	(i) may with respect	an	to
I

industrial agreement impose

such conditions as it considers

just and equitable;

(ii) may prohibit any association of

employes or any employer or

association of employers from

industrial enforcing an

agreement inconsistent with an

award or general ruling.

(6) An

agreement relating to an

industrial matter made between

an

1

association of employes and an

association of employ@= or any

employer or employers that is not

!

i

i

I

approved and registered under this or effect.

i

( 7 ) The Commlssion may make a general

ruling exempting from the operation

of any provision of this section

agreement any class or of

agreement relating to an industrial

matter and the provisions in

respect of which the general

ruling is made shall, while the

general ruling remains in force,

cease to apply to the extent

provided thereln.

(8) Every industrial agreement shall be

in a form approved by the registrar

and for a term to be specified

therein not exceeding three years	I:.
from the making of the agreement.

(9)	Unless otherwise expressly agreed
by the parties to the agreement an agreement shall be deemed to be made on the day on which it is first executed by any party to the
agreement and that day and the
names of all the original parties to the agreement shall be truly stated in the agreement.

(10) Notwithstanding the expiry of the

term of an industrial agreement, it

shall, subject to any award under

this Act, continue in force in

respect of all parties to the

agreement except those who retire

from the agreement.

(11) At any time after, or not more than

thirty days before the expiry of an

industrial agreement, any party to

the agreement may file in the

office of the registrar a notice in the prescribed form signifying his

intention to	retire	from	the
agreement at	the	expiration	of

thirty days from the filing of the

notice and that party shall, on the

expiration of that period, cease to

be a party to the agreement."

It is common ground that the local agreement was not filed in

I accordance with sub-S. ( 2 ) of this section, nor was the approval

I

25 .

-

of the Industrlal Relations Commission of Victoria sought or

obtained, pursuant to sub-S. ( 3 ) .

There can be no doubt that if sub-S. ( 6 ) is read

literally, it would prevent the local agreement from having any

operation. As Dr. Jessup pointed out, the provision is not

merely that

an agreement to which that sub-section applies is

unenforceable, but that

it is void and of no force or effect. It

is hard to see how, if the provision

could operate to the extent that its terms became part of
individual contracts of employment.

applies, the local agreement

Dr. Jessup contended that the provision should be read

literally. He emphasised the differences in wording between

sub-s. ( 6 ) and Sub-sectlon (1) empowers a recognised assoclation of employees to other provisions, especially sub-S. (1).

i
r .
I '

enter into an Industrial restricted in its express terms to an agreement, but sub-S. ( 6 ) is not

I:'

agreement made by such a

recognised association. It should be noted that provision for

the recognition of associations is made by Part V of the

Industrial Relations Act 1979. By S . 53, an application for

recognition may be made only "with respect	to any trade or trades
for which a Board has been constituted" under that statute.	m e n

the Industrial Relations Act 1979 was passed, the Australian
Conciliation & Arbitration Commission was applying a system of
wage fixing principles which gave rise to regular national wage

increases, based on movements in the consumer price index. This

system was known as "indexation" or, more properly, as	"partial
indexation".	The lncreases granted in national wage cases were
.	26.

I	0
I

generally passed on to employees whose terms and conditions of

1

employment were not governed by federal awards, by means of the

systems of lndustrial conclliation and arbitration operated under

the laws of the various States. It is possible that, when the

Industrial Relations Act 1979 was passed, the Victorian

Parliament may have wanted the Industrial Relatians Commission of

l

Victoria to relations, to the extent of denying any validity to agreements have control over all aspects of industrial

for wage increases in excess of those granted under the wage

fixing principles, unless such agreements were approved. Dr.

Jessup drew attention to the fact that sub-S. ( 6 ) had been

adapted from Conciliation and Arbitration Act what was then S . 89(l)(f) of the Industrial

1961 - 1975 (Qld.), a provislon

which has since been repealed in its	own State by Act No.	14 of
1983.

Whatever the reasoning behind the provision, if read

literally, sub-s. (6) would produce some strange results. It

I

would strike down an agreement entered into by an organization

registered under the Act, which could not become a recognised

I association, relevant area constituted under the State statute. It would by reason of the absence of any Board in the

strike down every agreement between	a trade union and	an employer	i -
d

to resolve any dispute about an industrial matter. Not only

would such agreement be unenforceable by legal means, but it
would be deprived of any validity, force or effect. Among the

agreements so struck down would be agreements about the provision

1

I	of conditions for the safety, health and welfare of employees,
i
and possibly agreements to recommend a return to work provided
I	I
I	27.

legal proceedings (Including perhaps proceedings at common law or

! under S. 45D of the Trade Practices Such agreements could not even be regarded as binding in honour; Act 1974) were withdrawn.

! they would be rendered "void and of no force or effect".

I	Further, sub-S.	( 6 ) would	have	the	odd	result	that	an
i

l	agreement made under it would be void and of no force or effect
i
I
I	instantly, upon Industrial Relations Commission would its creation. Only after its approval by the

It spring into life. It is	>.
I '
, .

legitimate to wonder what would exist for the purposes	of filing	f
L :
with the Registrar or referring to the Industrial Relations
. .

Commission, if the agreement were to be so treated from its '5

inception. No provision is made for interim validity, subject to

the agreement being struck down by the Industrial Relations disapproved.

A statutory provision could not be construed lightly as

having these effects. It is to be noted that in S. 89 of the

I, .

Queensland Act, as it was before the 1983 amendments, there was a

I..

reference to	"an	industrial union of employees" both in the
provision empowering the making of	an	agreement, and in the

provision that an agreement not approved or registered should be

void and of no force or effect; the difference in wordmg which

i

exists in the Victorian Act did not exist in Queensland. I

I

The strange consequences to which I have referred are

I	avoided if the whole of S . 47 is looked at, in the context of the scheme of the statute. If an agreement is approved, it is to be
. 28.

e

registered under S . 48, and can be proved in the manner specified

by that section. Parties may be added to it under S . 49. Its binding effect is extended by S. 50 to members of associations, and employees at work sites to which the agreement applies, and

the agreement 1 s made enforceable in all respects as if it were

an award. Under S . 51, it may be varied, and under S. 52, an

award whlch otherwise xould have applied is ousted by the

agreement. These provisions may well constitute substantial

incentives to seeking the approval of an industrial agreement

under S . 47. If such approval is sought and not granted, it is

logical that provision should be made for the fate of the
unapproved agreement; it is also logical that such provision
should have the effect of nullifying the unapproved agreement.

It could be regarded as undesirable that	an agreement which the
Industrial Relations Commission	of Victoria has held did not
merit approval should contlnue to be binding in honour	or at law.
No other provision in the Industrial Relations Act	1979 fulfills

,_

the function of providing for the fate of an agreement as to	I '
I , .,

which approval is withheld. On this basis,	an agreement would	be
binding legally or in honour, pending the determination of the	!

Industrial Relations Commission whether it should be approved.	..
In addition, it would be possible to have	a binding agreement for
which approval is not sought at all.

In my view, sub-S. ( 6 ) is to be construed properly in

this manner. It relates only to agreements entered into by

recognlsed associations; Industrial Relations Commission of Victoria refuses to approve. which are filed, and which the i

The change of language between sub-S. (1) and sub-S. (6) is

I (

c 2 9 .

i	e
I	I

loose, and not Intentional. Sectlon 47(6) ot the Industrial

i Relations Act 1979 (Vic.) does not affect the validity of the

local agreement.

I

!

i	There was a tune when the question whether the terms of a "collective agreement", made between a trade union and
I	an
i

employer, became

terms individual employees, members of the trade union, agitated the of the contracts of employment of

academic minds of

writers instance, Citrine's Trade Union England. in See, for

I

Law, 3rd ed., pp. 136-138, Cronin

and Grime, Labour Law, pp. 315-363 and Wedderburn, The Worker and

the Law, 2nd ed., pp. 171-180 and 185-197. It cannot be doubted

that, in the normal case, it is difficult	to establish that the
terms negotiated between a trade union and	an employer become

binding legally expressed in Young v. upon each employee. The difficulties are

Canadian Northern Railwav Co. C19313 A.C.

83, at pp. 88-89, Rodwell v. Thomas C19443 1 K.B. 596, at p.

601, and Ford Enqineerins & Foundry Worker C19693 2 Q.B. 303, at pp.	Motor	Co. Ltd. V. Amalqamated	Union	of
321-331.

!	There	are	differences	between	the	present	case	and	those
I

cases. In the present case, the local agreement, although

entered into by the unions concerned, was negotiated on their

c

behalf by employees of the respondent and not solely by officials of the unlon. The agreement is signed on behalf of the unions by

1 members of the closed shop committee. As I have already stated,

before any such signature, the terms	of the agreement, or any
variation of it, were the subject of decision by the	employees

1 I

l

I 30.

!

l	-	concerned. In these circumstances, it is much easier than in the
I	!
normal case to construe the agreement has having been entered
into by the union concerned, or by the negotiators, as agents for
the employees. It is even easier to find that the terms of the local agreement became part of the terms of the contract of employment of the applicant when the applicant himself was a negotiator in respect of variations to the local agreement, and its extension from November 1986 untll 23rd November 1989. It is
to be noted that the document which effected that extension, and
certain variations to the local agreement, was signed by the
applicant on behalf of the E T U .

On the basis of the English authorities, Dr. Jessup l

I

argued that the terms of the local agreement were inappropriate L .

for incorporation into individual contracts of employment. and I. .

that this factor indicated the intention of the unions concerned

I

!	and the respondent not to create legal relations	by means of the
I I
1

!	agreem-ment. lllausc 4 of the local agreement is described as a
I
"statement of purpose clause" and is in the following terms:

"The purpose of this agreement is:-

(a) To promote industrial harmony and

co-operation between the Company and its

employees.

(b) To formalise the parties agreement with

respect to:-

- Rates of pay and classification

- Benefits

- Hours of Work

- Conditions of employment to be observed

by the Company and employees.

(c) To establish working procedures for the settlement of disputes.

..

I

I .

31.

I

i (d) To create a working relationship that

will prevent work stoppages, lockouts or

any other action that wlll disrupt

I

peaceful co-existence between both

parties. "

I

!

Dr. Jessup conceded that the terms of the local agreement which

l	fulfilled the purpose specified in sub-cl. 4(b) were appropriate
I	for incorporation into individual contracts of employment, but
I
I
contended that the other provisions were not. One of the former provisions was that found in cl. 6(a)(ii), that membership of the
appropriate trade union is a condition of employment. One of the
latter was that found in cl. 22, that no employee should be
I
unfairly or unreasonably dismissed. Other provisions which Dr.

t

I Jessup described as being of a collective nature, and therefore

i	I	inapproprlate for incorporation into individual contracts of
employment were cl. 25, relating to shop stewards and union
I	procedure, cl. 2 6 , giving a right of entry to certain union

I I

officials, cl. 2 8 , giving certain rights to the use of notice

!

boards, cl. 31, providing for equal opportunity and equal pay

between the sexes, and cl. 32, wherein the respondent and the

I

unions agree to co-operate on matters affecting the security of

I

the respondent's product abiding by the legal requirements of search and arrest and the requirements provided in the Excise Act

I

1301. In my view, it is not unsuitable as terms of individual contracts of employment. so obvious that these matters are

To

l

the extent to which each of them provides rights from which

i

employees may benefit, or obligations from which the respondent

may benefit, there is no reason why each employee should not be

in a position to enforce those rights, or bound to perform those

!	obligations.
,
i
I	I
I

l .

I	3 2 .
!	-

The question whether parties to an agreement intend to
create legal relations by that agreement is one of fact in each

case; there is no rule that agreements between trade unions and

employers are necessarily outside the field of contract law. In

i

my view, in the present case, the agreement shows every intention
of the parties that it should be a legally binding document. It

is signed on behalf of each of the unions concerned and the

I respondent, and each signature is witnessed. The date of signing
is recorded. The agreement has a commencement date and a period

i-

of operation;	it is terminable by notice, and provision is made	!
for the Award or for State legislation to operate where the agreement is silent. Nothing else about the agreement	! <	.

so clearly

places it beyond the realm of the law as to make it unenforceable

..

according to law. To the best of my knowledge, the proposition L

that it is possible to divide an agreement into those terms by which the parties intend to create legal relations and those

terms by which they do not, so that part of the agreement is

legally binding and part is not, is a novel one.

For these reasons, applicant's contract of employment with the respondent, I hold that it was a term of the

as at

15th October 1986, that membership of the appropriate trade union

was a condition of his employment. It was also a term of that

contract of employment that the applicant was not to	be dismissed
unfairly or unreasonably.

Dr. Jessup's next contention was that the latter term,

if it were a term of the contract of employment, was void for

.

uncertainty. He was forced also to contend that the provisions

L .

of cl. 6(d)(vi) of the kdard were similarly void. He relied upon

i

cases such as Lee-Parker v. Izzet (No.2) E19723 1 W.L.R.775 and

Whitlock v. Brew (1968) 118 C.L.R. 445. In the former case, an

agreement for the sale of a house and land, expressed to be

"subject to the purchaser obtaining a satisfactory mortgage",	was
held to fail for uncertainty. In the latter,	an agreement to

grant a lease of land "upon such reasonahle terms as commonly
govern such a lease" was also held void. Both these results
occurred because there was no objective standard by reference to

which the content of a satisfactory mortgage, or of the terms

commonly governing such a lease could be determined. Dr.	Jessup
argued that words such	as "harsh, unjust or unreasonable" in cl.

G(d)(vi) of the Award and "unfairly or unreasonably"	in cl.	22
suffered from the same difficulty.

Mere difficulty in ascertaining the meanings of the

words used	in the document is no ground for declaring those words
to be void for uncertainty.	As Lord Wilberforce said, delivering

the opinion of the Privy Council in Cudcren Rutile (No.2) Ptv.

Ltd. v. Chalk C19753 A.C. 5 2 0 , at p. 536:

"Their Lordships consider that, in modern

times, the courts are readier to find an

obligation which can be enforced, even though

apparent certalnty may be lacking as regards

some term such as the price, provided that

some means or standard by which that term can

be fixed can be found. . . 'I.

Similar views were expressed by Barwick C.J. ,with whom McTiernan,

Kitto and Windeyer JJ. agreed in Upper Hunter Countv District

. 34.

I

l

*

l

i Council v. Australian Chillinq and Freezinq Co. Ltd.(1968) 118

C.L.R. 429, at pp. 436-437:

I "But a contract of which there can be more

l

than one possible meaning or which when construed can produce in its application more

l	than one result is not therefore void for
i	uncertainty. As long as it is capable of a
1	meaning, it will ultimately bear that meaning
i	which the courts, or in an appropriate case,
arbitrator, an decides is its proper
construction:  and the court or arbitrator
will  decide its application. The question
becomes one of construction, of ascertaining the intention of the parties, and of applying
l	it.  Lord Tomlin's words in this connexion in
Hillas & Co. Ltd.  v. Arcos Ltd. E(1932) 147
L.T. 503, at p. 5123 ousht to be kept in mind.
So  long. as -the langiage employed by the
parties,  to use Lord Wright's words in
Scammell (G.) & Nephew Ltd. V. Ouston
CC19413 A.C 2513 is not "so obscure and so
incapable of any definite or precise meaning
that the Court is  unable to attribute to the
parties any particular contractual intention",
i	l
the contract cannot be held to be void or
uncertain or  meaningless. In the search for
that intention, no narrow or pedantic approach
is warranted, particularly in  the case of
commercial  arrangements. will Thus
uncertainty  of meaning, as distinct from
absence  of meaning or of intentlon, be
resolved.  "

Words such as those used in the Award and the local agreement are

common in documents of similar kinds. Their content is often

determined by industrial trlbunals in specific cases of

I

dismissal. This Court is in no different position from such

tribunals, when it comes to determining the content of- an

obligation nat to dismiss an employee unreasonably.	The	fact
that it is not posslble to define with precision all of the

clrcumstances which would make a dismissal harsh, unjust,

unreasonable or unfair does not mean that those terms are void

for uncertainty. It is possible to determine in a particular case

' . 1

35.

I	.
i	whether a dismissal can be said properly to fall wlthin one or
I	more of these terms. Clause 6(d)(vi) of the award and cl. 22 of
I
the local agreement are both valid and enforceable.
I
I I

A question did arise as to the effect of the provision

in the Award. It is now established that a purported dismissal

of an employee otherwise than in accordance with provisions

covering dismissal in the contract of employment, is not

l

effective to terminate the contract of employment, unless it

I

amounts to a repudiation of that contract by the employer, and

the employee elects to treat the contract as at an end. This

proposition certainly applies in the case of failure to give

proper notice. Emplovees Federation See Turner v. Australasian Coal & Shale

(1984) 6 F.C.R. 177, at pp.189-193, and

Sevmour v. Stawell Timber Industries Ptv. Ltd. (1985) 9 F.C.R.

i

241, at pp. 265-266. Dr. Jessup contended that the provisions of

I	cl. 6(d)(vi) of the Award were to be distinguished from the other
provisions of cl. 6 of the Award providing for notice of
termination, and dismissal from operating to terminate the contract of employment. did not have the effect of preventing a
This argument was put in three different ways.
In the first place, Dr. Jessup argued that employment and an award made under the Act are separate sources a contract of
I	of rights; an award only operates to give rights or to impose
obligations when a contract of employment exists. If the
contract of employment comes to an end, the award no longer
operates as between the employer and the former employee. These propositions may be correct, but they overlook the fact that an

r

. 36.

l

, .

1. award may operate to prevent the exercise of what would otherwise

1. be rights available to a party under a contract of employment.

I  

!	Provisions for notice of terminatlon of employment in awards,
i	such as those dealt wlth in Turner v. Australasian Coal & Shale
I
i
I	Employees Federation (1984) 6 F.C.R. 177, so operate.
I
I

Dr. Jessup's second argument was that the same act

I I

cannot be both a breach of an award and ineffective to determine the contract of employment; either the contract is terminated

I

or

4

I

i it is not. If it is, then there is a breach of an award. If it

i	is not, there cannot	be any breach, because	the act itself	is
I
I	!

void. It is a well known principle, often applied to illegal

I	contracts, that an illegal act is without legal effect. The fact
I
i	that
an act absolve the person who purports to perform that act from criminal may be void because criminal, however, does not
l
liability. The argument that dismissal in defiance of the
I	I
National Securitv (Manpower) Resulations had to be effective, in
!
i	order for there to be offence under those regulations, failed to
I
I	convince the majority of the High Court of Australia in Automatic
I
!	Fire Sprinklers Ptv. Ltd. v. Watson (1946) 7 2 C.L.R. 435. The
l

argument is summarised in the dissenting judgment of Latham C.J.

I	at pp. 453-455.	The majority held that the regulations had the
j

effect of rendering the purported termination of a contract of I'

employment Ineffective, with Dixon J. at p. 471 following Georqe

v.   Mitchell & Kins Ltd. (1943) 59 T.L.R. 153, and setting out a

passage from the judgment of Goddard	L.J. In that case, in which
his Lordship said,	"If he refuses to employ the person he commits

I

l	an offence, but the contract is not terminated." The law has no
I	difficulty in contemplating that an act may be a criminal offence
i i

i

'1

37.

1

.

and at the same time ineffectlve to affect Lhe rights of persons
concerned. Even where a specific statutory provision leads to

the conclusion that the criminal act is void,	it is nevertheless
a	criminal

act. Association (1983) 67 F.L.R. See Linehan v. Australian Public Service

412, at pp. 414, 422-423 and 438. A

breach of an award is not ordinarily criminal; see Gapes v.

Commercial Bank of Australia Ltd. (1979) 38 F.L.R. 431, and

compare ss. 119 and 122 of the Act. If an award contains a

prohibition of certain acts, however, that prohibition may

operate to prevent the purported performance of those acts from having legal effect. The only difference between that situation

and a criminal offence is the method of enforcement of the

prohibition.

The third argument relied upon by Dr.Jessup was based on

the construction of cl. 6(d)(vi) of the Award, and on the

distinction between the form of that provision and the form of the provision of the National Securitv (Manpower) Rewlations, considered in Automatic Fire Sprinklers Ptv. Ltd. v. Watson

(1946) 72 C.L.R. 435. According to Dr. Jessup those regulations

(the relevant provision of which is set out at p. 453 in the

judgment of Latham C.J.) contained a prohibition on terminating

employment, other than in the circumstances speclfied, whereas
cl. 6(d) (vi) of the Award contemplates that a termination of an

employment may take place, but that it will constitute a breach

of the Award if harsh,	un~ust or unreasonable. Although there
are differences in the wording, the words	of cl. 6(d)(vi) of the
Award contain just as much of	a prohibition as did the words of
the regulations considered in Watson's case.	It is difficult to

imagine the framer of the Award contemplating that an employer

bound by the Award should be free to divest itself of an

employee, in clrcumstances where to do	so would be harsh, unjust
or unreasonable, merely in return for the payment of	a monetary
penalty at a later date.	It is true that specific provisions are

made in cl. 6(d)(vii) for dealing with disputes or claims arising

under cl. 6(d)(vi), but those provisions are expressly made

subject to the provisions of a number of sections of the Act,

including S. 119. In my view, the Award is intended to create an

obligation on employers bound by it not to terminate the

employment of their employees harshly,	un-~ustly or unreasonably,
and to make any purported termination	which is harsh, unjust or

unreasonable ineffective to determine the contract of employment.

Dr. Jessup then sought to argue that even if a contract

of employment is not determined by a purported dismissal which is

harsh, un~ust or unreasonable, and if the contract of employment

therefore remains on foot, the purported dismissal is sufficient

to terminate the "master and servant relationship" between the

employer and the employee. When pressed as to the nature of this

relationship, Dr. Jessup conceded that it is one of contract.

Indeed, as the law stands at present, it is hard to see how a

relationship between an employer and an employee could be other

than contractual. If that is so, either the contract must be

brought to an end, or it must continue to exist. What, then,	is
the "relationship of master and servant" upon which Dr.	Jessup

sought to rely? His argument made reference to certain passages

in Automatic Fire Sprinklers Ptv. Ltd. v. Watson (1946)	72
C.L.R.	435, especlally to the passage at p. 451 in the judgment

I
I
I

I	r
i	7 39.
!

i	of Latham C.J.,	where his Honour sald:
!
I
I

"Thus the wrongful dlsmissal determines the

relationship of master and servant created by

I	the contract, even though the servant may not have accepted hi5 dismissal as entitling him
l	to regard the contract as discharged."
I I
i	I

Reference was also made to a further passage in the judgment of

Latham G.J. at pp. 456-457, to xhat was said by Starke 461, and to what was said by Dixon J. J. at p.

I

at pp. 466 and 469. Dr.

i

upon Richmond-Upon-Thames London Borouqh Council C19803 I.C.R.755, passages Gunton in V.

Jessup also relied

I

1 especially at p. 778, where Brightman L.J. referred to the

relationship of master and servant.

In my view, nothing in those passages compels the

! conclusion that there is known to the law a relationship of

master and servant created by, but distinct from a contract of

employment, such that the contractual relationship may continue

I

~	whilst the other relationship may have ceased to exist. In
I	context, the passages indicate that the courts had in mind only
l

i	to describe certain incidents	of	the contract of employment.
j
I

Most commonly, the consideration for wages is the performance of

service; the two obligations are mutual. If one obligation

l

I	(service) is not being performed, then Its non-performance may absolve the other party from the performance of the mutual
i	obligation (the payment of wages). There may be other such
i	I
mutual obligations in a contract of employment. A l l that was
l	intended by the judges who referred to the relationship of master
l
and servant was to indicate that one party to the contract may be
i
i
j
II
. 40.

r

‘absolved from	the performance of certain obligations, because	of
the non-performance by the other party	of	other obligations.

There was also a feeling that, because of the supposed rule that a court could not grant any remedy which would amount to specific

performance of a contract of employment, it would be futile to

treat the contract as still on foot. Indeed, the sentence which

follows immediately upon that which	I	have quoted above from
Latham C.J. at p. 451 is:

“Any other view would in effect grant specific

performance of a contract of personal service,
a remedy which the courts have always refused

in such a case.. . ‘I.

It is now established that, in special circumstances, because of

the many incidents which the law	now attaches to contracts of
employment, remedies	which might be thought to amount to specific

performance can be granted in relation to contracts of

employment. See Turner v. Australasian Coal & Shale Emplovees

Union (1984) 6 F.C.R. 177, at pp. 192-193. Further, it has been

recognised that the entitlement to wages may arise where the

employee is ready and willing to perform work, but the employer

prevents him or her from doing so. See Sevmour v. Stawell -

Timber Industries Ptv. Ltd. (1985) 9 F.C.R. 241, at p.266. The

area in which mutual obligations exist may be narrower than was

thought previously. In my view, the assertion	of the existence
of a relationship of master and servant, which	may be destroyed

without the destruction of the contract of employment, is an

attempt to revive in another guise the now defunct rule that a
contract of employment may be determined by unilateral act of one
party, otherwise than in accordance with the terms of the
contract itself, and the equally cleIuIlcL rule that a court will

!

never grant speclfic performance, or a remedy akin to specific

performance, of a contract of employment.

For these reasons, I am of the view that if the

l

purported termination of the applicant's contract of employment

I

of 17th October 1986 was in breach	of a term of that contract as
being unfair or unreasonable or was in breach	of cl. 6(d)(vi) of

the Award as being harsh, unjust or unreasonable, it was

I

I ineffective to determine the contract. The crucial issue,

i	therefore, is whether that purported dismissal was unfair, harsh, unjust or unreasonable.
!
Dr. Jessup argued that this question must be determined by reference only to the state of knowledge of the respondent at
I	the time of the dismissal, and not by reference to subsequent
I
I	events. In support of this proposition, he relied upon decisions
applying the words "harsh, unjust or unreasonable" in what was
then S . 15(l)(e) of the Industrial Conciliation and Arbitration
i
I
Act 1972 (S.A.). In Stearnes V. Mver S.A. Stores Limited

! I

I (Industrial Commission of South Australia, 5th March 1973,

unreported) Bleby J. said:

I
i

!	"The question must be approached from the
point of view of the state of the company's i .
I	knowledge at the time when the dismissal took
:	place.  "
I
l

I	In Minchin v. South Australia, 9th March 1973, unreported), Judge Olsson,as	St. Judes Child Care Centre (Industrial Court of
I

he

1. then was, referred to this proposition and added:

   "In many cases, events which have transpired

   subsequent- to rlisrnissal may well be irrelevant

   esceyt,, pet-haps, In so far as they assist in

   deteralinlnq m post lal-trs the pt-~Lm&lc true

   motives of the employer, or otherwise directly

   bear upon the circumstances of the dismissal

or tend to confirm the reasonableness or

otherwise of a judgment arrived at at	the time
of dismissal.

Dr. Jessup also drew attention to the more recent decision of

Judge Allan in the Industrial Court of South Australia In Olsson

v. Woolworths (S.A.) Limited (14th December 1983, unreported),

in which his Honour rejected the approach of Bleby	J. and held
that the employer's belief	as to an existing state of affairs is

a relevant, but not the only, factor in deciding whether a

dismissal was harsh, unjust or unreasonable.	In my view, all of	!
I ,

the circumstances surrounding a dismissal must be considered, and

the Court may look at subsequent events for purposes of the kinds

envisaged by Judge Olsson.

i

I .

The applicant's case was that it was unfair, harsh,

unreasonable were the applicant's length of service with the respondent, the
part previously played by him in industrial relations at the
respondent's plant, the applicant's age and the fact that he has to dismiss the applicant in the

unjust or circumstances, because of a number of factors.

At the forefront

dependent upon circumstances, it was said, the respondent should have given the
applicant an opportunity to pursue the question of his membership him a wife and three children. In those

of the ETU before dismissing him.	This was particularly so in
the light of the practice which prevailed	at the respondent's
t

i c

I plant of sendlng anyone unable to prove financial membership of

the appropriate union off the site until such proof was

forthcoming.	It was said that the respondent should have applied
this practice to the	applicant, especially having regard to the

i
I

I fact that Mr. Barratt and Mr. Wheeler were suspended on full pay

until the question of their membership of the EXU was resolved.

The length and record of service of an employee, and his

or her age and family circumstances, are undoubtedly relevant

I	factors in considering whether a purported dismissal is unfair,
I
harsh, unjust however, that the longest and best of employment records, and the or unreasonable. It could not be contended,
most needy of family circumstances could operate to make any
I	employee immune from dismissal for any reason. Close attention
!
must also be paid to the immediate causes of an attempt to
dismiss.
I

i	In the present case, as	I have	held, the applicant's
I

!	contract of employment obliged him to	be	a	member of the
I	appropriate union. His membership of	the	ETU	fulfilled that

I

requirement until 15th October 1986.	On the following day, the
respondent was made aware of his expulsion, which it could	only
take to amount to a breach of that term. Of course, the	fact
that an employee is in breach of a term of his or her contract of	!

employment cannot be conclusive of the question whether the

dismissal of that employee is valid. There may be some	breaches
which would not justify a dismissal	as being other than unfair,
harsh, unjust or unreasonable.

l	i
I'

L

In the present cdbr, Lhe possible consequences of the

applicant’s non-membership of the were drastic.	It	was clear
that no member of	the E T U would work with him.	I am satlsfied

that the respondent dld not require the services of the applicant

other than at its Moorabbin premises; there	was no work which
would justify retaining him as	a full time employee at Braeside,

especially as the respondent had employed the applicant and three

others at Braeside for a period of	some weeks. The respondent
could	not

suspend ClaFificatiOn of his mem?x!rship the applicant without pay, pending

status; suspension without pay

is n u t open to an contract of employment or of an award permitting such suspension. employer In the absence of a term of the

See Re Application by Bul ld lnq Workers’ Indust,l-ial Union of

Australia (1979) 41 F.L.R. 192, at p. 194. To suspend the applicant on pay would have been to treat him more favourably

than other employees of the respondent; he would have received

remuneration, but	have been relieved of the obligation	to work.
It was argued respondent should have foreseen that the applicant may have had	on	behalf of the applicant that the

open to him various means of compelling the E T U or the members of

its State Council to restore his membership, and should have

allowed him time to pursue one or more of these means, before

dzsmissing him. In fact, the applicant had open to him under the

rules of	the ETU	a right of appeal from the State Council‘s
decision.	He	also had the right to bring proceedings in this
Court, pursuant to	S. 141 of the Act.	In fact, he exercised this

latter right, but it was unnecessary to pursue his application to
the end, because the State Council restored his membership in any

! ?

,

event.

!

It might be said with some justification that the

!

l	i
!	respondent, by its experienced industrial officer, Mr. Griffin,
should have been aware of the likely existence of an internal
I	right of appeal, and of the actual right conferred by S . 141 of
I	I
I	the Act. It is another question, however, whether in the
I
!
l	clrcumstances of this case it was unfair, harsh, unjust or
I
unreasonable for the respondent not to delay the dismissal of the
i	applicant until such time as he had exhausted all his rights. It
must be remembered that, in the discussions which took place
i
I	between the respondent and the applicant and others on his behalf
I
j	on 16th October, nothing was said to indicate to the respondent
I	that the applicant proposed to pursue any avenue at all with
respect to his membership of the EXU. Instead, the applicant had
I
attempted to join the AMWIT. The rules of the AMWU were not in
i
I	evidence, and the applicant did not seek to make a case that he
I
was eligible to belong to the AMNU. Still less did he seek to
!
challenge the respondent's view, expressed on 16th October 1986,
that it was inappropriate for a person employed by the respondent
I

as an electrician to belong to the AMWU. The applicant did

I

l

nothing on 16th October to indicate to the respondent that he

i

l	entertained any hope of overturning the decision	of the State
j

Council of the ETU in the immediate future, or that he was

I

prepared to attempt to do so. Had he outlined some course of

this nature, a question might have arisen whether it was unfair,

harsh, unjust or unreasonable on the part of the respondent to

l I

dismiss him prlor to such course being undertaken.

i

0

h

It non-membership of a particular trade unlon is of itself unfair, cannot be sdid that dismissal by reason of

harsh, unjust or unreasonable.	Each case must depend upon its
own circumstances. In the present case, membership of the	ETU

was not only a requirement of the applicant's contract of

employment, but was a fundamental feature of the industrial

relations environment respondent to have persisted in employing as in the respondent's plant. For the

an electrician a non

member of the ETU would have involved, at the very least,

jeopardising good relations with its other electrician employees,

who were all members of the ETU. It might easily have led to

severe industrial disputation.

It is true to say that the respondent could have adopted

a course other than the dismissal of the applicant. That does

not, however, conclude the question whether the respondent was

acting unfairly, harshly, unjustly or unreasonably in taking

the course

which circumstances, it could not be said that the dismissal was it took. In my view, in all of the

unfair, harsh, unjust or unreasonable.	The respondent gave to
the applicant pay in lieu of notice to the extent of five weeks,

that being the length of notice to which cl. 6(d)(i)(l) and ( 2 )

of the Award entitled him. The dismissal did not, therefore,

involve any breach of	the contract of employment,	or of	the
Award.

In the light of this conclusion, it is unnecessary for

me to deal with the interesting questions as to remedies which were raised in argument. There is one matter to which I should

I	_.	4 7 .
I
!
!

!	advert, however. In seeklng to rebut the appllcant's claim that
I	he was ready and willing to perform his contract, or in seeking to persuade the Court that any dlscretion to grant or refuse any
i
l	remedy should be exercised against the applicant, the respondent led evidence involving allegations of lack of skill and lack of diligence on the part of the applicant. The incidents related in
this evidence were few and far between, and none of them had been
regarded at the relevant time as sufficiently serious to warrant anything being said to the applicant. In the circumstances, it
is only falr to the applicant to say that I do not accept that
the applicant is anything other than a skilled and diligent
worker.
I I
!

For the reasons which I have given, the application must

i

I

!	be dismissed.
APPEARANCES
Mr. B. Lawrence and Mr. P. Harris for the applicant.
Instructing solicitors: Howie & Maher.

Dr. C. Jessup for the respondent.	t .
Instructing solicitors: Mallesons Stephen Jaques.	!

I

I
!
!

This is to certify that this
and the 46 preceding pages are
a true copy of the reasons for

judgment herein of His Honour

! Mr. Justice Gray.

Associate. Dated: