Horsman v Commissioner of Main Roads

[1999] FCA 406

FEDERAL COURT OF AUSTRALIA

Horsman v Commissioner of Main Roads [1999] FCA 406

INDUSTRIAL LAW – Industrial Relations Commission proceeding – undertakings by parties not to pursue proceedings in Court or Tribunal - undertaking by applicant to party to be bound by outcome - whether proceedings in Commission a private arbitration – functions exercised by Commissioner – whether agreement as to private arbitration – whether issue estoppel arises out of conciliation – whether estoppel by conduct arises.

Industrial Relations Act 1988 (Cth), s100, 101, 111

Commonwealth v Verwayen (1990) 170 CLR 394, discussed
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, applied
National Union of Workers v Pacific Dunlop Tyres Pty Ltd (1992) 37 FCR 419, applied

BARRY STANLEY HORSMAN v COMMISSIONER OF MAIN ROADS
W 111 OF 1997

R D NICHOLSON J

13 APRIL 1999

PERTH

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W 111 OF 1997

BETWEEN:	BARRY STANLEY HORSMAN Applicant
AND:	COMMISSIONER OF MAIN ROADS Respondent
JUDGE:	R D NICHOLSON J
DATE OF ORDER:	13 APRIL 1999
WHERE MADE:	PERTH

THE COURT ORDERS THAT:

Counsel be heard as to the appropriate form of orders.

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

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W 111 OF 1997

BETWEEN:	BARRY STANLEY HORSMAN Applicant
AND:	COMMISSIONER OF MAIN ROADS Respondent

JUDGE:	R D NICHOLSON J
DATE:	13 APRIL 1999
PLACE:	PERTH

REASONS FOR JUDGMENT

1. The applicant was formerly employed by the respondent under a Federal award as a plant operator instructor from 21 May 1990.  He alleges that on 7 October 1992 the respondent dismissed him, the dismissal was in breach of the terms of his contract and was harsh, unjust or unreasonable.  The applicant claims penalties for breach of an award and damages.

2. On 14 September 1998 French J delivered reasons for judgment in respect of three preliminary questions.  The third one was:

   “(3)Having regard to the Australian Industrial Relations Commission decision of Commissioner Laing in Australian Workers’ Union v Main Roads Department delivered on 6 November 1992 in which it was held that the Respondent had not acted harshly, unjustly or unfairly in terminating the Applicant’s employment, is this matter:

   (a)res judicata, and/or

   (b)subject to issue estoppel? ”

   When this preliminary issue came on for hearing before French J counsel for the respondent advised that reliance would not be placed on res judicata or issue estoppel but rather estoppel by conduct or agreement.  French J ruled that none of the preliminary questions, including the preliminary issue addressing only res judicata or issue estoppel, should be separately tried and the matter should go to hearing.

3. The respondent then amended his reply so as to rely upon the decision of Commissioner Laing as having determined the issues so that, by application of the doctrine of issue estoppel by conduct or agreement, it is not open to the applicant to argue to the contrary.

4. The hearing commenced on 15 December 1998.  Counsel for the respondent thereupon raised the question whether the new plea of estoppel should be dealt with as a preliminary issue.  He contended that there was no factual dispute that an agreement had been reached; the only question was a legal one as to the effect of that agreement.  Counsel for the applicant disputed the existence of an agreement.  It was then agreed between counsel that, as the trial would be a lengthy one, it would be appropriate for the new issues of estoppel to be dealt with as a preliminary issue.

   Estoppel Claims

5. For the applicant it is submitted that the respondent can now only prevent him from continuing with his claim if he can show:

   “(a)There was an agreement between the Applicant and the Respondent to hold a private arbitration which operated outside of the scope of the Industrial Relations Act (‘the Act’);

   (a)The Applicant and the Respondent agreed that they would each be bound by the decision of the Arbitrator and would not pursue the subject matter of the Arbitration in the Federal Court of Australia; and

   (b)The Arbitrator made a final decision with respect to the subject matter of the present Application before the Federal Court.”

6. However the respondent not only puts his case that way.  He also claims that whether or not there is an agreement the representation made by the applicant provides the basis of an estoppel.

7. For the purposes of making out his claim of estoppel the respondent’s case relies upon Commonwealth v Verwayen (1990) 170 CLR 394 at 409-412 per Mason CJ and at 443-445 per Deane J. It is convenient also to have in mind the summative and oft quoted statement by Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428‑429.

   Commission proceedings

8. On 9 October 1991 the Australian Workers’ Union (“the Union”) lodged a notification of dispute with the Industrial Relations Commission (“the Commission”) under s 99 of the Industrial Relations Act 1988 (“the Act”), notifying the Commission of an alleged industrial dispute.  The claim was in respect of the alleged unfair termination of the applicant’s employment for which compensation was sought.  The matter was the subject of a conciliation conference on 16 October 1991 which failed to resolve the dispute.

9. On 9 June 1992 the Union wrote to the applicant in response to an unsigned letter from him dated 28 May 1992.  The letter advised him the Union was willing to represent the applicant in the private arbitration before the Commissioner on 13 July 1992.  The letter stated:

   “Representatives of this Union have previously explained to you that Commissioner Laing is insisting that both parties to the private arbitration agree to be bound by its outcome prior to the private arbitration commencing.  If you do not give this undertaking then Commissioner Laing has indicated he will not privately arbitrate your unfair dismissal claim.”

   The letter advised that provided the applicant gave the necessary commitment, the Union would represent him at the private arbitration.  A form of indication of commitment was enclosed and the applicant was advised that if the signed form was not received by 6 July 1992 it would be assumed he would not wish to proceed with the private arbitration.

10. On 11 June 1992 the applicant wrote to the Commission stating that he did not consider the Commissioner had the right to request him to waive access to the judicial system.  On 17 June 1992 he wrote to the Commission requesting that another Commissioner be substituted for Commissioner Laing and that he have the right to appoint an independent advocate because of what he regarded as being the interests of the Union in protecting its members.

11. On 24 June 1992 the applicant wrote to the Union enclosing the signed requested form.  The form read:

    “I BARRY HORSEMAN, hereby confirm that I consent to my unfair dismissal claim against the Main Roads Department heard by Commissioner Laing of the Australian Industrial Relations Commission as a private arbitration and I further confirm that I will accept the outcome of the said private arbitration and will not seek to pursue this matter in any other tribunal or court.
    [Refer to Correspondence dated 24-6-92 ATT. Bruce Wilson A.W.U. Sec. [B.S.H.]

    SIGNED: [Signature.]
    DATE …23-6-92 ”

    The reference to “Correspondence dated 24-6-92” was a reference to a letter from him dated 26 June 1992 to the Secretary of the Union  in which the applicant stated he signed the form because without Union representation his action would fail as he, inter alia, lacked funds to pursue it in the Federal Court.

12. On 13 July 1992 the notification was listed for hearing before Commissioner Laing.  Mr Booth announced his appearance on behalf of the Union and Mr Taya on behalf of the respondent.  Commissioner Laing stated he had called on the matter to give the parties the opportunity to confirm on the record that the issue of jurisdiction was not alive and that all parties agreed that the Commission should hear and determine the application in final resolution of the claim for alleged unfair dismissal of the applicant from his employment with the respondent.  Mr Booth stated that the Union acceded to the Commission’s request the question of jurisdiction and would abide by the recommendations which would come out of the proceeding.

13. The Commissioner then stated the parties were not going to raise the issue of jurisdiction and were content to have the matters dealt with pursuant to the conciliation provision of the Act so that the Commission would conduct a private arbitration. He said the outcome would be binding because the parties were committed to it and not because of any powers in the Industrial Relations Act 1988 (Cth) (“the Act”). In so doing the Commission, he said, would be determining the issue “in private arbitration”. He said the decision would result in recommendations. He added: “the parties would be expected, because of the commitment that they have made, to comply with those recommendations.” He said he hoped this put the matter beyond any doubt in the mind of “Mr Booth, or your member’s mind or … Mr Taya” or his party. Mr Booth stated that was his understanding. Mr Taya proceeded to outline how the respondent’s case would proceed. In the course of so doing he said:

    “Main Roads does recognise the role of the commission in private arbitration and does give a commitment that it will abide by any recommendation of the commission in these proceedings.”

14. The matter was then adjourned until resumption on 30 July 1992 with a subsequent hearing date of 11 August 1992 and 27 August 1992. The transcript for each of those occasions is headed with the title of the Commission, the Commissioner, the matter number in the Commission and the parties, and with a description that the matter involved a notification pursuant to s 99 of the Act of a dispute concerning dismissal.

15. On 6 November 1992 the Commissioner handed down a written decision.  It was headed as follows:

    “AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

    Industrial Relations Act 1988

    s.99 notification of industrial dispute

    Australian Workers’ Union

    and

    Main Roads Department

    (C No. 60259 of 1991)

    AUSTRALIAN WORKERS’ UNION CONSTRUCTION, MAINTENANCE AND SERVICES

    (W.A. GOVERNMENT) AWARD 1987⁽¹⁾

    (ODN C No. 03002 of 1987)

    Plant operator inspector                 Road construction services

    COMMISSIONER  PERTH, 6 NOVEMBER 1992

    Termination of employment

    DECISION”

    Near the commencement of his reasons the Commissioner said:

    “The parties agreed, on 13 July 1992, that the Commission should deal with the matter as a ‘private’ arbitration as they were unable to reach agreement. This was understood to mean that the parties would not dispute whether the Commission had jurisdiction to deal with the claim and that they would accept a recommendation after presenting their respective cases. The parties also accepted that the Commission should make the recommendation as part of the conciliation of the matter and recognised that it would not result in any formal award or order. Although referred to as ‘private’ arbitration, I am satisfied that the true nature of the proceedings is not private in the sense of being an arbitration conducted outside of the boundaries of the Act and is instead properly before the Commission under the Conciliation powers, in particular under ss 100, 101, 102 and 111 of the Act, (see for example the Mack Trucks case: C No. 20474 of 1990 Print J7227).”

16. The sections referred to by the Commissioner as containing powers of conciliation provide as follows. Subsection 100(1) requires that where an alleged industrial dispute is notified under s 99 the relevant Presidential member shall, unless satisfied it would not assist the prevention or settlement of the alleged industrial dispute, refer it for conciliation. Pursuant to subs 100(2), where no such reference is made the Commission is required to deal with the alleged dispute by arbitration. Subsection 101(1) requires the Commission to determine the parties to the industrial dispute and the matters in dispute and record its findings although it also gives the Commission power to vary or revoke such findings. The powers of the Commission in relation to an industrial dispute are set out in s 111.

17. After reviewing the evidence the Commissioner concluded that on balance he was not able to find that the employer acted harshly, unjustly or unfairly.  However, he found that the employer should have provided more substantial notice to the employee.  He therefore strongly recommended that the respondent should provide an additional six weeks pay in lieu of notice to the applicant.

18. The written decision concludes with the words “by the Commission:  Commissioner” and those words are embossed with the seal of the Commission.

19. In the course of his reasons the Commissioner said that the materials before him involved 295 pages of transcript, extensive exhibits and the evidence of eight witnesses.

    Evidence in this proceeding

20. In his evidence-in-chief the applicant testified that the Union took the application to the Commission on his behalf.  Later he testified he did not know whether the Union was acting on his behalf – they had just said they would pursue the matter because they felt that on the information he had given them he was entitled to some sort of a hearing.  It became evident to him later that the Union was representing his interests and presenting his case.  In cross‑examination he said he agreed with the respondent to let Commissioner Laing decide the issue on the basis the parties agreed to be bound by the outcome before the Commissioner.  In cross‑examination he also testified that the respondent had paid him the money recommended by the Commissioner.

    Functions exercised by Commissioner

21. The distinction between private and industrial arbitration has been described in National Union of Workers v Pacific Dunlop Tyres Pty Ltd (1992) 37 FCR 419 at 424‑426 per Heerey J. At 426‑427 Heerey J referred to an entire absence of evidence that the judge there had been asked to act in “the unusual role of private arbitrator”. The same is true of the evidence here.

22. The Commissioner himself expressly abjured acting as a private arbitrator, stating in his reasons that he acted pursuant to the conciliation powers in the Act. There is no evidence of him having entered into an agreement to act as a private arbitrator. Nor is there any suggestion that he was offered or received payment for his services or that the consent of the Minister was sought pursuant to subs 25(1) of the Act for him to be engaged in paid employment outside the duties of his office.

23. The heading of the decision identifies it as a decision of the Commission.

24. Notification of the dispute had been given under s 99 of the Act. Consequently the Commissioner had the statutory obligation under s 100 of the Act to deal with the dispute by conciliation or arbitration. He purported to do that. That is entirely inconsistent with him conducting a parallel private arbitration at the same time.

25. As in Pacific Dunlop, so here: what the Commissioner did was consistent only with him exercising his industrial arbitration function under the Act. During ordinary working hours (as the transcript identifies) he received submissions from the parties, heard evidence and delivered a decision which on its face purports to be a decision of the Commission under his hand as a Commissioner and not an award of a private arbitrator. All of this was done with apparent acquiescence of the parties, including the respondent, who at no time suggested to the Commissioner that he should have been acting differently in a manner appropriate to a private arbitrator.

    Estoppel by agreement

26. The only evidence that an agreement was entered into between the applicant and the respondent is the evidence of the applicant in cross‑examination confirming an answer to a question that he had agreed with the respondent to let the Commissioner decide the issue.  The applicant was not giving a legal opinion as to the fact of agreement.  He was responding to a question putting to him a legal fact.  The existence of the fact receives no support from any other evidence.

27. There is no evidence which establishes any agreement between the applicant and the respondent.  Again as in Pacific Dunlop, the notification having been given under s 99, the matter was before the Commission. It suited the parties not to take the jurisdictional point. However there was no contract of mutual promises to achieve that. Rather two parties independently, for reasons which suited each one, took a similar course in relation to the Commission.

28. It is not contended for the respondent that consent (if it could be found) can create jurisdiction:  Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 163 cited in Pacific Dunlop at 427. However, here the respondent’s argument contends that both parties must have known there was no jurisdiction in law (as they did) and therefore there was an agreement to accept the Commissioner’s decision in his capacity as private arbitrator. On the evidence here it does not follow there was any agreement between the applicant and the respondent to treat the proceeding as a private arbitration producing a binding result. Again as in Pacific Dunlop at 427‑428, what occurred is explicable without resort to such a construction, for which in any event there is no support in the evidence.

29. Had an agreement been reached between the applicant and the respondent there is reason here which could have led to a finding it would have bound the applicant:  he had agreed with the Union to be bound by the outcome.  This was so although the applicant had no control over the hearing, no power over which witnesses were to be called and no right to instruct the Union to appeal:  cf Ejazzar v BHP Iron Ore Pty Ltd (1996) IR 40 at 43 per Madgwick J; Young v Public Service Board [1982] 2 NSW LR 456 at 466. This was also the case although the Union had not announced an appearance on behalf of the applicant. Mr Booth’s response to the Commissioner’s question, however, would support a finding the Union’s representative spoke also on behalf of its member, the applicant.

    Issue estoppel

30. As there was no private arbitration, there can be no issue estoppel arising out of a conciliation under the Act. See Australian Transport Officers Federation v State Public Services Federation (1981) 50 FLR 438 at 444‑447, followed in Pacific Dunlop at 428. See also Hatchett v Bowater Tutt Industries Pty Ltd (1990) 26 FCR 561 and Ejazzar at 43.

    Estoppel by conduct

31. I take the elements requiring consideration from Waltons Stores at 428‑429 per Brennan J.

32. (1)       Did the respondent assume or expect that as between he and the applicant a particular legal relationship would exist?

33. When each party gave an undertaking to the Commission to be bound by his recommendations, it can be inferred the respondent did so for the reason that the Commission could make recommendations to which both parties would be bound so that the dispute would be settled in accord with the Commission’s recommendations.  The assumption or expectation which the respondent had was that as between he and the applicant the issue of unfair dismissal would not be further litigated or reviewed.  It was thus an element of the assumed legal relationship that the applicant would not be free to proceed to the contrary.

34. (2)       Is there any evidence of any active inducement by the applicant of the assumption or expectation in the respondent?

35. In my view the relevant conduct of the applicant was his acquiescence in the undertaking given on behalf of the Union to the Commission.  The applicant knew that, as a consequence of his undertaking to the Union, any undertaking given to the same effect by the Union would bind him.  It was a step in the so-called private arbitration by the outcome of which he had agreed to be bound.  In sitting by while the Union gave the undertaking to the Commission, I consider the applicant acquiesced in the active inducement of the assumption or expectation.

1. There is in any event a further way in which this aspect can be approached.  In Walton’s Stores at 429 Brennan J said:

   “For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant’s property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff’s reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs."

2. The assumption or expectation here could only be fulfilled by a diminution of the respondent’s rights or an increase in his obligations, namely, the risk of being committed to comply with a recommendation from the Commission detrimental to its interests (as in fact occurred).

3. The applicant’s knowledge was that the Union would not represent him unless he gave its undertaking to it.  He also knew the Commission would not hear his application unless the Union and the respondent gave the commitment to be bound by the Commission’s recommendations.  He therefore knew that the respondent’s reliance on finality of proceeding concerning the alleged unfair dismissal was putting the respondent to the cost of participation in the proceeding and risk of commitment to compliance with the Commission’s recommendations.  It may be inferred it was therefore within the applicant’s knowledge that if the assumption or expectation of such finality was unfulfilled, the respondent would face the further cost of other proceedings and further risk of other orders with which to comply.

4. It is patent from the evidence the applicant failed to deny to the respondent the correctness of the assumption or expectation.  He could not do so in any event because of the terms of his commitment to the Union.

5. I therefore consider the second limb is established.

6. (3)       Is there evidence the respondent acted in reliance on the assumption or expectation?

7. In my opinion it is a clear inference that the respondent acted in reliance on the assumption or expectation of finality to litigation or review.  He did so in giving his undertaking to the Commission.  He did so in making payment to the applicant in compliance with the Commission’s recommendations.

8. (4)       Is there evidence the applicant knew or intended the respondent to act in reliance on the alleged assumption or expectation?

9. The applicant knew the Union would not appear to argue his case unless he gave his undertaking to be bound by the outcome to it.  He also knew the Commission required both the Union and the respondent to give the same commitment to the Commission.  He therefore knew that his application would not be heard and determined in the Commission unless the assumption or expectation of finality was made real by such commitments.  He must therefore have known or intended that the respondent should act upon such assumption or expectation for otherwise his application could not have been so determined.

10. (5)       It is patent that if the assumption or expectation of finality is unfulfilled, the respondent’s action in paying the applicant will occasion detriment to the respondent.

11. (6)       It is also patent the applicant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation of finality or otherwise.

    Conclusion

12. For these reasons I consider that the respondent cannot make out his claim of estoppel by agreement or issue estoppel but does succeed in establishing estoppel by conduct.  Counsel will be invited to make submissions on the form of orders which will achieve “proportionality between the remedy and the detriment which is its purpose to avoid”:  Verwayen at 413 per Mason CJ.

I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice R D Nicholson.

Associate:

Dated:             

Counsel for the Applicant:	Mr D. Van Zalm
Solicitor for the Applicant:	S C Nigam & Co
Counsel for the Respondent:	Mr J. O’Sullivan
Solicitor for the Respondent:	Crown Solicitor of Western Australia
Date of Hearing:	17 December 1998
Date of Judgment:	13 April 1999