Reid, A v Australian Institute of Marine & Power Engineers

[1990] FCA 335

Re: ALEXANDER REID
And: AUSTRALIAN INSTITUTE OF MARINE AND POWER ENGINEERS; PETER BAIRD; LAWRENCE
SIMS; TERENCE MATCHETT; A ROBERT DAILEY; ALAN NASH; WILLIAM CAMPBELL; LANCE
MAGUIRE; SYDNEY WILLIAMS; PAUL STEELE; ANTHONY FOOT; LEWIS BURNETT; ROBERT
ASHTON and TERANCE SNEE
No. Q I3 of 1990
FED No. 335
Industrial
96 ALR 174
33 IR 463

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
INDUSTRIAL DIVISION
Pincus J.(1)

CATCHWORDS

Industrial - entitlement of branch secretary to salary during period of suspension - whether suspension ordinarily imports loss of salary - whether the power of the Federal Council of the organisation to suspend an "officer" should be limited to "federal officer" - whether rescission by plebiscite operates ab initio or in futuro.

Industrial Relations Act 1988, s.209

HEARING

BRISBANE

#DATE 11:7:1990

Counsel for the applicant: Mr D.R. Hall

Solicitors for the applicant: W.H. Tutt and Quinlan

Counsel for the respondents: Mr S. Rothman

Solicitors for the respondents: McInnes, Wilson and Jensen, town agents for Turner Freeman

ORDER

The application be dismissed.

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

JUDGE1

This is an application for orders that the respondents pay the applicant certain sums said to be due under a contract of employment. The applicant, an employee of the first respondent, was suspended, but the suspension was later rescinded; the question is whether he is entitled to recover the salary which he would have received had he not been suspended.

1. The application is made under s.209 of the Industrial Relations Act 1988 against the first respondent, which is an organisation registered under that Act, and certain of its officials. Mr Rothman, who appeared for the respondents, questioned the appropriateness of use of s.209, particularly as against the first respondent; he argued that the first respondent was not a "person who is under an obligation to perform or observe" its own rules: see s.209(9). However, it is unnecessary to discuss that aspect of the matter, since the respondents agreed to have the claim decided on the merits. Specifically, the respondents agreed that, if use of s.209 was thought to be inappropriate, they were not opposed to the application's being treated as if it included a claim under the general law to the money in question.

2. The applicant is the Queensland Branch Secretary of the first respondent, and as at 13 November 1987, his salary was $39,809.40 annually. On 25 September 1987, the President of the first respondent, Mr Dailey, who is himself a respondent, caused to be delivered to the applicant a "summons to show cause", to a meeting of the Federal Council of the first respondent, why the applicant should not be removed or suspended from office on certain grounds set out in that document. The applicant, in consequence of that notice, attended on 13 November 1987 at a meeting of the Federal Council, which found him guilty of gross neglect of duty and gross misbehaviour. It was then resolved as follows:
   

" That the Queensland Branch Secretary Mr A Reid be suspended from office for a period of two months. "

That period expired, of course, on 13 January 1988. Subsequently, a plebiscite was held under r.6 of the first respondent's rules (further discussed below) and there was a majority in favour of rescission of the Federal Council's decision; the returning officer so declared on 8 June 1988, some months after the period of suspension had expired.

1. Counsel for the applicant, Mr Hall, submitted that the Federal Council had no power under the rules to suspend the applicant, that if there was such power, it did not involve the suspension of the right to receive salary, and that the rescission of the suspension operated ab initio, so as to require the restoration to the applicant of what he had lost by it.

2. Mr Rothman, for the respondents, contested each of these submissions and, as to the last, argued that the rescission could not operate in the way suggested and, indeed, could have no effect on a transaction which was complete. Mr Rothman added that the members had, in any event, no power to rescind, by plebiscite, a decision of the Federal Council.

3. All of the questions raised are of law, not fact. It was suggested during argument that I should take into account, and assume to be correct, allegations made against the applicant which were held by the Federal Council to have been made out. I do not think I should do so; the resolutions of the Federal Council do not create an estoppel binding on the applicant in this Court, so as to oblige the Court to assume against the applicant the correctness of the allegations there dealt with. It is true that the applicant has not here challenged the correctness of those allegations, but he was not obliged to do so.
   1. Does Suspension Import Loss of Salary?

4. The rule providing for suspension is r.41(a), which reads in part as follows:
   

" The Federal Council may remove or suspend from office any officer or member of the Federal Council at a meeting of the Federal Council to which the person concerned has been summoned in writing to show cause why he should not be so removed or suspended. "

There follows a proviso which is not relevant to this point; sub-r.(e) imposes a limit of three months on any suspension.

1. Rule 41(a) gives no indication as to whether a person suspended under it is entitled to receive salary during the period of suspension. The general rule, in my opinion, is that such a person is not so entitled.

2. I think there may be put to one side authorities dealing with a purported suspension not authorised by the contract of employment or by statute, and cases like Welbourn v. Australian Postal Commission (1983) 52 ALR 669. I was referred to authorities dealing with the effect of reversal of a dismissal, but they appear to me to be of little help. Further, I do not accept the suggestion that the common law concerning suspension of Crown servants is relevant.

3. In Wallwork v. Fielding (1922) 2 KB 66, the question was whether a police constable was properly suspended pursuant to a statute which gave express power to suspend. That point was decided against the plaintiff, but then Lord Sterndale MR went on:
   

" That disposes of the first point, but a second is taken - namely, that granted the power to suspend, that does not import the power to withhold pay during the suspension. I should have thought that power to suspend the operation of a contract necessarily suspended its whole operation, including, not only the performance of duty, but also the right to pay during the period of suspension." (71)

There was then reference to the decision of the Court of Appeal in Hanley v. Pease and Partners Limited (1915) 1 KB 698, which Lord Sterndale treated as authority for the view that:

" ... if there is a power of suspension which is exercised, the whole contract is suspended, the obligations on both sides are suspended. It seems to me that is the inevitable meaning of suspension ... The contract is suspended with regard to its performance by both sides, not only by one ... " (72)

Warrington L.J. and Scrutton L.J. agreed, the former saying:

" It would be a most extraordinary thing if suspension (assuming that there is power to effect suspension) were to be so one sided that the servant were to be excused from performing his part of the contract while the employer was to remain liable to perform his. It seems to me that suspension suspends for the time being the contractual relation between the parties on both sides ... " (75)

1. The same view of the general effect of a power of suspension in a contract of employment was taken by the Court of Appeal in Bird v. British Celanese Limited (1945) 1 KB 336.

2. There would be nothing unorthodox in including in a contract of employment a power in the employer to suspend an employee only in the sense of excluding him from the work, without affecting any other term of the contract. It seems to me, however, that the only sensible meaning one can give to an unqualified power of suspension of an employee is that, at least in general, the obligations under the contract, and all of them, are suspended.

3. I propose to apply these English cases and it follows that, on the proper construction of r.41, a power of suspension validly exercised takes away the right to salary during the period of its operation, and the applicant's first point fails.
   2. May the Federal Council Suspend a Branch Secretary?

4. It was argued for the applicant that under r.41(a), partially quoted above, the expression "any officer or member of the Federal Council" means any "federal officer or member of the Federal Council". Mr Rothman contended that there is no justification for reading the sub-rule in that way.

5. Mr Rothman pointed out that the applicant was, at relevant times, employed by the first respondent (the federal organisation) and not by the branch, and that therefore there was nothing strange about the Federal Council's having a power to suspend him from office.

6. Rule 41(c) gives the Branch Executive power to "remove or suspend from office any officer or member of the Branch Executive ..."; the rest of the sub-rule is framed in terms similar to those of sub- r.41(a). Mr Hall said that the applicant could be suspended only by the Branch Executive.

7. Under r.7(1), the Federal Council consists of six branch secretaries and eight other members. Thus, as Queensland Branch Secretary, the applicant was a member of the Federal Council and could have been suspended in that capacity under sub-r.41(a). However, he was not; the resolution referred to him as the Queensland Branch Secretary. There was some discussion as to whether the result of the suspension was, on the proper construction of r.7(1), to suspend his membership of the Federal Council also, but that seems to me of no consequence. The question simply is whether the power of a suspension of "any officer" in sub-r.41(a) should be read down.

8. Under r.8 the Federal Council is made "the supreme governing body of the Institute" and is given the "management and control of the affairs of the Institute". The first respondent is, of course, the "Institute" referred to in this rule. Under r.34, the Branch Executive is given power inter alia to manage the affairs of the branch; it is therefore not surprising that sub-r.41(c) gives the Branch Executive power to suspend any officer from office. It seems to me that this must mean any officer of the branch in question and includes a branch secretary.

9. But Mr Rothman argued that one should not make a corresponding implication in sub-r.41(a) - i.e. should not read "any officer" as "any federal officer". In my opinion, that contention is correct. The reason for reading down r.41(c) is that the Queensland Branch Executive, for example, cannot have been intended to be given power to remove the Victorian Branch Secretary; there is, however, no absurdity in reading "any officer" in sub-r.41(a) literally, for the Federal Council has under r.8 the supreme governance of the whole organisation and, as I have pointed out, the first respondent paid the applicant's salary. Although I was at first attracted by Mr Hall's submission on this point, I have come to the conclusion that there is no sufficient reason to qualify the general expression "any officer" in sub-r.41(a) in the fashion suggested.

10. I should add that Mr Rothman argued, and it seems to me correct, that the applicant's material gave no indication that the ground just discussed was to be taken, although the applicant's affidavit purports to contain the grounds of the application. That point would not, however, have prevented me from giving effect to Mr Hall's submission, if it were correct; in my opinion it is not.
    3. Was there Power to Rescind by Plebiscite?

11. Sub-rule 6(1) says:
    

" The decisions of the Federal Council and the Federal Executive shall have full force and effect unless rescinded at a subsequent meeting of the Council or unless rescinded by a plebiscite of members hereinafter provided. "

1. Rule 6 goes on to provide for a plebiscite on request signed by not less than 2% of the financial members of the first respondent.

2. On the face of it, the decisions whose effect is in question were decisions of the Federal Council within the meaning of sub-r.6(i) and therefore the sub-rule applies. Further, as Mr Hall pointed out, one would be reluctant to make any implication in sub-r.6(1) so as to cut down the provision for democratic control of decisions of the Council or executive.

3. The argument in favour of doing so was that, in general, powers given to the Federal Council are given expressly subject to plebiscite. Reference was made to r.8, referred to above, which begins:
   

" The Federal Council shall, subject to control by the members in accordance with these Rules, be the supreme governing body of the Institute and have the management and control of the affairs of the Institute and, without limiting the generality of the foregoing, shall in particular have power to:-

... "

There follows a list of specific powers, the content of which need not be set out.

1. The answer to this submission is that in general rules empowering the Federal Council do not do so subject to some expressed or implicit reference to the possibility of plebiscite. Rule 11, which gives the Federal Council power to create and disband sub-branches, does not do so; nor does r.20, which gives the Federal Council control of the Federal Funds; nor does r.33A(ii), which empowers the Federal Council to appoint a returning officer; nor does r.41, which contains the power to remove or suspend. It is true that r.41 makes no reference, express or implicit, to the possibility of control by the members, but nevertheless the respondents' contention on this point has no real substance. It is quite unlikely that those who made the rules intended the members' power to rescind to be confined to the matters set out in r.8, and even if they did, it would not assist the respondents. That is so because r.8 says, in essence, no more than that the Federal Council runs the Institute; its function in doing so includes the exercise of the powers under r.41.

2. I am therefore of opinion that the respondents' contention that a plebiscite cannot reverse a removal or suspension under sub-r.41(a) is incorrect.
   4. Did Rescission give a Right to the Unpaid Salary?

3. Counsel referred to a number of decisions illustrating the effect of rescission, but I did not find them of much assistance. For example, in Re Forssberg (1927) 27 SR(NSW) 200 was relied on. That is authority for the view that, under a particular town planning statute, a shire council had no right to approve a plan of proposed sub- division and then alter the approval after the work had been carried out on the faith of it (208). The basis of that is presumably an estoppel, but no question of that sort arises here. Mr Rothman contended that on the true construction of r.6, a rescission by plebiscite could not undo or in any way affect a suspension from office which was spent. As was pointed out above, at the time of the plebiscite, the two month suspension had ended.

4. It is true that, at least in one respect, the rescission could not reverse the effect of the Council's decision: during the period of two months, the applicant was obliged to do no work as branch secretary, and presumably did none. The rescission could, at most, restore the position unilaterally - by requiring the first respondent to pay the salary due during the two months, not by requiring the applicant to do the work which he would, had he not have been suspended, have been obliged to do during the two months. The solution to the problem which is proffered by Mr Rothman is thus a tidy one; if it is assumed that rescission under r.6(1) can only be as to the future, one ceases to be troubled by the problem that sometimes only partial restoration of the position which would have obtained, had there been no decision, is possible.

5. In contract law, the word "rescission" is used to describe an order of a court undoing a transaction, a condition of which is the possibility of restoring the parties to their original position: Alati v. Kruger (1955) 94 CLR 216 at 224, 228. Sometime, as the orders made in that case sufficiently illustrate, the process of doing so is fairly complex and involves the making of estimates and allowances to achieve substantial justice. The expression "rescission" is also used to describe quite a different process, namely terminating a contract: Carr v. J.A. Berriman Pty Ltd (1953) 89 CLR 327: see the principal judgment (that of Fullagar J.) at p 349. Although some writers have attempted to encourage a practice of using the word only in the sense of rescission from the beginning, it is, both in the authorities and in everyday legal usage, commonly taken to have the other meaning also. But I do not think that the word "rescinded" in r.6 should necessarily be read as intended to apply, particularly or generally, to contracts. What is spoken of is the rescinding of decisions which will not necessarily have anything to do with contracts, but may be purely administrative matters - e.g. to pursue a certain industrial policy or make a certain claim.

6. Although both views seem to me reasonably arguable, I favour what I regard as the more natural construction of "rescinded", which I think to be "treated as at an end". For example, I think that if the Council appoints an officer and later (perhaps much later) rescinds that decision, then the latter resolution can have no greater effect, under the rules, than to put an end to the appointment, from the time of rescission. If the Council makes a contract, then rescinding the decision to do so has no effect on the existence of the contract; it is otherwise if the original decision is not followed by an actual entry into a contract.

7. In my opinion, adopting the construction advanced by Mr Hall is likely, in practice, to lead to considerable complication. One can readily agree with the proposition that rescinding a past decision necessarily involves treating it, from that point on, as null, but it is a considerable step further to regard it as creating an obligation to undo, so far as practical, what has been done under the decision. The problem is particularly acute when one considers the rescission by plebiscite rather than by the Council itself. Mr Rothman contended, in my opinion correctly, that quite apart from sub- r.6(1), the Council must have power to pass resolutions which have the effect of reversing its previous decisions; when it does so, it can make provision as to the extent to which it requires what has been done to be reversed by active steps. Suppose the Council decides to buy a property and causes the organisation to enter into a contract with that in view; should the Council later change its mind, it could no doubt also decide to enter into negotiations with the vendor with a view to escaping from the contract. But the general body of members acting by plebiscite are not given the detailed management of the organisation under the rules. If they decide to rescind and their decision is taken to be operative ab initio, it may be quite uncertain how far the Council's obligation to take steps to reverse what has been done extends. It is my view that it is unlikely that those who made the rule intended the power of rescission by plebiscite to have such a complex and far-reaching effect as it would have if I acceded to Mr Hall's submission.

8. In summary, my views are that the suspension, while it was effective, suspended the obligation to pay salary, that the Federal Council has power to suspend a branch secretary, that there was power to rescind by plebiscite, but that the rescission, occurring as it did after the rescinded resolution was spent, had no practical effect; in particular, it did not oblige the respondent to pay the applicant's salary.

1. The application is therefore dismissed.