McKerlie v State of New South Wales

[1999] NSWSC 1050

CITATION:	McKerlie v State of New South Wales [1999] NSWSC 1050
CURRENT JURISDICTION:	Common Law
FILE NUMBER(S):	20662/97
HEARING DATE(S):	19 October 1999
JUDGMENT DATE:	26 October 1999
PARTIES :	Colin Robert McKerlie (Plaintiff) State of New South Wales (Defendant)
JUDGMENT OF:	Master Harrison

COUNSEL :	Mr J H Pearce (Plaintiff) Mr P Menzies QC with Mr D Dickinson (Defendant)
SOLICITORS:	Gillis Delaney Brown (Plaintiff) Crown Solicitor (Defendant)
CATCHWORDS:	Summary judgment; strike out statement of claim; termination of employment
ACTS CITED:	Public Service Management Act 1988 (NSW) Industrial Relations Act 1991 Industrial Relations Act 1996 Public Sector Management Act 1988
CASES CITED:	Air Services Australia v Zarb (NSWCA, unreported 26 August 1998) Dey v Victoria Railway Commissioners (1948-49) 78 CLR 62 General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 Webster & Anor v Lampard (1993) 177 CLR 598 Shenton v Smith 1895 AC 229 at pp 234, 235 Fletcher v Nott (1938) 60 CLR at 77 Kaye v Attorney General for Tasmania (1955-1956) 94 CLR 193 at 198 Suttling v Director-General of Education (1985) 3 NSWLR 427 at 447 Suttling v Director-General of Education (1986-87) 162 CLR 427
DECISION:	See para 26

10

THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

MASTER HARRISON

TUESDAY, 26 OCTOBER 1999

20662/97 - COLIN ROBERT McKERLIE v
STATE OF NEW SOUTH WALES

JUDGMENT (Summary judgment;
strike out statement of claim;

termination of employment)
1   MASTER: By notice of motion filed 4 June 1999 the defendant seeks that the amended statement of claim be struck out pursuant to Part 13 r 5 of the Supreme Court Rules (SCR) or alternatively that paragraphs 5 to 12 inclusive of the amended statement of claim be struck out. The defendant relied on the affidavits of Geoff Boyd sworn 17 June 1999 and Michael Frederick Sands sworn 6 May 1998.

2   Part 13 r 5 of the SCR refers to summary judgment. It states:

“(1) Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings -

(a) no reasonable cause of action is disclosed;

(b) the proceedings are frivolous or vexatious;

or

(c) the proceedings are an abuse of the process of the Court,
the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.”

3   In a recent decision in Air Services Australia v Zarb (NSWCA, unreported, 26 August 1998) Rolfe AJA found it useful to remind himself of the highly demanding test imposed on a party seeking summary judgment. His Honour referred to Dey v Victorian Railway Commissioners (1948-49) 78 CLR 62, General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 and Webster & Anor v Lampard (1993) 177 CLR 598. I have reproduced some of the passages quoted.

4   In General Steel Barwick CJ, who heard the application alone, referred to Dixon J’s passage quoted above at p 130. He then stated:

“Although I can agree with Latham CJ in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings, in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff’s claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed.”

5   Barwick CJ also said:

“It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of cause of action - if that be the ground on which the Court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; ‘so obviously untenable that it cannot possibly succeed’; ‘manifestly groundless’; ‘so manifestly faulty that it does not admit of argument’; ‘discloses a case which the Court is satisfied cannot succeed’; ‘under no possibility can there be a good cause of action’; be manifest that to allow them’ (the pleadings) ‘to stand would involve useless expense.”

6   More recently in Webster Mason CJ, Deane and Dawson JJ reinforced the rigorous testing stating, at p 602:

“The power to order summary judgment must be exercised with ‘exceptional caution’ and ‘should never be exercised unless it is clear that there is no real question to be tried.”’

7   According to Rolfe AJA in Zarb:

“The demanding nature of the test is in no way lessened in circumstances where there are the potential for difficult factual and legal issues to arise. Rather, as the decision in Webster made clear, it is heightened: see also Wickstead & Ors v Browne (1992) 30 NSWLR 1 and Esanda Finance Corporation Limited v Peat Marwick Hungerfords (1997) 188 CLR 241.”

8   The following facts are not in dispute.

(1) On 6 March 1991 the defendant’s Office of the Director of Public Prosecutions forwarded to the plaintiff and offer of appointment as Principal Solicitor Grade V. On 11 March 1991 the plaintiff accepted that offer.

(2) With the advice of the Executive Council, pursuant to the provisions of the Public Sector Management Act 1988 and upon the recommendation of the Director of Public Prosecutions, the Governor approved the appointment on probation of the plaintiff.

(3) On 4 July 1991 the plaintiff was given notice of certain allegations made against him by Ms Helen Barbalich and others in relation to his conduct and work performance and proposing that a disciplinary interview be conducted with him the next day.

(4) On 5 July 1991 the plaintiff was suspended, pending a resolution of disciplinary matters affecting him.

(5) On 11 July 1991 the plaintiff, by letter, resigned as a solicitor with the Office of the Director of Public Prosecutions with immediate effect. His resignation was accepted.

9   The plaintiff alleges that there were two relevant terms of the contract between the plaintiff and defendant namely those set out in paragraphs 5 and 9 of the amended statement of claim. They are:

“5. It was an implied term of the contract of employment between the Plaintiff and Defendant (“the contract”) that the Defendant, through its servants and agents, would not without reasonable cause, conduct itself in a manner likely to damage or destroy the relationship of confidence and trust between the parties as employer and employee.”

10   The defendant agrees that the above term is generally an implied term in a contract of employment.

“9. It was a term of the contract that the Defendant would conduct any disciplinary proceedings against the Plaintiff in accordance with the provisions of the Public Sector Management Act, 1998, the Public Sector (General) Regulations made pursuant to the Public Sector Management Act, 1988 and the Guidelines for Disciplinary action promulgated by the Attorney-General’s Department.”

11   It is alleged in paragraphs 10 of the amended statement of claim that:

“10. On 5 July 1991, the Defendant, by its employee Mr John Favoretto wrongfully and in breach of the terms of the contract set out in the paragraphs 5 and 9 failed to conduct a disciplinary proceeding against the Plaintiff in accordance with the Public Sector Management Act, 1988, the Public Sector Management (General) Regulations and the Guidelines for Disciplinary Action promulgated by the Attorney-General’s Department.”

12   and in paragraph 12 that:

“12. On or about 11 July, 1991, the Defendant, by its employee Reg Blanch QC wrongfully and in breach of the contract terminated and wrongfully constructively dismissed the Plaintiff and refused to employ him any longer.”

13   The plaintiff alleges that he has suffered injury and claims damages which include wage loss, injury to reputation and diminution of capacity to obtain employment in the legal profession.

14   The defendant submitted that whether the plaintiff had a contract of employment does not matter because there is a statutory regime in place that governs the plaintiff’s terms of employment and this statutory regime abrogates the common law. According to the defendant part of the statutory regime is that if the plaintiff wishes to pursue legal proceedings that his employment had been wrongly terminated, those proceedings should have been taken in the Industrial Relations Court.

15   The plaintiff was appointed to his position in accordance with s 28 of the Public Service Management Act 1988 (NSW) (PSMA) in that he as an officer of the Public Service was appointed to that position on probation for a period of 6 months. Section 29(1) of the PSMA provides that after a period of 6 months, the Governor may on the recommendation of the Department Head based on inquiry and report may either confirm the appointment after the period of appointment or annul the appointment during or after the period of appointment. Section 29(3) states that s 75 does not prevent the Governor from exercising at any time the power to annul the appointment under s 29(1). Section 75 refers to punishment of officers for breaches of discipline. Thus the plaintiff was appointed on probation for a period of 6 months. He resigned within that probationary period.

16   Sections 54 and 55 of the PSMA provide:

“54. Right of the Crown to dispense with an officer’s services not affected by the Act (1979 Act, s 118)
The right or power of the Crown to dispense with the services of any person employed in the Public Service, as it existed immediately before the commencement of this section, is not abrogated or restricted by any of the provisions of this Act.
55. No compensation to be paid where officer’s services dispensed with or salary reduced (1979 Act, 2 119)
An officer or temporary employee is not, except as provided by this or any other Act, entitled to any compensation as a result of the officer’s services being dispensed with or the officer’s salary being reduced.”

17   The position at common law prior to the commencement of the PSMA and its predecessors was that unless in special cases where it is otherwise provided, either expressly or by implication, those who serve in such a capacity hold their offices at the pleasure of the Crown: Shenton v Smith 1895 AC 229 at pp 234, 235. The general rule of the common law is that the King may refuse the services of any officer of the Crown and suspend or dismiss him from his office Fletcher v Nott (1938) 60 CLR at 77. Except under an act of Parliament, no one acting on behalf of the Crown has authority to employ any person except upon the terms that he is dismissible at the Crown’s pleasure: Kaye v Attorney General For Tasmania (1955-1956) 94 CLR 193 at 198. McHugh JA (as he then was) in Suttling v Director-General of Education (1985) 3 NSWLR 427 at 447 stated that generally the employment of a Crown servant may be terminated at any time at the pleasure of the Crown. He stated that this was an implied term of the ordinary contract of Crown employment but acknowledged that this general rule may be abrogated by the express terms of the contractor by statute. It is my view that s 54 recognises the continued existence of a right to dismiss at pleasure. That right has not been varied either by statute or by contract.

18 According to the plaintiff, s 24 in Part 8 of the Industrial Relations Act 1991 provides:

“Application of Part
(1) This Part applies only to the dismissal or threatened dismissal of:
(a) an employee for whom any conditions of employment are fixed by an award or agreement; or
(b) an employee of the Crown; or
(c) any other employee of a class prescribed by the regulations as a class of persons to whom this Part applies.
…”

19 and s 246(1) and (2) provide:

“Application
(1) If an employer dismisses, or threatens to dismiss, a person who is an employee of the employer and the person claims that the dismissal was, or that the threatened dismissal would be, harsh, unreasonable or unjust, the person (or an industrial organisation of employees on behalf of the person) may apply to the Commission for the claim to be dealt with under this Part.
(2) Any such application should be lodged with the Industrial Registrar not later than 21 days after, or (in the case of a threat of dismissal) may be lodged with the Industrial Registrar before, termination of the employment.
…”

20 These sections are almost identical to ss 83 and 84 of the Industrial Relations Act 1996.

21 According to the defendant, under the statutory regime in place during the plaintiff’s period of employment the defendant had the right to dispense with the plaintiff's services at will and the plaintiff is not entitled to any compensation except that provided in the PSMA and the Industrial Relations Act 1991. The Industrial Relations Act 1991 has been superseded by the Industrial Relations Act 1996 but it is common ground that the plaintiff’s case is covered by the 1991 legislation. According to the defendant, the only statutory right to compensation is that contained in ss 245 and 246 of the Industrial Relations Act 1991.

22   Both parties referred to the High Court decision of Suttling v Director-General of Education (1986-87) 162 CLR 427. In Suttling a teacher applied for a temporary position by the Director-General of Education (NSW) and was appointed on secondment for a fixed term at a higher salary than he then received. During the term, the establishment to which he was seconded was closed. No alternative position at an equivalent salary being available, he accepted one at a lower salary and sought to recover from the Director-General the difference between those salaries with interest. At p 437 Brennan J (with whom Deane J and Mason ACJ agreed) held that:

“Members of the [Public] Service are appointed pursuant to the Act and their rights must be ascertained by reference to its provisions. The relationship between a civil servant of the Crown and the Crown has often been described as contractual, though the civil servant has been appointed pursuant to statute: see, e.g., Gould v Stuart [1896] AC 575 at 577; Carey v The Commonwealth (1921) 30 CLR 132 at 137; Lucy v The Commonwealth (1923) 33 CLR 229 at pp 238, 249, 253. However, the contractual nature of the relationship has not been universally accepted: see e.g., Monckton v The Commonwealth (1920) 27 CLR 149 at pp 155, 156; Lucy v The Commonwealth (1923) 33 CLR at 244; Geddes v Magrath ; Morgan v Geddes (1933) 50 CLR 520 at pp 533-534; The Commonwealth v Welsh (1947) 74 CLR 245 at pp 262, 274 and Ryder v Foley (1906) 4 CLR 422 at 440. And sometimes an espousal of one view rather than the other has been avoided: see e.g., Reilly v The King [1934] AC 176 at 180; Kodeeswaran v Attorney-General (Ceylon) [1970] AC 1111 at 1118. If the relationship is contractual, the contract must be consistent with any statutory provision which affects the relationship. No agent of the Crown has authority to engage a servant on terms of variance with the statute. To the extent that the statute governs the relationship, it is idle to inquire whether there is a contract which embodies its provisions. The statute itself controls the terms of service: McVicar v Commissioner for Railways (NSW) (1951) 83 CLR 521 at 527.”

23   Many of the plaintiff’s submissions were concerned with the contractual nature of the relationship between employer and the employee but this does not seem to be the point. As Brennan J says in Suttling to the extent which the statute governs the relationship there is no utility in pursuing the enquiry whether there is a contract that embodies its provision.

24   In relation to the statutory provisions, the plaintiff submitted that as he resigned his services were not “dispensed with” so s 55 of the PSMA does not apply. Further he argued that the word “compensation” does not includes damages in s 55. The words of the statute should be given their ordinary and natural meaning. Those words should not be given a narrower interpretation and read down. It is my view that this argument is hopeless.

25 It is my view that s 55 of the PSMA disentitles the plaintiff to claim compensation except as provided by that Act or any other Act. The plaintiff has not pleaded his case under section of PSMA. The other Act that gives the plaintiff an entitlement is the Industrial Relations Act 1991. Section 246(2) of the Industrial Relations Act directs those claims to be made to the Industrial Registrar. There are statutory provisions which govern the plaintiff’s rights to take proceedings for wrongful dismissal. The amended statement of claim which pleads breach of contract is doomed to failure and should be dismissed. The plaintiff has already been given an opportunity to reformulate his claim. In the exercise of my discretion, as I do not think that a further opportunity to amended would overcome the deficiencies in the plaintiff’s claim, I dismiss the amended statement of claim. Costs should follow the event. The plaintiff is to pay the defendant’s costs.

26   The orders I make are:

(1) The amended statement of claim is dismissed.

(2) The plaintiff is to pay the defendant’s costs.

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Last Modified: 10/26/1999