Innes v University of Adelaide (No.2)
[2007] FMCA 1988
•4 December 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| INNES v UNIVERSITY OF ADELAIDE (No.2) | [2007] FMCA 1988 |
| INDUSTRIAL LAW – Employment – claim of unfair termination of employment – whether applicant was an employee bound by a fixed term contract or a full time employee – where inconsistent terms – interpretation and relevance of surrounding circumstances. |
| Workplace Relations Act 1996 (Cth) |
| Metropolitan Health v ANF [2000] 176 ALR 46 Oxford Dictionary of Law (5th ed, Oxford University Press, 2002) |
| Applicant: | JOHN MICHAEL INNES |
| Respondent: | UNIVERSITY OF ADELAIDE |
| File Number: | ADG 127 of 2007 |
| Judgment of: | Raphael FM |
| Hearing date: | 29 October 2007 |
| Date of Last Submission: | 29 October 2007 |
| Delivered at: | Adelaide |
| Delivered on: | 4 December 2007 |
REPRESENTATION
| Counsel for the Applicant: | Mr R Manuel |
| Solicitors for the Applicant: | Gun & Davey |
| Counsel for the Respondent: | Mr T L Stanley QC |
| Solicitors for the Respondent: | Minter Ellison |
ORDERS
Parties to bring in Short Minutes giving effect to these reasons within 14 days together with submissions upon the reserved costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADG 127 of 2007
| JOHN MICHAEL INNES |
Applicant
And
| UNIVERSITY OF ADELAIDE |
Respondent
REASONS FOR JUDGMENT
(As corrected)
Introduction
In 2002 Professor Innes left his tenured position as Dean of the School of Psychology at Murdoch University and accepted the post of Executive Dean in the Faculty of Humanities and Social Sciences of the University of Adelaide. He considered the post a promotion and he entered into correspondence about the contractual arrangements with the Vice Chancellor, Professor CD Blake AO. The contract he signed on 29 May 2002 was prepared by the University. Professor Innes did not take legal advice upon it. It was expressed to run for 3 years from 29 July 2002 to 28 July 2005. Prior to its termination Professor Innes was offered an extension of two years in accordance with the letter of offer from the University dated 26 November 2004. He took the extension and entered into a new agreement on 9 December 2004. That agreement was expressed to terminate on 28 July 2007. The University allowed it to terminate. Professor Innes believes that by doing so the University has repudiated the agreement it had with him. He does not accept the repudiation. He claims he is still employed by the University as a full-time employee. He seeks relief from this court.
The University denies liability to Professor Innes. It says that the arrangements between it and the Professor, properly construed, constitute a fixed term contract that the University was not required to renew. That contract has terminated and it has no further obligation under it to the Professor. It denies a breach of contract and any breach of the Workplace Relations Act 1996. The parties have agreed that I should first make findings on the breach of contract. If I should find in favour of the applicant Professor I will hear the parties upon the alleged breaches of the Workplace Relations Act.
The issue with which the court must grapple is whether it should ignore the existence of a termination on notice provision in the contract “to give effect to the clear intention of the parties” [per the University] or to hold the parties to the arrangements that they did enter into that would define the contract as a contract of “full-time employment” requiring termination, relevantly, only on giving six months’ notice which has not been given [per the applicant].
The documents
The first offer of appointment was made by the then Vice Chancellor CD Blake AO to Professor Innes on 29 May 2002 [JMI 2] to the affidavit of Professor Innes. The relevant parts of the letter of offer are extracted below:
“Dear Professor Innes
I write to offer you an appointment to the position of Executive Dean, Faculty of Humanities and Social Sciences, with a suitable commencement date to be negotiated but not later than 29 July 2002. A contract of employment between the University of Adelaide and yourself is enclosed for signature if you wish to accept the offer of employment on the terms detailed in the contract.
…
Your appointment will be held in accordance with the terms and conditions set out in this agreement and the University of Adelaide Enterprise Certified Agreement 2000-2003, as varied from time to time. A copy of the Agreement may be inspected in your department office or Human Resources web page: <
…
Please sign and return the attached two copies of the contract of employment to me. I will then sign on behalf of the University of Adelaide and return one signed copy to you. You should also complete the enclosed Credit Authority for Whole of Net Pay Form and Tax File Number Declaration Form and return these documents with the signed copies.”
The letter from the Vice Chancellor was responded to by Professor Innes on 6 June 2002 [JMI 3]:
“Dear Professor Blake
Executive Dean, Faculty of Humanities and Social Sciences
With this letter I have sent a formal letter of acceptance of the above position, under the terms of the contract offered. I wish here to raise other matters regarding the functioning of the office of Executive Dean and its necessary support.”
Nothing in the remainder of that letter refers to the term of the contract or to the certified agreement. The actual contract of employment dated 6 June 2002 [JMI 6] contains the following relevant clauses:
“AGREEMENT
1. Appointment
1.1The University appoints the Employee and the Employee agrees to serve the University as Executive Dean, Faculty of Humanities and Social Sciences (or such other position as determined by the University from time to time) on a full time basis for a period of three (3) years, renewable annually by mutual agreement. [emphasis added]
…
7.Performance Review
Annual performance reviews will be conducted by the Deputy Vice-Chancellor (Education) and Provost having regard to performance indicators determined by the Deputy Vice-Chancellor (Education) and Provost in consultation with the Employee. The performance indicators may be varied by the Deputy Vice-Chancellor (Education) and Provost from time to time 12 months after the commencement of this agreement.
…
12.Termination
12.1 Either party may terminate employment by giving to the other written notice for a period of not less than three (3) months. The University may give pay in lieu of notice. (emphasis added)
12.2 The University may terminate the Employee’s employment at any time without notice if the Employee:
12.2.1 commits a wilful breach or neglect of the terms of this agreement;
12.2.2 is physically or mentally unfit to perform any duty under this agreement for a period of 90 days in any twelve (12) month period or any additional period determined by Council paying cognisance to the years of service, nature of the medical condition and the Employee’s sick leave record.”
On 26 November 2004 Professor McWha who was now the Vice Chancellor wrote to Professor Innes [JMI 8]:
“Dear Mike
Re:Further Appointment as Executive Dean, Faculty of Humanities and Social Sciences
I have pleasure in offering you a further appointment to the position of Executive
Dean, Faculty of Humanities and Social Sciences on a full time basis, and Adjunct Professor in the Department of Psychology for the period 29 July 2005 to 28 July 2007.The appointment is offered subject to your acceptance of the conditions and requirements set out in the contract of employment and the enclosed documents. You should read all of these papers carefully. …
During the period of appointment you will be responsible to the Deputy Vice-Chancellor and Provost. This contract of employment includes a role statement. Key Performance Indicators for 2005 will be developed and agreed with the Deputy Vice-Chancellor and Provost shortly.
If you agree to accept this further contract, could you please sign and return one of the attached copies of the employment contract to me at your convenience.
If you have any further queries please contact Mrs Sue Turner in Human Resources on extension 33804.
I look forward to receiving your acceptance of this further contract and continuing our working relationship.
Yours sincerely
PROFESSOR JAMES A. McWHA
Vice-Chancellor and PresidentEnclosures: Contract of Employment (2 copies)
Salary package spreadsheet”The corresponding agreement dated 20 November 2004 [JMI 9] contains the following relevant clauses:
“AGREEMENT
1. Appointment
1.1The University appoints the Employee and the Employee agrees to serve the University as Executive Dean of the Faculty of Humanities and Social Sciences on a full time basis (or such other position as determined by the University from time to time) and Adjunct Professor in the Department of Psychology, for the period 29 July 2005 to 28 July 2007. This is a fixed term appointment pursuant to clause 41.5.7 of the Enterprise Certified Agreement 2000 – 2003 and any replacement agreements and subsequent clauses. [emphasis added]
…
13.Termination
13.1Either party may terminate employment by giving to the other written notice for a period of not less than three (3) months. The University may give pay in lieu of notice.”
The letter advising Professor Innes that his contract was not to be extended was written from the office of the Deputy Vice Chancellor (Academic) Professor Fred McDougall [JMI 10]. It stated:
“Dear Mike
I am writing to confirm the situation in regard to your request for a further term as Executive Dean of the Faculty. As discussed with you early this week, the Vice-Chancellor has decided that he does not wish to offer you a third term as Executive Dean. He wants to see a competitive appointment process put in place for this position. He also wants to see this process start this year to ensure that an appointee is able to commence at the expiry of your current contract on the 28 July 2007.
He has asked me to manage the appointment process in regard to this position. At this stage, I intend to start the appointment process at the end of September 2006, with the development of selection criteria and an information memorandum for the position, and the possible briefing of a recruitment agency to undertake the search task.
It is probably unnecessary to say this, but you have my full support and confidence in fulfilling your current role for the remainder of your contract period.
Yours sincerely
PROFESSOR FRED MCDOUGALL
Deputy Vice-Chancellor (Academic)”That letter was responded to by Professor Innes on 26 October 2006 in a letter to Vice-Chancellor McWha [JMI 11] which relevantly states:
“Dear Vice-Chancellor
I am writing to you with respect to the decision by you not to extend my contract beyond 2007 for the position of Executive Dean, Faculty of Humanities and Social Sciences.
I would like to have in writing the reasons why this decision has been made. I have had no explicit or clear reasons given to me.
In any performance review with the previous Deputy Vice-Chancellor (Academic), Professor Penny Boumelha, at no time was any performance indicator identified as unsatisfactory. Quite to the contrary all indicators indicated highly satisfactory performance. In any meeting with the incoming Deputy Vice-Chancellor, Professor Fred McDougall, no discussion of performance indicators occurred and certainly there was no indication of any concerns.
It is the case, therefore, that while I was aware, of course, that my contract could be terminated, no indication was given, explicitly or implicitly, that I was acting in a manner that would result in termination. With proper performance management it would seem appropriate that indication would be given that I was seen, in some sense, to be acting unsatisfactorily. That the performance indicators were changed without notice would, in itself, I think be indicative of inappropriate management practice. A failure to provide me with appropriate feedback that I was seen as failing to manage property is a further problem.”
Professor McWha replied to Professor Innes on 13 November 2006 [JMI 12]:
“Dear Mike
I am responding to your letter of 26 October which arrived on the day I left for overseas, so I apologise that it was not possible to respond to you more speedily.
The terms of your appointment as Executive Dean do not provide for an automatic right of renewal, and the University does not propose to move along those lines. You have had the responsibility of leading the Faculty in a time of transition and consolidation. Having taken advice, my view is that a change is needed, going forward. The decision not to offer a further contract has been made not in response to perceived shortcomings, but out of a recognition that a different skill set is needed for the future.
While I realise this decision is difficult for you, I hope that you will accept that it is made in what I believe are of the best interests of the Faculty and the University. I likewise hope that we can work towards a transition that encompasses not only the ongoing responsibilities of your office, but a fitting celebration of you contribution.
With regard to your future plans, I am happy to act as a referee for you, and assure you of my clear support in this regard.
Best regards,
PROFESSOR JAMES A. McWHA
Vice-Chancellor and President”The final document is the University of Adelaide Enterprise Certified Agreement 2000-2003 of which the relevant terms seem to be the following:
“3 INTENT AND OBJECTIVES OF AGREEMENT
3.3The parties agreed that they should be aiming for improved conditions of employment for all staff members including improving salaries and job satisfaction, so that the University is seen and appreciated as an employer of choice by current and potential staff members.
3.4The parties accept that the Enterprise Agreement is a key means by which the University achieves its strategic mission and strategic objectives, and agree that they should achieve and maintain a productive partnership in pursuit of this mission and objectives.
3.5The parties commit to the provision of an environment which seeks to provide employment security to staff.
5 APPLICATION
5.1This Agreement shall be binding according to its terms upon:
(i) The University of Adelaide;
(ii) the National Tertiary Education Industry Union (NTEU)
(iii)the Australian Liquor, Hospitality and Miscellaneous Workers Union (ALHMWU);
(iv)The Australian Municipal Administrative, Clerical and Services Union (ASU);
(v)The Community and Public Sector Union SPSF Group (SA Branch (CPSU); and
5.2shall apply to all academic and general staff employment by the University of Adelaide who are members or eligible to be members of the above named unions and to each staff member of the University of Adelaide eligible for membership of these unions.
11 INDIVIDUAL CONTRACT EMPLOYMENT
A staff member in the positions listed below may enter into an agreement with the University which may provide:
· A term for the contract, or a specific body of work or a project as agreed;
· An agreed salary for the life of the contract; and
· The conditions under which the contract is to be performed, in any performance standards and measures.
Positions
· Vice-Chancellor
· Deputy Vice-Chancellors
· Executive Directors
· Pro Vice-Chancellors
The terms of this Agreement other than this clause, and any Awards of the AIRC shall not apply to the employment of that staff member except in relation to annual recreation leave, long service leave, sick leave and family leave specified in this Agreement and superannuation under the UniSuper scheme for as long as that staff member continues to hold that position.
EMPLOYMENT STANDARDS
41.1The University shall engage a person as a staff member on terms that correspond with one or other of the types of employment prescribed in this section and in accordance with this agreement. To avoid doubt nothing in this agreement prevents a staff member engaging in additional work as a casual staff member in work unrelated to, or identifiably separate from, the staff member’s normal duties. Nothing in this Agreement and, after the making of this Agreement, nothing in any agreement covering staff members to which this Agreement applies, shall limit the number or proportion of staff members that the University may employ in a particular type of employment.
41.2Full-time employment means all employment other than “fixed-term”, “part-time”, or “casual”. Full-time employment may contain a reasonable probationary period that is directly related to the nature of the work to be carried out under the contract. As a condition incidental to employment on probation, a staff member shall be advised of, and given an opportunity to make response to, any adverse material about the staff member which the University intends to take into account in a decision to terminate the employment upon or before the expiry of the period of probation.
41.4Fixed-term employment means employment for a specified term or ascertainable period, for which the instrument of engagement will specify the starting and finishing dates of that employment, (or in lieu of a finishing date, will specify the circumstance(s) or contingency relating to a specific task or project, upon the occurrence of which the term of the employment shall expire), and for which, during the term of employment, the contract is not terminable, by the University, other than during a probationary period, or for cause based upon serious or wilful misconduct. [emphasis added]
Fixed-term employment may contain a reasonable probationary period that is directly related to the nature of the work to be carried out under the contract. As a condition incidental to employment on probation, a staff member shall be advised of, and given an opportunity to make response to, any adverse material about the staff member which the University intends to take into account in a decision to terminate the employment upon or before the expiry of the period of probation. Any second or subsequent fixed-term contract with the same employer shall not contain a probationary period.
41.5The use of “fixed-term employment” shall be limited to the employment of a staff member engaged on work activity that comes within the description of one or more of the following circumstances:
…
41.7Senior contract positions
A staff member in the positions listed below or their successor positions may enter into fixed-term contract with the University:
· Executive Deans
· Director, Executive Services
· General Manager, Client Services
· General Manager, Human Resources
· General Manager, Information Technology Services
· Financial Controller
· University Librarian
· Director, Research Branch
If the need arises, the parties agree to negotiate the inclusion in this clause of other new positions that have similar characteristics to the above-mentioned positions.
47 TERMINATION OF EMPLOYMENT AND DISCIPLINARY ACTION
47.9Notice of Termination
47.9.1 Subject to clause 47, employment shall be terminated by either notice in writing on either side given at anytime subject to the payment or forfeiture, as the case may be, or salary equivalent to that which would have been paid during the period of notice, unless otherwise mutually agreed between the parties. The period of notice required shall be:
Academic Staff
(i) Higher Degree Research Fellows (1 month)
(ii) all other academic staff (6 months)”
Evidence
The evidence of Professor McWha is that he intended the second contract to be a fixed term contract as permitted by the certified agreement. After receiving certain feedback from the faculty headed by Professor Innes he came to the view that it would be in the best interests of the University if the contract was not renewed. Any decision in relation to renewal of the contract was to have been made by Professor McWha. Professor Innes thought that he had a fixed term contract but that it would be renewed from time to time provided the performance reviews were satisfactory. There is no evidence they were not satisfactory so he expected that the contract would be renewed for a further term from 29 July 2007. It is not suggested that Professor Innes ever read the certified agreement in any detail or concluded at the time of signing either of the two agreements that he was, in reality, a full time employee. But he now believes he is such based upon legal advice. The University has not disputed that Professor Innes has not accepted what he argues is the University’s repudiation of the full time agreement by bringing his employment to an end as of 28 July 2007.
Discussion
The parties agree, and if they had not done so I would have so found, that the primary document relating to the employment of academics at the University of Adelaide is the Certified Agreement. It is the Certified Agreement that permits the employment of academics and defines the terms under which they can be employed. The only exception to this rule is the employment of persons such as the Vice Chancellor and the Deputy or Pro Vice Chancellors who are specifically excluded. [Cl 11 in [5]] Professor Innes is not one such. The position to which he is appointed is a position which permits of employment either under the category of full time employment or fixed term employment. In coming to an employment relationship with Professor Innes the University had to produce a document that fell within one or the other of these categories. The University purported to bring the contract within the fixed term category by making a reference not to the definition of “fixed term” contained in the enterprise agreement but to the categories of persons who were entitled to enter into such an arrangement. The University then inserted into the contract clause 13 providing for notice, which was specifically prohibited under the definition of fixed term employment in clause 41.4 of the Certified Agreement. To that extent the contract is inconsistent with a fixed term employment and the applicant argues that if his contract is not one of fixed term employment then it must be of full time employment by virtue of the definition “full time employment means all employment other than fixed term, part time or casual.”
It has not been suggested that by the respondent that Professor Innes was able to contract out of the Certified Agreement nor that his actions in accepting the agreements in the terms that they were written, he was somehow estopped from raising the arguments that he now raises to bring his relationship with the University within the terms of the certified agreement. There would have been considerable difficulties in doing this given the views expressed in Metropolitan Health v ANF [2000] 176 ALR 46 at [24] and [25] and the cases therein cited. The respondents seek to argue their position on the basis of interpretation of contracts and rules of construction. In particular:
“The applicant’s contract of employment, like any deed, must be read as a whole in order to ascertain the true meaning of several clauses. The words in each clause should be interpreted so as to bring them into harmony with the other provisions if that interpretation does no violence to the meaning of which they are naturally susceptible North Eastern Railways v Hastings [1900] AC 260 per Lord Davey at [267].” [Respondent’s submissions]
The current law relating to inconsistent terms and the use of surrounding circumstances to ascertain the real intention of the parties can be shortly expressed.
The issue of repugnancy can arise when there is a contradiction or inconsistency in the terms of a document: see Oxford Dictionary of Law (5th ed, Oxford University Press, 2002).
The original principle of law that was applied to identify the prevailing clause in a case of repugnancy was set out in Forbes v Git [1922] 1 AC 256, where it was stated at 259:
“If in a deed an earlier clause is followed by a later clause which destroys altogether the obligation created by the earlier clause, the later clause is to be rejected as repugnant and the earlier clause prevails.”
However, in more recent times, the preferred method of identifying a prevailing clause in a contract or deed has been set out in Chitty on Contracts (Vol. I, London Sweet & Maxwell, 2004) at 744, where it is stated:
“Where the different parts of an instrument are inconsistent, effect must be given to that part which is calculated to carry into effect the real intention of the parties as gathered from the instrument as a whole, and that part which would defeat it must be rejected. The old rule was, in such a case, that the earlier clause was to be received and the later rejected, but this rule was a mere rule of thumb, totally unscientific, and out of keeping with the modern construction of documents. To be inconsistent a term must contradict another term or be in conflict with it, such that effect cannot fairly be given to both clauses. A term may also be rejected if it is repugnant to the intention of the parties as it appears from the document. However, an effort should be made to give effect to every clause in the agreement and not to reject a clause unless it is manifestly inconsistent with or repugnant to the rest of the agreement.” (emphasis added)
In Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 348 Mason J recognised that evidence of surrounding circumstances is admissible in aid of interpreting the construction of a contract. His Honour at 350 relied on a statement by Lord Wilberforce in Reardon SmithLine v Hansen-Tangen (1976) 1 WLR 989, at 995-996, acknowledging that it is legitimate for the court to explore the surrounding circumstances to identify the preferred construction of a contract:
“In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating.”
Mason J proceeded at 352 to consider the rule to be applied when considering the surrounding circumstances:
“The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.”
In regards to the principle of surrounding circumstances as stated in Codelfa, the High Court in Toll (FGCT) Pty Limited v Alphapharm Pty Limited and Others (2004) 219 CLR 165 and Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 has set out to clarify the accepted approach to be taken by Australian courts.
In Toll at [40], their Honours (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ), making reference to the court’s earlier decision in Pacific Carriers, expanded on what is now recognised as the correct approach to be taken:
“This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.”
More recently, in Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2006] FCAFC 144 Lander J confirmed the principle with reference to Pacific Carriers at [251]:
“It is now clear and settled law that the meaning of commercial contracts and documents is to be determined objectively. To determine the objective intention of the parties regard must be had, of course, to the words in the document themselves, but regard should also be had to all of the surrounding circumstances which were known to the contracting parties at the time the document was created including the underlying purpose and object of the commercial transaction: Pacific Carriers per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ at [22].””
The respondent relies very heavily on what fell from Wicks J (with whom Debelle and Williams JJ agreed) in Amec Engineering Pty Ltd v Shanks (2001) SASC 257 at [36] and [37]:
“[36] If there are two clauses or parts of a deed repugnant to each other the first will be received and the latter rejected unless there is some special reason to the contrary: Bateson v Gosling [1871] LR 7 CP 9, per Willes J at p 12. If in a deed an earlier clause is followed by a later clause which destroys altogether the obligation created by the earlier clause, the later clause is to be rejected as repugnant and the earlier clause prevails: Forbes v Git [1922] 1 AC 256 at p 259. Repugnancy arises where one provision is contrary or contradictory to another or where one provision is inconsistent or incompatible with another. That is the case here. The rule as to repugnancy has been described as an expedient to which the court very reluctantly has recourse, and never until it has exhausted every other means in its power to reconcile apparent inconsistencies: Bush v Watkins (1851) 14 Beav 425 at p 432. In the present case we are not concerned with a deed but rather with a contract in writing. I see no reason why this rule should not be applicable to such an instrument. The rule is subordinate to the general principle that the intention must be ascertained from the entire contents of the document. Hence, when one clause is in accordance with, and the other is opposed to, the real intention, the former must be received and the latter rejected whatever their relative positions: Halsbury's Laws of England, 4th Ed vol 12 par 1504.
[37] In my opinion, the paragraph in the letter of 2 February 1998 as to notice by monthly agreement to which I have referred should be ignored. It is contradictory to the paragraph dealing with the minimum service period of two years as this paragraph is clearly fundamental to the entire contract.
The respondent argues that I should follow Amec and strike out from the agreement the notice clause. The difficulty I have with this approach is twofold. First, I am of the view that Amec can be distinguished from the case presently before me. Mr Shanks took up employment with Amec on the basis of certain representations made to him by the manager Mr MacDougall. He was to move from Mt Gambier to Roxby Downs and become branch manager of Roxby Downs and Olympic Dam. He was told by Mr MacDougall that the position would be one for two years after which he could continue at Roxby Downes or alternatively a position would be made available to him in Adelaide without the Roxby Downs remote site allowance. The written contract contained the following terms:
“The terms of employment in this position will be a minimum of two years and you will be reporting to the manager of the maintenance and shutdown division (Mr Hugh MacDougall) based in Adelaide. … We confirm that the notice of termination of employment as stated in the attached terms and conditions is by monthly agreement”.
After considering at [25] the principles relating to the method by which a court should ascertain the true meaning of an agreement, Wicks J opined at [29] and [30]:
“[29] The clear intention of the letter is that the plaintiff will serve the defendant for a minimum period of two years at Roxby Downs, that during that period the plaintiff cannot be removed from his employment with the defendant as Branch Manager – Roxby Downs and Environs – unless there has been misconduct, neglect, incompetence of unsatisfactory performance. After the expiration of the two year period, either party could terminate the agreement on one month’s notice. The qualification relating to misconduct etc will be discussed later in these reasons.
[30] While the clause in the letter relating to the two year period clearly overrides anything in the Terms and Conditions, there is a difficulty in the letter itself. Early on, the letter makes it clear that the period of employment is for a minimum of two years. However, at the end of the document the following paragraph appears:
We confirm that the notice of termination of employment as stated in the attached ‘terms and conditions’ is by monthly agreement.”
The court dealt with the anomaly by applying the rules of construction extracted at [13] of these reasons before saying at [37]:
“[37] In my opinion the paragraph in the letter of 2 February as to notice by monthly agreement to which I referred should be ignored. It is contrary to the paragraph dealing with the minimum service period of two years as this paragraph is clearly fundamental to the entire contract.”
but then went on to say at [38]:
“[38] It was alleged by the defendant in the Notice of Appeal that the learned Judge erred in finding that a contract of employment reached between the parties did not contain a clause allowing the defendant to terminate the plaintiff’s employment on one month’s notice. On that point, I am of the opinion that the learned trial Judge was correct in finding that the defendant could not terminate the plaintiff’s employment on one month’s notice during the two year period in which the plaintiff was required to serve as branch manager at Roxby Downs except in the case of misconduct etc. The first ground of appeal must therefore fail.”
It seems to me that although the court appeared to deal with the matter on the basis of two competing clauses, what it in fact did was to read the contract so that it reflected the agreements reached between the parties, relying on the terms of the agreement itself and such evidence as to the surrounding circumstances as was permitted by the High Court in Codelfa. The court found, using those rules of construction that there was room both for the expressed two year term and for the notice period once the two year term had expired.
The second matter that concerns me is the primacy of the Certified Agreement. There is not just one inconsistency in this case. There is the clear inconsistency within the agreement that is expressed to be for a fixed period of time but which contains a notice period and there is also the inconsistency between that internally inconsistent agreement and the certified agreement. The term as to notice that was contained in the agreement with Professor Innes was not capable of being contained either in a fixed term agreement or in a full time employment agreement with an academic. If the University had sought to act on that clause the primacy of the certified agreement would have been invoked and the six months’ notice term substituted. But the primacy of the certified agreement would also have prevented Professor Innes from arguing that he was entitled to any more than six months’ notice because the agreement that he had actually signed was a full term employment agreement and not a fixed agreement, unless it could be said that the objective intention of the parties was to create a fixed term agreement.
What then was the objective intention of the parties? A similar question faced the Industrial Relations Court of Australia in Anderson v Umbakumba Community Council (1994) 126 ALR 121. In that case the plaintiff was employed under an agreement which commenced on 5 April 1993 and was to cease at the close of business on 4 April 1995. That allowed the respondents to argue it was a contract of employment for a specified period of time which was excluded from the operation of the relevant provisions of the Industrial Relations Act 1988 (Cth) by regulation 30B(1)(a) of the Industrial Relations Regulations. But the contract also contained a clause permitting the employer to terminate the agreement at any time before the expiration of the period for a number of events which included the giving of two weeks notice in writing. Von Doussa J held at [126]:
“[126] In the present case cl 3 and Sch 1 of the employment agreement clearly state both a commencement date for the employment and a cessation date, but in light of the right on either party to the contract arising under cl 21(c) to bring the employment to an end on two weeks’ notice, and the right of the employer under cl 21(d) to bring the employment to end without notice on payment of two weeks salary, the cessation date merely records the outer limit of a period beyond which the contract of employment will not run. … Within the period stated in Sch 1 the period of the contract of employment is indeterminate.”
And at [127]:
“In this case, however, the unqualified rights to terminate without reason under cl 21(c) and cl 21(d) make it clear, in my opinion, that the contract cannot be so characterised.” [As a contract of employment for a fixed time]
I have come to the conclusion that the proper interpretation of the agreement between the University and Professor Innes is that of employment as a full time employee and not pursuant to a fixed term agreement. My reasons for coming to that conclusion can be found from an analysis of the second agreement between the parties the surrounding circumstances which commence with a letter from Professor McWha to Professor Innes dated 26 November 2004 that states in its first paragraph:
“I have pleasure in offering you a further appointment to the position of Executive Dean, Faculty of Humanities and Social Sciences on a full time basis, and Adjunct Professor in the Department of Psychology for the period of 29 July 2005 to 28 July 2007.”
Clause 1 of the Agreement dated 20 November 2004 signed by Professor Innes and the Vice-Chancellor states:
“The University appoints the Employee and the Employee agrees to serve the University as Executive Dean of the Faculty of Humanities and Social Sciences on a full time basis (or such other position as determined by the University from time to time) and Adjunct Professor in the Department of Psychology, for the period 29 July 2005 to 28 July 2007. This is a fixed term appointment pursuant to Clause 41.5.7 of the Enterprise Certified Agreement 2000 to 2003 and any replacement agreements or subsequent clause.”
Although clause 1.1 of the Agreement states that the appointment is a fixed term appointment pursuant to clause 41.5.7 of the Certified Agreement, it was not. It contained a clause that was anathema to clause 41.5.7 being the clause providing for three months’ notice to terminate the agreement. A document does not become a particular type of agreement just because it says it is one. It has to be consistent with such an agreement. The court examines both the substance and the effect of such agreements: see Radaich v Smith (1959) 202 CLR 209; Commissioner of State Revenue v KJRR Pty Ltd (1997) 97 ATC 5079. For example, it is established in the case of leases and licenses that an express statement that an agreement is a lease is not necessarily determinative of the document’s nature: see, for example Attorney-General (Vic) v Geelong Harbour Trust Commissioners [1933] VLR 244; ICI Alkali (Australia) Pty Ltd (in vol liq) v Commissioner of Taxation of the Commonwealth of Australia [1977] VR 393 at 400 per McInery J (see also Halsbury’s Laws of Australia at [245-5]).
There is no reference to a fixed term in the letter of offer, the words used being ‘full time’, so nothing can be gained from that. There is nothing in the definition of ‘full time employment’ in the Certified Agreement which prevents an agreement being entered into between the University and the Professor for a particular period subject to notice as permitted by the certified agreement. The ‘fixed term’ concept does not permit of notice. It seems to me to do less damage to the principles of interpretation of documents as outlined in these reasons to find that the parties intended to enter into an agreement to employ Professor Innes for the period mentioned, subject to the certified agreement’s requirement of six months’ notice either at any time during the currency of the arrangement or at what would otherwise be its conclusion. The three month notice period would be deleted and the six month period substituted pursuant to the primacy of the certified agreement. Interpreting the contract in this way avoids the necessity of invoking the rules relating to repugnancy, which consideration of the whole of the agreement might not justify.
Although it is not suggested that the contra preferendum rule applies to the contract, it is difficult to ignore the existence of the notice clause nor that the document was drawn by the University and presented to Professor Innes. Looked at objectively, it would not be unreasonable to say that the University’s intention was to give Professor Innes a contract that permitted termination on notice. Such a condition is as fundamental to the agreement as the fixed term itself. The fact that Professor McWha might say that he had no intention of utilising it or that his counsel might say that it was not utilised is irrelevant to an objective consideration of what the contract meant. The statement in the contract that it is a fixed term appointment pursuant to clause 41.5.7 is not a term of the contract, it is a label. It cannot be a term of the contract because another actual term prevents it being so. Thus, there are not two repugnant terms the later of which must be expunged, there is only the contract as it is written and that contract interpreted pursuant to the requirements of the certified agreement is a contract for full time employment. It follows therefrom that it was a contract that could not be allowed to expire by a effluxion of time and that the purported notice of cessation of the contract written on 1 September 2006 was a breach of the contract of employment. The court should declare that Professor Innes remains employed by the University as a full time employee, although he accepts that this employment would not be as Dean and he would not be entitled to a Dean’s allowance. In these proceedings I have not been asked to deal with the alleged breaches of the Workplace Relations Act 1996 and I would not propose to make any declarations relating thereto. Those matters and the question of penalty will remain alive for another day. I reserved certain costs. I would ask the parties to provide me, through my associate, within fourteen days written submissions as to how those costs should fall together with the Short Minutes putting these reasons into effect.
I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date: 4 December 2007
CORRECTIONS
1. Order (1) – delete “7” insert “14”.
2. Order (2) – deleted.
3. Paragraph 21 line 27 – delete:
“The costs of this part of the substantive application shall be paid by the University to Professor Innes. I reserved the costs of the interlocutory hearing.”
Insert: “I reserved certain costs.”
4. Paragraph 21 final sentence – delete “7” insert “14”.
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7
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