Industrial Relations Commission of New South Wales CITATION : CFMEU (on behalf of Laming) v Northern Sydney Area Health Service [2004] NSWIRComm 251 PARTIES : Construction, Forestry, Mining and Energy Union (New South Wales Branch) (on behalf of Terry Laming) Northern Sydney Area Health Service Asset Services Group FILE NUMBER: 767 of 2004 CORAM: Grayson DP CATCHWORDS : Unfair dismissal, application for reinstatement, employers decison to terminate based on alleged frustration of contract, analysis of doctrine of frustration due to illness and incapacity, absence from work following back injury, back injury not work related, graduated return to full duties proposed by treating doctors, refusal by employer to accommodate graduated return to work, reliance by employer on medical opinion not preferred, rejection by employer of treating doctors opinions, capacity for full range of painting duties attested to by applicant Held, doctrine of frustration inapplicable, dimissal harsh, unreasonable and unjust, applicant's age and assumed difficulty in finding other employment adds to harshness, reinstatement ordered, payment of lost remuneration ordered, continuity of employment ordered Annual Holidays Act 1944 LEGISLATION CITED : Industrial Arbitration Act 1940 Industrial Relations Act 1996 Long Service Leave Act 1955 Bettini v Gye (1876) 1 Q.B.D. 183 Poussard v Spiers (1876) 1 Q.B.D. 410 Jackson v Union Marine Insurance Co. Ltd (1874) L.R. 10 C.P. 125 CASES CITED : Marshall v Harland & Wollff (1972) 1 WLR 899 Finch v Sayers (1976) 2 NSWLR 540 Cachia v State Authorities Superannuation Board (1993) 47 IR 254 Hilton Hotels of Australia Ltd. v Pasovska (2003) 122 IR 428 HEARING DATES: 07/20/2004; 08/09/2004; 08/18/2004 DATE OF JUDGMENT: 09/01/2004 Mr S Marshall Industrial Officer for Construction, Mining, Energy Union (New South Wales Branch) LEGAL REPRESENTATIVES: Mr C Knappick Human Resource Manager for Northern Sydney Area Health Service JUDGMENT: - 10 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES Coram: Grayson DP Date: 1 September 2004 Matter No IRC 767 of 2004 CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION (NEW SOUTH WALES BRANCH) (ON BEHALF OF TERRY LAMING) -v- NORTHERN SYDNEY AREA HEALTH SERVICE ASSET SERVICES GROUP Application by Construction, Forestry, Mining and Energy Union (New South Wales Branch) on behalf of its member Terry Laming re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 DECISION [2004] NSWIRComm 251 1 Mr Laming was employed as a painter by Northern Sydney Health in 1994 and was dismissed from that employment on 11 February 2004. 2 The dismissal is said by the employer to result from a frustration of the employment contract brought about by the applicant's physical incapacity to carry out his painting work on a full time basis. 3 The employer's decision to terminate the applicant's employment was made during a period of absence from work following the onset of non-work related back pain in or about October 2003. 4 The applicant remained in the care of his treating doctors. At their recommendation, he attended for hydrotherapy and took anti - inflammatory and analgesic medication. He was referred to and seen at the employer's request, by Dr Kanagaratnam, occupational physician, on 18 December 2003 and 5 February 2004. Dr Kanagaratnam reported on those consultations on 20 May 2004 presumably for the purpose of these proceedings. I say that having regard to the applicant's oral evidence bringing into question some of the observations contained in Dr Kanagaratnam's report. 5 For example, the applicant said he was not taking six Voltaren tablets per day. He did not recall, and by implication doubted telling Dr Kanagaratnam on 5 February 2004, as the doctor reported, that he rated himself "50% to normal". In terms of the doctor's recorded history of "intermittent back pain for the past nine years", the applicant made the point that there were long periods when he was pain free. Against that, the applicant relies upon the opinion evidence of his treating doctor, Drs Bateman and Needham that he was fully fit for his pre-injury duties as at 19 March 2004. This opinion would have come as no surprise to the employer given that Dr Bateman's certificate of 7 January 2004 postulated progressive improvement throughout a graduated return to work programme and then fitness for full-time pre-injury duties from 16 February 2004. 6 To the extent that Dr. Bateman's opinion in that regard may be qualified, and I do not necessarily accept that it should be, by the opinion of Dr. Needham, the rehabilitation specialist who saw the applicant on 22 January 2004 on referral from Dr. Bateman, there can be no doubt that both regarded the applicant's condition as progressively improving and that both can be taken as attesting to the applicant's fitness for full-time pre-injury work in mid-March 2004 at the latest. 7 I have little difficulty given among other things the more direct and continuing clinical relationship to the applicant, in giving greater weight to the opinion of the treating doctors and to the extent that it differs with the opinion evidence of the employer's doctor, I prefer it. 8 It follows that I accept that at all times relevantly certified by the treating doctor, that is from or about mid-January 2004, the applicant was able to carry out the full range of his pre-injury duties albeit not on a full-time basis until the middle of February 2004 according to Dr. Bateman or the middle of March 2004 according to Dr. Needham. 9 This becomes important in the consideration of whether the applicant was unfairly dismissed particularly when one has regard to the following evidence given by the applicant in cross-examination: - Q. When you had a look at Mr Carroll's statement and his statement in relation to this case you stated it was generally understood there were no light duties in your job? A. Yes. Q. Can you explain further what you meant by that? A. Actually I remember you yourself saying at one time painting is painting. It is a bit of a heavy job and that's true. You are down at the skirting board and up near the ceiling lifting things. It is regarded as a heavy job, more so when dealing with older buildings and old enamels and things like that. Q. So there are no light duties in the ole (sic) in which you are employed as a painter? A. That's right. Q. You have entioned (sic) it involves bending down and stretching, being up to the ceiling? A. Yes. There is one thing I could add. Painting, because a painter is used to this movement on a regular basis, it is not as hard for him as for someone who is not experienced. A painter is used to those movements. Q. If I could refer to Dr Kanagaratnam's medical reports, Exhibit 5, and to job placement. Under "suitable for placement subject to the following conditions," "it says no heavy lifting greater than 5 kilos, no repetitive bending or twisting of the spine. Your description of the type of work that painting involves, involves these type of activities? A. This I believe was an overly conservative estimate. Q. But it does involve those activities? A. Yes, which I am very used to carrying out. Q. That medical report is dated 18 December. If I could refer you further into that document and to Exhibit 12, again from Dr Kanagaratnam, 5 February under the heading "Suitable for placement subject to the following conditions", and this is seven weeks later, the return to work program suggested no heavy lifting, exactly the same as before, no repetitive bending and twisting movements of the spine. So the medical reports were identical even though they are seven weeks apart. They both stated no greater than 5 kilos yet your lifting you said was more than that in your role, more than 5 kilograms? A. Yes, although I believe this to be an overly conservative report. Q. It was suggested in the other doctor's certificates that were put forward to you by your treating practitioners that you could do a reduced number of days in your role. Was there a suggestion you could do a full day's work on those days? A. Yes. Q. Including lifting greater than five kilos? A. Yes. Q. Including forward bending? A. Yes. Q. Including twisting movements? A. Yes. Q. And yet your injury from the lamb shanks was something weighing how much do you think? A. Six kilograms each bag. Q. And the weighing of the painting equipment as aound (sic) ten kilograms? A. Yes, planks and trestles. Q. If I could refer now to Mr Carroll's statement Exhibit 5, the first page -- A. If I could interrupt, regarding the lifting of trestles and planks, it is something you may only do only occasionally according to the job. You go for some period without lifting ladders and without lifting any trestles and using an ordinary six foot aluminium ladder which is very often the case. If I said I am fit for painting duties I mean all painting duties. In actual fact though the heavy lifting is now (sic) always there and at times the equipment can be brought up in a truck which makes the situation easier still. I just thought I would add that. 10 It seems to me that the applicant is best placed as a painter of many years experience to know most about his capacity to carry out his duties and he did not present in the witness box as a person who would pay less than due regard to his health and safety in making those assessments. 11 The employer does not appear to have canvassed the matter with the applicant from that perspective at the time it was decided to dispense with his services. Having said that and to be fair to the employer, the applicant was allowed to remain absent on authorised leave without pay for a period after his sick leave had been exhausted and prior to his dismissal. At odds with such an approach, however, is the refusal to provide him with suitable duties on a graduated return to full duties programme designed by the treating doctors. This refusal seems to based on the notion that the applicant could not at the relevant time carry out his duties as a painter and that there were no other types of work available to him. In fact, on his own evidence and that of his treating doctors indicates, his only limitation at the date of his dismissal was that he may have been incapable of carrying out the work of a painter for five days each week. 12 The question whether other types of work were available to the applicant does not arise and it seems to me that where there was a clear discretion within the employer's human resources policy to bring the applicant back on painting work albeit on the basis of graduated return to full-time work, it should in the circumstances of this case, have done just that. 13 Indeed as the manager Mr Carroll said in his evidence the employer is now engaging contractors who are brought in from time to time (as distinct from full-time) to carry out the painting work previously carried out by the applicant. 14 I do not consider that there were sufficient grounds for the employer to conclude that the contract of employment had been frustrated at the date of the dismissal and I am of the view that the such a misconception on the part of the respondent of itself renders the dismissal harsh, unreasonable and unjust. 15 In so concluding, I bear in mind the cases to which I have been taken and in particular Finch v Sayers (1976) 2 NSWLR 540 in which the issue of frustration following incapacity was considered in the context of the cases extensively reviewed by Wootten, J who said: - The review of the authorities shows that, before one can answer the question of whether a contract of employment is frustrated, one must look at the whole of the terms of the contract, express and implied, and at all surrounding circumstances, including the provisions made for the sickness and retirement of the employee, and the general practice of the particular employer, or in similar employment. When one does this, it may well be that, in many areas of employment in contemporary society, particularly where one is dealing with an indefinitely continuing relationship, and not the performance of a specific task, there is relatively little room for the operation of the doctrine of frustration due to illness. 16 As Mr. Marshall rightly submitted, when the various factors to which Wootten, J alludes are considered in the circumstances of this case, the elements necessary to found the doctrine of frustration are not sufficiently established. 17 The cases make it clear that these factors are interrelated and cumulative but not necessarily exhaustive of those which have to be taken into account (Marshall v Harland & Wollff (1972) 1 WLR 899). The question relevantly raised for determination is whether the employee's incapacity, looked at before the purported dismissal, was of such a nature or did it appear likely to continue for such a period that further performance of his obligations in the future would either be impossible or would be radically different from that previously undertaken by him and accepted by his employer under the agreed terms of employment. As Mr. Marshall submitted, the answer in this case must be emphatically no. The incapacity was not such that it was impossible for the employer to accommodate and after fulfilling the frequently seen and completely orthodox graduated return to work programme, the applicant would have been back to full duties. The contract was therefore not frustrated. 18 Furthermore, and as Wootten, J observed in Finch, it is necessary in the construction of contracts to import contemporary standards of society into such considerations. His Honour described it this way at 546-7: - One cannot but feel reluctance to embrace a view of the law of contract which produces a result not only contrary to what is a common assumption and basis of action of both parties, but contrary also to what common experience tells one is the normal basis on which employers and employees conduct their relationships today in this community, when permanent or indefinite employment is contemplated. If, as the defendants contend, the authorities constrain me to this course, I must adopt it. But I cannot accept that the proper starting point for consideration of this particular matter is the view adopted by the courts in England one hundred years ago of the consequences of an opera singer being disabled by illness: Bettini v Gye (1876) 1 Q.B.D. 183, Poussard v Spiers (1876) 1 Q.B.D. 410 or even the general view of the rights of an ordinary servant at that time: Jackson v Union Marine Insurance Co. Ltd (1874) L.R. 10 C.P. 125. Certainly one can no longer assimilate an employee becoming ill to a chartered ship running aground, as was considered natural in the judgement later cited. Decisions of that era are quite natural and sensible expositions of the terms to be implied in contracts of employment in the laissez faire society of one hundred years ago, when the usual rights and obligations of an employee were quite different from what they are in the highly unionized welfare society of today. But it is a misconception to attempt to weave out of these decisions on the construction of contracts at that time rules of law to be applied automatically to regulate the rights of parties today. The proper starting point is today the same as that adopted by the judges in those days, namely to ask what are the terms of the contract under consideration, and, where the express terms provide no answer, to ask what terms may be reasonably implied in a contract of the parties, assuming them to be reasonable men according to the standards of the day - not the standards of one hundred years earlier. In this community the legislatures have either directly, or through the arbitration tribunals which they have set up, established a considerable array of minimum standards governing the rights of an employee to absent himself from work. Some of these provisions apply to all employees, including award-free executives, e.g Annual Holidays Act , 1944, Long Service Leave Act , 1955. They may, of course, be rendered inoperative by inconsistent federal awards, but these invariably make their own provisions on such matters. Even where the legislature has stipulated the minimum standard only through awards, as in the case of sick leave under s. 88c of the Industrial Arbitration Act , 1940, the effect has rubbed off on to award-free employees such as executives, who are commonly afforded more favourable terms. Indeed, the extension of these benefits to the general body of employees has usually been in the first instance a catching-up process on benefits previously available to more favoured public servants and white collar employees. In addition, superannuation benefits have become widespread amongst public servants and white collar employees, and are spreading to other groups. One important feature of many of these benefit, e.g. long service leave, annual leave, sick leave and superannuation, is that they commonly depend on, or are proportioned to, continuity of service. In such circumstances, the proposition that independently of any act of the parties, a contract of employment is automatically discharged by a certain degree of incapacity on the part of the employee bears a totally different aspect from what it did one hundred years ago. Then it merely meant that that the employee could not be sued for not carrying out the agreed work, and the employer did not have to go on paying for work which was not being performed, and hold the job open. Today a similar proposition could have quite unforseen and arbitrary effect on accruing rights, as is indeed claimed by the defendants in this very case, and would mean the automatic discarding of the disabled employee in a way quite inconsistent with current attitudes and industrial practice. 19 That case has more recently been cited with approval by a Full Bench of this Commission in Court Session in Hilton Hotels of Australia Ltd v Pasovska (2003) 122 IR 428 where their Honours, Wright, J, President, Walton, J, Vice-President and Boland, J said this: - We consider that the authority which provides relevant assistance is the judgment of Wootten J in the Equity Division of the Supreme Court in Finch v Sayers . His Honour's judgment was described by the Full Industrial Court in Cachia v State Authority Superannuation Board (1993) 47 IR 254 at 273 - 274 as "the principal relevant authority relating to the question of frustration of employment contracts" in New South Wales, and that the reasoning of Wootten J was "overwhelmingly persuasive in a modern industrial context". We consider that those observations are correct and that his Honour's judgment has particular significance in relation to award-related employment. Such employment (except where casual in nature) may usually be described as employment of indefinite duration. Such employment is the subject of terms drawn from either the award or the contract of employment which invariably provide a ready facility for termination of the employment by either party to the contract of employment. That is the situation in the present case. The significance and utility of the judgment in Finch v Sayers lies not only in Wootten J's conclusions but also in his Honour's careful analysis of contemporary employment law and regulation and the way in which such circumstances have affected legal notions developed in times when employment relations and attitudes to such relationships were very different. 20 It is further the case, as Mr. Marshall submitted, that dismissal from employment in the case of this applicant who is 61 years of age and may be assumed to experience greater difficulty in finding alternative employment than a younger person, can reasonably be regarded as carrying with it an added degree of harshness. 21 Finally and although there is reference in the evidence to elements of dissatisfaction with the applicant's pace of work in the months preceding his absence due to incapacity, that dissatisfaction formed no part of and is not relied upon by Mr. Knappick in justification of the employer's decision to dismiss. As much was helpfully conceded by Mr. Knappick in response to a question from the Commission during oral submissions. That matter will therefore be left to one side. 22 I am of the view and find accordingly that the dismissal was harsh, unreasonable and unjust and I order the employer to reinstate the applicant to his former position on terms not less favourable to the applicant than those that would have been applicable if the applicant had not been dismissed. 23 I further order that the employer pay to the applicant an amount that the applicant would have received by way of remuneration but for dismissal. In so ordering, it is noted for the assistance of the parties that the applicant was on the preferred evidence, fit for 2 days work per week in the period 12 January 2004 to 18 January 2004; 3 days work per week in the period 19 January 2004 to 1 February 2004; 4 days work per week in the period 2 February 2004 to 15 February 2004 and 5 days work per week thereafter. 24 I finally order that the period of employment of the applicant with the employer be taken not to have been broken by the dismissal. 25 These proceedings are concluded. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.