LWB Disability Services South Limited t/as Life Without Barriers v Smith

[2021] NSWCA 37

Court of Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:

LWB Disability Services South Limited t/as Life Without Barriers v Smith [2021] NSWCA 37

Hearing dates:

18 February 2021

Date of orders:

18 March 2021

Decision date:

18 March 2021

Before:

Bell P at [1]; Macfarlan JA at [103]; Payne JA at [104]

Decision:

(1)   Allow the appeal with costs.

(2)   Set aside the orders of the primary judge of 15 May 2020 and 2 July 2020.

(3)   Order that the statement of claim filed 25 January 2019 be dismissed.

(4)   Order that the Respondent pay the Appellant’s costs at first instance.

Catchwords:

CONTRACT – Contract of employment – whether location of employment in a letter of offer of employment was an essential term, breach of which gave rise to a right to terminate and a claim for damages – where employee asserted that employer’s insistence upon changing the employee’s work location amounted to repudiatory conduct and purported to accept that repudiation.

EMPLOYMENT & INDUSTRIAL LAW – Contract of employment – whether location of employment in a letter of offer of employment was an essential term, breach of which gave rise to a right to terminate and a claim for damages – where relevant Award contained mobility of staff clause which provided for employer to move employees around relevant District upon satisfaction of certain conditions – whether location as outlined in letter of offer ousted operation of mobility of staff clause in Award.

Legislation Cited:

Crown Employees (Public Service Conditions of Employment) Award 2009

Crown Employees Ageing, Disability and Home Care – NSW Department of Family and Community Services (Community Living Award) 2010

Crown Employees Ageing, Disability and Home Care – NSW Department of Family and Community Services (Community Living Award) 2015

Industrial Relations Act 1996 (NSW) s 12(1)

National Disability Insurance Scheme (NSW Enabling) Act 2013 (NSW) s 14

Public Sector Employment and Management Act 2002 (NSW) s 87(2), Div 1, Pt 3.2

Cases Cited:

Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241; [2005] HCA 10

Byrne v Australian Airlines Ltd (1995) 185 CLR 410; [1995] HCA 24

DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; [1978] HCA 12

Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12

Josephson v Walker (1914) 18 CLR 691; [1914] HCA 68

Kilminster v Sun Newspapers Limited (1931) 46 CLR 284; [1931] HCA 37

Maggbury Pty Limited v Hafele Australia Pty Limited (2001) 210 CLR 181; [2001] HCA 70

The King v The Darling Island Stevedoring and Lighterage Company Limited; Ex parte Halliday; Ex parte Sullivan (1938) 60 CLR 601; [1938] HCA 44

Texts Cited:

P Herzfeld and T Prince, Interpretation (2nd ed, 2020, Thomson Reuters)

K Lewison and D Hughes, The Interpretation of Contracts in Australia (2012, Lawbook Co)

Category:

Principal judgment

Parties:

LWB Disability Services South Limited t/as Life Without Barriers (Appellant)
Greg Smith (Respondent)

Representation:

Counsel:

K Nomchong SC with N Avery-Williams (Appellant)
M Gibian SC (Respondent)

Solicitors:

Kennedys Law (Appellant)
Integrated Legal (Respondent)

File Number(s):

2020/174642

Publication restriction:

N/A

 Decision under appeal 

Court or tribunal:

District Court of New South Wales

Jurisdiction:

Civil

Citation:

[2020] NSWDC 141

Before:

Smith SC DCJ

File Number(s):

2019/27235

HEADNOTE

[This headnote is not to be read as part of the judgment]

From 2008, Mr Greg Smith (Mr Smith) was employed by the Department of Family and Community Services (FACS) as a casual disability support worker. In around mid-2009, Mr Smith commenced permanent part-time employment as a disability support worker at the Carlton Group Home in Sydney (the Carlton Group Home).

On 17 January 2013, Mr Smith was offered and accepted a full-time position at the Carlton Group Home. The letter of offer outlined the “details of the position and conditions of employment”, with a table on the letter specifying that the location of employment was “Carlton GH 13 Wheeler St, Metro South Region”. Text underneath the table outlined that Mr Smith’s “employment conditions will be in terms of the Crown Employees Ageing, Disability and Home Care – Department of Human Services (Community Living Award) 2010 and the Crown Employees (Public Service Conditions of Employment) Award 2009”. The first of these Awards, and subsequent iterations of it, contained a provision entitled “Mobility of Staff”, which permitted the transfer of employees and which, by cl 25(v) provided that where an involuntary transfer was necessary, consultation with the Public Service Association (PSA) will be undertaken prior to transfer of an employee.

In June 2017, twelve staff members at the Carlton Group Home submitted a joint complaint to FACS against Mr Smith concerning allegations of bullying. An independent investigation recommended that Mr Smith be relocated away from the Carlton Group Home. He was informed in a meeting in November 2017, attended by a PSA representative, that he would be relocated to a Group Home in Rosebery, to which he protested. He worked at this Group Home for less than a week.

In 2018, disability support was privatised in New South Wales, and Mr Smith’s employment was transferred to LWB Disability Services South Limited t/as Life Without Barriers (LWB). LWB informed Mr Smith that he would continue to be employed on the same basis as he had been employed immediately prior to transfer (i.e. that set out in the 17 January 2013 letter) and that the current Award/s would continue to apply to his employment.

LWB subsequently made a decision to transfer Mr Smith to a Group Home in Caringbah. The transfer was discussed at a meeting with Mr Smith in April 2018, attended by a PSA representative. Mr Smith protested this decision, worked at this Group Home for less than a week, and remained off work during 2018.

In September 2018, Mr Smith asserted that the refusal of LWB to permit him to return to work at the Carlton Group Home constituted a repudiation of his employment contract, which he purported to accept. Mr Smith brought a claim for damages in the District Court of New South Wales.

The primary judge found in favour of Mr Smith, holding that it was an essential condition of the employment contract that Mr Smith’s place of employment was at the Carlton Group Home. His Honour held that provisions in the relevant Awards did not allow LWB unilaterally to change the place where Mr Smith was to carry out his work, and awarded Mr Smith damages in the sum of $208,815.74.

The principal issues on appeal were:

1. Whether the primary judge erred in finding that the identification of a location of work in the 17 January 2013 letter ousted the operation of the Award;

2. Whether the primary judge erred in failing to find that consultation with the PSA had been undertaken;

3. Whether the primary judge erred in the assessment of damages.

The Court held (Bell P, Macfarlan and Payne JJA agreeing), allowing the appeal:

1. The primary judge erred in his construction of the 17 January 2013 letter of offer. The identification of the work location of the Carlton Group Home was not an “express condition” or an “essential term” of the employment contract, but simply supplied a detail of Mr Smith’s position: [66], [72] (Bell P); [103] (Macfarlan JA); [104] (Payne JA).

2. The consequence of the primary judge’s construction of the letter was to disapply the mobility staff provisions in the Award but this was inconsistent with the fact that Mr Smith’s employment conditions were in terms of the relevant Awards, as was expressly stated in his letter of offer. The primary judge erred in holding that LWB was not entitled to transfer Mr Smith to a different Group Home because it had effectively contracted out of any right under the Award to do so: [67]-[68], [84] (Bell P); [103] (Macfarlan JA); [104] (Payne JA).

Byrne v Australian Airlines Limited (1995) 185 CLR 410; [1995] HCA 24; Josephson v Walker (1914) 18 CLR 691; [1914] HCA 68; Kilminster v Sun Newspapers Limited (1931) 46 CLR 284; [1931] HCA 37, considered.

3. The primary judge erred in holding that LWB’s insistence in asserting its entitlement to transfer Mr Smith to a different Group Home amounted to repudiatory conduct that entitled Mr Smith to terminate the employment relationship: [85] (Bell P); [103] (Macfarlan JA); [104] (Payne JA).

4. The primary judge erred in awarding Mr Smith damages, in circumstances where there was no repudiatory conduct by LWB, and thus no valid termination of the employment contract by Mr Smith: [85], [99] (Bell P); [103] (Macfarlan JA); [104] (Payne JA).

5. Although not strictly necessary to decide, the primary judge erred in concluding that there was a lack of consultation with the PSA prior to Mr Smith’s transfer, and that this amounted to repudiatory conduct: [89]-[98] (Bell P); [103] (Macfarlan JA); [104] (Payne JA).

Judgment

1. BELL P: This appeal relates to an award of damages in the sum of $208,815.74 following the purported termination of an employment contract between the respondent, Mr Greg Smith (Mr Smith), a disability support worker, who was employed by the appellant, LWB Disability Services South Limited t/as Life Without Barriers (LWB).

2. Mr Smith had originally been employed in the public sector, within the Department of Family and Community Services (FACS), commencing in 2008 as a casual disability worker at the Rickard Road Group Home in Sydney. His conditions of employment were governed by a series of industrial awards including, for purposes relevant to the current proceedings, the Crown Employees Ageing, Disability and Home Care – NSW Department of Family and Community Services (Community Living Award) 2010 and the Crown Employees (Public Service Conditions of Employment) Award 2009. He was also subject to the operation of the Public Sector Employment and Management Act 2002 (NSW) (the PSEM Act).

3. Disability support was privatised in 2018 in New South Wales with the employment of public sector employees in the sector being transferred to LWB in circumstances explained more fully later in these reasons.

4. By 2018, Mr Smith was working at a group home in Wheeler Street, Carlton (the Carlton Group Home), a suburb in southern Sydney within what FACS had described as the “Metro South Region”. In late April 2018 and early May 2018, LWB directed Mr Smith to work from a different group home operated by it within the same region of Sydney. Mr Smith refused to change the location of his work and insisted upon continuing at the Carlton Group Home (albeit that at that time he was not physically attending the premises and was in receipt of workers compensation payments, as will also be explained more fully below).

5. LWB, in turn, insisted that it was entitled to determine where in the region Mr Smith undertook work for it. Mr Smith claimed that this insistence by LWB amounted to a repudiation of his employment contract, purported to accept that repudiation, and brought a claim for damages in the District Court of New South Wales.

6. Smith SC DCJ (the primary judge) found in favour of Mr Smith (see Smith v LWB Disability Services South Limited t/as Life Without Barriers [2020] NSWDC 141), holding that it was an essential condition of the employment contract that Mr Smith’s place of employment was at the Carlton Group Home and that he could not be directed by LWB to work in another group home in the same region or district.

7. His Honour held that, while there was provision in the Crown Employees Ageing, Disability and Home Care – NSW Department of Family and Community Services (Community Living Award) 2015 (the 2015 Award) (which his Honour treated as applying to Mr Smith) which enabled LWB to change the location of its employees’ work, this provision did not alter the term of Mr Smith’s employment contract and, more specifically, it did not allow LWB unilaterally to change the place where Mr Smith was to carry out his work.

8. The primary judge awarded damages, said to be equivalent to what Mr Smith would have earned had he continued to work under the contract of employment up until the end of February 2020, together with damages for a further period from that date ending 12 months after the date of judgment.

9. In a separate judgment delivered on 2 July 2020, the primary judge assessed Mr Smith’s damages as $208,815.74.

10. Before turning to the grounds upon which LWB seeks to challenge this decision, further factual background to the proceedings is necessary.

Background

11. As already noted, in about February 2008, Mr Smith commenced his public sector employment as a casual disability worker at the Rickard Road Group Home.

12. Between 2008 and 2013, Mr Smith worked in various positions at a number of work locations. In around mid-2009, he commenced permanent part-time employment as a disability support worker at the Carlton Group Home. In around September 2011, he accepted a permanent full-time position as a disability support worker at the Rickard Road Group Home.

13. On 17 January 2013, Mr Smith was offered and accepted a full-time position at the Carlton Group Home. The offer was made by letter dated 17 January 2013 from FACS which commenced by noting that approval had been given for Mr Smith’s permanent transfer in terms of s 87(2) of the PSEM Act (the 17 January 2013 letter).

14. Section 87 falls within Div 1 of Pt 3.2 of the PSEM Act. That part is headed “Staff mobility”, and the division is headed “Movement of staff within and between public sector agencies”. It makes provision for temporary and permanent transfers. Section 87(2) provides:

“87    Employer-sponsored permanent transfers

…

(2)    The head of a public sector agency may, subject to this section, transfer a member of staff of the agency to another position or other employment within the agency, following consultation with the member of staff.”

15. The 17 January 2013 letter then stated “[t]he details of the position and the conditions of employment are as follows”. There was then set out a table as follows:

Position title	Disability Support Worker
Grade	DSW
Agency	Ageing Disability and Home Care
Location	Carlton GH 13 Wheeler St, Metro South Region
Position number	00004889 GS
Salary	$46,452 pa to $57,193 pa
Commencing salary	$50,384 pa, DSW, 5th year rate
Hours per week	Full time, 38 hpw
Entry on duty	28 January 2013

The following text then appeared underneath the table:

“Your employment conditions will be in terms of the Crown Employees Ageing, Disability and Home Care – Department of Human Services (Community Living Award) 2010 and the Crown Employees (Public Service Conditions of Employment) Award 2009. Your appointment may satisfy the requirements for eligibility as a Transferred Officer under the Crown Employees (Transferred Employees Compensation) Award.”

16. The letter then continued:

“The transfer requires satisfactory pre-employment screening checks to be undertaken where required for the position. 

We aim to offer an inclusive environment where people with a disability – including those with a medical condition, injury or illness – are accommodated within the workplace.  In keeping with these aims, we will consider any reasonable workplace adjustment requests to enable you to undertake the requirements of the job and work safely.  Contact should be made with the manager prior to your start date to identify necessary workplace adjustments. 

In accepting this position you agree to support core NSW public sector values of cultural diversity, equity and ethical practice, and a healthy, safe and fair workplace.  Please note that in applying for this change in status you authorise the deduction of monies from your salary where the change in status results in additional monies being paid to which you are not entitled. 

If you wish to accept the offer of permanent transfer as stated above, please sign the attached acceptance and return to […] within seven days of the date of this letter.  Please note that non-receipt of this acceptance could result in a delay in the process.

If you have any questions, please contact …”

17. The primary judge noted that the Crown Employees Ageing, Disability and Home Care – Department of Human Services (Community Living Award) 2010 became the Crown Employees Ageing, Disability and Home Care – Department of Family and Community Services NSW (Community Living Award) 2010 in 2012 (the 2010 Award). In turn, that Award became the Crown Employees Ageing, Disability and Home Care – NSW Department of Family and Community Services (Community Living Award) 2015 (the 2015 Award).

18. In each iteration of the Award, there was a provision entitled “Mobility of Staff”, in relevantly identical terms, save that the word “Region” in the 2010 Award was altered to “District” in the 2015 Award. A variation of the 2015 Award was made on 30 August 2017 which had the effect that cl 25 became cl 27 but there was no material alteration to the wording of the “Mobility of Staff” clause.

19. Clause 25 of the 2010 Award provided that:

“Mobility of Staff

(i)   All staff members are recruited to a Region, not a unit. The movement of staff members within the Region will occur in a reasonable manner.

(ii)  Staff may be rotated through shifts at various units for the following purposes where practicable:

For staff and workforce development, including unit induction;

To meet client support needs;

To address OH&S issues or injury management obligations;

When a staff member has identified a desire to work in another unit; or

To support workforce requirements including the filling of long term vacancies.

(iii)  Staff will not be asked to work a shift in another unit:

Without reasonable notice; or

If the distance the staff member is required to travel is unreasonable having regard to the individual’s circumstances

(iv)  Where possible, all transfers will be undertaken on a voluntary basis.

(v)   Where an involuntary transfer is necessary, consultation with the PSA will be undertaken prior to the transfer being affected [sic].

(vi)   For the purposes of this clause, no transfer will be used as a punitive measure.”

20. The reference to PSA in cl 25(v) was to the Public Service Association.

21. Mr Smith accepted the offer of a position at the Carlton Group Home on 10 February 2013, by counter-signing and returning the 17 January 2013 letter and in due course commenced working there.

22. In mid-2016, Mr Smith was advised that the NSW Government was planning on privatising its accommodation and respite services in NSW.

23. On 20 June 2017, Ms Rachel Bartley (Coordinator at FACS), Ms Vanessa Harris (Team Leader at FACS) and Mr Thomas Due (Manager, Accommodation and Respite at FACS) (Mr Due) received a letter of joint complaint from twelve staff members at the Carlton Group Home against Mr Smith. That letter requested that all staff grievances relating to Mr Smith be escalated to a formal independent investigation, in particular the allegations concerning bullying, harassment and intimidation.

24. In or around July 2017, FACS arranged for an independent investigation to be undertaken by Ms Wendy Klaassen (Ms Klaassen), a Director of GVK Consulting, into the complaint that had been raised in relation to Mr Smith.

25. On 1 August 2017, LWB was announced as the new operator for supported accommodation and respite services in the South-East Sydney region.

26. On 14 August 2017, Mr Smith was interviewed by Ms Klaassen in relation to the complaint. During the interview with Mr Smith, the topic of his transfer to another location within the same region was canvassed. Mr Greg Shaw of the PSA (Mr Shaw) participated in this discussion and indicated that any approach to moving Mr Smith to another position either part-time or permanently needed to be managed cautiously, as staff in the new environment often wonder about a staff member’s history, or what they have done to be transferred. Mr Shaw also acknowledged the impact that Mr Smith’s absence may have on clients with whom he had a strong connection.

20. By letter dated 12 September 2017, Mr Smith was informed by FACS that his employment would be transferred automatically to LWB, and that the Government was planning on finalising the transfer by 22 February 2018. The 12 September 2017 letter stated that a LWB “letter enclosed confirms the terms and conditions that will apply to your employment following transfer”. That particular letter does not appear to have been tendered at the trial.

21. Prior to the transfer of his employment to LWB, Mr Smith was off work for a period of time as a result of an anxiety related psychological injury arising from or related to the complaint about him by other staff members at the Carlton Group Home.

22. Ms Klaassen’s report was received by Mr Due in or around September 2017. It recommended that Mr Smith should be relocated to an alternative vacant position away from the Carlton Group Home.

23. A meeting took place between Mr Smith, Mr Shaw, Mr Due and Mr Keith Paten (IM Rehabilitation Coordinator at FACS) on 9 November 2017 (the first PSA meeting). The purpose of the first PSA meeting was to discuss the findings and recommendations of Ms Klaassen’s report. The minutes of the first PSA meeting included the following (with references to “Wheeler St Group Home” being to the Carlton Group Home):

“Recommendations in relation to Mr Smith

1.   That Mr Smith be counselled and warned about his past conduct towards other staff at Wheeler St Group Home.

2.   That Mr Smith be relocated to an alternative vacant position in the District.

Thomas [Mr Due] advised the actions to be taken, as decided by the District

1.   To formally provide counsel to Mr Smith by Thomas Due, manager, and warn about his past conduct towards other staff at Wheeler St Group Home.

2.   To immediately relocate Mr Smith to:

-   316 Gardeners Road Rosebery NSW 2018.

-   Fulltime line available for Mr Smith.

-   Similar care support needs of residents as Wheeler St.

-   The opportunity for a fresh start in a new environment.

Thomas [Mr Due] asked Mr Smith to comment on the actions. Mr Smith referred to his previous E-Mail communication dated 8 Nov 2017 where he states that does not wish to relocate and that he is the victim”. (emphasis in original).

31. On 7 December 2017, Ms Carina Vitelli (Ms Vitelli), Rehabilitation Consultant at Workers Health Centre, issued a Return to Work Suitable Duties Program No 1 for Mr Smith to return to work at the Gardeners Road, Rosebery Group Home (the Gardeners Road Group Home). This was an alternative work location to the Carlton Group Home. The Program assessed Mr Smith as being fit for “suitable” duties (but not pre-injury duties) for 4 hours per day, 3 days per week. Mr Shaw of the PSA signed off on this Program on 12 December 2017.

32. Mr Smith returned to work at the Gardeners Road Group Home in December 2017 but remained for less than a week.

33. Ms Vitelli completed a second Return to Work Suitable Duties Program No 2 for Mr Smith on 22 February 2018 (the No 2 Program). This stated that he was fit for “suitable” duties for 4 hours per day, 2 days per week and specified the suitable duties location as being 1 Chamberlain Avenue, Caringbah (the Caringbah Group Home), which was an alternative work location both to the Gardeners Road Group Home and the Carlton Group Home.

34. By letter dated 26 February 2018, LWB wrote to Mr Smith to confirm “your terms and conditions of employment following transfer” and to “set out the terms and conditions that now apply following the transfer”. The letter contained the following terms:

“Continuation of your employment status

Your existing employment has now transferred to and will be recognised by LWB Disability Services South. This means you will continue to be employed on the same basis as you have been employed immediately prior to transfer. That is, as a permanent (ongoing), fixed term (temporary) or casual employee. Any temporary arrangements (e.g. reduced hours for return to work) will not affect your contractual employment status.”

Continuation of Award Terms

Your current Award/s has transferred and will continue to apply to your employment. LWB Disability Services South will not seek to make any new enterprise agreement with transferring employees during the two year guarantee period. Salary adjustments made in accordance with the Fair Work Act 2009 (Cth) will apply during this period.” (emphasis added).

This letter had the consequence that Mr Smith’s ongoing employment with LWB would continue to be governed by the terms of the 17 January 2013 letter, and that the current award (which was the 2015 Award) would also continue to apply.

35. The transfer of employment was effected by operation of law. In this context, s 14 of the National Disability Insurance Scheme (NSW Enabling) Act 2013 (NSW) (the Enabling Act) provided that:

“14      Transfers to non-government sector employment

(1) The Minister may, for the purposes of the authorised implementation, enter into an agreement (a transfer agreement) with an employer in the non-government sector for the transfer of the employment of a disability services employee to the employment of that employer as the new employer of the employee.

(2) The Minister may by order in writing transfer the employment of a disability services employee to the employment of the new employer to give effect to a transfer agreement.

(3)   A transfer of employment under this section does not require the consent of the person transferred.

(4)   A transfer agreement must contain provision to give effect to the following requirements:

(a)   the employment of a transferred employee with the new employer is to be on the same terms and conditions as applied under an industrial instrument to the employee as a disability services employee immediately before the transfer of employment,

(b)   in the case of a transferred employee who is an apprentice or trainee under the Apprenticeship and Traineeship Act 2001, the new employer must apply under section 20 of that Act for approval to the transfer of the apprenticeship or traineeship to the new employer,

(c)   the provisions of section 15 apply in respect of the transferred employee.

(5)   A transfer agreement may specify an employment guarantee period for the transferred employee and if it does so must contain provision to give effect to the following requirements:

(a)   the terms and conditions of employment of the transferred employee with the new employer under an industrial instrument cannot be varied during the employment guarantee period for the transferred employee except by agreement entered into by or on behalf of the transferred employee in accordance with any applicable industrial law,

(b)   the employment of a transferred employee with the new employer cannot be terminated by the new employer during the employment guarantee period for the transferred employee, except:

(i)   for serious misconduct, or

(ii)   pursuant to the proper application of reasonable disciplinary procedures, or

(iii)   by agreement with the employee.

(6)   A transfer agreement may include provision with respect to any other matters concerning the terms and conditions of employment of the transferred employee.”

36. A transfer agreement was in due course entered into between the State of New South Wales and LWB, and specified an employment guarantee period of two years.

37. Consistent with this agreement, the letter of 26 February 2018 sent to Mr Smith referred to at [34] above noted that the employment guarantee period was two years for permanent employees and that, during this period, employment would not be terminated except for serious misconduct, by the proper application of reasonable disciplinary procedures, or by agreement with the employee.

38. On 27 February 2018, Mr Smith attended work at the Caringbah Group Home as recommended by the No 2 Program but only remained for approximately one week.

39. Mr Smith was certified by WorkCover as having no capacity for work from 10 March to 18 April 2018.

40. A meeting was held on 30 April 2018 attended by Mr Smith, Mr Due, Ms Vitelli, Mr Shaw of the PSA and Mr Diarmuid Hogue (Human Resources at LWB) (the second PSA meeting). Mr Due gave the following account of this meeting:

“Me:      As you are aware, on 9 November 2017 we met with you and provided you with the outcome of the external investigation conducted by FACS. During that meeting, I informed you that based on the information gathered, the investigation concluded it was more likely than not that you had engaged in the alleged conduct. The investigation report recommended for you to be counselled and warned about your past conduct towards staff at the Wheeler Street Group Home, and for you to be relocated to an alternative vacant position in the district. On this basis, FACS decided that you should be relocated to another location. Consistent with that decision, LWB has decided that your employment is to be relocated to another location.

Mr Smith:   I've never been given anything in writing about the outcome of the investigation or my removal from Wheeler Street Group Home. I require written notice of the decision to remove me from Wheeler Street Group Home.

Me:      Ok, I will make it an action item that after the meeting, we will provide a written record of the outcome of the external investigation, and the decision to relocate you to a new position.

We have located a suitable alternative position that is available at the Chamberlain Avenue Group Home in Caringbah. This position has similar duties and clients requiring a similar level of support to Wheeler Street. Therefore, you are required to relocate on a permanent basis to the Chamberlain Avenue Group Home. This decision has been signed off by the HR team and Operations Manager.

Mr Smith:   Ok, I agree, with the goal to return to Wheeler Street at a later time.

Me:      Due to the findings in the investigation, that is not possible.

Mr Smith:   That is my goal.

Me:      The business will not return you to Wheeler Street.”

Mr Smith’s account of the meeting was not radically different. He stated that he said: “I want to go back to Wheeler Street. I will work at Chamberl[a]in Ave as part of a return to work plan, if approved by the doctor, but I want to be returned to my job at Wheeler Street.”

41. Upon request for written confirmation, Mr Smith received a letter dated 4 May 2018, which stated under the heading “Change in reporting line – Location”:

“This letter is to confirm our recent discussions regarding changes to your current reporting line within the LDS South East Sydney team.

Effective from 7/05/2018 you will report directly to Tony Muzich, at 1 Chamberlain Ave Caringbah, 2229.

All other employment terms and conditions outlined in your current Contract of Employment will remain unchanged.”

42. An email was sent by Mr Due to Mr Smith on 7 May 2018, providing written confirmation of the change in Mr Smith’s reporting line and location of work, as follows:

“…You were informed on the 9th of November 2017, based on the information gathered during the investigation it appears more than likely than not that you had engaged in the alleged conduct.

The investigation report recommended:

1.   For you to be counselled and warned about past conduct towards other staff at Wheeler St Group Home.

2.   For you to be relocated to an alternative vacant position in the District.

In our discussion you explained that your goal is to return to Wheeler St Group Home. Unfortunately that is not something we can support.

As agreed on the 30th of April 2018 you are to be relocated to 1 Chamberlain Avenue, Caringbah 2229 on a permanent basis. Team Leader: Tony Muzich…”

43. By letter dated 10 May 2018, Mr Smith protested the decision, stating that he had not requested it and did not agree to the transfer. It also stated that he did not agree “to being terminated from my employment at Wheeler Street Group Home”.

44. LWB responded to Mr Smith on the following day, stating that:

“I confirm that your employment has not been terminated. You are employed to the South East Sydney District, and may be moved within the unit as required. As you were advised by letter dated 4 May 2018, you have been transferred to a different location within the district, and effect 7^th May 2018 you will be substantively based at 1 Chamberlain Ave Caringbah, 2229.

I look forward to supporting you with a successful return to work”.

45. Also on 11 May 2018, Ms Vitelli issued a Return to Work Suitable Duties Program No 3, for Mr Smith to work at the Caringbah Group Home.

46. On 16 May 2018, Mr Smith responded to LWB’s email of 11 May 2018 as follows:

“While you assert that your letter dated 4 May 2018 records the outcome of the external investigation conducted at Wheeler St in 2017, the letter makes no mention of an investigation. Your letter merely mentions changing the reporting line. Again, I stress that I was not consulted, did not agree to and have not requested any changes in connection with my reporting line”.

47. Mr Due responded on 18 May 2018, referring Mr Smith to the earlier email as of 7 May 2018 and indicating that LWB’s “standpoint has not changed”.

48. On 30 May 2018, Mr Tom Jones (Mr Jones), a clinical psychologist, prepared a Treating Clinical Psychologist Report in relation to Mr Smith, based on information obtained and observations over a total of 26 sessions he had held with Mr Smith. Mr Jones indicated that, in his opinion, Mr Smith met the criteria for diagnosis of Adjustment Disorder with Anxiety and Depressed Mood and stated that he did not believe that he could successfully return to work for his former employer and that a return to the Carlton Group Home was “not possible”.

49. Mr Smith remained off work during 2018.

50. By letter to LWB dated 27 September 2018, solicitors for Mr Smith reiterated his position that he did not agree to any transfer, and asserted that the refusal to permit Mr Smith to return to work at the Carlton Group Home constituted a repudiation of his contract of employment. That letter included the following:

“On 4 May 2018, our client received a letter from Thomas Due, Manager Accommodation and Respite, LWB, which purported to alter the conditions of his employment by removing him from Wheeler St to Chamberl[a]in Ave Group Home.

In the exchanges which have followed, our client has made it clear that he is prepared to return to work at Wheeler St pursuant to an appropriate return to work program, but that he does not and will not agree to any transfer away from his Wheeler St work location. LWB has continued to indicate that our client should resume work at the Chamberl[a]in Ave Group Home.

LWB has not identified the basis on which it purports to be entitled to unilaterally alter the terms and conditions of our client's employment by changing his work location.

We invite you to confirm that LWB no longer asserts that it is entitled to direct our client to work at a location other than Wheeler St, that any purported direction to that effect is withdrawn, and that LWB will accommodate our client's return to Wheeler St. We respectfully request that such confirmation be provided by 4pm on Wednesday 3 October 2018.

If you do not provide that confirmation, our client will proceed on the basis that LWB refuses to permit our client to return to Wheeler St. Our client will treat that refusal as a repudiation of his employment contract. He reserves his rights to take such action as is available to him in that case.”

51. LWB responded by letter dated 18 October 2018. The primary judge characterised this letter at [20] of his judgment as LWB “refus[ing] to withdraw its direction for [Mr Smith] to relocate”. That was, with respect, neither a fair nor accurate characterisation of what was a detailed response from LWB. It is necessary to set out that response in full:

“Greg Smith return to work process

We refer to your letter dated 27 September 2018. Thank you for allowing some extra time for us to respond. As will become apparent, this is a fairly complex matter with several moving parts.

For brevity and clarity, we will utilise the following abbreviations throughout this letter to refer to three relevant work locations:

•   13 Wheeler Street, Carlton NSW (Wheeler St)

•   Chamberlain Avenue, Caringbah (Chamberlain Ave)

•   316 Gardeners Road, Rosebery NSW (Gardeners Rd)

As per the letter that was sent to Greg and other transferring employees on 26 February 2018, LWB acknowledges that it must continue to employ transferring employees on the same basis as they were employed by FACS immediately prior to the transfer. LWB also acknowledges that its power to terminate a transferring employee’s employment during the 2-year ‘employment guarantee period’ is restricted to three specified grounds.

However, the decision to change Greg’s reporting line and work location, and the written direction dated 4 May 2018 giving effect to that decision, does not amount to a repudiation of Greg’s contract of employment or initiate the termination of his employment. There are a number of interrelated reasons for this which I have done my best to outline below.

No repudiation or termination

Firstly, as the 26 February 2018 letter makes clear, certain award terms continue to apply to Greg’s employment. One of the relevant awards is the Crown Employees, Ageing, Disability & Home Care NSW Department of Family & Community Services (Community Living Award) 2015 (Community Living Award). Clause 25 of this award deals with staff mobility and provides that:

•   employees are recruited to a ‘district’ not a ‘unit’ and may be moved within their ‘district’ in a reasonable manner;

•   Staff may be moved between ‘units’ for various reasons including, relevantly, to address WHS issues or injury management obligations; and

•   an employee can be required to work at different units provided that reasonable notice is given and she or he is not required to travel an unreasonable distance having regard to the individual’s circumstances.

Note: The word 'unit' is defined in clause 2 of the Community Living Award to mean a group home, respite centre or in-home support service. Based on the previous practice of ADHC within FACS, movement between particular facilities is not new or unusual.

Secondly, whilst there may be cases where the location of work is a fundamental term of the employment, subject to any express terms to the contrary in an industrial instrument or employment contract, an employer may relocate an employee's place of work provided that reasonable notice is given and travel time/distance is reasonable.

Thirdly, LWB's obligation to the NSW Government and under the Fair Work Act is to maintain employee entitlements and certain other benefits (e.g. wage rates, leave entitlements, superannuation contributions). Particularly having regard to the statutory and award context of Greg's employment, it is clear that the performance of work at a particular location (Wheeler St) was not a condition of his employment in the relevant sense.

Fourthly, LWB remains ready willing and able to perform its obligations under Greg's contract of employment. The direction with regard to Greg's reporting line and work location was lawful and reasonable - it does not constitute a ‘repudiation’ or ‘dismissal’.

Lastly, the 26 February 2018 letter specifically refers to the possibility that team structure and reporting lines may change over time to align facilities previously operated by FACS with LWB's existing business.

Reasons for direction

Following on from the above, LWB declines to withdraw the 4 May direction with respect to Greg's reporting lines and work location. However, we would like to meet with Greg to discuss return to work supports and his future at LWB generally (see next steps section below).

To facilitate an informed discussion, and to enable you to properly advise your client, I have endeavoured to set out below the reasons underpinning the relocation direction and the circumstances in which the direction was given.

The reasons why Greg has been directed to work at a different location stem from a workplace investigation carried out in mid-2017 in relation to a joint complaint by 12 staff members at the Wheeler St site against Greg.

Based on documentation provided to LWB as part of the transfer process, we understand that your client was advised of the outcome of that investigation in a meeting at FAC's Hurstville Office on 9 November 2017. Given his ongoing absence from work, the outcome was revisited in a meeting between Thomas Due, Manager A&R, and Greg on 30 April 2018 at LWB's Rockdale office.

In essence, Greg was found to have engaged in a range of inappropriate conduct towards his co-workers leading to a breakdown in relationships and communication in the workplace and adverse effects on service delivery to clients. The investigation recommended that Greg be relocated to another unit within the district to defuse the situation and give him a fresh start.

At the time, there was a suitable vacancy at Gardeners Rd, so FACS directed Greg to relocate there. However, as far as we are aware, due to Greg's extended absence on workers' compensation leave, this directive was never implemented.

Since then, at least three return to work plans have been developed for Greg by the rehabilitation consultant (Workers Health Centre) appointed by FAC's insurer (QBE). The individual consultant working with Greg is Ms Carina Vitelli. Ms Vitelli is a trained psychologist. She has been working in conjunction with Greg's treating GP, Dr Morgan Wei, and WorkCover certificates of capacity issued by him.

Since taking over responsibility for Greg's rehabilitation, LWB has been involved in updating the return to work plan. The latest plan was developed in May 2018. It lists Chamberlain Ave as the suitable duties location and specifies that Greg is to receive support and supervision by Tony Muzich, Team Leader, at an alternative work location to enable Greg to reintegrate into the work environment.

Regrettably, shortly after the updated RTW plan was shared with Greg, Dr Wei issued a new certificate of capacity stating: “Physically able. May trial work at placements with appropriate level of support. Not to work at Chamberlain Ave and Gardeners Rd (where psychological stress was exacerbated previously). Any proposed RTW locations must be approved by medical practitioner, psychologist or psychiatrist. May attend Work Trial”.

LWB is not aware of the bases for Dr Wei's assertion that Chamberlain Ave and Gardeners Rd are unsuitable for Greg. These specific restrictions appeared suddenly and without elaboration shortly after the May 2018 version of the return to work plan. Further, Greg's psychological injuries originated out of Wheeler St, not the other locations.

More recently, an independent medical assessment by Dr Graham George (Psychiatrist) carried out in July/August 2018 concluded that LWB has undertaken reasonable actions to resolve the long-term interpersonal conflict in the workplace and that Greg has capacity to return to his pre-injury role at a different location.

In any event, it is important for Greg to appreciate that the workers compensation scheme is a two-way street. It imposes obligations on both employers and employees. In particular, whilst LWB is required to provide Greg with suitable work, Greg is required to cooperate with LWB and make reasonable efforts to return to work in suitable employment. Significantly, such employment may be at the worker's previous place of work or another workplace: see sections 48-49 of the Workplace Injury Management & Workers Compensation Act 1998 (NSW) which picks up the definition of 'suitable employment' under section 32A of the 1987 Act.

Whilst Greg may have worked exclusively or predominantly at Wheeler St over the 4 ½ years from January 2013 when his employment with FACS commenced and September 2017 when his current period of absence commenced, that does not give him a right to stay there permanently regardless of prevailing circumstances.

The fact is, Greg has been out of the workplace for over a year. During that time, a significant divestment process has occurred. The interpersonal issues at Wheeler St are effectively unresolved. Returning Greg to that workplace poses an unnecessary and unacceptable risk to health and safety for everyone concerned, and there are no current vacancies there. LWB has explored many different options which Greg has so far resisted. Chamberlain Ave presents the best opportunity for LWB to provide Greg with suitable employment.

Going forward

As things stand, Greg has been directed to report to Mr Tony Muzich, Team Leader, and to work at Chamberlain Ave. However, his ongoing absence from work has prevented this new arrangement from being implemented and we are keen to identify a workable solution.

As we foreshadowed above, LWB proposed to meet with Greg and his nominated support person (you are welcome to participate) for the purposes of better understanding his return to work supports and his intentions and aspirations towards his future at LWB generally. To that end, would you please advise Greg’s availability in the week of 29 October – 2 November 2018.

The present situation is clearly unsustainable and unhealthy for Greg. It is our sincere hope that a resolution can be reached without legal escalation.

Sincerely

Kylie Gorman

Regional Manager

LWB Disability Services”. (emphasis in original).

52. By letter dated 29 October 2018, Mr Smith’s solicitors informed LWB that Mr Smith regarded its conduct as a repudiation of his employment contract, and that he accepted the repudiation.

53. By email dated 7 November 2018, LWB responded, rejecting Mr Smith’s acceptance of the purported repudiation and affirming the employment contract.

54. From November 2018, Mr Smith applied for many jobs and had one face-to-face interview, but was unable to secure permanent employment.

55. By letter dated 19 December 2019, solicitors for LWB wrote to Mr Smith’s solicitors, stating:

“Our client has recently received a copy of your client’s WorkCover NSW Certificate of Capacity dated 5 November 2019 (copy enclosed), which certifies your client as being fit for pre-injury duties from 17 September 2019.

We understand that QBE, our client’s workers compensation insurer, ceased making workers compensation payments to your client on 13 September 2019. Since that time, your client has been on unpaid leave.

As you are aware, our client denies that it has repudiated your client’s contract of employment, and maintains that your client remains a current employee.

Accordingly, please confirm whether your client wishes to return to work with our client at a location other than the Wheeler Street Group Home.

Should he wish to do so, our client will make the necessary enquiries to ascertain which suitable positions are available for your client to return to work, in accordance with our client’s obligations under the contract of employment”.

56. No response was received to this letter.

The primary judgment

57. The primary judge held that LWB was not entitled unilaterally to change the location of Mr Smith’s workplace, and that LWB repudiated the contract of employment when it insisted that Mr Smith work at a place other than the Carlton Group Home: at [43]. The essence of the primary judge’s reasoning to this conclusion was as follows:

“23    The plaintiff argues that the employment contract expressly provides for the location of the workplace and that it is an essential term of the contract. He says that the effect of the Award is to provide for a minimum set of conditions for the employee but that it did not prevent the parties from agreeing to terms that are more advantageous to the employee. The location provision in the contract, the plaintiff argues, is more favourable to the plaintiff than the mobility provisions of the Award because it does not allow unilateral changes to be made by the employer, whereas the Award does.

24    The defendant accepts that the Award does not form part of the contract by implication but says that it and the employment contract operate separately but parallel to each other, with the terms of the Award overlaying the contract in the background.

25 The meaning of terms of contractual documents 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: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 457 at [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40].

26 The factual background to the entry into the employment contract includes that the plaintiff was already employed in a permanent full-time position as a disability support worker at the Rickard Street Group Home from 2011 when he was offered the position at the Wheeler Street Group Home. The offer of employment was made by letter dated 17 January 2013. It was said to have been a ‘permanent transfer’ pursuant to s 87(2) of the Public Sector Employment & Management Act 2002 (NSW). That provision empowered the head of a public sector agency to transfer a member of staff of the agency to another position or other employment within the agency following consultation with the member of staff.

27    The position offered was disability support worker, a position already held by the plaintiff. The ‘transfer’, then, was to a different location.

28    The letter itself referred to a ‘permanent transfer’ as ‘stated above’. As I have observed in the factual background, the details of the position and conditions of the employment included the location which was given as ‘Carlton GH 13 Wheeler St, Metro South Region’. Given that the plaintiff had moved between locations including the Rickard Street Group Home and the Wheeler Street Group Home, I infer that those were both within the same administrative district of FACS for the services provided at those homes.

29    The offer of a new employment contract with a change of location from Rickard Street to Carlton was inconsistent with the mobility provision in the Award. That provision is based on the express premise that employees are recruited to a District, not a unit (i.e. they are not recruited, or employed, at specific group homes). I will return to the effect of that inconsistency later in these reasons. It is sufficient for present purposes to note that the contract of employment contained an express condition specifying the Wheeler Street Group Home as the location of employment.

30    Against the background of the plaintiff’s current work at the time of the offer it is apparent that the critical change was the location of his work. This makes it clear that it was an essential term of the contract that the work was to be carried out at the Wheeler Street Group Home. The terms of the contract pursuant to which the plaintiff first started working on a full-time permanent basis at the Wheeler Street Group Home remained the same when his employment was transferred from the New South Wales government to the defendant upon privatisation of the government’s disability services”. (footnotes omitted, emphasis in original).

58. The primary judge rejected LWB’s argument that the mobility provisions of the Award which, by 2018, was the 2015 Award, gave LWB the right to change Mr Smith’s work location.

59. His Honour held that although the provisions of an award bind relevant employers and employees, given their scope and purpose, it was open to employers and employees to agree to terms that conferred benefits on the employee that were greater than those provided for in the award: at [36]. At [37], his Honour stated that:

“There can be no doubt that a term specifying one location as the workplace is more beneficial to an employee to one that enables the employer to unilaterally change the location where the employee is to work. For that reason, it was open for the parties to agree to such a term and it is that term which governs the place of work.”

60. The primary judge rejected LWB’s alternative argument based on the well-known observation of Dixon J in The King v The Darling Island Stevedoring and Lighterage Company Limited; Ex parte Halliday; Ex parte Sullivan (1938) 60 CLR 601 at 621-622; [1938] HCA 44, that it was an implied term of the contract that Mr Smith comply with all reasonable and lawful directions of LWB, and that the requirement to work at a different group home was such a direction. The primary judge held at [41] that this argument failed to recognise that a direction is not lawful unless it falls within the scope of the contract, and that it is not lawful simply because it is reasonable in every other respect.

61. Given his conclusion in relation to repudiation and lawful direction, the primary judge noted that it was unnecessary to deal with the third issue, namely that, if there was a power to transfer Mr Smith, whether what the primary judge described as the “preconditions” to the exercise of that power had been fulfilled. This was a reference to cl 25(v) of the Award: see [19] above. Such conditions were that an employee’s travel must not be unreasonable having regard to the individual’s circumstances, and that there must be “consultation” with the PSA prior to any transfer.

62. The primary judge held that it was not unreasonable for Mr Smith to be required to travel to the Caringbah Group Home nominated in the direction of 4 May 2018. As to the second condition, however, his Honour held at [55] that, although there had been consultation with the PSA on 9 November 2017 (see [30] above), LWB had failed to consult the PSA as required by the mobility clause prior to the directive of 4 May 2018 for Mr Smith to work at the Caringbah Group Home. In relation to the second PSA meeting on 30 April 2018 (see [40] above), the primary judge held that:

“56    At the second meeting, however, there appears to have been no similar opportunity for Mr Shaw to present the views of the PSA. There are no notes of the meeting but Mr Due, then the Operations Manager – Accommodation for the defendant, recalled that at the meeting he said to the plaintiff:

‘… We have located a suitable alternative position that is available at the Chamberlain Avenue Group Home in Caringbah. This position has similar duties and clients requiring a similar level of support to Wheeler Street (Carlton). Therefore, you are required to relocate on a permanent basis to the Chamberlain Avenue Group Home. This decision has been signed off by the HR team and Operations Manager.’

57    Mr Due says that the plaintiff agreed to a temporary transfer but with the goal of returning to the Wheeler Street Group Home. Mr Due’s response was:

‘The business will not return you to Wheeler Street.’

58    This shows that the defendant had made its decision and would not enter into any further discussion about it. In doing so, however, it failed to consult the PSA as required by the mobility clause and so acted beyond its authority. In those circumstances, the defendant’s insistence on the plaintiff working at a different site constituted a repudiation of the employment contract.”

63. The primary judge held that, in the alternative, even if it were open to LWB to transfer Mr Smith to a different group home, its relevant failure to consult with the PSA also amounted to repudiatory conduct which entitled Mr Smith to terminate the employment contract.

Grounds of appeal

64. LWB, for whom Ms Nomchong SC and Mr Avery-Williams appeared, appealed on the following grounds:

1. In respect to the application of cl 27 of the 2015 Award, the primary judge erred:

1. In finding that the identification of a location of work in the letter of offer of permanent transfer dated 17 January 2013 ousted the operation of cl 27 of the 2015 Award, contrary to the principles enunciated in Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 421; [1995] HCA 24 (Byrne);

2. In failing to find that consultation with the PSA had been undertaken for the purpose of cl 27(v) of the 2015 Award;

3. Further or in the alternative to ground (1)(b), in finding that consultation with the PSA was a precondition to an involuntary transfer under the clause, and/or in failing to find that any breach of cl 27(v) of the 2015 Award was a separate matter which did not, of itself, undermine the ability of LWB to impose an involuntary transfer on Mr Smith pursuant to cll 27(i) or (ii) of the 2015 Award;

2. The primary judge erred by finding that LWB did not give a reasonable and lawful direction in directing Mr Smith to work at a different location;

3. As a result of the errors alleged in appeal grounds 1 and 2, that the primary judge erred in finding that LWB repudiated Mr Smith’s contract of employment;

4. In relation to the assessment of damages, the primary judge erred in finding that Mr Smith would have earned income from 29 October 2018 until 14 May 2021 had his place of work remained the Wheeler Street Group Home;

5. The primary judge erred in finding that Mr Smith would be likely to find further employment in the social work industry within 12 months of the date of judgment;

6. The primary judge erred in accepting Mr Smith’s calculation of the quantum of damages;

7. The quantum of damages was manifestly excessive.

Consideration

65. Central to the primary judge’s decision on liability was his construction of the 17 January 2013 letter: see [13]-[21] above. As noted above, his Honour held that the identification of “Carlton GH 13 Wheeler St, Metro South Region” in the table contained in this letter was an “express condition” and an “essential term” of the employment contract.

66. The effect of his Honour’s characterisation of the identification of a particular place of work, viz. the Carlton Group Home, as an essential condition was that, absent Mr Smith’s consent, LWB was obliged to employ him in that location and that it would be a fundamental breach of contract amounting to repudiation for LWB to transfer Mr Smith to another group home within the Metro South Region, however reasonable or justified or necessitous such a transfer might be.

67. The primary judge’s construction had the consequence that the simple identification of the Carlton Group Home in the 17 January 2013 letter operated to disapply cl 25 of the 2015 Award, the terms of which were materially identical to the 2010 Award set out at [19] above.

68. This would be a particularly surprising consequence as the 17 January 2013 letter expressly stated that Mr Smith’s “employment conditions will be in terms of the Crown Employees Ageing, Disability and Home Care – Department of Human Services (Community Living Award) 2010”. That statement was unqualified, that is to say, the whole of the Award was referred to and it was made “binding on all employees and employers to which it relates, whether or not they were a party to the making of the award”, by force of s 12(1) of the Industrial Relations Act 1996 (NSW) (the IRC Act).

69. It is immaterial that the 2010 Award (and by extension, the 2015 Award) was not incorporated by reference nor implied into Mr Smith’s employment contract. It applied by virtue of s 12(1) of the IRC Act and, as far as concerns Mr Smith’s employment with LWB, by virtue of s 14(4) of the Enabling Act. The 2010 Award’s operation by force of law was a necessary and critical part of the context in which the contract constituted by Mr Smith’s acceptance of the 17 January 2013 letter fell to be construed, as was Pt 3.2 of the PSEM Act.

70. The Award and the PSEM Act were “matters of law” forming part of the “background knowledge” that would reasonably have been available to the parties: see Maggbury Pty Limited v Hafele Australia Pty Limited (2001) 210 CLR 181; [2001] HCA 70 at [11]; see also Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241; [2005] HCA 10 at [50] and [64]; K Lewison and D Hughes, The Interpretation of Contracts in Australia (2012, Lawbook Co) at [4.06]; P Herzfeld and T Prince, Interpretation (2nd ed, 2020, Thomson Reuters) at [29.70] (Interpretation). Indeed, both the Award and the PSEM Act were expressly referred to in the 17 January 2013 letter of offer.

65. With that background knowledge, by simply nominating or specifying a particular place of work in the 17 January 2013 letter, the parties should not have been taken to have intended to deprive FACS of an ability to transfer an employee either within or to another public sector agency. That was a matter that had been expressly bargained for in the Award, was consistent with Pt 3.2 of the PSEM Act and was undoubtedly an important management tool. It also comported with commercial common sense: see Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 at [23]-[25] and [57].

66. Further, a natural reading of the 17 January 2013 letter supports the view that the information contained in the table of the letter simply supplied the “details of [Mr Smith’s] position” and that the conditions of his employment were contained in the 2010 Award as well as the Crown Employees (Public Service Conditions of Employment) Award 2009. After all, the sentence of the 17 January 2013 letter immediately following the table began by stating that “[y]our employment conditions will be in terms of” the Awards (emphasis added): see [15] above. His Honour’s construction of the 17 January 2013 letter with respect failed to have regard to the terms of the letter as a whole, contrary to a well-established canon of contractual construction: see Interpretation ch 22, and the cases there digested and referred to.

67. Even if the details in the table did constitute contractual terms, the reference in the table to the location at which Mr Smith was to work, at least insofar as it referred to “Carlton GH 13 Wheeler St”, supplied a “[d]etail of the position” that Mr Smith was to assume within the Metro South Region. Clause 25(i) of the 2010 Award stated “[a]ll staff members are recruited to a Region, not a unit”. A “unit” was defined in the Award as meaning “a group home, respite centre or in-home support service”.

68. As a matter of construction, therefore, reading the 17 January 2013 letter in its proper context including that supplied by the Award and cl 25(i) in particular, Mr Smith was not retained to work in a particular group home but in the Metro South Region. The Carlton Group Home was simply the place within that particular region to which he was to report, subject to the possibility of being transferred within that region at some future time.

69. In light of cl 25(i) of the 2010 Award, the reference to the Carlton Group Home in the 17 January 2013 letter could not reasonably be construed as involving a promise, let alone one amounting to an essential term or condition of the employment contract, that Mr Smith would only ever work at the Carlton Group Home. The primary judge was in error in so concluding. Mr Smith was not “recruited to” the Carlton Group Home but to the Metro South Region.

70. This analysis is reinforced when regard is had to Byrne, a seminal decision dealing with the operation of industrial awards which sit alongside contracts of employment. At 421, Brennan CJ, Dawson and Toohey JJ held that:

“In a system of industrial regulation where some, but not all, of the incidents of an employment relationship are determined by award, it is plainly unnecessary that the contract of employment should provide for those matters already covered by the award. The contract may provide additional benefits, but cannot derogate from the terms and conditions imposed by the award.” (emphasis added, footnote omitted).

77. Their Honours cited in support of this last proposition Kilminster v Sun Newspapers Limited (1931) 46 CLR 284; [1931] HCA 37, and had earlier cited with approval the following passage from the decision of Isaacs J in Josephson v Walker (1914) 18 CLR 691 at 700; [1914] HCA 68, a case in which an employee claimed the unpaid balance of wages due under an award:

“And the unpaid balance is claimed as due by virtue, not of a common law contract, but of the statutory obligation which subsists notwithstanding any agreement to the contrary – no man being capable under the Statute of contracting himself out of his rights or obligations in this respect. The right claimed is a new right. It is a right which was unknown before to the law: a right to receive from an employer more than was bargained for.” (emphasis added).

78. The primary judge’s interpretation of the reference to the Carlton Group Home as being an essential term or condition of the employment relationship and as outflanking the mobility of staff clause in the Award was in the face of these authorities. Whilst it might be open to parties to an industrial award separately to negotiate to confer additional benefits on a worker by way of contract, that is only permissible to the extent that the award in question is not derogated from, for instance by purporting to withdraw rights conferred on employers by the award.

79. To the extent that the primary judge drew any support for his construction from the reference in the 17 January 2013 letter to “permanent transfer in terms of section 87(2) of the” PSEM Act, “permanent” in that context was plainly being used in the same sense as it was used in that Act, namely by way of contrast to a “temporary” transfer. Mr Smith’s transfer was “permanent” in contrast to a transfer for a particular period of time to or within another agency, at the expiry of which he would return to his existing agency or position within a particular agency. It did not mean that he could never be transferred again, but simply that he was being transferred from the Rickard Road Group Home to the Carlton Group Home on a permanent rather than temporary basis.

80. A further aspect of the primary judge’s reasoning was that, given that Mr Smith was already a permanent employee of FACS at the time of the 17 January 2013 letter, the only significance of this letter lay in the new work location that it specified. His Honour used this fact to elevate the specification of the Carlton Group Home into a contractual promise that Mr Smith could not ever be transferred from that location without his consent.

81. Not only did that reasoning not take into account the various matters, principles and authorities set out above precluding such a construction, the purpose of the 17 January 2013 letter could be readily explained on a basis other than that it represented an agreement that Mr Smith could not be transferred from the Carlton Group Home in the future without his consent. It is plain from the reference to s 87(2) of the PSEM Act in the opening words of the letter that there must have been consultation by or on behalf of the head of the public sector agency with Mr Smith in relation to his transfer. The letter was the formal confirmation of his transfer and it was scarcely surprising in that context that it would make reference for the sake of good order to the group home to which Mr Smith was being transferred and set out the details of his position.

82. The details supplied sensibly recorded the date upon which he would enter into duty, his commencing salary and the hours per week Mr Smith would work at this new location. Even if these did not differ from those applicable at the previous group home at which he had worked, setting them out in detail in a formal letter such as that of 17 January 2013 in the context of his move to a new location no doubt constituted good practice and ensured that there could be no issue or confusion as to the matters specified upon commencement at the new location. The reference to the location did not, however, necessitate interpreting the 17 January 2013 letter in a way that precluded FACS (and LWB as a result of the 2018 transfer of Mr Smith’s employment) from transferring Mr Smith at some point in the future, should the need arise or circumstances otherwise require that outcome.

83. One consequence of the primary judge’s construction was that, if the Carlton Group Home for example ceased to be habitable or became unsuitable to operate as such, Mr Smith could have insisted on his contractual rights and FACS would have been powerless to transfer him against his will to another group home. That further illustrates the lack of commerciality of the construction preferred by the primary judge.

84. For all of the above reasons, it follows that appeal ground 1(a) should be upheld and that the primary judge erred in his construction of the 17 January 2013 letter and in his analysis of the rights and obligations of the parties as at 2018 when Mr Smith purported to terminate the contract on the basis of LWB’s alleged repudiation. The primary judge also erred in holding that LWB was not entitled to transfer Mr Smith to a different group home in the Metro South Region in May 2018 because it had effectively contracted out of any right under the Award to do so.

85. It follows further that LWB’s insistence in asserting its entitlement to do so and in resisting Mr Smith’s position to the contrary was not repudiatory conduct that entitled Mr Smith to terminate the employment relationship as he purported to do so, through his lawyers, on 27 September 2018. There was no entitlement to terminate on this basis and thus no entitlement to the damages awarded.

86. Even if the primary judge had not erred in the ways explained above, there would have been a question whether LWB’s conduct was in truth repudiatory, in circumstances where it was not looking to sever its relationship with Mr Smith, but endeavouring conscientiously to find a place for him to work within the network of Group Homes that would accommodate, on the one hand, his psychologist’s view that he should not return to the Carlton Group Home and, on the other hand, the complaints that had been made in relation to him in 2017. In circumstances where parties have a bona fide disagreement as to the meaning of their contractual rights and obligations, a mistaken understanding by one party of those rights or obligations will not always or necessarily amount to repudiation: see DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 432; [1978] HCA 12.

87. It is not, however, necessary to enter upon that question in view of my conclusions as to the primary judge’s construction of the contract and Mr Smith’s lack of any entitlement to terminate the contract and to an award of expectation damages.

88. Mr Gibian SC, who appeared for Mr Smith, accepted that the second and third grounds of appeal were tied to success or failure on ground 1(a). It follows that those two grounds should also be upheld.

89. There remains to be addressed the question of the correctness or otherwise of the primary judge’s conclusion on the alternative basis that there was a lack of consultation by LWB with the PSA within the meaning of the mobility of staff transfer provisions in cl 25 of the 2010 and 2015 Awards, and that this lack of consultation amounted to repudiatory conduct.

90. It will be recalled that cl 25(v) of 2010 Award which ultimately became cl 27(v) of the 2015 Award, as varied in 2017, provided that “[w]here an involuntary transfer is necessary, consultation with the PSA will be undertaken prior to the transfer being affected [sic].”

91. The primary judge’s reasoning on this issue has been set out at [62] above. There are a number of difficulties with it. Most fundamentally, to the extent that [58] of his Honour’s reasoning was to the effect that a failure by LWB to consult the PSA amounted to a repudiation by LWB of its contract with Mr Smith, such a conclusion cannot be sustained and, in fairness to Mr Smith’s legal representatives, was not pleaded.

92. Any failure to consult may have amounted to a breach of the Award, but how it would manifest an intention no longer to be bound by a contract and thus amount to repudiatory conduct is not clear in circumstances where the very transfer about which the consultation was to have occurred involved the continuation of the contract and employment relationship, albeit at a different location.

93. I would, in any event, accept the submission made on behalf of LWB that there was no relevant failure to consult the PSA.

94. The primary judge found that there had in fact been consultation with the PSA in relation to Mr Smith’s transfer away from the Carlton Group Home during the first PSA meeting on 9 November 2017: see [62] above. His Honour appeared to treat this consultation as irrelevant because at that consultation, the new group home to which Mr Smith was to be transferred was not the Caringbah Group Home which was the subject of the direction of 4 May 2018 but, rather, the Gardeners Road Group Home.

95. Whether or not consultation within the meaning of cl 25(v) of the Award requires consultation not only in relation to the reasons for a proposed transfer but also in relation to the specific location to which an employee is to be transferred need not be decided because I am of the view that there was in fact consultation about the transfer to the Gardeners Road Group Home at the second PSA meeting of 30 April 2018, and that the primary judge’s conclusion to the contrary was not correct. The purpose of the second PSA meeting was to discuss the transfer. Mr Shaw of the PSA was in attendance at that meeting. That no witness in the case gave evidence as to what if anything he said during the meeting did not mean that the PSA had not been consulted. Mr Smith made very clear at the meeting what he wished to say. Mr Shaw could have spoken up if he did not think that Mr Smith understood what was happening or was not being given an opportunity to express his view or had not communicated that view clearly. From the affidavit accounts of the meeting, Mr Smith was given an opportunity to and did express his view and evidently understood the position as it was put to him on behalf of LWB.

96. The primary judge appears in [58] of his decision, extracted at [62] above, to have based his view as to lack of consultation in part at least upon the fact that he thought that LWB had made its decision to transfer prior to the consultation. That is one construction of the exchanges. Another (and the preferable one) is that nothing that was said in the meeting altered a provisional view that LWB would not return Mr Smith to the Carlton Group Home.

97. The 2015 Award required consultation with the PSA to occur before a transfer was effected, not before a decision is made to transfer an employee. There was no failure to consult prior to the transfer; the 30 April 2018 meeting occurred prior to the direction of 4 May 2018. Even if cl 25(v) should be construed as meaning that consultation must occur prior to a decision to transfer an employee, it will invariably be the case that at least a provisional decision will have been made to transfer by the time of consultation and that the purpose of the consultation is to give the PSA the opportunity to ensure that the employee’s views have been communicated. That plainly occurred in the present case.

98. It follows that appeal grounds 1(b) and (c) should be upheld.

99. It is not strictly necessary to address the various grounds of appeal relating to the award of damages, as I have held that Mr Smith was not entitled to damages as there was no repudiatory conduct on the part of LWB and thus no valid termination of the employment contract by Mr Smith.

100. It is sufficient to record, however, that there appears to be considerable merit in LWB’s submission that, on the primary judge’s own reasoning, the income Mr Smith would have earned in what the primary judge specified as the damages period would have been zero (or close to it) because:

• from 29 October 2018 until 13 September 2019, he was certified as unfit to work his pre-injury duties, meaning that he was unfit to work at the Carlton Group Home, and as such he could not have been receiving full time wages at that time;

• he remained medically unfit to work at the Carlton Group Home until 19 November 2019 (and continued to submit WorkCover medical certificates to that effect), with the effect that he would have earned no income in that period;

• on 15 November 2019, he submitted a WorkCover Certificate indicating that he was fit for pre-injury duties from 19 November 2019 however, on 19 December 2019, LWB wrote and offered to find suitable employment at a location other than the Carlton Group Home, but Mr Smith did not respond;

• in any event, even if it were theoretically the case that Mr Smith could have returned to the Carlton Group Home after 19 November 2019, the primary judge’s findings made it clear that he would not have done so at all or, if he did, not for very long.

101. In this latter respect, LWB pointed to the primary judge’s acceptance of the evidence of Mr Jones, Mr Smith’s treating psychologist, that it was impossible for him to remain at the Carlton Group Home: at [66]; that that Home had a toxic effect on Mr Smith’s health: at [66]; and that it was most likely that he could not have continued his employment at the Home far beyond the end of the Guarantee Period (being 26 February 2020), if that far: at [65].

Conclusion

102. For all of the above reasons, the orders I would make are as follows:

1. Allow the appeal with costs.

2. Set aside the orders of the primary judge of 15 May 2020 and 2 July 2020.

3. Order that the statement of claim filed 25 January 2019 be dismissed.

4. Order that the Respondent pay the Appellant’s costs at first instance.

103. MACFARLAN JA: I agree with Bell P.

104. PAYNE JA: I agree with Bell P.

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Amendments

22 March 2021 - [72] - revision made to last sentence as follows: "... contrary to a well-established canon of statutory construction ..." replaced by "... contrary to a well-established canon of contractual construction ...".

Decision last updated: 22 March 2021