Horsman, Barry Stanley v Commissioner of Main Roads [1998] FCA 1179

FEDERAL COURT OF AUSTRALIA INDUSTRIAL RELATIONS - unfair dismissal – breach of award – penalty – whistle blower duties – preliminary questions – availability of damages for breach of contract – maximum penalty – res judicata – inadequacy of questions – careful consideration of necessity for questions required – no issue of principle. Industrial Relations Act 1988 (Cth) s 178 Workplace Relations and Other Legislation Amendment Act 1996 (Cth) s 144

Byrne and Frew v Australian Airlines Ltd (1995) 185 CLR 410, referred to.

Australian Workers Union v Main Roads Department (unrep. 6 November 1992, Australian Industrial Relations Commission), referred to.

BARRY STANLEY HORSMAN v COMMISSIONER OF MAIN ROADS WG 111 OF 1997 FRENCH J

PERTH

14 SEPTEMBER 1998

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY WG 111 of 1997

BETWEEN: BARRY STANLEY HORSMAN

Applicant

AND: COMMISSIONER OF MAIN ROADS

Respondent

JUDGE: FRENCH J

DATE: 14 SEPTEMBER 1998

PLACE: PERTH

EX TEMPORE REASONS FOR JUDGMENT ON PRELIMINARY ISSUES This is an application which was filed in this Court on 7 October 1997. The applicant, Barry Stanley Horsman, was employed by the Commissioner of Main Roads under a federal award as a plant operator instructor from 21 May 1990. He says that he was employed also under certain conditions contained in a Conditions of Service Manual which, together with the award he refers to as "the Contract". It is pleaded in the application that Horsman's duties included an obligation to inform senior officers of undesirable, illegal, improper or inappropriate practices or behaviour on the part of other employees, or any reasonable suspicion he may have had of such practices or behaviour. He says that, in accordance with that obligation, he brought to his employer's attention practices and behaviour which he regarded as falling into that category. These included poor mid-level management and supervision, poor work performance and attitude of certain of the Commissioner's rank and file personnel, misuse of plant and equipment, conversion and sale of property and on-duty consumption of alcohol and/or drugs by other employees. He says that he carried out all his duties in the course of his employment, including the obligation to draw these matters to the Commissioner's attention. The application then sets out terms of the Contract which refer, inter alia, to provisions of the award and in particular to clause 9(e)(ii)(1) that the termination of any employment of the applicant should not be harsh, unjust or unreasonable. It refers also to conditions of service which require inquires into the subject of any complaint against an employee, the recording of the names of witnesses, advice as to what they have said and written warnings that a repeat of the offence would result in termination. It also asserts that Horsman was entitled to be dealt with in accordance with the principles of natural justice. It is alleged that on 7 October 1992 the Commissioner dismissed Horsman and that the dismissal was in breach of the terms of contract. Horsman contends that his dismissal was harsh, unjust or unreasonable. The basis of the dismissal is said to have been that he had made continued and unfounded allegations against his fellow employees amounting to mischievous behaviour justifying dismissal for misconduct. His contention is that it was harsh, unjust or unreasonable because he was dismissed for carrying out the duties earlier referred to in par 3 of the application, was not given the benefit of the procedures prescribed, was not advised to and did not make contact with an employee counsellor and was not dealt with in accordance with the rules of natural justice. The application alleges that as a result of the breach of contract by the respondent, Horsman has suffered loss and damage. He claims the imposition of a penalty for breach or non-observance of the award, payment of all amounts due to him under the contract which have not been paid and damages for breach of contract, interest and costs. The matter was originally to be set down for hearing but the parties submitted that there were certain preliminary issues that ought to be resolved and that might save time in relation to the disposition of the matter. The preliminary questions were framed by reference to par 11 of a statement of facts and contentions lodged by the applicant on 15 January 1998 which set out the relief claimed as follows: "11.1 The imposition of a penalty for breach or non-observance of the Award. 11.2 Payment of all amounts due to the Applicant under the Contract which have not been paid. 11.3 Damages for breach of the Contract. 11.4 Interest. 11.5 Costs." The preliminary questions which were settled by consent and an order made accordingly were in the following terms: "(1) If the Applicant establishes that the Respondent breached the Australian Workers Union Construction, Maintenance and Services (WA Government Award) 1987 ("the Award") is the Court empowered to make an award of damages for breach of contract as set out in paragraphs 11.2 and 11.3 of the Applicant's Statement of Facts and Contentions dated 15 January 1998 and the Further and Better Particulars of Claim dated 20 February 1998? (2) If the Applicant establishes that the Respondent breached the Award what is the maximum penalty available under section 178 of the Industrial Relations Act 1988? (3) Having regard to the Australian Industrial Relations Commission decision of Commissioner Laing in Australian Workers' Union v Main Roads Department delivered on 6 November 1992 in which it was held that the Respondent had not acted harshly, unjustly or unfairly in terminating the Applicant's employment, is this matter: (a) res judicata, and/or (b) subject to issue estoppel?" The preliminary questions came on for hearing on 14 September 1998. In his outline of submissions Horsman's counsel said, on the question of damages for breach of contract, that he accepted that damages are not currently available for breach of contract based on breach of a clause in an award which is not made an express term of the contract of employment. He referred to Byrne and Frew v Australian Airlines Ltd (1995) 185 CLR 410. In the course of submissions on this first point, counsel pointed out that the respondent's contentions in reply to its statement of facts and contentions in par 4 made the following statement: "At paragraph 11.2 and 11.3 the Applicant claims payment of all amounts due and payable under the contract and damages for breach of the contract. Presumably the claim is for amounts owed and damages suffered as a result of the alleged breach of clause 9(e)(ii)(1)." The respondent's submissions then went on to say: Clause 9(e)(ii)(1) is not a term of the contract. No action in contract relating to its breach can be maintained. The case of Byrne & Frew v Australian Airlines Ltd (1995) 185 CLR 410 is on point. See in particular the joint judgment of Brennan CJ, Dawson and Toohey JJ at pages 417-424." From what Horsman's counsel has said, the basis upon which he asserts a claim for damages for breach of contract is broader than that hypothesised by the respondent. He foreshadowed his intention to amend his statement of facts and contentions to raise an implied term of the contract that Horsman was to be provided with reasonable notice of termination except in circumstances justifying summary dismissal. Thus it would seem that the basis upon which Horsman seeks relief by way of damages for breach of contract is broader than the reliance upon cl 9(e)(ii)(1) of the award, which is the presumed basis referred to by the respondent in its submissions. In addition, there is a reference to reliance upon par 5.3 of the conditions of service and the applicant's asserted entitlement to be dealt with in accordance with the principles of natural justice, which is also said to have been breached. From this it appears that the first preliminary question as formulated by the parties rests on a false premise as to the basis upon which the award for damages is sought. The mere raising of the possibility of implication raises the possibility that there may have to be evidence taken about the implication and the basis upon which the implication is sought to be made. This is plainly not appropriate for disposition as a preliminary question. I therefore do not propose to answer the first preliminary question and both parties seem to agree that that is an appropriate course of action. As I have remarked earlier, it is a pity that these things were not further and more closely explored when the preliminary question was settled. The second preliminary question asks what maximum penalty applies under s 178 of the Industrial Relations Act 1988 (Cth) if the applicant establishes that the respondent breached the award. This question as a point of contention between the parties seems to have evaporated. Both are agreed that the appropriate maximum penalty for a breach of an award referred to in s 178 at the relevant time is $1,000. No doubt the issue arose because the current maximum penalty is $10,000 and there was a question about whether it was the current penalty or the penalty applicable at the time of the breach, that applied. As the submissions of counsel for the respondent point out, in construing a statute there is a presumption against retrospective operation. There is no express intention to be found in s 44 of the Workplace Relations and Other Legislation Amendment Act 1996 (Cth) that the new penalty of $10,000 for a breach of s 178 should apply to offences committed before the commencement of the Workplace Relations and Other Legislation Amendment Act 1996. The relevant amending provision is simply in these terms: "Subparagraph 178(4)(a)(ii) – omit $1,000", substitute "$10,000 for a body corporate or $2,000 in other cases." It was accepted by the respondent that the penalty of $1,000, though now repealed, continues to apply due to the operation of s 8(d) of the Acts Interpretation Act 1901 (Cth). This is accepted by the applicant, so the answer to the second question is - "$1,000". The third question asks whether, having regard to the Australian Industrial Relations Commission decision of Commissioner Laing in Australian Workers Union v Main Roads Department delivered on 6 November 1992, is the matter res judicata and/or subject to issue estoppel? The question seems to be posited on the assumption that the decision was a judicial decision. Counsel for the respondent now tells me that neither res judicata nor issue estoppel is to be relied upon but, rather, estoppel by conduct or agreement on the basis that the proceeding before Commissioner Laing was in the nature of an arbitration pursuant to an agreement made by the parties. There are references to such an agreement in the reasons for decision of Commissioner Laing given on 6 November 1992. However, that is not necessarily the compass of the evidence that may be brought if the respondent's reply is to be amended to encompass estoppel by conduct. Although the answer to question three is, in my opinion, no, that does not dispose of the matter because the respondent proposes to rely upon another ground. The exercise of dealing with this matter by way of the resolution of preliminary questions has been, I think it can fairly be said, a waste of time and that waste of time is really at the door of the parties who have not properly addressed the bases upon which the claims are being made and the defences established. I suppose this does confirm the degree of scepticism that I had about this matter initially in relation to its resolution by preliminary questions. The matter should now go directly to a hearing without any further interlocutory skirmishing. The answers to the questions will be: As to question 1: not answered; As to question 2: $1,000; and As to question 3: no. I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice French