FEDERAL COURT OF AUSTRALIA Independent Education Union of Australia v Australian International Academy of Education Inc [2012] FCA 1512 Citation: Independent Education Union of Australia v Australian International Academy of Education Inc [2012] FCA 1512 Parties: INDEPENDENT EDUCATION UNION OF AUSTRALIA and GEORGIA BUTTERS CAIN v AUSTRALIAN INTERNATIONAL ACADEMY OF EDUCATION INC File number: VID 1114 of 2012 Judge: GRAY J Date of judgment: 24 December 2012 Catchwords: INDUSTRIAL LAW – employment – teacher engaged on fixed term contract – allegation of contravention of award – conditions for fixed term employment alleged not to exist – whether interlocutory order could require employer to treat employment as having been on a full-time basis and as continuing Legislation: Associations Incorporation Act 1981 (Vic) Associations Incorporation Reform Act 2012 (Vic) Fair Work Act 2009 (Cth) ss 545, 545(1), 545(2), 545(2)(a) Fair Work (Registered Organisations) Act 2009 (Cth) Workplace Relations Act 1996 (Cth) s 178 Educational Services (Teachers) Award 2010 cll 10.1, 10.2(c), 10.3, 10.4, 10.5, 10.6, 10.6(a), 10.6(b), 10.6(c), 11.2. Cases cited: Construction, Forestry Mining and Energy Union v Pilbara Iron Company (Services) Pty Ltd (No. 3) [2012] FCA 697 considered National Tertiary Education Industry Union v The University of Wollongong [2002] FCA 31 considered Date of hearing: 24 December 2012 Place: Melbourne Division: FAIR WORK DIVISION Category: Catchwords Number of paragraphs: 26 Counsel for the applicants: Mr E White Solicitor for the applicants: Maurice Blackburn Counsel for the respondent: Mr M Follett Solicitor for the respondent: Gadens Lawyers IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY FAIR WORK DIVISION VID 1114 of 2012 BETWEEN: INDEPENDENT EDUCATION UNION OF AUSTRALIA First Applicant GEORGIA BUTTERS CAIN Second Applicant AND: AUSTRALIAN INTERNATIONAL ACADEMY OF EDUCATION INC Respondent JUDGE: GRAY J DATE OF ORDER: 24 DECEMBER 2012 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The application for interlocutory relief be dismissed. 2. The proceeding be referred to a registrar for mediation to be completed, if possible, by 15 March 2013. 3. The proceeding be allocated to the docket of a judge and listed for directions on a date to be fixed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY FAIR WORK DIVISION VID 1114 of 2012 BETWEEN: INDEPENDENT EDUCATION UNION OF AUSTRALIA First Applicant GEORGIA BUTTERS CAIN Second Applicant AND: AUSTRALIAN INTERNATIONAL ACADEMY OF EDUCATION INC Respondent JUDGE: GRAY J DATE: 24 DECEMBER 2012 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 The first applicant in this proceeding, the Independent Education Union of Australia ("the Union"), is an organisation of employees registered pursuant to the Fair Work (Registered Organisations) Act 2009 (Cth). Its members include school teachers. The second applicant is a school teacher and a member of the first applicant. The respondent is a body corporate, originally incorporated under the Associations Incorporation Act 1981 (Vic) and now incorporated under the Associations Incorporation Reform Act 2012 (Vic). It conducts a school at a number of campuses. 2 The application, which was filed in the Court on 20 December 2012, seeks a variety of orders in respect of alleged contraventions of the Educational Services (Teachers) Award 2010 ("the Award"). For the most part, the orders sought concern the imposition of pecuniary penalties. There is a claim for an order declaring that the second applicant is a full-time employee of the respondent, and a claim for an order that the respondent compensate the second applicant for any loss and damage caused by the alleged contraventions and an order that interest be paid on any such compensation. 3 In respect of the 2011 school year, the second applicant entered into a contract of employment with the respondent, under which she was engaged as a full-time teacher, described as a "Primary Generalist Teacher". The tenure for which she was engaged was described in the contract as "Replacement 2011 School Year". 4 By letter dated 4 November 2011, the respondent informed the second applicant that there was a replacement vacancy available in the next year. The letter said: As a result, your Replacement Period of appointment at the Academy will be extended until the end of 2012 School Year, on the same terms and conditions of [sic] your Appointment Notice. As a consequence, the second applicant continued to teach at the respondent's school during 2012. 5 On 22 October 2012, she was given a letter from the respondent in the following terms: Re: End of your Replacement Tenure. By the end of Term 4, 2012, your replacement tenure will be completed. However, if any suitable position for 2013 appears before the end of term 4 this year, the office will inform you of the available position for your consideration. On behalf of the AIA family, I would like to thank you for your valuable services during the replacement period and I wish you the best of luck to find a suitable and rewarding position. 6 Clause 10.1 of the Award provides: Employees under this award will be employed in one of the following categories: (a) full-time employment; (b) part-time employment; (c) casual employment; or (d) fixed term employment. 7 Clause 10.2(c) of the Award provides: Where the employer engages the employee on a fixed term basis, the letter of appointment will inform the employee of the reason the employment is fixed term, the date of commencement and the period of the employment. 8 Clauses 10.3, 10.4 and 10.5 of the Award make specific provisions for full-time employment, part-time employment and casual employment respectively. Clause 10.6 contains specific provisions relating to fixed term employment as follows: An employee may be employed for a fixed period of time for a period of at least four weeks but no more than 12 months on either a full-time or part-time basis to: (a) undertake a specified project for which funding has been made available; (b) undertake a specified task which has a limited period of operation; or (c) replace an employee who is on leave, performing other duties temporarily or whose employment has terminated after the commencement of the school year. Provided that where the replacement arrangement extends beyond 12 months, the fixed term employment may be extended for up to a further 12 months. 9 One of the contraventions alleged in the application is that no proper basis existed for the appointment of a fixed term employee, at the time when the second applicant's appointment was made. It is also alleged that there was a failure to comply with the requirements of cl 10.2(c) in relation to the second applicant. Significantly, however, there are general allegations made in the affidavits supporting the application to the effect that the respondent has engaged in systemic contraventions of the provisions of cl 10.6, by purporting to engage fixed term employee teachers in circumstances where the award requirements for the making of such appointments were not satisfied. 10 Attempts have been made by the Union to inspect documents held by the respondent, for the purpose of investigating whether such systemic contraventions have occurred, and to what extent. The material suggests that those attempts have been frustrated in part by the respondent and that the respondent has engaged in the falsification of documents, the inference being that it has done so in order to conceal its systemic contraventions. In the extensive affidavit material that was filed in Court this morning on behalf of the respondent, there is no issue taken with those allegations, despite the fact that the affidavits have been careful in taking issue in relation to a number of other allegations. For the purposes of this interlocutory application, I therefore assume that such systemic contraventions have occurred, and that the respondent has attempted to conceal them. 11 Before me today is an application for interlocutory relief claimed in the application filed on 20 December 2012. The form of the relief sought is as follows: 1. Until the hearing and determination of the application or further order, an injunction or order pursuant to s 545 of the Fair Work Act 2009 (Cth) restraining the Respondent, whether by itself, its servants or agents, from dismissing or terminating the Second Applicant. 2. Until the hearing and determination of the application or further order, an interim order pursuant to s 545 of the Fair Work Act 2009 (Cth) that the Respondent treat the Second Applicant as a full-time employee. 12 Section 545 of the Fair Work Act 2009 (Cth) ("the Fair Work Act") gives the Court wide powers. Subsection (1) provides that the Court may make any order the Court considers appropriate, if the Court is satisfied that a person has contravened or proposes to contravene a civil remedy provision. It can be taken that a contravention of the terms of a modern award, of which the award is one, is a contravention of a civil remedy provision. Subsection (2) of s 545 gives some examples of orders the Court may make, which are specifically said not to limit the breadth of subs (1). Those orders include in para (a) an order granting an injunction or interim injunction to prevent, stop or remedy the effects of a contravention. 13 It is clear on the material that the applicants have substantial difficulty in seeking an interlocutory injunction based on the proposition that the second applicant is an employee of the respondent, whose employment contract will ultimately be enforceable by means of a permanent injunction. Even on the assumption that there have been contraventions of the kinds alleged in the proceeding on the part of the respondent, it is difficult to see how the combination of those contraventions, the provisions of cl 10 of the Award and the provisions of s 545 of the Fair Work Act could bring about the conclusion that the second applicant was, or is, a full-time employee of the respondent. 14 In National Tertiary Education Industry Union v The University of Wollongong [2002] FCA 31 at [39], Branson J dealt with a similar argument in relation to previous legislation. Her Honour said: Neither s 178, nor any other provision of the WR Act, discloses, in my view, an intention that a consequence of the type for which the applicants here contend should flow from a breach of a term of an enterprise agreement. Were an intention able to be gleaned from the terms of the WR Act that the making of contracts in breach of enterprise agreements is prohibited, it would be necessary to consider whether the statute also discloses an intention that such contracts should be rendered void and unenforceable (see Yango Pastoral Company Pty Ltd v First Chicago Australia Limited (1978) 139 CLR 410). However, in this case the applicants do not argue in favour of invalidity. They argue in favour of a "contract" of employment coming into existence, the terms of which do not reflect any offer made by the University or accepted by Dr Rodwell. No principle of law was identified by the applicants which would justify the Court in declaring the existence of such a "contract". 15 I am more than prepared to accept the submission on behalf of counsel for the applicants in the present case that the terms of s 545 of the Fair Work Act are significantly broader than were the terms of s 178 of the Workplace Relations Act 1996 (Cth). As Katzmann J said in Construction, Forestry Mining and Energy Union v Pilbara Iron Company (Services) Pty Ltd (No. 3) [2012] FCA 697 at [186], "The section confers the broadest of discretions on the Court." Her Honour said that in the context of considering a claim that the failure to reappoint a fixed term employee was a contravention by the employer concerned of the provisions known as the adverse action provisions. Her Honour found that the employer concerned had made its decision not to re-employ the employee because of reasons that were prohibited by the Fair Work Act. Her Honour was therefore considering the question of reinstatement and how best to exercise the power that undoubtedly existed to reinstate the employee in employment. In the result, her Honour exercised that power by ordering that the employer offer the former employee permanent employment on the same terms and conditions that applied to employees classified in a particular way, with a particular length of service. 16 The present case is a very different one. Whatever the breadth of the discretion to formulate orders offered by s 545(1) of the Fair Work Act, it remains difficult to see a principle of law that would justify the Court in creating a contract that simply did not exist. Even if it could be said that cl 10.6 of the Award deprived the respondent of any power to employ an employee for a fixed term unless the requisite circumstances existed, as was the case in the University of Wollongong case, the applicants here do not contend that any contract entered into by the second applicant with the respondent should be rendered void and unenforceable. Rather, they contend that it should be assumed that, because the respondent was unable to employ the second applicant for fixed terms, she would have been employed as a full-time employee teacher. The suggestion is that her employment of such a notional kind should therefore be enforced by injunction. This proposition is difficult enough in itself. 17 However wide a discretion the Court may have to make orders consequent upon contraventions of awards, it must be doubted whether the change in the legislative provisions has so broadened the power as to enable the Court to create employment relationships, or to create employment relationships of kinds that have not hitherto existed. 18 Even if it be assumed that the respondent, having a vacancy for a teacher, would have wished to employ one, it cannot necessarily be assumed that it would have taken the step of employing the second applicant as a full-time employee. Although the specific provisions relating to part-time employment and casual employment would seem to rule out the filling of a vacancy by something other than a full-time employee, it is not impossible to suppose that the respondent could have cobbled together some form of part-time employment for one or more teachers, or some form of casual employment for one or more periods, in order to cope with the vacancy. 19 More importantly, however, it is inappropriate for the Court to be inventing relationships as a means of dealing with the contravention of awards. If a power of that kind can ever be exercised, it must be in extremely rare cases. 20 There is an even greater difficulty in the way of the applicants in the present case, however. The respondent's letter to the second applicant, dated 22 October 2012, made it very clear to her that she would not be employed in the respondent's school after the end of term 4, 2012. Even if she were considered notionally to have some form of full-time employment, it is very clear that she was being given notice by means of that letter that whatever employment she had would cease at the end of term 4, 2012. In the absence of any provision for notice in the express terms of her contract of employment, she would have been entitled to reasonable notice. Clause 11.2 of the Award provides for a term of notice of at least seven term weeks. It would be difficult to argue that compliance with such a provision of the award would have led to the applicant, a relatively junior teacher, being given notice that was less than reasonable. The only conclusion I can reach, therefore, is that after the end of term 4, 2012, the second applicant was no longer a teacher employed by the respondent. 21 The affidavit material filed on behalf of the respondent suggests that the end of term 4, 2012 was 18 December 2012. No issue is taken by counsel for the applicants with that proposition as a matter of fact. Counsel for the applicants seeks to argue by reference to the specific terms of the contract entered into between the respondent and the second applicant, which mention the phrase "School Year", that the contract must be construed by reference to the terms of the Award and that the school year must be taken to have expired immediately prior to the beginning of the first term 2013. Even if that be so, cl 11.2 of the Award does not seem to suggest that any period of notice of termination of employment must expire at the end of any particular school year, or at the end of any other particular period. 22 Accordingly, it seems that at 18 December the second applicant ceased to be employed by the school. That was two days prior to the filing of the application in this Court. The relief sought in para 1 of the claim for interlocutory relief in that application plainly cannot be granted. The dismissal or termination of employment of the second applicant had already taken effect, and the Court cannot restrain the respondent from effecting it. 23 The second paragraph of the application for interlocutory relief is also problematic in the circumstances. It does not specify strictly when the applicants seek that the respondent should be required, or should have been required, to treat the second applicant as a full-time employee. If it were to be construed as requiring the respondent now to employ the applicant and to treat her as a full-time employee, I would not consider that to be an appropriate order to make consequent upon any contravention alleged in the applicant's application. 24 For these reasons, it seems to me that there is no serious question to be tried as to whether the applicants would be entitled to final relief of the kinds they seek that would support the grant of an interlocutory injunction at the present time. It is therefore strictly unnecessary to turn to the question of the balance of convenience. I do wish to say, however, that if I had been of the view that the applicants had an entitlement to some form of injunctive relief that would have reinstated the second applicant in her employment, or would have required the respondent to accept her continuing service, I would not have been disposed to accept the respondent's arguments that the balance of convenience favoured not granting such an order. 25 In particular, I do not accept that the respondent's school would have allowed a teacher to be on its payroll without allocating any duties to her whatsoever, as was suggested in the affidavit material. Nor do I accept that the possibility that the second applicant might not perfect her registration as a teacher by April 2013 would be a barrier to the granting of such an order. In my view if injunctive relief had been a viable option, it would not have been brushed aside as lightly as the respondent would seek to do. In the result, however, it will be necessary for me to dismiss the application for interlocutory relief. 26 The orders I make are: 1. The application for interlocutory relief be dismissed. 2. The proceeding be referred to a registrar for mediation to be completed, if possible, by 15 March 2013. 3. The proceeding be allocated to the docket of a judge and listed for directions on a date to be fixed. I certify that the preceding 26 (twenty-six) numbered paragraphs are a true copy of the reasons for judgment herein of the Honourable Justice Gray. Associate: Dated: 21 January 2013