Holden v Tasmania
[2018] TASFC 12
•29 November 2018
[2018] TASFC 12
COURT: SUPREME COURT OF TASMANIA (FULL COURT)
CITATION: Holden v Tasmania [2018] TASFC 12
PARTIES: HOLDEN, Jane Elizabeth
v
STATE OF TASMANIA
FILE NO: 1468/2017
JUDGMENT
APPEALED FROM: Holden v State of Tasmania [2017] TASSC 29
DELIVERED ON: 29 November 2018
DELIVERED AT: Hobart
HEARING DATE: 30 May 2018
JUDGMENT OF: Estcourt J, Geason J, Marshall AJ
CATCHWORDS:
Employment Law – Termination and breach of contract – Transfer of employment – Whether there was deemed appointment to new office – Whether trial judge erred in failing to find that old office had ceased to exist – No error found – Redundancy – Redundancy stated basis of termination – Employee claim that termination was on the basis of performance and conduct issues – Whether termination amounted to breach of contract –– Inference of termination due to performance or conduct issues not reasonably open – Appeal dismissed.
State Service Act 2000 (Tas), ss 29, 31, 33
Acts Interpretation Act 1931 (Tas), s21A
Tasmanian Health Organisations Act 2011 (Tas), ss 28, 30
Aust Dig Employment Law [1059]
REPRESENTATION:
Counsel:
Appellant: M Rinaldi
Respondent: P Turner, D Osz
Solicitors:
Appellant: Dobson Mitchell & Allport
Respondent: Solicitor General
Judgment Number: [2018] TASFC 12
Number of paragraphs: 143
Serial No 12/2018
File No 1468/2017
JANE ELIZABETH HOLDEN v STATE OF TASMANIA
REASONS FOR JUDGMENT FULL COURT
ESTCOURT J
GEASON J (Dissenting)
MARSHALL AJ
29 November 2018
Order of the Court
Appeal dismissed.
Serial No 12/2018
File No 1468/2017
JANE ELIZABETH HOLDEN v STATE OF TASMANIA
REASONS FOR JUDGMENT FULL COURT
ESTCOURT J
MARSHALL AJ
29 November 2018
Background
The appellant, Jane Elizabeth Holden, was appointed to the office of Chief Executive Officer (CEO) of the Southern Tasmania Area Health Service (STAHS), by an instrument of appointment dated 8 March 2012. Prior to that appointment, Mr Rhys Edwards, the then Secretary of the Department of Premier and Cabinet, had prepared and sent, on 2 March 2012, a minute to the then Premier.
Although the instrument of appointment made no reference to any appointment of the appellant as the CEO of a proposed new entity to be known as Tasmanian Health Organisation South (THO South), it seems apparent from the minute that it was intended that the appellant would succeed to that office when that organisation came into existence on 1 July 2012. Indeed, on 27 June 2012, the Premier gave a direction pursuant to s 21A of the Acts Interpretation Act 1931 (the AI Act), (s 21A direction), that the appellant should perform the duties of the office of CEO of THO South in accordance with the provisions of the Tasmanian Health Organisations Act 2011 (the THO Act), and the State Service Act 2000 (the SSA). Subsequently, until 23 May 2014, the appellant was given a number of s 21A directions, all of which were in relevantly identical terms.
On 16 August 2013 the Governing Council (GC) of THO South did write to the Premier recommending that the appellant be appointed to the substantive role as CEO, THO South. However, following a meeting of the GC on 25 April 2014, that recommendation was rescinded by letter dated 28 April 2014. Subsequently the GC recommended to the Premier, by letter dated 23 May 2014, that the appellant no longer continue in the role of Acting CEO of THO South. And, on 3 June 2014, in accordance with s 32(1) of the SSA and cl 8, Sch 5, cl 2(b) of the appellant's original instrument of appointment, her appointment as an officer was terminated.
The stated reason for the termination of the appellant's appointment was that the Premier had abolished the position of CEO STAHS pursuant to s 29(5) of the SSA, there no longer being any operational requirement for the position, there being no duties being attached to it at the time of its abolition. The appellant contended however that such was not the basis for the termination, but rather that the respondent's motivation related to conduct or performance issues outlined in a report of the Tasmanian Integrity Commission (IC report), which issues were not the subject of any adverse findings against the appellant and which the respondent does not suggest provided any basis for the termination of the appellant's appointment.
It was against this background that the appellant instituted proceedings against the respondent for damages for breach of contract.
The decision below
The learned trial judge, Tennent J, held that the position of CEO, STAHS, could only have been an office created under the SSA, s 29(4), and that neither a notice dated 19 June 2012, which had been published in the Tasmanian Government Gazette (the Notice), transferring employees to THO South, nor the THO Act, had the effect of appointing the appellant to the position of CEO, THO South.
Her Honour held that the office was therefore vacant, and amenable to the appointment of an officer to act in the position until such time as a CEO was appointed, which was what the various s 21A directions to the appellant achieved. Her Honour held that it may well have been intended that the appellant would be appointed as CEO THO South, but it was clear from the process undertaken following 1 July 2012 that what was proposed was an appointment, the subject of a fresh instrument of appointment by reference to the THO Act, s 28.
The appellant also claimed that the respondent was estopped from denying that she had been appointed to the position, asserting that representations had been made to her upon which she relied, with the result that she reasonably believed that she had been appointed to the position pursuant to an instrument of appointment attached to the GC's letter to the Premier of 16 August 2013 recommending her appointment.
The learned trial judge accepted that the appellant did not apply for any other positions of employment between 1 July 2012 and 3 June 2014 when her employment was terminated, and that she did not do so because she thought her employment was secure. Her Honour was not satisfied however that the pleaded representations were made out, and was not satisfied that if the representations had been made as asserted, they were made by any person who had authority to make them on behalf of the Premier. Moreover, her Honour did not accept that the appellant could possibly have held any reasonable belief that she had been appointed to the substantive position of CEO, THO South, as from 16 August 2013 as a result of conduct of members of the GC.
Thus, having determined that there was no transfer of employment and that the appellant had only been acting as CEO, THO South from 1 July 2012, pursuant to s 21A directions, the asserted breach of contract fell to be considered against the background of her Honour's findings that the only contract of employment was that of 8 March 2012, that the appellant's substantive position thereafter was as CEO, STAHS, and that she was acting CEO, THO South from 1 July 2012 to 23 May 2014 by virtue of the s 21A directions.
Ultimately, to establish a relevant breach of contract, the appellant needed to prove that, while there may have been operational reasons to justify the termination of her appointment as an officer as CEO, STAHS, the respondent in fact did do so not as a consequence of that redundancy, but in reliance on the conduct and performance issues raised by the IC report.
The learned trial judge found that the GC's decision to rescind the recommendation to appoint the appellant was not made in complete isolation from the existence of a draft of the IC report, as the comprehensive minutes of the 25 April 2014 meeting, at which the draft report was considered, clearly contained comment about the draft report and the relevance it had to discussions. Her Honour found that it was also clear from those minutes that the GC members had concerns about issues relating to performance of the appellant. She concluded however that the preponderance of the evidence from the GC members was that it was not the allegations or findings in the draft IC report they had before them at the meeting which resulted in the withdrawal of the recommendation to appoint but rather, her Honour accepted it was the issues relating to the appellant's performance.
The learned trial judge noted that the GC also made a second decision relating to the appellant's status as acting CEO, THO South, and that was its decision to recommend to the Premier by letter dated 23 May 2014 that the appellant no longer continue in that role. Her Honour held that the minutes of the meeting of the GC which preceded that letter and the correspondence, established that it was also performance issues which resulted in that decision.
Her Honour concluded that the appellant had not established that the termination of her appointment was based on conduct or performance issues raised by the IC report as pleaded in her statement of claim.
Finally, for present purposes, as a consequence of her findings the learned primary judge concluded that there was no need to deal with the appellant's case insofar as it related to quantification of damages. Her Honour dismissed the appellant's action.
The appeal
The appellant has appealed to this Court against the dismissal of her action. The notice of appeal contains three substantive grounds, all of which assert that the learned trial judge "erred in holding" as she did, or "erred in failing to hold" that which the appellant contended for at trial.
We will set out the grounds of appeal directly. However, before doing so we observe, as Estcourt J (in dissent as to the result) did in Chu v Russell [2016] TASFC 1 at [61]-[65]. There, his Honour said:
"[62] As was pointed out by Porter J in Calvert v Badenach [2015] TASFC 8 at [46], although this is an appeal by way of rehearing, the appellant nonetheless needs to show an error on the part of the trial judge.
[63] In Allesch v Maunz (2000) 203 CLR 172 at 180 Gaudron, McHugh, Gummow and Hayne JJ said at [23]:
'23 For present purposes, the critical difference between an appeal by way of rehearing and a hearing de novo is that, in the former case, the powers of the appellate court are exercisable only where the appellant can demonstrate that, having regard to all the evidence now before the appellate court, the order that is the subject of the appeal is the result of some legal, factual or discretionary error, whereas, in the latter case, those powers may be exercised regardless of error …'. (Footnotes omitted.)
[64] In Bahonko v Sterjov [2008] FCAFC 30 at [3], Gyles, Stone and Buchanan JJ said at [3]:
'Notwithstanding the obligation of an appeal court, where it is able to do so, to make its own evaluation of the material at first instance, it is a fundamental aspect of the appellate process that appeals are made available for the correction of error (see Coal & Allied Operations Pty Limited v Australian Industrial Relations Commission (2000) 203 CLR 194 at [14]; Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 at [22]-[30]; Poulet Frais Pty Ltd v The Silver Fox Company Pty Ltd (as trustee for the Baker Family Trust) (2005) 220 ALR 211 at [45]). This basic principle imposes an obligation upon an appellant to identify where error is to be found in a judgment under appeal, whether it be an error of fact, law or general principle. It is not necessary for an appeal court to hunt through all the material at first instance and recanvass every aspect of it unless an occasion arises for suspecting, on reasonable grounds (generally those provided by the appellant), that such an examination may yield a conclusion of appealable error.'
[65] This unsatisfactory state of affairs was fortunately remedied by the provision of the written submissions of Mr Jackson SC on behalf of the appellant, many of which however could not reasonably have been divined from scrutiny of the notice of appeal."
The same can be said of the amended notice of appeal and the ultimate effect of the appellant's written submissions in the present appeal.
The three substantive grounds in the amended notice of appeal are as follows:
"1 The learned Judge erred in holding that:
(a)(at [59], [88]): the position or office of Chief Executive Officer – Southern Tasmania Area Health Service (CEO-STAHS) existed:
(i)after 30 June 2012; or
(ii)on 3 June 2014,
particularly having regard to s 81 of the Tasmanian Health Organisations Act 2011 and clause 3 of Schedule 6 to that Act, and the ministerial notice given thereunder dated 19 June 2012 and published in the Government Gazette on 27 June 2012 (together, the Transfer of Employment);
(b)(at [55], [59], [103]): the position or office of CEO_STAHS was the Appellant's 'substantive role' although it had no functions or duties attached to it:
(i) after 30 June 2012; or
(ii) on 3 June 2014,
particularly having regard to the Transfer of Employment;
(c)the Transfer of Employment was 'an administrative mechanism' (at [56]);
(d)there was no transfer of employment as pleaded in paragraph 7 of the Further Amended Statement of Claim dated 1 December 2016 (at [59], [88], [100]) ;
(e)there was no 'provision in the THO Act' that contained the phrase 'transfer of employment' (at [52]) and 'no such thing as a 'transfer of employment' (at [59]) (despite the provisions of clause 3 of Schedule 6 to the Tasmanian Health Organisations Act 2011);
(f)the office of CEO, STAHS could only have ceased to exist if it is accepted that the Appellant was appointed as CEO, THO South (CEO-THOS) (at [103]) (this despite the Transfer of Employment);
(g)the Appellant was redundant from the position or office of CEO-STAHS on 3 June 2014 (at [106]).
(h)the Appellant was redundant from the Respondent's employ on 3 June 2014 (at [106]); and
(i)the Appellant had not 'established that the [Respondent's] termination of the Old Contract was based on conduct or performance issues' (at [139]), in circumstances in which there was an ongoing need for someone to fulfil the functions and duties of the CEO-THOS, so that the Governing Council recommending 'that the Appellant no longer be acting CEO of THO South, and that Mr Matthew Daly be appointed to the position of CEO and head of agency for six months' (at [93]) must have been for some reason of cause, that is, related to conduct or performance, but which did not come within the sub-clauses of Schedule 5 to the Old Contract (Exhibit P1) which were not relied upon.
2 The learned Judge erred in failing to hold, and ought to have held, that:
(a)the position or office of CEO-STAHS ceased to exist at midnight on 30 June 2012;
(b)the position or office of CEO-STAHS was not the Appellant's 'substantive position' on 3 June 2014;
(c)the Appellant was not redundant from the position or office of CEO-STAHS on 3 June 2014;
(d)the position or office of CEO-THOS was not redundant as at 3 June 2014;
(e)the Appellant was not redundant from the Respondent's employ on 3 June 2014;
(f)the Appellant's employment was transferred from employment within the Southern Tasmania Area Health Service administrative division of the Department of Health and Human Services to employment within the newly constituted Tasmania Health Organisation – South on 1 July 2012;
(g)the Appellant was employed in the position of CEO-THOS from 1 July 2012 under the terms of the CEO – STAHS contract, in accordance with the ministerial notice given thereunder dated 19 June 2012 and published in the Government Gazette on 27 June 2012 pursuant to s 81 and clause 3 of Schedule 6 of the Tasmanian Health Organisations Act 2011 (Tas);
(h)the Appellant was employed in the position of Chief Executive Officer –Tasmania Health Organisation South on 3 June 2014 under the terms of the CEO – STAHS contract which continued to apply.
3 The learned Judge erred in failing to hold, and ought to have held, that the Appellant was, upon termination of her employment by the Respondent on 3 June 2014, entitled to be paid out the balance of the remuneration payable under the CEO – STAHS contract until its expiry date plus consequential losses and expenses, less the amount paid to her by the Respondent upon termination and other post-termination earnings."
Legislation considered in the action
The learned trial judge set out in her reasons the relevant provisions of the SSA, the THO Act and the AI Act. We gratefully adopt her Honour's summary.
The SSA relevantly provided that:
· The Minister administering the Act was the Premier, and the department responsible to the Premier for the administration of the Act was the Department of Premier and Cabinet.
· The object of the Act was to establish and manage the State Service.
· The State Service consisted of heads of agencies, holders of prescribed offices, senior executives and employees.
· The head of the State Service was the Secretary of the Department of Premier and Cabinet.
· The employer, where referred to in the Act, was the Premier.
· An "officer" was defined to mean a person appointed as a head of agency, appointed to a prescribed office or appointed as a senior executive under s 31.
The SSA, s 29, provided for the creation of certain offices within the State Service. It relevantly provided:
"Creation of certain offices of Head of Agency and senior executive
(1) Each office of Head of Agency specified in Column 2 of Division 1 of Part 1 of Schedule 1 is taken to be created by virtue of this Act.
(2) …
(3) …
(4) If the Commissioner has determined duties to be of a senior executive nature or equivalent specialist nature, the Premier may create an office to enable those duties to be performed.
(5) The Premier may abolish an office created under subsection (4)."
The SSA, s 31, dealt with the appointment of people to offices within the State Service, and in subss (1) to (4), as it stood as at March 2012, relevantly provided:
"(1) The Premier, on behalf of the Crown, may appoint a person as an officer to a vacancy —
(a)in an office created under section 29; or
(b)in any prescribed office.
(2) The Premier may delegate the power to appoint a person to an office created under section 29(4).
(3) The provisions of this Act (other than Division 1 of Part 7 and sections 47 and 50(1)(a)) apply to a person appointed under subsection (1) as a senior executive as if that person were an employee.
(4) An officer —
(a)holds office for such period as is specified in his or her instrument of appointment; and
(b)is entitled to such remuneration and allowances as are specified in his or her instrument of appointment; and
(c)is taken to be an employee for the purposes of the Long Service Leave (State Employees) Act 1994; and
(d)holds office on such terms and conditions with respect to matters not provided for in this Act in relation to officers as are specified in the instrument of appointment."
The office of CEO, STAHS, was not a prescribed office by reference to the State Service Regulations 2011.
The SSA, s 33, provided:
"Transfer of certain Heads of Agencies and senior executives
(1) The Premier may transfer a person appointed to an office specified in Division 1 of Part 1 of Schedule 1 to any other office specified in that Division.
(2) The Premier may transfer a senior executive from an office created under subsection (4) of section 29 to another office created under that subsection.
(3) The Premier may delegate the power to transfer a senior executive.
(4) A person transferred under subsection (1) or (2) is to receive a salary level not less than the salary level he or she received immediately before the transfer."
The THO Act was introduced to restructure the health system in Tasmania as part of national health reforms. It received Royal Assent on 22 December 2011. The provisions of the THO Act came into force between 2 April 2012 and 1 July 2012. The entity known as THO South was created by the THO Act, s 6, and came into being on 1 July 2012.
The THO Act relevantly provided that:
· The responsible Minister was the Minister for Health and the department administering the Act was then the Department.
· THO South was a body corporate and represented the Crown (s 9).
· Its functions and powers were as set out in ss 11 and 12 of that Act.
· A Governing Council (the GC) was created for the THO South to oversee its operation (s 14).
· The GC had the functions outlined in s 22 and the necessary powers to perform those functions.
The THO Act, s 28, also relevantly provided:
"28 Chief executive officer
(1) Subject to and in accordance with the State Service Act 2000, a person may be appointed as the chief executive officer of a Tasmanian Health Organisation.
(2) The chief executive officer of a Tasmanian Health Organisation is to be appointed in accordance with subsection (1) on the recommendation of the governing council of the organisation.
(3) The office of the chief executive officer of a Tasmanian Health Organisation is taken to be an office created under section 29 of the State Service Act 2000."
The office of CEO, THO South was a head of agency position.
The THO Act, s 30, then provided:
"Subject to and in accordance with the State Service Act 2000, persons may be employed or appointed for the purposes of a Tasmanian Health Organisation."
The THO Act, Sch 6, contained transitional and savings provisions. In that schedule, the term "commencement day" was defined to mean the day on which s 6 of the THO Act commenced. It commenced on 1 July 2012. A "transferring employee" was defined to mean a person who, immediately before the commencement day, was a State Service employee, or State Service officer, appointed or employed for the purposes of the department responsible for the administration of the Health Act 1997. There was no dispute on the trial that the appellant was a transferring employee within the meaning of the definition of that term.
Clause 3 of Sch 6 relevantly provided:
"Minister may transfer employees to another Agency
(1) The Minister, by notice published in the Gazette, may specify that, on or after the commencement day or a later day specified in the notice-
(a) a particular transferring employee who is specified in the notice; or
(b) …
is to be taken to have been appointed under the State Service Act 2000 for the purposes of the Tasmanian Health Organisation specified in the notice.
(2) The Minister, by notice published in the Gazette, may provide for any matters that are incidental to the transfer of employment of transferring employees to a Tasmanian Health Organisation.
(3) A person who is specified in … a notice under subclause (1) to be taken to have been appointed under the State Service Act 2000 for the purposes of a Tasmanian Health Organisation, is to be taken, on and after the commencement day or the later day, as specified in the notice, to have been appointed under the State Service Act 2000 for those purposes.
(4) …
(5) A notice for the purpose of subclause (1) may be combined with any other notice under this Schedule."
The AI Act, s 21A, was used by the State Service to place State Service officers in positions by way of acting in those positions on a temporary basis. It provided:
"(1) Where —
(a) by any enactment, instrument, contract or agreement, any duty, obligation, right or power is imposed or conferred on the holder of an office, position or appointment —
(i)arising from the appointment or employment of a person under the State Service Act 2000; or
(ii)being the office or position of a member, officer or employee of a State authority within the meaning of that Act; or
(iii)being a statutory office or any other office or position in the service of the Crown; and
(b) for any reason —
(i)the holder of that office, position or appointment is unable to perform or exercise the duty, obligation, right or power; or
(ii)that office, position or appointment is vacant —
that duty, obligation, right or power may be performed or exercised by any eligible person so directed in writing by the appointing authority in the same manner and to the same extent in all respects as if that eligible person were the holder of that office, position or appointment.
(2) In this section –
appointing authority, in relation to an office, position or appointment, means —
(a) in the case of an office, position or appointment to which appointments are required by or under an enactment to be made by the Governor– the Minister administering that enactment; and
(b) in any other case– the person by whom appointments to that office, position or appointment are authorized to be made;
eligible person, in relation to an office, position or appointment, means a person who possesses the qualifications required by law to be possessed by the holder of that office, position or appointment;
enactment means —
(a) an Act; or
(b) any other instrument of a legislative character; or
(c) any provision of an Act or of an instrument referred to in paragraph (b)."
The appellant's employment history
We also gratefully adopt as accurate the learned trial judge's elucidation of and commentary upon the contractual dealings between the parties which was substantially as now follows in this section of these reasons.
The appellant was appointed to the office of CEO, STAHS, by an instrument of appointment dated 8 March 2012. That instrument provided:
"I, Matthew Daly being and as (the delegate of – if there has been a delegation under section 31(2) of the Act) the Premier of Tasmania, on behalf of the Crown in right of the State of Tasmania ('the Employer') hereby appoint Jane Elizabeth Holden of Hobart, Tasmania ('the Officer') under section 31 of the State Service Act 2000 ('the Act') to the office of Chief Executive Officer – Southern Tasmania Area Health Service, Senior Executive Level 3 in the Department of Health and Human Services ('the Office') in the State Service, and to undertake and perform such duties as may be assigned to the Officer as hereinafter provided, for the period, upon the salary, benefits and allowances and subject to the terms and conditions specified in this instrument of appointment."
Attached to that document was a further 16 pages which contained the terms and conditions referred to. The appointment was for a period of five years commencing 19 March 2012.
Prior to her substantive appointment as CEO, STAHS, the appellant acted in the position pursuant to short term arrangements. The first of these commenced on 7 March 2011 and was for a period of three months. The details of that arrangement were set out in a letter dated 20 February 2011 sent by the then Secretary of the Department, David Roberts, to the appellant. The letter advised:
"I am writing to confirm our recent discussions regarding your agreement to a fixed term transfer to the role of CEO Southern Tasmania Area Health Service based in Hobart.
I wish to confirm the following agreements regarding the transfer:
1 That you have accepted a three month fixed term transfer from 7 March 2011 to 3 June 2011 to the role of CEO Southern Tasmania Area Health Service. The exact KPIs of the role will be agreed prior to your commencement but will broadly focus on actively managing the performance of the Royal Hobart Hospital on a day to day basis and developing an achievable business plan for 2011-2012.
2 That you will retain your substantive role of CEO North West Area Health Service (NWAHS) as per your current SES contract and will return to this role at the completion of the transfer unless other arrangements are agreed.
3 That for the term of the fixed term transfer that you will be provided accommodation and a vehicle whilst in Hobart, and airfares between the North West and Hobart on a weekly or as required basis, at the Agency's expense.
4 That the transfer will commence on 7 March 2011 in Hobart. You will receive a formal briefing on the role prior to this date.
5 That you can attend two Board meetings in New Zealand during this transfer.
6 That I approve one day's annual leave on 2 May 2011 to attend a family wedding on the preceding weekend.
I realise it is only possible for you to take on this role by you bringing family members from New Zealand to allow your working extended periods from home. Therefore I am agreeing a Higher Duties Allowance of $4 000 per month during the period of this transfer to reflect the added responsibility of the role and these extra costs.
After discussion regarding the communication of this change I will consider the following words for any communication surrounding this transfer:
'Jane Holden has accepted a transfer to the role of CEO of the Southern Tasmania Area Health Service for a period of around three months. Her focus will be on day to day management and working with the Royal Hobart Hospital (RHH) team to prepare a business plan for 2011-2012.
This transfer recognises both the competence and strength of the North West Area Health Service to manage over the three month period and performance of the North West as a whole'.
Jane Holden will commence at the RHH on 7 March 2011 and her substantive position will be filled by (Gavin Austin/Karen Linegar) (to be confirmed)'.
You will be provided with a copy of the finalised communication prior to any release.
I thank you for your willingness to assist the Agency and the Southern Tasmania Area Health Service during this time of change and hope that you find this transfer challenging and rewarding."
That letter reflects that the appellant's substantive position during the currency of these short term arrangements remained that of CEO, North West Area Health Service. By a letter dated 26 February 2011, which Mr Roberts sent to the appellant, it appears her north west position was reclassified as a Senior Executive Service Level 3 officer with effect from October 2009. These same arrangements continued until the end of December 2011. In or about November 2011, the substantive position of CEO, STAHS, became vacant and it was advertised. The appellant applied for the position. She was interviewed for it some time in February 2012, and was appointed to the office in March 2012. At the time the appellant was interviewed for the position, the THO Act had been passed, but its provisions had not yet come into force.
The statement of duties for the office of CEO, STAHS, was tendered and became exhibit D24. The first heading in that document was "Focus of Duties". That provided:
"This role and the post holder will be responsible and accountable for the effective and efficient management of the Royal Hobart Hospital including its major capital redevelopment program. In addition this role will ensure that the effective integration of the acute and primary care services and transition to a Tasmanian Health Organisation as part of the National Health Reform.
The CEO is responsible and accountable for ensuring the safety and quality of care provided within the Southern Tasmania Area Health Service, and that the provision of all services is in accordance with the approved strategic direction and policy of the DHHS and that clinical and financial governance are of the highest order.
This is the highest level of operational management within the Southern Tasmania Area Health Service."
The statement of duties provided that the CEO, STAHS, reported to the Deputy Secretary, Health and Hospitals. There was no evidence about the statutory basis, if it existed, for STAHS. It was accepted it was a division of the Department.
Prior to the instrument of appointment dated 8 March 2012, Mr Rhys Edwards, the then Secretary of the Department of Premier and Cabinet, prepared and sent a minute to the then Premier, the Honourable Lara Giddings. It was dated 2 March 2012 and the subject of it was "Appointment of the Chief Executive Officer, Southern Tasmania Area Health Service (THO)". What appears to be Ms Giddings' signature appeared on the top of the document beside the word "Approved" with the date 5 March 2012. The terms of the minute were as follows:
"RECOMMENDATION:
That you
1)Note that Ms Jane Holden has been selected for appointment as the Chief Executive Officer, Southern Tasmania Area Health Service (THO).
2)Note that this selection has occurred on the basis that Ms Holden will transfer to the new Southern Tasmanian Health Organisation (THO) Chief Executive Officer position when it is established from 1 July 2012.
3)Approve the following terms and conditions for Ms Jane Holden:
Salary: $299,564 pa for five years
Additional Allowance: $ 40,000 pa for two years
Additional Relocation Expenses: As approved by the Secretary, Department of Health and Human Services within reasonable quantum and time limits
Other Conditions: In line with standard Senior Executive Service (SES)/Head of Agency (HOA) conditions.
4)Note that a joint Department of Health and Human Services (DHHS) / Department of Premier and Cabinet (DPAC) exercise will be undertaken to size and work value the three new Chief Executive Offices for future selection and appointment purposes.
BACKGROUND:
·The salary and conditions for Hospital CEOs has not previously aligned well with the Mercer methodology used for classifying Senior Executive Levels and assigning conditions.
·An additional market allowance has been approved in the past for Chief Executive Officers (CEOs) in recognition of the market competition for these positions throughout Australia. Such market allowances were assessed and approved on a case by case basis. These CEO offices in the past were equated to SES Level 3. The specialised nature and health administration capabilities were also recognised, however, the hierarchical relationships through DHHS reduced the responsibility level.
·With the move to the THO (and HoA powers reporting to a Governing Council) it is appropriate that they be classified in line with Heads of Agency with specific specialist requirements.
·On this basis to assess the value and sizing of these offices, competitive market comparisons and change structuring as THO (x3) a separate exercise will be required. This will allow attraction and retention to be addressed in a competitive environment. The Secretary, DHHS has agreed this will be a joint DHHS/DPAC exercise. It also will identify differentials between the three THOs (South, North and North West).
·Ms Holden has been acting in this position during which time she has received:-
SES Level 3 salary: $187,164 pa Market Allowance: $ 64,490 pa Additional Allowance $ 48,000 pa $299,654 pa
Due to the temporary nature of this arrangement accommodation has also been paid.
·There is a critical need to finalise the appointment of the CEO, Southern Tasmania Area Health Services immediately, due to:
- Royal Hobart Hospital (RHH) rebuilding project;
- Transition to the new THO;
- Flow on effect in the North West (Ms Holden's position); and
- Significant budget, staffing and service delivery issues requiring attention.
·The negotiated package for Ms Holden takes into account her present salary level with the 'base level' ($299,654) including the market allowance rather than identifying this separately. Her salary will move with HoA salary increases as approved by the Premier.
·The additional $40,000 pa has been negotiated for two years only on the basis of the management responsibility for the RHH building program, specific transition responsibilities for Southern Tasmania to the THO and family dislocation issues in the immediate future specific to Ms Holden.
·Actual relocation of Ms Holden's family will not occur immediately, therefore, the matter of reimbursement costs associated with relocation should be left with the Secretary 'within reasonable expenditure limits' and 'within a reasonable period of time' (eg two years).
·The structure of this package has been designed in such a way to minimise the flow on to the other Tasmanian CEO positions for THOs and not pre-empt the joint DHHS/DPAC exercise – in effect it establishes the highest salary level and provides sufficient flexibility to establish reasonable relativity differences between Northern and N/Western CEOs. The 'base' package for this CEO position is within the lower range of similar positions and responsibilities (size, budget, teaching hospital, capital city) in other jurisdictions, although it has been difficult to obtain the exact nature of such packages (as they are negotiated on an individual basis and vary substantially).
·Other conditions leave, motor vehicle, severance will be standard HoA conditions."
It seems plain from that minute that, although the instrument of appointment dated 8 March 2012 made no reference at all to any appointment as CEO, THO South, it was intended, when the appellant was selected for appointment to the office of CEO, STAHS, she would "transfer" to the office of CEO, THO South when that entity came into being on 1 July 2012. The minute was silent as to the mechanics of how that might be effected, having regard to the provisions of the THO Act and the SSA.
The March instrument of appointment, however, expressly provided that the appellant was appointed to her office with STAHS by a delegate of the then Premier pursuant to the SSA, s 31, that she was an "officer", and that the position to which she was appointed was "an office". It also expressly described the office to which the appellant was appointed as a senior executive level position. It was not described as a head of agency position.
The GC formally commenced its operations on 1 July 2012, although its chairman, Graeme Houghton, had already been appointed as an interim chairman.
On 26 June 2012, Mr Houghton wrote to the then Premier in the following terms:
"Subject: Acting Chief Executive Officer – Tasmanian Health Organisation – South
I wish to advise that the Governing Council has recommended, by resolution under Schedule 4 of the Tasmanian Health Organisation Act 2011 (THO Act), that Jane Holden be directed to perform and exercise the duties, obligations, rights and powers of the office of Chief Executive Officer of Tasmanian Health Organisation – South from 1 July 2012 until:
· a person is appointed as the Chief Executive Officer of the Tasmanian Health Organisation – South pursuant to and in accordance with the provisions of the THO Act and the State Service Act 2000 or
· a recommendation is made by the Governing Council to the Premier for another person to be directed to perform and exercise the duties, obligations, rights and powers of Chief Executive Officer of Tasmanian Health Organisation – South.
whichever occurs first.
I have confirmed this arrangement with Ms Holden. Ms Holden's SES employment is being transferred to Tasmanian Health Organisation – South by a transfer notice under Schedule 6 of the THO Act. Please arrange for the preparation of an appropriate instrument of direction under section 21A of the Acts Interpretation Act 1931, with Ms Holden's remuneration continuing at its current level."
On 27 June 2012, a notice dated 19 June 2012 was published in the Tasmanian Government Gazette (the Notice) in the following terms:
"TASMANIAN HEALTH ORGANISATIONS ACT 2011
(Section 81 and Schedule 6)
Notice in respect of employees
Tasmanian Health Organisation – South
I, The Honourable Michelle Anne O'Byrne MP, Minister for Health, acting pursuant to section 81 and clause 3 of Schedule 6 of the Tasmanian Health Organisations Act 2011 (the Act):
1 specify that each employee specified in the Schedule (each a Transferring Employee) is taken to have been appointed under the State Service Act 2000, for the purposes of the Tasmanian Health Organisation – South on 1 July 2012; and
4 in relation to each Transferring Employee, determine that:
(a)all industrial agreements, awards, contracts of employment and instruments of appointment, relating to that Transferring Employee's employment by the Crown, applying as at 11.59pm on 30 June 2012, will continue to apply in relation to the employment of that Transferring Employee after that time; and
(b)the employee entitlements of that Transferring Employee as at 11.59pm on 30 June 2012 are to be discharged by the Tasmanian Health Organisation – South.
In this notice unless a contrary intention is apparent, words or phrases or terms defined in the Act have meanings given to them in the Act.
Dated: 19 June 2012
[signed]
Michelle Anne O'Byrne MP
Minister for Health"
Attached to the Notice was a list of names of those people who were affected by it. One of those was the appellant. There was nothing in the Notice, nor indeed was there anything in either s 81 or cl 3 of Sch 6, which dealt with the creation or abolition of offices under the SSA, or expressly provided that a particular officer would be taken to be appointed to a particular position with the THO South. That is, there was no express provision by which the appellant was appointed CEO, THO South.
On the same date as the publication of the Notice, that is 27 June 2012, the appellant was given a direction pursuant to the AI Act, s 21A. That direction provided as follows:
"I, LARA GIDDINGS MP, Premier of Tasmania, acting on the recommendation of the Governing Council of the Tasmanian Health Organisation South and in the exercise of the powers conferred upon me by Section 21A of the Acts Interpretation Act 1931, hereby direct that
JANE HOLDEN
shall perform and exercise the duties, obligations, rights and powers of the office of chief executive officer of the Tasmanian Health Organisation South from 1 July 2012 until a person is appointed as the chief executive officer of the Tasmanian Health Organisation South pursuant to and in accordance with the provisions of the Tasmanian Health Organisations Act 2011 and the State Service Act 2000, or until I, acting on a recommendation from the Governing Council of the Tasmanian Health Organisation South, direct another person to perform and exercise the duties, obligations, rights and powers of the office of chief executive officer of the Tasmanian Health Organisation South, whichever first occurs.
Dated at Hobart this 27th day of June 2012
[signed]
Lara Giddings MP
Premier"
That was clearly the direction foreshadowed by Mr Houghton in his letter to the Premier dated 26 June 2012.
Also on 27 June 2012, Mr Houghton sent an email to the appellant. It read:
"Attached is your Instrument of Appointment.
When you were appointed to the position of CEO Southern Tasmania Area Health Service (as I recall for a term of five years) it was the expectation of all involved that you were also being appointed CEO of THO-South, and that remains the case.
I note that:
· the statement of duties for the position has been amended
· we have to negotiate your performance agreement
· we have to ensure that you have the right compensation package, and
· the Governing Council will need to recommend confirmation of your appointment in due course.
I will be recommending that the Governing Council in turn recommends confirmation of your appointment.
Congratulations on this further step in confirming your appointment. It has perhaps been a trying process but I am looking forward to working with you and confident that the GC members will agree."
By reference to the description of the attachment, the "instrument of appointment" Mr Houghton was referring to was not in fact an instrument of appointment, but was the s 21A direction set out above.
The statement of duties for the office of CEO, THO South, was also tendered. That statement was far more comprehensive than the one for CEO, STAHS. It provided for a different system of reporting in that the holder of the office was to report to the GC and not anyone in the Department. It also provided for responsibility for a very large budget, and overseeing more areas of responsibility and staff than the CEO, STAHS was required to do.
Between the s 21A direction, dated 27 June 2012, and May 2014, the appellant was given a number of s 21A directions, all of which were in identical terms, save for the date nominated for the commencement of duties. Whenever the appellant was absent from the State between July 2012 and May 2014, another person was given a direction pursuant to the AI Act, s 21A, which required them to fulfil the duties the appellant had been fulfilling. Those directions were in different terms to those given to the appellant. The first of them, post that which is extracted in [28] above, was given to Larraine Millar on 1 October 2012. It provided as follows:
"I, LARA GIDDINGS MP, Premier of Tasmania, acting on the recommendation of the Governing Council of the Tasmanian Health Organisation South and in the exercise of the powers conferred upon me by Section 21A of the Acts Interpretation Act 1931, hereby direct that
LARRAINE MILLAR
shall perform and exercise the duties, obligations, rights and powers of the office of chief executive officer of the Tasmanian Health Organisation South from 1 to 7 October 2012, inclusive.
Dated at Hobart this 1st day of October 2012
[signed]
Lara Giddings MP
Premier"
In effect, after that first direction to the appellant, she was given a further direction in the same terms each time she returned to the State after an absence. A direction to the appellant, or indeed anyone, operated until a new direction was given. The last direction prior to the appellant's termination was given to her on 5 May 2014. It provided for her to perform the relevant duties from 7 May 2014. On 23 May 2014, a direction was given to Matthew Daly. That direction provided:
"TEMPORARY EXERCISE OF POWERS OF HEAD OF AGENCY
I, WILLIAM HODGMAN MP, Premier of Tasmania, acting on the recommendation of the Governing Council of the Tasmanian Health Organisation – South and in the exercise of the powers conferred upon me by Section 21A of the Acts Interpretation Act 1931, hereby direct that
MATTHEW DALY
shall perform and exercise the duties, obligations, rights and powers of the office of chief executive officer of the Tasmanian Health Organisation – South from 23 May 2014 until 22 November 2014 or until a person is appointed as the chief executive officer o the Tasmanian Health organisation – South pursuant to and in accordance with the provisions of the Tasmanian Health Organisations Act 2011 and the State Service Act 2000, or until I, acting on a recommendation from the Governing Council of the Tasmanian Health Organisation – South, direct another person to perform and exercise the duties, obligations, rights and powers of the office of chief executive officer of the Tasmanian Health Organisation – South, whichever first occurs.
Dated at Hobart this 23rd day of May 2014
[signed]
Will Hodgman MP
Premier"
That direction took effect on 23 May and was to continue until 22 November 2014. When that direction was given to Mr Daly, the direction given to the appellant on 5 May ceased to have effect.
The evidence from Mr Daly was to the effect that, where a direction was given pursuant to s 21A, it was preceded by a discussion with the person to whom the direction was to be given, and that person could, if they wished, refuse to accept the direction. In effect, they could not be made to accept it. There was no evidence about any discussion between the appellant and any departmental representative about the direction issued to her dated 27 June 2012 prior to it being issued. Equally, there was no evidence that the appellant took any issue with the direction when it was issued, nor any subsequent ones issued to her. None of those directions reflected a substantive appointment to the office of CEO, THO South. All reflected an acting appointment only.
By reference to s 21A(1)(b), the use of directions under s 21A was limited to circumstances where either an office was vacant or the person holding the office was unable for some reason to perform the duties associated with it. Counsel for the appellant maintained at trial that the directions given were unnecessary because the office of CEO, THO South, was not vacant, the appellant having been appointed to the position already, and there could be no suggestion, if the appellant had indeed been appointed, that she was unable to perform the duties of the office.
There is no doubt, having regard to the evidence, that at no stage on or after the appellant's appointment as CEO, STAHS, was she appointed to the position of CEO, THO South, by any duly executed instrument of appointment.
There can however, equally be no doubt on the evidence that, over the period 1 July 2012 to 16 August 2013, the appellant was discussing with members of the GC terms upon which she might be appointed as CEO, THO South. There were communications about salary, allowances, the impact of a position the appellant held on the board of a health organisation in New Zealand, and other matters.
On 26 August 2012, Mr Houghton sent an email to Matthew Double in the following terms:
"Hi Matthew,
Note the attached temporary instrument of appointment.
At its meeting last week, the Governing Council of THO-South considered recommending to the Premier confirmation of Jane Holden's appointment for the remainder of her five year term.
Following the GC meeting, members reviewed the PD for the position, Jane's application and the selection report and they have unanimously informed me by email that they support Jane's appointment and that confirmation of it should therefore be made to the Premier.
Following receipt of the Mercer report, we will review Jane's compensation package and we also have to negotiate an annual performance agreement. The Governing Council noted that these two, latter issues will be reviewed annually and that it is important to confirm its confidence in Jane as CEO at this time and negotiate the compensation package and performance agreement later.
Can you initiate the process of making a recommendation to the Premier or is there someone else I need to consult?
Graeme."
The "temporary instrument of appointment" referred to was in fact the s 21A direction to the appellant dated 27 June 2012.
On 24 April 2013, an email was sent by Mr Phil Foulston, Director, Executive Division, Department of Premier and Cabinet, to Ms Suzy Baker, then a member of the GC, in the following terms:
"Here is a draft letter in terms that I understand that the GC would like to recommend to the Premier about an appointment of a CEO of the THO South. I have also included a draft instrument of appointment that would apply to such an appointment. These have been prepared so that the GC can ascertain with the potential appointee if she would accept the appointment if these were the terms that were eventually offered should the recommendation/appointment proceed."
The documents referred to in the email were attached to it. Mr Foulston sent a copy of the email and its attachments to Matthew Double and David Nicholson of the Department for their information later the same day. In his covering email, Mr Foulston said that his understanding of the next step was that Graeme Houghton would meet with the Minister for Health or her staff.
On the same date, Mr Houghton sent an email to the appellant which relevantly read:
"Sue has just told me that the Premier has been consulted about your IoA so we are approaching the finish line and Sue and I need to meet you to wrap it up."
On 24 July 2013, Mr Foulston sent an email to a lady who was the administrative support for the GC. The email was in the following terms:
"As discussed here are the draft letters previously prepared re a Jane Holden appointment. They are identical (apart from comments to follow) to ones that Sue Baker was discussing with the Minister and Jane when Graeme delegated her this task. The changes are that I've included what the salary would be if the 2% was added to the previous salary identified which was $346,415pa. Perhaps you could confirm what Jane is currently being paid to make sure this is still correct. Also I've now included a reference to the Procare actual remuneration of NZ$40k and the letter from the Procare chair confirming this and have taken out some previous figures (about estimates of travel and accommodation) costs that had been provided to Sue.
I think that Sue had cleared the previous letters with Jane and was going to pass them by the Minister (I am not sure if this was done) – but Graeme could now confirm that the current versions are acceptable and then we can proceed as we did with JK – ie letter signed from Graeme to Premier including a short resume or CV for Jane and then provided to me – and I'll prepare a Cabinet brief for the Premier's signature. If she is OK to sign that and Cabinet notes appointment then I can get the instrument of appointment signed and the letters from the Premier to Graeme and Jane."
Tendered on the trial was a letter dated 16 August 2013 signed by Mr Houghton addressed to the then Premier, the Honourable Lara Giddings. The letter provided as follows:
"APPOINTMENT OF THE CHIEF EXECUTIVE OFFICER, TASMANIAN HEALTH ORGANISATION – SOUTH
I write to advise that the Governing Council of the Tasmanian Health organisation (THO) – South recommends the appointment of Ms Jane Holden to the office of chief executive officer THO – South.
I enclose a draft instrument of appointment prepared by the Department of Premier and Cabinet which has responsibility for head of agency appointments. The instrument sets out the remuneration, allowances and terms and conditions that the Governing Council supports and recommends. This includes:
1 A term of 5 years from the date of signing;
2 A starting salary of $353,343 pa (to be increased in line with government policy from time to time) plus standard superannuation arrangements;
3 A fully maintained vehicle in accordance with government policy;
4 Standard head of agency leave arrangements;
5 Standard head of agency severance and consecutive appointment arrangements; and
6 Acknowledgement that Ms Holden's previous service in the State Service is recognised for benefits including sick leave, annual leave and long service as well as for any severance calculations that may materialise in the future.
There is provision in Ms Holden's current contract for an entitlement for relocation expenses which she has activated. By virtue of the State Service Regulations I understand that this entitlement is available to her for a two year period from 19 March 2012, which is her commencement date in that contract. The new instrument of appointment also provides for Ms Holden to claim relocation expenses in certain circumstances. I have agreed with Ms Holden that the provision is limited to allow the continuation of the conditions relating to reimbursement for unclaimed relocation expenses incurred for a period up to two years from 19 March 2012.
Currently, as you may be aware, Ms Holden has an ongoing involvement with the Board of Procare Health Limited in New Zealand (the Procare Board). The Governing Council considers there are professional development benefits from her continuing with this activity in terms of assisting her in the management of broader issues around the relationship between primary, secondary and tertiary health services in Tasmania. The Governing Council requests that Ms Holden be entitled up to 5 additional leave days per year without pay (the precise dates to be agreed with, and managed by, the Governing Council) to undertake this role. I am advised that this entitlement could be approved by you as 'other leave' under the relevant provision contained in instruments of appointment for heads of agency. This entitlement would be solely for Ms Holden's work on the Procare Board, and it would cease if her involvement with that board finished.
As Ms Holden will be absent from the State on the days when undertaking this role, the Governing Council believes it is prudent to appoint an acting chief executive officer for these periods or ensure that there is an officer in the THO – South with appropriate delegations to sign documents or make decisions if required. This will be the subject of separate correspondence.
You will note that clause 2.1 of Schedule 3 of the draft instrument of appointment provides that the chief executive officer will not hold any position of profit or engage in any activity for reward outside his or her duties as chief executive officer without your permission. I can inform you that Ms Holden has advised me that she receives remuneration from Procare Health Limited of NZ$40,000 per annum. She also advises that she has to use this remuneration to fund costs for her attendance and her work in preparation for Procare Board meetings including travel, accommodation and other incidental costs. As confirmation I attach a note form the Chairman of Procare Health Limited. The Governing Council does not consider there is presently any conflict of interest with Ms Holden continuing in this role and recommends that you permit her to continue this Procare Board work.
I understand that the standard arrangements for heads of agency include a provision that means that the amount of any external board fees may be deducted from the salary paid to the officer. Given the professional development aspect of this work and the arrangements outline above in relation to Ms Holden's role with the Procare Board, the Governing Council requests that this provision be waived.
In respect to other operational matters that are not included in the instrument of appointment, I provide the following information:
1 The Governing Council has agreed that Ms Holden will be provided with an opportunity to participate in professional development (in addition to the Procare Board role) as agreed between the Governing Council and her. The Governing Council has agreed to set a notional value for these professional development activities of up to $10,000 per annum and this amount may be accrued across 2 years, but no more than 2 years.
2 Subject to the provisions of the relevant legislation and Australian Taxation office rulings, Ms Holden will be eligible for 'Salary Packaging' arrangements that apply to public benevolent institutions in a form which she may select from a list of available options. Salary Packaging and similar tax concessions are administered under Commonwealth legislation and, as such, cannot be regulated in an instrument of appointment.
The Governing Council looks forward to Ms Holden's appointment being confirmed. Please contact me if you have any queries."
There was no clear evidence that the letter was ever actually received by the Premier, although Mr Houghton believed he had put it into the system used for the forwarding of correspondence from his office. The only reference to it perhaps being received in the Premier's office was one in a memorandum prepared by Mr Rhys Edwards dated 23 October 2013. The learned trial judge accepted that the letter and its attachments were sent, and that the Premier received them. Mr Houghton also later wrote to the Minister for Health by letter dated 27 September 2013 in the following terms:
"Subject: Tasmanian Health Organisation – South: CEO Instrument of Appointment
The Governing Council has asked me to write to you to enquire as to the status of the employment contract for our Chief Executive Officer Ms Jane Holden.
The Governing Council strongly endorses the appointment of Ms Jane Holden as Chief Executive Officer of Tasmanian Health Organisation – South and are of the opinion that it is essential for her contract to be approved and issued by you and the Premier urgently as an endorsement of her dedication and achievements in a very difficult and demanding job.
We would appreciate your advice as to where this contract is in the approval process and the estimated time for the signed contract to be issued."
In the few months following that last letter there was a change in government. Ms Giddings ceased to be Premier, and Ms O'Byrne ceased to be the Minister for Health.
The appellant's appointment as an officer was terminated by letter dated 3 June 2014 sent by Mr Matthew Daly to the appellant. That letter provided as follows:
"Dear Ms Holden
Thank you for the letter dated 2 June 2014 in response to my letter of 28 May 2014. I have given due consideration and sought advice regarding the matters raised in your letter.
As I advised you by letter of 29th May, 2014, the Premier has abolished the position of Chief Executive Officer of Southern Tasmania Area Health Service pursuant to s29(5) of the State Service Act 2000, there no longer being any operational requirement for the position, no duties being attached to that position at the time of its abolition. At the time of abolition of that office you were appointed to it.
I have reviewed the statement of duties for the position of Executive Director Acute Operations, which I believe is the position of 'clinical manager' alluded to in your letter.
At the current time, I am reviewing the management structure of Tasmanian Health Organisation – South and will not be appointing anyone to the position of Executive Director Acute Operations.
Regrettably, I can see no other way forward and therefore in accordance with s32(1) of the State Service Act 2000 and clause 8, Schedule 5-clause 2(b) of your instrument of appointment I hereby terminate your appointment as an officer, effective close of business today.
This decision entitles you to the benefit of the severance arrangements that are provided for in clause 9 of your instrument of appointment, Schedule 6-clause 6(a); ie, a sum equivalent to 24 times the following amount; your current weekly salary plus 9.25% of that salary.
You are also entitled to notice under clause 4 of Schedule 5. The notice period that you are entitled to because of your age and length of service is 5 weeks. It is my intention to pay you 5 weeks salary in lieu of this notice period, as provided for by clause 2 of Schedule 5.
Of course you are also entitled to be paid out any unused accrued recreational leave.
To arrange for your payments and the return of any property of the Government, currently in your possession, please contact Mr Matthew Double on […]."
Schedule 5 of the terms and conditions of the appellant's employment was headed "Termination". A subheading was "Termination for cause". Paragraphs 1 and 2 under that sub-heading relevantly provided:
"1The Premier may terminate the Appointment at any time without notice if the Officer is found to have engaged in serious and wilful misconduct or if the Officer has abandoned the appointment.
2The Premier may terminate the Appointment by giving notice of termination in writing or payment in lieu of such notice if:
(a) It is determined:
(i)in accordance with the process established for employees under section 48 of the State Service Act 2000 that the Officer is unable to effectively and efficiently perform the Officer's Duties; or
(ii)that the Officer has breached the Code of Conduct contained in the State Service Act 2000 in circumstances in which a sanction of termination could or would be likely to be imposed for that breach; or
(iii)the Officer has not maintained a satisfactory standard of performance in accordance with the requirements of clause 4 of Schedule 3 of this instrument.
(b) It is necessary or desirable to do so having regard to the operational requirements of the Employer."
The letter pursuant to which Mr Daly terminated the appellant's employment was preceded by other correspondence relevant to the termination.
By letter dated 23 May 2014 from Mr Houghton to the Premier, the GC recommended that the appellant no longer be acting CEO of THO South, and that Matthew Daly be appointed to the position of CEO and head of agency for six months. On the same day, the Premier signed the s 21A direction by which Matthew Daly was directed to perform and exercise the duties, obligations and powers of the office of CEO, THO South, until somebody was permanently appointed to that position. The direction was to operate from 23 May 2014 to 22 November 2014. Also on the same date the Premier wrote to the appellant in the following terms:
"I have received a recommendation from the chair of the Governing Council of THO South recommending that I issue Matthew Daly with a direction under s21A of the Acts Interpretation Act 1931 to perform and exercise the duties, obligations, rights and powers of the office of chief executive officer, THO South from 23 May 2014. I have determined to act in accordance with that recommendation.
As you are aware your current direction under s21A of the Acts Interpretation Act ceases as soon as I issue the same direction under that provision to another person. I confirm that I have issued the relevant direction to Mr Daly.
In your substantive SES office of chief executive officer, Southern Tasmania Area Health Service you now report and are accountable to the acting chief executive officer, THO South. The terms of this appointment remain as specified in your instrument of appointment to that office dated 8 March 2012."
On 27 May 2014, Mr Daly wrote to the appellant. He said in that letter:
"Dear Ms Holden
As you are now represented by Ms A Mills in this matter, I am writing to you, care of her.
I am writing to inform you that I have recommended to the Premier that he, pursuant to s29(5) of the State Service Act 2000, abolish the office of Chief Executive Officer, Southern Tasmania Area Health Service, as there is no longer any operational requirement for the position, there being no duties assigned to that position.
As you are aware, you are appointed to this office, and while you were so appointed it was transferred to the Tasmanian Health Organisation – South (THO-South) when the THO-South was created. This was achieved by way of a notice issued by the Minister under clause 3(1) of Schedule 6 to the Tasmanian Health Organisations Act 2011, you being specified as a transferring employee in that notice.
In the event that the Premier determines to abolish the office, it will be my intention to terminate your employment in accordance with clause 2(b) of Schedule 5 to your Instrument of Appointment, dated 8 March 2012. Before taking such a course I will give you the opportunity to provide me with any reasons as to why I should not do so.
If you wish to provide me with such reasons, you will be required to do so within 48 hours of receipt of my written confirmation that the position of Chief Executive Officer, Southern Tasmania Area Health Service has been abolished and that it is my intention to terminate your employment in accordance with clause 2(b) of Schedule 5 to your Instrument of Appointment.
In the event of termination of your employment in that manner, you will be entitled to a severance payment in accordance with clause 5 of Schedule 6 to your Instrument of Appointment."
Mr Daly wrote again to the appellant on 29 May 2014. He said:
"Dear Ms Holden
Further to my letter to you of 27 May 2014, I am writing to confirm that the Premier has, pursuant to s29(5) of the State Service Act 2000, abolished the office of Chief Executive Officer, Southern Tasmania Area Health Service, as there is no longer any operational requirement for the position, there being no duties attached to that position.
I confirm that it is my intention to terminate your employment in accordance with clause 2(b) of Schedule 5 to your Instrument of Appointment, dated 8 March 2012.
As foreshadowed in my letter to you of 27 May 2014, I am now giving you the opportunity to provide me, within 48 hours of receipt of this letter by your legal representative, any reasons as to why I should not terminate your employment in accordance with clause 2(b) of Schedule 5."
On 2 June 2014, the appellant responded to Mr Daly in the following terms:
"Dear Mr Daly,
I refer to your letter received by my lawyer at 3.30pm May 29th by email. As directed I am writing to advise, without prejudice to my breach of contract claim, why I believe I should not be made redundant although the position I was transferred to last week has now been abolished.
I have worked with DHHS since November 5th 2007. Firstly in the North West and secondly in the South. In both organisations the performance significantly improved to meet the health needs of the community as well as considerable improvement in budget performance. Notably in the North West waiting lists were reduced to ensure almost every patient on the list was seen in the recommended waiting time, an outcome not achieved by any other service before or since. Furthermore the North West Area Health Service was the only one of the three during my tenure that did not exceed its budget.
In the South massive cost improvements have been achieved whilst still providing an increase in services to the public. THO South despite budget cuts continued to reduce the waiting list and at the same time improved on all of the benchmarks of the Health Round Table over the past two years and has this year almost met national efficient price whilst revealing massive improvements in Emergency department and quality performance indicators in the last 6 months.
I believe that I bring a vast depth of knowledge in health management and skill to the Tasmanian health sector and I am able to motivate clinical staff and support improving clinical performance – my past record supports this claim. I am also aware of the need for health services to live within the State's means and understand the need to drive both productivity gains and cost reductions.
I am aware that there is a position for a clinical manager at the RHH for example but there may be others in the system which I have the skills and competence to fill. I would take on a suitable role with the dignity and professionalism appropriate of a public servant.
The Chairman of the Governing Council made it clear to both myself independently and to the Executive of THO South subsequently that the Integrity Commission report was not the reason they took the steps that they did. In fact in his meeting with me he stated that the only impact the Integrity Commission had on their decision was the timing. The tabled Report does not include all the evidence and I strongly dispute the 'findings' made in relation to me. I intend to defend these matters. I have always understood the privilege of being a public servant and have never taken any steps in my career to abuse that privilege. In any event, these matters do not relate to the Response I have been directed to give you.
Whilst not operational I also add that I have moved to Hobart from the North West with my family. Two of my children attend both school and university here whilst my eldest completes a degree in Launceston this year. I have both professionally and personally committed myself to serving the public through the public health system in Tasmania.
Thank you for your consideration,
Jane Holden".
On 6 August 2013, the CEO of the Integrity Commission (IC) had written to the Premier advising that, in accordance with the Integrity Commission Act 2009 (the IA Act), s 38(1)(g), she had determined that the IC would investigate a complaint. The letter outlined that the complaint related to the appellant and Mr Gavin Austin (an officer then fulfilling the role the appellant had been undertaking in the north-west of the State), and gave brief details of it. The letter also advised that, at that point in time, neither the appellant nor Mr Austin or the GC had been given notice of the complaint or proposed investigation. The Premier was also advised that:
"This notice is a confidential document under s 98 of the Act. You must not disclose the existence of this document to another person unless you have a reasonable excuse."
About 10 days later, on 16 August 2013, the Premier received a letter from Mr Houghton about a proposed appointment of the appellant as CEO, THO South.
Mr Rhys Edwards, the then Secretary of the Department of Premier and Cabinet, prepared a memo in or about October 2013. In that, he indicated that the Premier felt she was in a difficult position because she did not feel she could progress an appointment of a head of agency the subject of an IC investigation, but could not explain why. Mr Edwards contacted the IC. He spoke to both its chairman and CEO. He was told they could offer no assistance to the Premier. As far as the Office of the Premier was therefore concerned, it just did nothing about an appointment.
At some time in the first half of April 2014, a draft IC report was distributed to a limited number of people. One of those was Mr Houghton. There was no evidence as to whether the draft IC report the appellant received, and that sent to Mr Houghton, were the same. There was in fact no evidence at all about precisely what was in the draft report because a copy was not provided to the learned trial judge.
On 27 May 2014, in accordance with the IC Act, s 11(3), the Chief Commissioner of the IC forwarded a copy of the final IC report titled "An investigation into allegations of nepotism and conflict of interest by senior health managers" to both Houses of Parliament. On the same date, that report was tabled in the House of Assembly by the Minister for Health, and a ministerial statement was made in relation to it. The next day a report about it appeared in the Mercury newspaper.
The decision to rescind the recommendation to appoint the appellant to the substantive role as CEO, THO South, was made at a meeting of the GC on 25 April 2014. The meeting was a confidential one because a topic was to be the draft IC report. The meeting did not include any secretarial staff and did not include the appellant. Mr Houghton took the minutes.
The decision of the GC to rescind its recommendation was communicated to the Minister for Health in a letter dated 28 April 2014 sent by Mr Houghton. In that letter Mr Houghton said:
"As you know, the CEO of the Integrity Commission has issued for comment, on very limited distribution, a draft report on events at THO-South and THO-North West.
The Governing Council of THO-South met on 25th April 2014 to consider the report and, following discussion of the findings of the draft report, and taking into account other performance-related issues, it was unanimously resolved to rescind the recommendation to the Premier that Jane Holden is substantially appointed as CEO.
I would welcome an opportunity to report more fully on the Governing Council's discussions at a suitable opportunity. The Governing Council's resolution has not yet been communicated to Jane Holden."
Following that meeting, notwithstanding the rescission of the recommendation referred to above, the appellant continued by reference to a s 21A direction to be acting CEO, THO South.
The appellant met with Mr Houghton on 12 May 2014. At that meeting he gave her a letter which read as follows:
"I write in respect of our performance discussions on 14th April which included the results of the performance appraisal questionnaire completed by Governing Council members in October last year, and feedback from Governing Council members about aspects of your current performance.
You will recall that our discussion informed you of the Governing Council's concerns about your communication and management style, and your ability to develop constructive relationships with key stakeholders. More recently in our conversation of 17th April, and again after the Governing Council meeting on 25th April, I informed you of the erosion of the Governing Council's confidence in your performance as CEO as a result of the organisation's failure to match activity levels to available budget in the current financial year.
Further information has recently become available, including the draft Integrity Commission report and other reports indicating a culture of poor processes, disengagement, and alleged bullying and harassment in parts of THO-South. While it should be noted that these are not allegations made specifically against you, the Governing Council looks to the Chief Executive Officer to set the cultural lead within the organisation.
This has served to crystallise concerns held by the Governing Council about your ability to create and sustain an organisational culture that upholds the highest standards of integrity, the provisions of the State Service Act Code of Conduct, the reputation of THO South.
Given the issues stated above please take this as an opportunity to demonstrate how you would work towards restoring the Governing Council's confidence in your capacity to continuing in the role of Acting CEO.
If you think it would be helpful to you, the Governing Council would support reasonable costs for you to access mentoring, counselling or career transition support.
I will also send you separately the final version of your performance plan for 2013-14 as amended by the Governing Council subsequent to our discussions about its content."
As requested, the appellant responded to the concerns raised by Mr Houghton in a comprehensive letter which she emailed to Mr Houghton on 14 May 2014. The appellant said in that letter:
"Dear Graeme
Subject : Performance Issues
Thank you for meeting with me on Monday afternoon with Matthew Double to discuss my performance.
You have advised me that I have 48 hours to provide feedback to the Governing Council to demonstrate how I would work toward restoring the Council's confidence in my capacity to continue in the role of Acting Chief Executive for THO South referencing concerns in regard to communication and management style, ability to develop constructive relationships with key stakeholders, matching activity levels to available budget in the current financial year, and referencing other reports that indicate a culture of poor processes, disengagement and alleged bullying and harassment in parts of THO South.
Firstly, I wish to be clear that I am absolutely open to feedback on my performance and am committed to working with the Governing Council to ensure THO South is an organisation that is reliable, safe, effective and led with integrity.
I have taken very seriously the feedback I received in regard to my communication and management style. Last year, I was supported by Governing Council to attend a Learning Set and I have used these opportunities to case study challenges I face on a day to day basis both internally and externally ensuring I get feedback from colleague CEO's on approach, style and frameworks for implementing change. I have also taken time to develop productive relationships with DHHS, other THOs and other stakeholder agency colleagues especially in regard to ensuring that I fully understand their position in terms of challenges we face and working with all whole of state committees to seek solutions to some of these challenges. This has included the shared service committee, the consultancies arranged through the Commission, the Enzyme review on HR and KPMG review on procurement. I have encouraged the sharing of information from THO South across the sector including the Tasmanian Medicare Local and UTAS to ensure openness and have regularly checked with SPP in DHHS to ensure that there is comfort with the information accuracy and sharing between THO South and DHHS. I have also invested considerable time into working with all unions to ensure they have a good understanding of the organisation and whilst there is not always agreement on issues, there is now an open relationship that is reflected by less negative 'press' as issues are brought to the table for open dialogue. I believe the 360' feedback process that was agreed as part of my 2013/14 performance plan will reflect that I have developed constructive relationships with key stakeholders. You have also recently provided feedback to me that you believe there is a significant improvement in relationships.
In regard to ongoing improvement in this area, I am very supportive of the proposed 360' survey and using this as a baseline for ongoing improvement. If it highlights opportunities for improvement I intend to take them on board and discuss coaching support to best make any necessary changes. I also remain fully supportive of working with a mentor on a one on one basis to build these skills as has been proposed. I have been discussing the issue of leadership and management with the Executive team who support leadership development across the organisation and I propose external input into the organisation in this regard is essential. We have discussed the findings of the HRS review and there is a general acceptance that culture does need to be challenged in terms of 'living within our means' and 'holding each other accountable for our performance. These discussions include clinical staff who are increasingly revealing true engagement in managing within a price volume and activity based funding environment albeit they find it very challenging. I have also identified as I progress the performance appraisals that personal mentoring would be another valuable tool for leadership throughout the organisation. Whilst I accept responsibility for the poor budget outcome and am not looking to duck this is in anyway, the potential for this result was highlighted to Council prior to the Service Agreement being signed in May 2013, results have been transparently reported monthly to Council and in fact the predicted deficit is lower that than forecast at the time. THO South has reduced admission rates over the past year and has also dramatically reduced costs over the past two years to almost NEP a goal set by Council indeed cost study 17 suggests we are likely to be functioning at below the NEP in 2014/15 although this system my change under the new Commonwealth budget announcements.
I also believe that I have support in general from the staff of THO South which has been earned over the past two years and which is being used to drive positive change. As Council is aware leadership change has been a constant for especially the RHH and this has left it rudderless and a high financial risk to the State. I believe that change now would create significant risk and the momentum gained in creating an organisation moving under one banner – FLAGSHIP would be lost.
I also accept that concerns regarding poor processes, alleged bullying and disengagement have been made. Whilst there is no doubt some credibility for poor processes, I do not believe this is endemic and I think some of those criticisms relate to confusing in role and function as a result of the changes to the health system since July 2012. In terms of alleged bullying and or harassment, I have appropriately followed up any claims in this regard and can confirm a zero tolerance for bullying which is accepted throughout the organisation. I do not bully and I do not believe there has been any accusation of bullying that has not been or is not being appropriately dealt with. I believe that the appointment of the GM Corporate Services and the future appointment of the GM Clinical services – South which only recently been approved by SSMO, I will have more time to concentrate on important strategic issues that have, of necessity of workload not been given the attention they deserve.
I would welcome working with the Governing Council on specific allegations. I have not had the opportunity to see or respond to some of the complaints you are referring to.
THO South and in particular the RHH has been criticised for disengagement of staff. I think again there is some credibility to this claim and it largely arises in relation to medical staff. I believe we have begun to make real inroads into this. We are openly discussing what engagement looks like, we are challenging resistance to change and we are seeing evidence of improvement. However, the medically dominated culture of RHH has existed for many years and the solution I believe is in nurturing a change Which takes time. Clearly, this has to be within reason as change is required. Whilst I had hoped that Alan Sandford would be a powerful and positive influence in moving this agenda forward, this hasn't proven to be the case. However, we have another opportunity to recruit to the role in the future and as with the GM Corporate Services, I again would seek Council involvement in that appointment.
I also believe the addition of the EDMS and EDON to the Council meetings will be a positive. This is something I raised over 12 months ago as I feel it will provide the Council with more depth to information and perspectives in terms of a number of issues and I believe will give Council more confidence in advice given especially in regard to comments that I 'sanitise the information to Council to ensure it is always positive'.
I accept that the reputational issues for THO South are challenging and that I have been the centre of some of those which is most unfortunate. These have included an accommodation being paid by DHHS whilst I was on secondment to STABS; a telephone data account the settlement details of which were agreed to be confidential but which resulted in no cost to the State, and the potential release of the integrity commission report. Whilst I fully accept these are not issues any Board would want the CEO involvement in, they are issues I have and have had to face alone, they are challenges I have not been unprepared to own or be accountable for. I do not see any further issues however, I am the 11th CEO in 14 years and this turnover has in no small way been led by the Mercury. We have made some really positive inroads in regard to public relations with the appointment of Nikki Karpeles, but there is clearly further work to do.
In summary, I believe the Council can have confidence in me as the CEO of THO South. I have led positive change in relation to both budget and clinical reform and I am open to improving my performance. I am absolutely committed to personally doing an excellent job for THO South and I accept that confidence is a fundamental to the positive relationship between a Board and CEO.
I can't be clearer that it is my firm resolve to continue to work in the role of CEO THO South, however, the ongoing insecurity around the acting status of that role is one that creates considerable insecurity for me and my family and I believe this needs to be resolved with clarity one way or the other.
I understand that this is a very serious situation and given that my employer is the Premier I have thought that this letter in response to yours should be also be sent to both the Premier and Minister of Health for his information. I seek your advice on this as soon as possible.
I am happy to discuss this response further with yourself and or the whole Council. Yours sincerely
Jane Holden
Acting Chief Executive THO South
Hobart."
The appellant's response was sent to members of the GC and then discussed at a meeting involving Mr Houghton, Ms Baker and Ms Wardlaw-Kelly on 15 May 2014. The minutes of that meeting record the following:
"The teleconference was convened to discuss Jane's reply of 14th May to the Governing Council's letter to her.
It was agreed that:
• Jane's letter does not demonstrate new insight sufficient to change the mind of the GC members about her suitability for the job.
• We would support her transition to a new position outside THO-South if that is negotiated.
• We propose a three stage appointment process:
o An immediate short term appointment
o An acting appointment for perhaps six months
o Recruitment to the substantial position.
• Jane's letter should be given to the Minister and Premier as requested by her.
• David Nicholson, Adrienne Belchamber and Coral Paton may be suitable to fill the immediate acting role – in that order of preference. There was concern that an in-house appointee may be placed in a very difficult position.
It was the preference of the meeting that this is resolved before Monday's GC meeting and that a large component of the meeting is given over to meeting the Acting CEO and Executive.
The Chair undertook to seek advice from FONT Media about messages and audiences."
A special GC meeting was then held on 19 May 2014, which meeting was chaired by Mr Houghton and attended by members Ms Baker and Ms Wardlaw-Kelly. In attendance were Mr Tony Lawler and Mr Matthew Daly.
On 21 May 2014, the appellant met with Mr Houghton and Mr Double. Notes of that meeting were prepared by Mr Houghton.
By a letter dated 21 May 2014, Mr Houghton advised the appellant as follows:
"Dear Jane
Subject: Your Appointment
Thank you for your letter of the 14th May. The Governing Council has considered your response to our letter of 12th May and has recommended to the Premier that you no longer continue in your current role as Acting CEO of THO – South.
As you are aware, when we wrote to you we asked you to address the following matters:
• Your management style and communications approach;
• Your capacity to build strategic relationships; and
• Your approach to financial management.
WE have considered these matters and believe your response was inadequate. Hence, our view that you should no longer act in this role is confirmed.
On a personal basis, the Governing Council wishes to thank you for your dedication and commitment, in particular your achievements in this role.
While we understand that you are likely to be disappointed with our decision, we still believe that you have very significant strengths to offer in your professional life."
As already set out above, the final event in the appellant's employment history was the termination of her appointment as an officer by the letter dated 3 June 2014 sent by Mr Matthew Daly to the appellant.
Discussion and disposition
The question for determination in this appeal is whether the appellant's employment was terminated lawfully on the ground of redundancy.
Counsel for the appellant submits that the approach of the primary judge in accepting the respondent's analysis of what occurred to the appellant's employment placed a higher emphasis on form than substance.
Much of the factual detail in this matter is undisputed. The critical issue for resolution is what the effect was of the setting up of the THO South on the appellant's employment.
The primary judge found that the appellant's substantive position was that of CEO of STAHS. Her Honour observed that the position of CEO of STAHS was a senior executive position and not a head of agency position.
When the appellant was appointed CEO of STAHS, legislation to establish THO South had been enacted but was not then operative. The primary judge referred to a minute about the appellant's appointment prepared by the Secretary of the Department of Premier and Cabinet. The minute stated that the appellant's selection occurred on the basis that she would transfer to the new THO South, CEO position. Her Honour observed that "[t]he minute was silent as to the mechanics of how that might be effected having regard to the provisions of the THO Act and the SSA".
It was the intention of those involved in the process of appointing the appellant to CEO of STAHS that she would become CEO of THO South and be confirmed in that substantive position. However, apart from various times in which the appellant acted in that position, she was never appointed substantively to that position.
Counsel for the appellant submits that her employment in STAHS as CEO was transferred to THO South as CEO as a consequence of a notice published in the Tasmanian Government Gazette (the Gazette) on 27 June 2012, but dated 19 June 2012. That notice is set out at [42] above. The key aspects of the notice were:
· Employees specified in a schedule (including the appellant) were "taken to have been appointed under the State Service Act 2000 for the purposes of the Tasmanian Health Organisation – South on 1 July 2012.
· All "contracts of employment and instruments of appointment" relating to such employees' employment by the Crown as at 11.59am on 30 June 2012, continued to apply thereafter.
The primary judge observed, at [27] of her reasons for judgment, that there was no express provision in the notice by which the appellant was appointed CEO of THO South.
On the previous day, 26 June 2012, the Chairman of the GC of THO South wrote to the Premier about an acting CEO for THO South. That letter is set out at [41] above. The gist of the letter was that the GC recommended that the appellant perform the duties of CEO of THO South from 1 July 2012 on an interim basis until an appointment to that position was made, or another person was directed to perform those duties on an interim basis.
On 27 June 2012, as foreshadowed in the 26 June 2012 letter, the Premier made a direction under s 21A of the AI Act, directing the appellant to perform the duties of the office of CEO of THO South until a person was appointed to that position, or another person was directed to perform those duties. The full text of the direction is set out at [43] above.
On 27 June 2012, the Chairman of the GC, Mr Houghton, sent an email to the appellant. The full text of the email is set out at [45] above. The email attached the "instrument of appointment", which was the s 21A direction. It stated that "it was the expectation of all involved" that the appellant, when appointed CEO of THO of STAHS, was "also being appointed CEO of (THO South)". The email also noted that the GC would need to recommend confirmation of the appellant's appointment. The email further noted that a statement of duties for the position had been amended.
Her Honour observed, at [31] of her reasons, that the statement of duties for the office of CEO of THO South was far more comprehensive than the statement of duties for the CEO of STAHS. The reporting was to the GC, there was a very large budget, more areas of responsibility, and more staff.
Each time the appellant left the State for a number of days, a s 21A direction was given to another person to perform the duties of CEO of THO South for a set period of time. On her return to the State on each occasion, the appellant received a s 21A direction, the last of which was given to her on 5 May 2014, in respect of the performance of duties from 7 May 2014. On 23 May 2014, a direction was given to another person, Mr Daly, until 22 November 2014, or the appointment of a person to the office of CEO of THO South.
At [35], her Honour observed that the use of s 21A directions was limited by s 21A(1)(b) of the AI Act to circumstances where an office was vacant, or the person holding the office was unable to perform the duties attached to it. Her Honour noted a submission of counsel for the appellant that the directions were not necessary because the office of CEO of THO South was not vacant. The submission was that the appellant had been appointed to the position and was able to perform the duties of the office. In submissions on the appeal, counsel described the s 21A direction as "bureaucratic superfluity", except when issued to a person to cover the appellant's absence from the State from time to time. Counsel contends that the appellant was transferred into the position of CEO THO South on 1 July 2012, pursuant to the provisions of the THO Act. The gist of the submission is that the appellant was appointed "by force of that legislation". Counsel relies on s 81 and cl 3 of Sch 6 to that Act. Clause 3 of Sch 6 was relied on to support the notice published in the Gazette on 27 June. The text of cl 3 is set out at [30] above. The clause allows the Minister to transfer specified employees to a Tasmanian Health Organisation. There is nothing in Sch 6 or, in particular, cl 3 thereof, which deems a transferred employee to hold any particular office in a Tasmanian Health Organisation.
Section 28 of the THO Act dealt with the appointment of CEOs. The full text of the section is set out at [27] above. Any such appointment was subject to the SSA and, under s 28(2), was to be made on the recommendation of the relevant GC. It is uncontested that the position of CEO, THO South was a "head of agency" position. Accordingly, the appointment was required to be made by the Premier, albeit on the recommendation of the GC. The provisions of s 28 of the THO Act are a formidable barrier in the way of any contention that a notice under cl 3 of Sch 6 was effective to appoint any particular person to the office of CEO of a Tasmanian Health Organisation. There is nothing in cl 3 of sch 6 to indicate that it was intended to render the provisions of s 28 of the THO Act inapplicable to the first appointee to the position of CEO of THO South. There is no warrant in our view for reading s 28 subject to cl 3 of sch 6 given that the later provision does not deem any employee to be transferred to any particular position.
At [59] of the primary judgment, her Honour said that the office of CEO, STAHS did not cease to exist, although practically STAHS ceased to exist as a separate entity. Her Honour said that there were no functions and duties attached to that office. At [82], her Honour said that the appellant's employment "was at all times governed by the instrument of appointment dated 8 March 2012 by which she was appointed CEO, STAHS". The appellant's counsel takes issue with these findings on the basis of his submissions as to the effect of the 27 June 2012 notice in the Gazette. Counsel contends that the notice had the effect of transferring the appellant in her employment from CEO, STAHS to CEO, THO South. In the absence of an appointment under s 28 of the THO Act, such a submission cannot be accepted. Given that the appellant was only ever temporarily appointed CEO of THO South at various times, it is legitimate to ask what her substantive position was at all times. We consider that the primary judge was correct in her analysis that the appellant held a senior executive office (CEO, STAHS) at the time of transfer to THO South, and that therefore she was entitled to be regarded as someone who still held that office substantively, albeit that there were no duties and responsibilities attached to it. If that were not the case, then the appellant would have no substantive position, which is at odds with the protection prescribed by Sch 6 of the THO Act.
Accordingly, as at 3 June 2014 when the appellant was terminated from her employment, she was terminated from the substantive office which she held, albeit without any duties attached. The fact that the appellant was not otherwise appointed to any office in the service of the State meant that the State was entitled to consider that she was redundant from its employ.
Counsel for the appellant challenged her Honour's finding at [139] that the termination of the appellant's "old contract" was not based on conduct or performance issues. The challenge to that finding depends on the acceptance of the submission that the appellant was being terminated from the CEO, THO South position. We do not accept that any such termination occurred. We agree with the view of the primary judge that the appellant ceased to act as CEO, THO South when Mr Daly was appointed to that acting position on 23 May 2014.
In the context of ground 2 of the amended notice of appeal, we consider that the primary judge did not err in failing to hold that the office of CEO, STAHS ceased to exist at midnight on 30 June 2012. There was nothing in Sch 6 of the THO Act which had the effect of abolishing any office. The re-assignment of the appellant's existing employment to THO South as a Senior Executive Level 3 in STAHS occurred in circumstances where her existing entitlements were protected, including her senior executive status.
For the reasons expressed above at [96]-[98] we consider that her Honour was entitled to hold that the office of CEO, STAHS remained the appellant's substantive position and that she was redundant from that position, in the absence of being appointed to any other role, as at 3 June 2014.
In any event, in the absence of any evidence as to what if any role either the draft or final IC reports, or the performance issues referred to at the meeting of 25 April 2014 may have played in the Premier's or his delegate's decision to terminate that substantive position, the appellant had failed to establish that such termination was based on such conduct or performance issues. Moreover, no inference to that effect was reasonably open.
We reject the submissions of counsel for the appellant, for reasons which we have given above, that the appellant was employed in the position of CEO, THO South on 3 June 2014. On that day, Mr Daly held that position pursuant to a s 21A direction, on an interim basis. As at 3 June 2014, no person had been appointed pursuant to s 28 of the THO Act to CEO, THO South as a substantive office, as distinct from an interim role.
In view of the conclusions we have reached as to grounds 1 and 2 of the notice of appeal it is unnecessary to consider the issue of damages raised by ground 3.
For the foregoing reasons, we are of the view that the appeal should be dismissed.
File No 1468/2017
JANE HOLDEN v STATE OF TASMANIA
REASONS FOR JUDGMENT FULL COURT
GEASON J
2018
The question in this case is whether the appellant's employment was lawfully terminated on the grounds of redundancy. In my view it was not.
The amended grounds of appeal are set out in the judgment of Estcourt J and Marshall AJ at [19].
Relevant facts
There were many facts placed before the learned trial judge, but the relevant facts are these:
(i)The appellant had been Chief Executive Officer (CEO) of the North West Area Health Service.
(ii)By instrument of appointment dated 8 March 2012 the appellant was appointed to the role of CEO Southern Tasmania Area Health Service (STAHS). (Prior to that appointment it had been recorded in a minute to the Premier that the appellant had been selected for appointment as CEO Tasmanian Health Organisation South (THO South) and would transfer to that position when it was established.)
(iii)THO South was created under the Tasmania Health Organisations Act 2011 (the THO Act) as part of the National Health Reforms agreed between the Commonwealth and State Governments. (Similar entities were created in the other regions of the State.)
(iv)THO South commenced operation on 1 July 2012.
(v)On that date the duties attaching to the position of CEO STAHS were transferred to the statutorily created position CEO THO South. Additional duties were added to that role. It was at a higher classification within the State Service than CEO STAHS.
(vi)Thereupon there were no duties attached to the position CEO STAHS.
(vii)STAHS was absorbed within THO South and ceased to exist.
(viii)On 1 July 2012 the appellant's employment was transferred to THO South under the transitional provisions of the THO Act contained in Sch 6, Item 3. The transfer was published in the Government Gazette (the Notice). The appellant was thereupon "taken to be appointed under the State Services Act 2000, for the purposes of the THO South".
(ix)The appellant performed the role of CEO THO South pursuant to a direction from the Premier given on 27 June 2012. This was a direction made pursuant to s 21A of the Acts Interpretation Act 1931 (A s 21A direction). (There were a number of s 21A directions made in respect of the appellant. The need for all of them is doubtful but their validity is not an issue in this appeal.)
(x)Between 1 July 2012 and 16 August 2013, the Governing Council (GC) of THO South was engaged with the appellant in discussing terms upon which her appointment would be made.
(xi)On 16 August 2013 the GC of THO South wrote to the Premier recommending the appellant be appointed to the role. This did not occur.
(xii)On 25 April 2014 the GC advised the Minister for Health it no longer wanted the appellant to be appointed to the role.
(xiii)On 23 May 2014 Matthew Daly was appointed to the position for a term of six months.
(xiv)On 27 May 2014 Mathew Daly wrote to the appellant advising that he would be recommending to the Premier that he abolish the position of CEO STAHS pursuant to s 29(5) of the State Service Act.
(xv)On 29 May 2014 he wrote to the appellant and advised that the Premier had accepted his recommendation that the position of CEO STAHS be abolished, there no longer being any operational requirement for the position there being no duties attached to it.
(xvi)On 3 June 2014 the appellant's employment was terminated on the grounds that she was the person holding the position which had been abolished. The respondent proceeded to termination the appellant's employment in accordance with cl 2(b) in Sch 5 of her contract of employment.
In order to succeed in prosecuting its contention that Ms Holden's positon had become redundant, the respondent had to persuade the court that the job of CEO STAHS continued to exist until the premier abolished the position in 2014, and that the appellant was the person appointed to that job at that time. The learned trial judge so determined, holding that the position of CEO STAHS continued to exist without any duties attached to it, until the time it was abolished by the Premier.
That conclusion meant that until that occurred, there were two extant jobs in the southern Tasmanian health services employment structure, which had the same duties (albeit that one had additional duties). It required the conclusion that it is legally possible for the position CEO STAHS to exist, even though the entity known as STAHS did not itself exist after 1 July 2012; that is that the appellant was CEO of a non-existent organisation.
There were a number of factual matters referred to in this appeal not relevant to the question to be determined. They reveal such things as the administrative machinations of the GC and others, misunderstandings about the need for s 21A directions, and delays in making progress to effect an appointment to the role of CEO THO South. The issue of the appellant's status after her transfer to THO South is a matter in this category, and has become an unnecessary distraction from the primary question. The facts were these: first there was a transfer of the appellant's employment under the transitional provisions in Sch 6, cl 3 of the THO Act. This transferred the appellant's employment to THO South. Within that newly created entity she acted as its CEO. The transfer did not affect an appointment to that role. As such no issue of circumvention of s 28(1) and (2) of the THO Act arises.
It appears the appellant was considered by all to be the CEO "in waiting".
The learned trial judge held that the position of CEO STAHS was an office created pursuant to s 29(4) of the State Service Act, and that neither the Notice (facts at viii above) nor anything in the Tasmanian Health Organisations Act (the THO Act) had the effect of appointing the appellant as CEO THO South. The evidence supports such a finding but I also regard this as an irrelevant matter because I consider that it has no bearing on the question of whether the position CEO STAHS continued to exist until it was abolished in 2014, such that, as a matter of fact and law, the appellant could be removed from that job because of changed operational requirements which made her position redundant.
It is unnecessary for the Court to make a finding that the appellant's employment was terminated because of an interim Integrity Commission report which raised questions about her conduct. The respondent's case was that it caused the GC to meet to consider whether it should maintain support for the appellant's appointment as CEO THO South, but that there were other concerns about her suitability. I observe that the appellant had not been afforded any opportunity to speak to the Integrity Commission report. (For that reason I do not think that it could fairly have been relied upon to justify termination). I do conclude however that the content of the report set in train a process culminating in the GC concluding that it could not maintain its recommendation that the appellant be appointed CEO THO South. In my view that was unfair.
The employment law context
Employment law is a branch of the law of contract. As in taxation and revenue cases, in employment law, enquiry focuses upon the substance of arrangements, such as contractual relationships, rather than the description applied to them. Whatever description is applied to an employment arrangement, it is the substance of the arrangement that is determinative of the relationship type. Thus the question of whether one is employed or is an independent contractor, is not determined according to the description attached to the engagement by the parties, but upon the substance of the relationship; factors such as control of the method of work, and responsibility for the provision of tools and equipment, as examples. As Gray J stated in Re Porter; re Transport Workers Union of Australia (1989) 34 IR 179 at [13]:
"Although the parties are free, as a matter of law, to choose the nature of the contract which they will make between themselves, their own characterisation of that contract will not be conclusive. A court will always look at all of the terms of the contract, to determine its true essence, and will not be bound by the express choice of the parties as to the label to be attached to it. As Mr Black put it in the present case, the parties cannot create something which has every feature of a rooster but call it a duck and insist that everybody else recognise it as a duck."
The law relating to redundancy is another example where consideration of the actual circumstances is required to determine whether there really is redundancy. An unfair dismissal claim does not arise where dismissal results from a "genuine redundancy"; see the Fair Work Act 2009, s 389. It is thus not unusual for dismissals to be characterised as "redundancies" to avoid consequences that might flow from termination of employment on other grounds. Such claims necessitate an examination of the circumstances to determine whether there is a genuine redundancy as a result of a change in the employer's operational requirements, and will the basis upon which a claim is decided, whatever the employer chooses to call it. The same approach is required in the resolution of this case.
Redundancy
I return to the primary question in this case: was there a redundancy?
Redundancy is a concept applicable to a position in a business; not to the person occupying the position. Redundancy of position is not a legal or industrial term of art, though there are many cases which examine the concept of redundancy, usually for the purpose of distinguishing it from other causes of retrenchment: Amcor v CFMEU [2005] HCA 10; 222 CLR 241 at [14].
In R v Industrial Commission of South Australia; Ex parte Adelaide Milk Co-operativeLtd (1977) 16 SASR 6 at 8, Bray CJ provided the now classic definition of redundancy: "a job becomes redundant when an employer no longer desires to have it performed by anyone".
A job involves "a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employer's organisation, to a particular employee"; Jones v Department of Energy and Minerals (1995) 60 IR 304, per Ryan J at 308. Where there has been a reorganisation of duties, if there is no longer any function or duty to be performed by a person, the job is said to be redundant.
"What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the re-organisation, any duties left to discharge. If there is no longer any function or duty to be performed by that person, his or her position becomes redundant in the sense in which the word was used in the Adelaide Milk Cooperative case." Jones v Department of Energy and Minerals (above).
The concept of changing operational requirements in this context was explained by Lee J in Nettlefold v Kym Smoker Pty Ltd (1996) 69 IR 370 at 373:
"The Act does not define 'operational requirements'. Obviously it is a broad term that permits consideration of many matters including past and present performance of the undertaking, the state of the market in which it operates, steps that may be taken to improve the efficiency of the undertaking by installing new processes, equipment or skills, or by arranging for labour to be used more productively, and the application of good management to the undertaking. In general terms it may be said that a termination of employment will be shown to be based on the operational requirements of an undertaking if the action of the employer is necessary to advance the undertaking and is consistent with management of the undertaking that meets the employer's obligations to employees."
What emerges from the cases is that the focus in answering the question, "is there a redundancy", is upon the existence of the job in question within the business. That means it is necessary to identify the business.
In Amcor (above) the facts were that Amcor operated a paper making business. Employee conditions were regulated by an agreement. In 1998 it restructured its operations, selling its paper making business to its subsidiary Paper Australia. The employees of Amcor were simultaneously terminated and offered employment at Paper Australia on the same terms. All accrued benefits and entitlements were preserved. The CFMEU claimed the employees of Amcor were entitled to redundancy payments.
At [14] Gleeson CJ and McHugh J said:
"The argument for the respondents treats 'position' as meaning 'position in the employment of Amcor', so that any change by which another legal entity became the employer would mean that the positions became redundant, unless Amcor proposed to employ other people to take their place. This approach is too narrow, and allows insufficient flexibility to accommodate the commercial and industrial realities with which the general terms of cl 55.1.1 had to deal. On the other hand, if the words are given the meaning for which the appellants contend, that is to say, position in a business, they are more readily capable of sensible adaptation to the circumstances of particular cases."
Gummow, Hayne and Heydon JJ at [51]-[52] interpreted the word "position" in cl 51.1.1 to mean "position in a business" as opposed to a "position with the employer". They held that the work being done by the employees was still required by the new company running the business, namely, Paper Australia, after the sale of the assets and the termination of the employees' employment by and with Amcor. It followed that no "job" was made redundant
The question becomes, "what is the business?" The business is that of providing health services to the community in the southern region. Accordingly the focus of this enquiry must be upon the job of CEO within that business.
It is clear that health services were never provided through STAHS and THO South simultaneously; there was never a CEO of each service engaged to lead each one as it delivered health services. Nor was there a merger of the two entities, STAHS with THO South with the result that there was a "surplus" CEO. There was only ever one active position of CEO in a service providing health services to the southern community, because there was ever only one business actively providing those services in the south.
At midnight on 30 June 2012 the business of providing those services, passed from STAHS to THO South. With that transfer, the duties of the position of CEO in the former business (STAHS) transferred to the position of CEO in the new business (THO South).
The approach taken in Amcor is apposite in this case. The respondent's case treats the "position" of CEO STAHS as meaning "position in the employment of STAHS", so that any change by which another legal entity became the employer, results in the CEO STAHS job ceasing to exist; it becomes redundant. Viewing the matter in terms of the business of delivering health services, it is obvious that there was no redundancy; the job of CEO of the business providing those health services continued. I do not think that the fact that additional duties attach to the role within THO South effects that conclusion because it is agreed that the duties in the STAHS role carried over to the THO South position. There is thus the requisite continuity of the position of CEO of the business providing health services to the southern community, to defeat the claim of redundancy.
For these reasons I hold that there was no redundancy. The circumstances necessary for the termination of the appellant's engagement pursuant to cl 2(b) in Sch 5 of her contract, had not therefore arisen.
It was because of the decision to terminate the appellant's employment for redundancy that she ceased to act as CEO THO South. Once that had occurred, Matthew Daley was appointed. To describe the appellant as redundant because Mr Daley had been appointed to act in the role is somewhat circular, but however described, it incorrectly focuses on the identity of the individual, not the job. The legal focus is on the job, not any person; R v Industrial Commission of South Australia; Ex parte Adelaide Milk Co-operativeLtd (above). The job was not redundant for the reasons I have given.
I consider the mechanism for the appellant assuming the role of CEO THO South was the transfer of the business of health services from STAHS to THO South; Sch 6 cl 3 transferred her employment to the new business. The settlement of personal terms once completed would have enabled the contract (or instrument of appointment) to be settled. As to the terms upon which the appellant acted as CEO, I hold that her contract continued, on its terms current at the time. It can be implied that the parties had informally re-entered an arrangement on the same terms and conditions which had governed their previous employment relationship, pending settlement of the new terms which were being negotiated in the expectation of the appellant's appointment. Such conclusion can be implied from all the facts; Damevski v Giudice [2003] FCAFC 252, 133 FCR 438, per Marshall J at [89]. In that case his Honour said
"[89] … Viewed objectively, it can be implied that Endoxos and Mr Damevski informally re-entered an arrangement in the nature of a contract of service on the same terms and conditions under which Mr Damevski had previously worked for Endoxos the preceding day."
Alternatively, it would be open to the court to hold that the terms of the original contract were simply transferred (rather than informally re-entered into) and applied "mutatis mutandis", pending settlement of new terms.
Abolition of the position CEO STAHS
The only remaining matter after the transfer of the business of STAHS in 2012, was the abolition of the position "CEO STAHS"; a position in a business which ceased to exist at midnight on 30 June 2012. That was a formal step, the position, by this time a mere shell; a title without functions; a label on a position tree for an entity that was no longer.
It was not done at that time STAHS ceased to exist. When it came to be done it was a case of tidying up an administrative "loose-end" and was not otherwise legally significant in the way the respondent contends to make the case for redundancy in order to justify the appellant's termination.
Unless there was some other reason for the appellant's termination which brought it within the terms of the contract of employment as a basis therefor, the respondent was in breach of contract when it terminated the appellant's employment.
Some performance issues were raised in evidence, and there was the matter of the interim Integrity Commission report, which I have mentioned. None of these issues was properly dealt with, in a procedural sense. The respondent did not engage the procedures required to be followed in the Employment Directions under s 48(3) of the State Service Act, or for breach of the Code of Conduct in s 9 of the Act. Accordingly the respondent cannot rely on those matters to assert a lawful termination of employment within the terms of the contract.
It was, of course, open to the respondent to withdraw from its plans to appoint the appellant to the position of CEO in the new business, but if it did so outside any of the agreed bases upon which the appellant's engagement could be ended, it breached the contract.
Conclusion
I find that the respondent breached the appellant's contract of employment. She is entitled to damages for that breach.
I hold that the learned trial judge erred in finding that the position CEO STAHS continued after 1 July 2012 and was the appellant's substantive position at the time of her termination.
I uphold ground 1 of the amended notice of appeal to the extent that I find that each of the conclusions of the learned trial judge particularised at (a), (b), (f) (g), (h) and (i) are incorrect.
I uphold ground 2 of the amended notice of appeal as particularised in pars (a) to (f). The learned trial judge erred in not holding in accordance with each of those matters. I do not accept that the findings referred to at paragraph (g) or (h) amount to errors, but nor do I think they affect the outcome, for the reasons I have given.
Damages
The appellant is entitled to damages calculated by reference to her salary and other allowances as contained in the contract of employment. She is entitled to employer superannuation payments under the Superannuation Guarantee Levy. Damages will be net of the redundancy payment and any mitigation. I note the quantum of the appellant's claim and the reference to the amended particulars of damage filed on 1 December 2016. I also note the respondent's contentions as to damages made at trial, and that it raises the further reorganisation of the health system on 1 July 2015 as relevant to quantification. This was not developed on the appeal. I would require further submissions before I could quantify the appellant's loss. In view of the outcome of this appeal that will not be necessary.
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