|
|
Home
| Databases
| WorldLII
| Search
| Feedback
Australian Industrial Relations Commission Transcripts |
AUSCRIPT PTY LTD
ABN 76 082 664 220
Level 4, 60-70 Elizabeth St SYDNEY NSW 2000
DX1344 Sydney Tel:(02) 9238-6500 Fax:(02) 9238-6533
TRANSCRIPT OF PROCEEDINGS
AUSTRALIAN INDUSTRIAL
RELATIONS COMMISSION
MUNRO J
SENIOR DEPUTY PRESIDENT O'CALLAGHAN
COMMISSIONER DEEGAN
C2002/2273
APPEAL UNDER SECTION 45 OF THE ACT
BY DEPARTMENT OF DEFENCE AGAINST SENIOR
DEPUTY PRESIDENT DRAKE'S DECISION DATED
25 SEPTEMBER 2002 RE MR ARENDS
SYDNEY
10.22 AM, MONDAY, 17 FEBRUARY 2003
PN1
MUNRO J: This is matter C2273 of 2002. It is the adjourned hearing of an appeal against the decision of Senior Deputy President Drake on 22 September 2000, last year. Could we have any changes to appearances, please?
PN2
MR CROWE: If the Commission pleases, I seek leave to appear for the appellant, Commonwealth, in respect of the Department of Defence.
PN3
MUNRO J: I gather otherwise appearances are as previously noted. Sorry, yes, Mr Rich?
PN4
MR RICH: If the Commission pleases, I appear for the CPSU and I seek leave to intervene in these proceedings.
PN5
MUNRO J: Is leave to intervene opposed?
PN6
MR CROWE: Yes.
PN7
MUNRO J: Could you explain the reasons for your intervention?
PN8
MR CROWE: Yes, your Honour. The CPSU seeks leave under section 43 of the Act which as the Commission will be aware grants a wide discretion to allow any person or organisation to intervene provided the Commission is satisfied that it is desirable that the person or organisation be heard in essence. The authorities establish, and in particular I refer to The Crown v Ludeke and Others ex parte Customs Officers Association of Australia [1985] HCA 31; 155 CLR 513 which establishes that the section extends to persons whose rights are not directly affected by the proceeding but who may be indirectly affected by the outcome where considerations of fairness support their being heard.
PN9
Now, the CPSU is a federally registered union with broad coverage and representation rights for employees across the public sector and in particular also in the Department of Defence. The union is the principal union for the Public Service employees across all departments. The CPSU is registered under the Work Place Relations Act as a union in the industry of employment in the Commonwealth, amongst other industries. Although we are not directly affected by these particular proceedings we are indirectly affected. Both our members, potential members and the union itself give its interests as I've outlined, are directly affected by the principles under debate in this appeal and which the Full Bench is being asked to determine, particularly insofar as they relate to the engagement of Commonwealth employees.
PN10
These issues under debate go directly to the status and security of employment of Commonwealth Public Service employees. If the Commonwealth is successful in the arguments that it puts before this Commission then it threatens to impact directly upon all union members and CPSU coverage insofar as it will determine the employment of all public sector employees and potentially allows for employment outside of the Public Service Act, simply by the Commonwealth determining that it will employ persons as independent contractors.
PN11
So it is on this basis that the CPSU seeks leave to intervene. Now we are conscious of not wanting to lengthen the proceedings which are already before the Full Bench as such we have prepared written submissions which we have already distributed to the parties and which were despatched to the Commission on Friday. It might be premature at the moment to hand up copies but I have copies to hand up should leave be granted.
PN12
Now we will seek to rely substantially upon those written submissions with simply a few additional supporting oral arguments so as not to unduly lengthen proceedings. The issues on which we seek to address the Full Bench relate particularly to the interpretation of section 22 of the Public Service Act and also to delegation under the Act and the power of the Commonwealth to engage employees in that respect.
PN13
Further, the issues which we seek to address have already been raised in general in this appeal although not in a way that we have put them necessarily in our submissions but as such we would not anticipate that significant additional time or any additional evidence should be required to address the arguments that we have raised and it might be expected given the nature of our submissions that any response from the parties could be put in writing.
PN14
In conclusion in all the circumstances given the CPSUs broad interest the arguments it seeks to address, the implications of the Commonwealth's submissions should they be successful, on all of these bases and in the interests of fairness we submit that leave to intervene should be granted. Thank you.
PN15
MUNRO J: What is your position, Mr Brady? Did you wish to put a submission?
PN16
MR BRADY: No objection, your Honours.
PN17
MR CROWE: If the Commission pleases the appellant opposes the application for leave to intervene. All it wishes to say is that the submissions which were filed, or I should say served upon us late on Friday, we have looked at quickly over the weekend, they are we submit misconceived and they don't assist the Commission. On that basis the application should be rejected.
PN18
MUNRO J: We will allow the intervention. In doing so we note it is our understanding that there have been some matters of a cognate kind that have been stood over, we will await the outcome of these proceedings whether or not the CPSU is involved in matters we do not know but having regard to the basis upon which the intervention is sought we will allow the CPSU leave to intervene.
PN19
Yes, Mr Crowe? Perhaps before going to that I will just run through what we have. The materials before the Commission are, the appellants submissions which is a document that was lodged on 13 December or thereabouts. We intend to mark that as COM1.
PN20
MUNRO J: We have received two affidavits, both sworn I think on - well one is not sworn it would appear but both lodged on 14 February. One is the affidavit of Francis Kim Henley and we mark that COM2 subject to reserving all rights about its tender and the other is an unsworn document of Neil Westphalen lodged the same day, that can be for present purposes COM3. Again subject to rights reserved.
EXHIBIT #COM2 AFFIDAVIT OF FRANCIS KIM HENLEY LODGED 14/02/2003
EXHIBIT #COM3 AFFIDAVIT OF NEIL WESTPHALEN LODGED 14/02/2003
PN21
MUNRO J: There is from mr Brady on behalf of Mr Arends applicant's submissions in relation to the amended notice of appeal under section 45. That can be marked as A1.
EXHIBIT #A1 APPLICANT'S SUBMISSIONS IN RELATION TO AMENDED NOTICE OF APPEAL UNDER SECTION 45
PN22
MUNRO J: I think on the same date there is an attached document which is headed Applicant's Responses to Supplementary Submissions made by the Respondent. That can be A2.
EXHIBIT #A2 APPLICANT'S RESPONSES TO SUPPLEMENTARY
SUBMISSIONS MADE BY THE RESPONDENT
PN23
MR CROWE: Your Honour, I don't have a document with that heading and I wonder if - - - ?
PN24
MUNRO J: I just whether there might not have been on my part - this is going to come up in relation to the third document, I think these could be documents out of the appeal book because they're both headed U2395 of 2002. One is headed Applicant's Responses to Supplementary Submissions made by the Respondent and then there is another one, Respondent's Supplementary Submissions concerning earlier contracts. They're on the file.
PN25
MR CROWE: I think if your Honour goes to volume 1 of the appeal book, page 159, one of the two documents to which you've just referred might be that one.
PN26
MUNRO J: Perhaps these are just attached ones that - yes, that is one of them.
PN27
MR CROWE: Page 153 might be the other?
PN28
MUNRO J: In that case they are - this one is headed Applicant's Responses to Supplementary Submissions made by the Respondent, so perhaps it is in the appeal book.
PN29
MR CROWE: Perhaps 168 in volume 1, your Honour.
PN30
MUNRO J: That is the document. Perhaps we might disregard those documents. Then there is the CPSU written submission. We will mark that CPSU1
PN31
MUNRO J: We have the appeal book in two volumes and I think that completes the material that we are treating as formally before us. If I have omitted anything perhaps now is the time to draw it to attention.
PN32
MR CROWE: Could I ask your Honour if the document which you have identified with the numbers A1 is a four page document or a much longer document headed Applicant's Responses to Appellant's Submissions.
PN33
MUNRO J: It's both. It is the four page applicant's submissions in relation to the amended notice of appeal and then, at least on this one, attached to it is a document of some 50 paragraphs which is applicant's responses to appellant's submissions. I've marked them as one.
PN34
M CROWE; Thank you your Honour, I understand. There is another document which I am anxious to ensure that the Commission has and it was an amended notice of appeal filed with the submissions of the appellant on or about 13 December last year.
PN35
HIS HONOUR: Yes, I think we have it. I am just not sure where it is located. That is not in the appeal book.
PN36
MR CROWE: No, it's not.
PN37
HIS HONOUR: Very well.
PN38
MR CROWE: If leave is necessary I seek leave to - - -
PN39
HIS HONOUR: Yes, we've attached it to the respondent's - sorry to your submissions so it is part of COM1.
PN40
MR CROWE: I understand, thank you.
PN41
HIS HONOUR: But I think leave to amend the notice of appeal was granted, wasn't it at one of the interlocutory proceedings.
PN42
MR CROWE: I am instructed that's right.
PN43
HIS HONOUR: If not it's granted in any event. I think it's not contested.
PN44
MR CROWE: Your Honour marked two documents as COM2 and COM3 and you remarked that both of them were unsworn affidavits.
PN45
HIS HONOUR: I think the one I have for Mr Francis Kim Henley is sworn. The one for Commander Westphalen as received, I think came in by fax, is not but it may be just an accident of what's been picked up. They are both sworn I think on the other copies that are in.
PN46
MR CROWE: Thank you, your Honour. Now, your Honour, the other material that I have to provide for the Commission is the appellant's submissions in reply which were finalised this morning. could I hand up three copies of those. They are directly in response to the respondent's submissions that were filed on or about 30 January.
PN47
PN48
MR CROWE: I have also prepared a document based on material in the appeal books which may be of assistance to the Commission following the submissions and it's a table headed Contracts which refers to the places in the appeal materials where each of the contracts of engagement can be found and it also sets out the dates of the signing, commencement and expiry of each of those contracts and obviously subject to Mr Brady's rights, I am just checking that. I hand that up in the hope that it might assist the Commission. It's not tendered as new evidence, it's simply a summary of what's in - - -
PN49
HIS HONOUR: To assist in finding it we will mark it Exhibit COM5.
PN50
MR CROWE: Thank you. Your Honour gave a direction about further material I think on two occasions when this appeal was before your Honour sitting alone. One of the directions required three copies of materials to be prepared for handing up today. My instructing solicitor has brought with me three copies for the bench. It probably is due any minute with further folders from my friend at the bar table. I apologise that they are not yet here. Could I hand up though the three that I do have.
PN51
Before I do that though could I say that the last document in a bundle is a copy of the High Court decision in Director-General of Education v Suckling which was taken off the internet which of course what we should have provided was a copy from the CLR. So I therefore hand up three folders and photocopies of the CLR publication of that particular case. It's Volume 162 CLR at page 427 which is in lieu of the last document in the folder and i can give my friends copies of the CLR publication now.
PN52
I don't need to take the Commission to that straight away. What I would seek to do now, if the Commission pleases, is take the Commission to appeal book volume 2. Appeal Book volume 2 has been filed around the same time as submissions were filed in December last year. It is material that we provide generally speaking on the basis of our understanding of the direction or view that your Honour the presiding member expressed at the directions hearings in the matter. I think I need to explain how it is that this material is within the terms of the direction or otherwise why it is tendered to the Commission on appeal.
PN53
The first document in Volume 2 is an Australian Taxation Office superannuation guarantee ruling. It's identified in the index at the beginning of Volume 2 as a document 8.1. It is a document referred to in the submissions of the appellant at first instance which commence at page 159 of volume 1 of the appeal book and conclude at page 162 and in paragraph 13 of that document, that's page 162 of volume 1, there is a reference to this document which should have been - we are not certain, frankly, whether in fact this document was provided to her Honour although the language of paragraph - I am not instructed it was provided to her Honour and indeed the submission at page 162 refers to it as being attached. So it is, in effect, rectifying an omission from volume 1 by including it here.
PN54
Similarly, the document which is document 8.2 is a Department of Finance and Administration Superannuation circular which was referred to at paragraph 11 of the same submissions at page 162 of Volume 1 of the appeal book and, again, it was provided to her Honour as an attachment to that submission and its omission from volume 1 was sought to be rectified by its inclusion here. This document 8.2 is also referred to in another document which is referred to at several places in the evidence and it's a defence instruction, general, admin 24-1 and paragraph 21 of the versions of that defence instruction general which appear in pages 269 and 299 of volume 2 you will see mention of this Department of Finance and Administration Superannuation circular.
PN55
Document 8.3 over the page in the index in volume 2 is a Naval Support Command Minute from Lieutenant Commander Sullivan re superannuation contributions. This was a direction to make superannuations for contractors who were deemed for the purposes of the superannuation guarantee legislation to be employees.
PN56
MUNRO J: So which one are you referring to, 822?
PN57
MR CROWE: No, 8.3 which appears at page 35 of Volume 2. This document, if you go to page 35, has a list of references at the beginning of the minute and the third one of those, a reference C is the last document I took the Commission to, document 8.2 in the bundle.
PN58
The last document in the folder is 8.4, an ADF Surgeon General bulletin. This is the document referred to as B in the minute at page 35. And the next, 8.5, the Defence Departmental contracts instruction, number 11/'95, is reference A in that minute of Lieutenant Commander Sullivan's of 8 November 1995.
PN59
As we understand or interpret the direction which Munro J published to us, one of the things that you asked attention to be given to was superannuation arrangements concerning contractors and employees, and this material goes to the superannuation treatment or payments to persons who were in fact contractors but nevertheless in respect of whom the Commonwealth is obliged to make superannuation payments. And these documents explain the process by which that extension of superannuation contributions came to be made to contractors after the superannuation guarantee legislation came into effect.
PN60
Document 8.6 in volume 2, which is at page 43, is a minute concerning superannuation payments for the respondent in this appeal. It's the implementation, if you like, in respect of him of the minute of 8 November 1995 which I've taken you to at page 35, and you'll see reference to that minute at reference A in this document at page 43. And so this shows that since April 1996 superannuation contributions were made in respect of the respondent by reason of those earlier minutes and directions, notwithstanding our view that he was an independent contractor because the legislation required him, or required us to provide superannuation contributions in respect of him.
PN61
Document 8.7 is a Department of Finance and Administration circular. This was referred to in that submission in volume 1 to which I've already taken the Commission at paragraph 11 on page 161, and it also was attached to that submission when it was tendered to her Honour below and had been omitted from volume 1. It's now included here in volume 2.
PN62
Document 8.8 is a photocopy of an advertisement that appeared in the Sydney Morning Herald for the position which the respondent to the appeal first occupied. That is at page 73. Again we understand that to be a document within the category of documents that the direction of the Commission addressed to us.
PN63
The next document is in the same category. This is an e-mail from a lady called Jeanette McCrow - M-c-C-r-o-w - the second page of which was unable to be located in the proceedings before her Honour. The document which is in this volume of the Appeal Book at pages 74 and 75 has been sent to Ms Henley of the Department of Defence, who is sitting at the Bar Table with me today, from another person who was on the list of addressees, not the particular addressee to whom the one before her Honour was addressed but nevertheless the text is the same. It's the same e-mail.
PN64
The document that was before her Honour only went down as far as the words in item 1:
PN65
Contract with partnerships or incorporated companies, the CHPs would...
PN66
Everything from there on is, if you like, the second page or the missing page. It's sometimes hard to explain these e-mails.
PN67
Now, you will see in the e-mail a reference to JHSA conference. I'm instructed that that means Joint Health Services Agency. And then there is a reference further down to Colonel Ramsey rather than Colin Ramsey, Colonel Ramsey, who is director of that agency. And at the end of the document at the top of page 75 the Commission will see an icon. Now, that represents an annexure to this e-mail, and the annexure is on the next two pages of the document, and that is the document which is identified in the index as document 8.10.
PN68
Now, that annexure at page 76 refers to BNH. Well, that's obviously Balmoral Naval Hospital, and SCAHS I'm instructed is the Sydney Central Area Health Service of the Department of Defence. It is not the New South Wales Government organisation of a similar name; it's a Department of Defence organisation. Balmoral Naval Hospital is in the Sydney central area. It's at Balmoral near Mosman.
PN69
The next document is document 8.11 and that's a minute from Commander Futuris, and this is one response to the e-mail from Jeanette McCrow. Commander Futuris is a Navy dentist and he responds in respect of the dental assistance in his area. I'm reminded that the date which appears at the end of the document is not the date that Commander Futuris originally sent this to Jeanette McCrow. The date of 12 November 2002 is the date that a further copy of this electronic minute was sent by Commander Futuris to Ms Henley for the purpose of its provision to the Commission in these proceedings. It's one of those dates on computer documents which automatically insert with the date that it's being sent. So the date of 12 November is not the original date of the document.
PN70
The next document is 8.12. That's at page 80, and that's a single page minute from Air Commodore Austin of 12 December last year in which he advises the Director of Policy of Defence Workplace Relations of the current state of play with respect to the matters that were raised in Lieutenant Commander McCrow's e-mail. He refers to that e-mail in paragraph 1. He says at the time Lieutenant Commander McCrow held the position of Manager Medical Services at Balmoral Naval Hospital, Sydney Area Health Service:
PN71
She has since separated from the Department of Defence. The employment status of Contract Health Professionals -
PN72
I'm told that CHPs is a plural of CHP, which is Contract Health Professionals -
PN73
has been the subject of some debate for some considerable time including discussions ...(reads)... further amendments have since been incorporated.
PN74
That was issued on 21 June 2001.
PN75
SENIOR DEPUTY PRESIDENT O'CALLAGHAN: Was the date of that memorandum 12 December, or is that also a date of printing?
PN76
MR CROWE: That's the actual date that it was sent. That was the date it was prepared. We don't purport that it was an original document. It's a document prepared - - -
PN77
SENIOR DEPUTY PRESIDENT O'CALLAGHAN: Yes. It's prepared to summarise the situation.
PN78
MR CROWE: Yes, for these proceedings. Then the next document at page 81 is Defence Health Policy Directive number 906. This is one of a number of documents that have been included because they are referred to in versions of DIG Admin 24-1. Now, the Commission may have noticed if it has had the opportunity to read any of the materials in this matter that that DIG is the source of the authority by which the appellant says the contracts with the respondent were made, and indeed the form of contract, written contract that was made with the respondent was by, generally speaking, a form annexed to the various versions in force from time to time of that DIG.
PN79
And the DIGs are included in this document, and I'll come to those in a minute. And we've also included any documents referred to in the DIGs in case the Commission needs to refer to them in order to understand particular parts of the DIG.
PN80
Can I say it is not necessary in the approach that we take in this appeal to take the Commission to any of those things but we include them because we understand that it is necessary in order to comply with the direction and to assist the Commission.
PN81
Now the first of these 8.13 is a document which is referred to in DIG Admin 24-1 of June 2001. That was exhibit AR2 before her Honour and it appears in volume 1 at page 60 - sorry I commences at page 58 but the place where this document is referred to is on page 60 paragraph 4(n) at the bottom of page 60 in volume 1. The next document is 8.14, chief executive instructions edition 3. This is a later version of a document that was referred to in the same DIG which was marked exhibit ARENDS2.
PN82
You will see at page 66 of volume 1 at paragraph 27(e) which is right at the top of the page, a reference to defence chief executive instructions. The version that would have been current at the time that that reference was made in June 2001 hasn't been able to be located but this July 2002 version has been included instead, that is because there is not much difference between them. We don't expect that there would be much difference between the version at 8.14 and the earlier version 12 months earlier which is referred to at page 66.
PN83
The next document is 8.15 which is at page 88. This is a recent advice to defence agencies, in fact directive, concerning the provision of superannuation payments to contractors pursuant to Superannuation Guarantee Legislation. It obviously post dates the termination of the contracts with the respondent but it is included to provide the Commission with the current state of play. 8.16 is a document called DEFPUR 301. This is the document which replaced a document known as DRB3 which stands for Defence Reference Book 3.
PN84
DRB3 was referred to in the DIG Admin 24-1 of June 2001 which was exhibit AR2 below. You will see a reference at page 59 of appeal book 1, in paragraph 2 of that DIG or of that version of the DIG to DRB3 and it is said that he indicates that common law employment are outlined in DRB3. Anyway, this document DEFPUR 301 is the current equivalent of DRB3. You will see at page 90 that there is an updated indexed which shows DRB3 in the left hand column and a reference in the middle column to DEFPUR 301 as having replaced it. Then DEFPUR 301 follows.
PN85
The next document is 8.17 and 8.17 is mentioned in DIG Admin 24-1 at paragraph 19, that can be found at page 64 of volume 1 and the one that is included here is the current version. 8.18 is DRB3 itself, it seems not have been and exhibit before her Honour but we've included it here. This is obviously the predecessor of the document which is 8.16. The next document is 8.19, Defence Financial Administration Manual volume 1 contents only. This has been included in response to the direction. It is a document which is also known as DEFINMAN1 which is referred to in paragraph 7 in another version of the DIG in fact the 1991 DIG Admin 24-1 which starts at page 247 of this volume and the reference in paragraph 7 is to DEFINMAN1 is at page 250 of volume 2. DEFINMAN1 is document 8.19. So it has been included to assist in the understanding of that DIG which I'm about to come to.
PN86
We then have documents 8.20, 8.21 and 8.22 which are further version of the DIG Admin 24 which was exhibit AR2 below. We've got here the 1992 version, the 1999 version and the 2000 version which precede the versions which was exhibit AR2. In relation to 8.22 which is the 2000 DIG I should note that it refers to some annexures, two of which are not in the document but I don't believe that that is going to be a problem. If you go through the body of it there are references to four annexures A, B, C and D. The version that we've included only includes annexure B and C, annexures A and D are omitted.
PN87
MUNRO J: This is at what page?
PN88
MR CROWE: The document itself starts at page 293, the annexures are listed at page 302 and you will see that there are four of them, A, B, C and D but we've only included B and C. The next document is 8.23 this is a purchase order and contract form. This is referred to in the previous document DIG Admin 24 for January 2000 at page 299 at paragraph 22. In order to assist in the understanding of paragraph 22 we've included the document which is referred to and that is 8.23.
PN89
8.24 is a further written contract or agreement between the respondent and the appellant which has been discovered since her Honour's decision. The written contracts which were tendered to her Honour are in volume 1 of the appeal book in document COM5 which I handed up this morning, the references are listed. A further document has been added and since been identified and discovered. We included here at page 322, it's referred to in document COM5 and it is the second contract in the chain.
PN90
If one looks at COM5 you will see with one exception all the contracts or terms for which the contracts themselves provides, the terms are contiguous. The exception is between contract two and three. There is a gap of about 18 months between the expiry of contract 2 and the commencement of contract 3.
PN91
All the other contracts run up one against the other. I am instructed that we don't know whether the 18 month gap is a period for which there was a written contract that we haven't been able to find or it was a period for which there was no written contract at all, I'm afraid. We cannot make any submission or that any inference one way or the other should be drawn from that gap. The next document is 8.25, that is a letter from the respondent to a Lieutenant Zoe Reed regarding superannuation benefits. This is dated 12 December 1995. Again this is included as it appears to us to be embraced by the terms of the direction of the Commission and for the same reason we've included the next document at page 332 which is a letter in which the respondent sought an increase in his hourly rate.
PN92
Neither of these documents were in evidence before her Honour below. Those are the documents which - that's one section of documents. There's another section of three documents in the index. The first of them is 9.1. This is the application the respondent made at first instance which ordinarily should have been included in the appeal book in its initiating process. It's customary to include all the pleadings in an appeal book and this initiating process is the equivalent and we regret that that was omitted from the volume 1. We've included it in volume 2. The respondent employer, as the form provides, anyway the department, the appellant, provided a response to the application which is the document at 9.2, page 338 and that is in the same category as the application itself.
PN93
Both of those were, if you like, the pleadings or the equivalent of pleadings and they should have been included. The last document is an affidavit of Dale Leonard Thomas sworn 12 December 2002, obviously not something that was before her Honour. Again though, something that we have provided on our understanding of the requirements of the Commission's direction. This is additional evidence from the person who signed the last two contracts with the respondent and he says in the affidavit that - he says who he was at the relevant times or is still, and confirms that he signed on behalf of the Commonwealth the contracts in the forms prescribed in the DRG Admin 24 and he repeats that for two contracts, the first on 16 February 2000 and the second on 15 March 2001.
PN94
In paragraph 4 he says "I do not hold and did not at any time hold a delegation to engage employees of the Commonwealth pursuant to the Public Service Act 1999. In signing those contracts with Mr Arends I did not believe I was engaging Mr Arends as an employee of the Commonwealth, nor did I believe I was continuing any employment created at an earlier time". Lieutenant Commander Thomas signed the last two contracts in the listing COM5. The four earlier written contracts were all signed on behalf of the Commonwealth by Commander Westphalen and his affidavit is COM3 and he says the same things in relation to the contracts he signed as Lieutenant Commander Thomas said in respect of his contracts.
PN95
In paragraph 6 of COM3, Commander Westphalen who is now at a naval base in Western Australia, says that during his tenure at HMAS Albatross "I did not at any time hold a delegation to engage employees of Commonwealth pursuant to the Public Service Act 1999, the Public Service Act 1922 or any other Act. In signing those contracts with Mr Arends I did not believe I was engaging Mr Arends as an employee of the Commonwealth nor did I believe I was continuing any employment created at an earlier time". That affidavit was sworn on, I am instructed it was sworn on 14 February, last Friday, in Western Australia and faxed across to Sydney.
PN96
The last document that I need to take you to by way of additional evidence on the appeal is COM2. This is an affidavit of Frances Kim Henley who is the assistant director defence work place relations. She deposes to her current position and history and to the source of her knowledge at paragraph 2 and to the stages of employees of Department of Defence in paragraph 3. She says "Members of the Australian Defence Force itself are not employees of the Commonwealth and are not subject to the PSA 1999". Then in paragraph 5, she says "Prior to 15 May 1994 certain persons were employed in relation to naval establishments pursuant to section 42 of the Naval Defence Act 1910."
PN97
Stopping there, this affidavit and this evidence was prompted by the submissions of the respondent on the appeal in which he raised the possibility or indeed I think it went further and asserted that if he was not an employee engaged under PSA '99 or '22, then he was an employee under the Naval Defence Act section 42. Returning to paragraph 5, Ms Henley says "Those persons were employed in physical grades classifications on duties such as gardening, kitchen hands, driving, cleaning, machine operating and also some maritime activities. There were no classifications for health professionals under the Naval Defence Act 1910 and I found no record indicating that health professionals were employed pursuant to section 42 of the Naval Defence Act 1910".
PN98
MUNRO J: Were there classifications, do we know, for gardening, kitchen hands, driving, machine operating under the Naval Defence Act, 1910?
PN99
MR CROWE: My instructions are, your Honour, that the classifications appeared in pay scales which themselves were in determinations made by persons within the Department of Defence with delegated authority to make those determinations. They were not, themselves, in regulations or of course in the Naval Defence Act. Then in paragraph 6 she notes that the Public Service Commission directed that persons employed under the Naval Defence Act other than some of those engaged on maritime activities be transferred to the APS with effect from 15 May 1994. A copy of the determination is attached and you will see that the first page of the annexure contains a direction from the Assistant Minister of State Industrial Relations, Gary Johns, and then half way down the page:
PN100
Now therefore I, Ian Edwards, delegate of the Public Service Commissioner hereby ...(reads)... from 19 May 1994.
PN101
There is annexed to that a determination pursuant to that. So that is the means by which the physical grades classifications, of course none of which the respondent was in, were transferred to the Australian Public Service on and from 1994. Now, this is something, this affidavit was prompted by the allegation or submission in the respondent's written submissions but we frankly anticipated that submission having been made. The Commission would want such information as we could obtain about it of a similar kind.
PN102
MUNRO J: I think that's a reasonable anticipation, Mr Crowe, for reasons other than Mr Brady's submissions, section 42 had come under the Full Bench's notice and obviously the last paragraph of the definition of, I think it's Commonwealth Public Sector employee leaves open the possibility that there's another law of the Commonwealth that might have given rise to the power to engage civilian employees.
PN103
MR CROWE: Yes and we anticipated that the Commission would want us to - - -
PN104
MUNRO J: I think it's helpful material. Could I just ask this, and it goes to the factual material you've taken us to, it might be easiest just to answer it in relation to Lieutenant Thomas who signed I think what's been referred to as the last contract and is the one attached to 9.2 at page 344 of volume 2.
PN105
I think his affidavit says that he didn't hold a delegation under the Public Service Act, if I am correct. Do we know from the evidence what delegation he did hold for the purpose of finding that document, I assume it is something out of - in relation to DIG 24-1 but is there an answer to that question? Presumably he had the delegation that allowed him to sign a contract for services or sign some form of contract and determine - or it appears more particularly to determine the terms and conditions under which the CHP is engaged. Whence did that authority derive? I think it has been put it was under section 9A of the Defence Act, was it not?
PN106
MR CROWE: I am sorry, your Honour, the Defence Act section 9A authorised the making of DIG Admin. 24 by the Chief of the Defence Force, it does not provide the source of the power to delegate to Lieutenant Commander Thomas about which you were asking me. I am frankly not able to answer your question about the source of his delegated power to enter into a contract with an independent contractor, I am instructed it is not in DIG Admin.24. Could we perhaps - - -
PN107
MUNRO J: Perhaps if I put the question more specifically, there seems no question that Lieutenant Thomas and for that matter his predecessors had at least ostensible authority to I suppose engage the services of contract health providers so you are all on common ground that he had at least authority to do that. I thought in terms of something I read that what the document is headed Terms and Conditions of Agreement for Engagement - and it is a standard form - was a determination of the terms and conditions of the engagement of the contract health provider rather than ostensibly a contract in itself but it is treated as the contract.
PN108
The question about which I am exercising my mind is that if the Department of Defence authorised officer for that purpose had authority to determine terms of engagement in a form which allowed a contract for services how is that authority actually established and why did the terms of it exclude authority to contract or to enter a contract of services. To put it in terms of the Naval Defence Act if there is authority under 42 to engage civilian employees under a contract of employment, may there not also be - well, why would that authority not be co-extensive with whatever other contracting authority either under that Act or the Defence Act authorises the prescription of terms under a contract for services?
PN109
I know it takes the debate away from the Public Service Act appointment processes but to the extent that section 42 is raised it leaves open whatever was the actual authority might have been effectively indistinguishable as to whether it was a contract for services or a contract of services. Now, I know in terms of procurement of services - and I think you have broadly outlined in the material supplied there may have been a distinction drawn through those documents but it would be helpful if somewhere in the material there is an indication of what was the specified authority of the medical hierarchy, I suppose, to engage CHPs.
PN110
MR CROWE: I will have to take part of that on notice, your Honour. We will make inquiries - - -
PN111
MUNRO J: Yes, I realise that section 42 wasn't addressed in your original submissions.
PN112
MR CROWE: No. The submission which we handed up today does deal with section 42.
PN113
MUNRO J: Yes, the one in reply, certainly.
PN114
MR CROWE: Could I take your Honour to the folder of material in an attempt to partially answer your Honour's question? The Commission will hopefully have a series of numbered stickers or flags. The flag which is number 2 is hopefully - mine unfortunately are not numbered - - -
PN115
MUNRO J: That is the Naval Defence Act, yes.
PN116
MR CROWE: Page 8 contains section 42 and it provides that the authorised person may, on behalf of the Commonwealth, engage persons and in section 40(1) which is the only subsection there is a definition of authorised person. One submission we make is that there is no evidence before you that either Commander Westphalen or Lieutenant Commander Thomas was an authorised person under section 42. Now, if the respondent wants to say that he comes within the jurisdiction of the Commission by reason of that third leg of the definition of Commonwealth Public Sector employee, then he had to establish the jurisdictional fact that he was engaged under another relevant law and that jurisdictional fact would have been established by evidence that the person who signed those contracts was an - well, among other things it would be established by evidence that that person was an authorised person under section 42 and there is no evidence by the respondent of that.
PN117
It is not available to the respondent to say that we had to do that. The obligation, for the reasons which are explained in our reply submission, was on him to establish the jurisdictional facts and it is quite plain from the definition of Commonwealth Public Sector employee in section 170CD1 that it means one of three things and the third of them is a person in employment by authority of the law of the Commonwealth. It was not - I stand to be corrected - but I don't recall any mention of section 42 of the Naval Defence Act before her Honour, it is something which I think the respondent has come across in the course of preparing the appeal, there was no evidence to support any conclusion that he was engaged under section 42 of the Naval Defence Act.
PN118
MUNRO J: - - - placed in this difficult position but to be honest I came across section 42 more as a result of looking at something that Professor Campbell wrote back in the 70s about the power of the Commonwealth to contract and she listed the Naval Defence Act, the Public Service Act and the Supply and Development Act 1939 as the heads of power in statute for the Commonwealth to employ or for authorities under the Commonwealth to employ. The reason there is some curiosity about it or one is driven to it is that even on the concessions made by the Commonwealth in this matter you have a curiosity that you accept that there was a contract of employment for part of the time or at least you do not dispute that finding by SDP Drake on appeal.
PN119
So we have the possibility that if SDP Drake be right a contract for services which in fact gave rise to an employment relationship but it is outside the scope of the Workplace Relations Act unless for purposes of part 6B it comes in under the definition to which you referred, I think 179CD. That is so because if there is an employment relationship entered into it is not an employment relationship with a Commonwealth authority. The definition in the Workplace Relations Act takes the Department's - or does not include the Department's, does not include the Commonwealth itself in the definition of Commonwealth authority.
PN120
So you could have this extraordinary situation that if there is a power to contract for employment it is not caught by the Act unless the contracting authority is within the definition of Commonwealth authority. Now the exception to that then arises in relation to section 170CD where there is a different definition applying of Commonwealth Public Sector employment which includes any employment, as I understand it, under authority of the law of the Commonwealth. So thereby at least for the purposes of part 6B - I'm always a bit confused about whether I am referring to the right part but for determination of employment provisions an employee engaged by the Commonwealth would be within the coverage of that termination of employment provision, by reference to 170CD.
PN121
The question then arises if the Public Service Act which - and we have to hear you on this - but subject to what is put, provides for appointment, does not apply to a common law employment, does any other provision apply? Now, it is in that context that Mr Brady whether it is fortuitously or otherwise has adverted to section 42 but his efforts would have been probably spared because Professor Campbell did not overlook it in 1975 and it took us some time to locate the material, so I think section 42 does have to be laid to rest and that was partly where the question I originally put to you went, if Lieutenant Thomas had authority to enter into a contract for services was his actual authority so tightly constrained that he could not, when he thought he was doing so, establish a common law employment and the power to do so at least was provided for under section 42 of the of the Naval Defence Act. That's how the argument or the concept would run.
PN122
I can't say that - and I think I speak for all of the Full Bench wholeheartedly on this - it's a problem that we welcome; but when the directions were issued we did have in mind that there may be other dubious common law employment floating around that preferably should have the facts of at least the broad position outlined so that, if it's dealt with at this level and it has to go forward then there is an as clear as possible statutory and other basis for the Court, whatever Court has to deal with it, understanding what we thought we were dealing with.
PN123
The conundrum does arise, can the Commonwealth, qua Commonwealth, have a common law employment, which seems to be assumed in the Defence writings that you're talking about, without there being specific authority for it? The state of authority seems to say that if you have something like the Public Service Act that says it will be done - my words - one way then that excludes some other source of authority; but you haven't yet excluded, on that approach, a common law in contract under section 42.
PN124
Now, I can see where you head on that. You say well - and the answers that were given or the affidavit material tends to suggest that section 42 proceedings generally were dealt with only in one way, they applied to a specific class of physical grades and set up a distinct employment but I don't know whether you need to go further than that but if you have somebody floating around getting engagements for services they must have authority to do something and why does it therefore preclude giving engagements of services and that, in a nutshell, is what I am trying to say. You will get your turn, Mr Brady.
PN125
MR CROWE: Your Honour, we will have inquiries made to see if we can bring something before the Commission today that is specific to Lieutenant Commander Thomas because I understand that to be part of your Honour's interest. But there are more general propositions that we would advance in relation to the area that your Honour has raised with me which I can put to you whilst that is being done.
PN126
MUNRO J: In that context could I indicate a difficulty the full bench has? Well, I hope it is not a difficulty, we will need to rise at 3.45, we are prepared to sit shorter hours over lunchtime to try to accommodate the parties.
PN127
MR CROWE: Thank you. In the submission that we handed up today which is COM4 at paragraph 31 and following we said something about this question of the Commonwealth engaging employees at common law. The submission we make is that the Commonwealth cannot engage employees directly as a result of contract. The Parliament has specified in legislation the methods and occasions upon which the Commonwealth can engage employees. Mostly that falls to be considered under the Public Service Act of 1999 but those provisions exclude the possibility, expressly exclude the possibility of the Commonwealth - someone on behalf of the Commonwealth - signing a contract of employment at common law and thereby creating employment. Section 6 of the Public Service Act of 1999 - - -
PN128
MUNRO J: Where do we find that?
PN129
MR CROWE: In the black folder at tab 3. I should qualify this submission because section 6 refers to performance of functions in a department or executive agency, nearly all persons will be in a department or executive agency although there is the possibility of residual - - -
PN130
MUNRO J: Folder 3, yes.
PN131
MR CROWE: You will see section 6 provides in subsection 1:
PN132
All persons engaged on behalf of the Commonwealth as employees ...(reads)... authority of another act.
PN133
That expressly excludes the possibility of the Commonwealth or anybody on its behalf making a contract and by force only of that contract creating employment except and unless the person is a person who is engaged to perform a function other than in a department or executive agency and I am instructed that it would be the Governor General who is the only person who would make such appointments and the numbers of them are very, very small for people in very exceptional positions at a high level.
PN134
MUNRO J: What is an executive agency?
PN135
MR CROWE: It is in section 7, an executive agency established under section 65. Part 9 provides for executive agency. I will see if I can give your Honour some examples of them.
PN136
MUNRO J: May we paraphrase they are agencies under a machinery of government arrangement?
PN137
MR CROWE: I am instructed yes, your Honour.
PN138
MUNRO J: I don't want to head off your submissions but both the Supply and Development Act and the Naval Defence Act and the relevant provisions so the Public Service Act does not apply and the fairly long-winded question I put to you was posited on the assumption that civilian employment by those Defence agencies is not employment in a Department of Defence. In other words what I'm raising here with you is section 6 goes to employees employment in a department or executive agency must be engaged under the Act and then or under the authority of another act. So you are not talking about, if there is engagement under the Naval Defence or Supply and Development Act it seems to be by definition outside the engagement under the Public Service Act in a department.
PN139
MR CROWE: Yes, your Honour, persons employed under section 42 of the Naval Defence Act would still be employed in a department within the meaning of the words "under the authority of another act" in section 6 of the Public Service Act.
PN140
MUNRO J: I see, yes.
PN141
MR CROWE: Perhaps I should also say there is a distinction drawn in the submissions we handed up today, COM4 - explanation is a better word - explanation about the position that the appellant regards itself as in as a result of the limited scope of the appeal that it brings. We have not challenged on this appeal findings by her Honour about the weight of the indicia for and against employment at common law. I think that necessarily involves a concession - I don't think we have expressly said this but a concession that the Commission on appeal would probably uphold the finding her Honour made that at the time of termination the indicia in favour of employment at common law outweighed the indicia against employment at common law.
PN142
That does not involve any concession that during the relationship between the parties that there was any understanding by us and indeed by the respondent of an employment relationship. It was the position of the department at first instance that the respondent was an independent contractor. Lieutenant Commander Thomas and Commander Westphalen depose in their affidavits to the fact that they were signing contracts with him as an independent contractor not as an employee and that they have no delegation to engage him as an employee. ]So our decision not to challenge her Honour's findings about the a
PN143
Accumulation of sufficient common law indicia for an employment relationship doesn't involve a concession that during the relationship we actually thought he was or treated him as an employee. To the contrary, the evidence of Lieutenant Bryant or Lieutenant Commander Bryant who was the department's witness before her Honour was that he thought the respondent was a contractor and treated him as such and every contract that he signed right up until the last one in May 2001 expressly negated an employment relationship so we have not made any concession about what we understood the relationship to be during the relationship.
PN144
Now, that has the consequence that it enables us to make the number of submission that we make. The respondent was not engaged as an employee. This is a point we make in paragraph 33 of our recent submissions in relation to section 42 of the Naval Defence Act. Section 42 requires that the authorised person engage persons for employment. The respondent wasn't engaged for employment, he was engaged to be an independent contractor. As far as we were concerned he remained an independent contractor right up until the end of the relationship and the only reason we are here is because after the event, after the end of the relationship the respondent has sought to recharacterise the relationship in order to avail himself of the remedies that this Act provides for employees.
PN145
He is not being deprived and we are not seeking to deprive him of the common law rights that he had under those contracts. He could have sued us in the ordinary course for breach of the provisions of those contracts for underpayments of his fees or emoluments for services; all his rights were protected. The only thing that we say he hasn't got or can't have is an almost an approbation or reprobation power. I don't put that formally but what he can't have is we say recourse to the remedies that this Act, the Workplace Relations Act provides for employees of particular kinds.
PN146
Even though it may be available to a tribunal looking perhaps with the benefit of hindsight looking back retrospectively of the relationship to say, well, if this was purely a matter of common law I would say that the indicia of common law employment outweigh the indicia against common law employment. But we say and we explain this in detail in Com4 that doesn't get the respondent far enough. It didn't get her Honour where she needed to be to make the finding.
PN147
It's not enough to say that on common law indicia there was sufficient to find an employment relationship. You have to go further and say, was this person in a category of person who under section 170CB or who is listed in 170CB(1) and the only one of those which is seriously argued we would submit by the respondent is the first of them, Commonwealth Public Sector Employee and that's defined in section 170CD(1) and it has three limbs and our case is in a nutshell, he called no evidence to prove that he was in any of those three limbs of the definition of Commonwealth Public Sector employee.
PN148
Of course he couldn't because as the evidence we've called shows he was never intended to be a Commonwealth Public Sector employee, he was intended to be an independent contractor with his rights flowing entirely from his contract and enforceable if it need be in the ordinary course and it was so understood, we would say, certainly on our side throughout the whole of the relationship. So this is not a case where we are seeking to deprive a public sector employee of his rights under the Act to seek a remedy for unfair dismissal, this is an independent contractor who signed a series of written contracts acknowledging that he was an independent contractor who is now trying to recharacterise his relationship and get a remedy that if he turned his mind to it he could not rationally have ever expected to have.
PN149
But this comes back - I may have strayed a little from your Honour's question which is what I set out to answer. We do say that it's not enough or it's the wrong question to ask whether there was a relationship that the common law understands as employment. That doesn't establish the jurisdictional facts upon which the claim for relief depends. We say that you cannot have the creation of an employment relationship with the Commonwealth purely under the common law because that would be a relationship created purely by contract, whether implied or express and the Acts to which we have referred and the effect of Section 67 of the Constitution which we also address in these submissions is that employment in the Commonwealth has to be under the authority of an Act, there has to be engagement in a department of the Commonwealth or an executive agency.
PN150
He has to be under the authority of an Act and the only Acts pointed to are the Naval Defence Act Section 42 and I've explained why that couldn't have been the case and the Public Service Act whether 1922 or 1999. It has to be the Public Service Act, 1999, but there were transitional provisions that enabled a person employed under the 1922 Act to be treated as employed under the 1999 Act, and it is not that, for reasons which we have explained in detail, and you can't say, I made a contract with this man and he is an officer of the Commonwealth and, therefore, I am a Commonwealth Public Servant. It doesn't work that way. The Public Service Act, 1999, has all these mechanisms that demonstrate the force of the submission we make, that there has to be a deliberate and conscious active engagement of a person as and to be an employee. There are procedures for merit protection, or merit consideration.
PN151
We have mentioned the requirement that appointments all be notified in the Gazette. The language, itself, of section 22. I do not want to extend things by going over what is in the written submissions, but those are the things we point to as demonstrating the requirement for an act of engagement, and it is frankly the submission of the respondent which seems to be, in summary, that he became an employee in the Australian Public Service by default, simply is contrary to the legislation. You just cannot become employed under the Public Service Act, 1999, or another act, by default.
PN152
SENIOR DEPUTY PRESIDENT O'CALLAGHAN: Mr Crowe, I wonder whether you can help me in one respect? I would like to take you to page 76 of book 2. I am referring particularly to the memorandum from Commander Loxton. At paragraph 4, this memorandum canvasses what I had wondered might have been another option, on which I would invite you to comment, in terms of an expansion of your earlier answer to Munro Js question.
PN153
It seems to envisage some temporary staffing arrangements under the Public Service Act provisions. Can you comment on that particular statement, in the context of your answer to Munro Js question? If I have thrown you out, I do not mean to do so. I am happy for you to come back and cover that question at some stage, but I thought it might be an opportune time to raise it.
PN154
MR CROWE: The Public Service Act, 1922 - yes, at the time this memorandum was written, your Honour, the Public Service Act, 1922 was in force, because the 1999 Public Service Act commenced on 5 December, I am instructed, of 1999. You will see that the date of the memoranda at pages 76 and 77, is 27 April 1999?
PN155
SENIOR DEPUTY PRESIDENT O'CALLAGHAN: Yes, indeed.
PN156
MR CROWE: Now, the Public Service Act, 1922, provided for a number of categories of employees in division 10 of part 3, and you will find the Public Service Act, 1922 in the folder that we have provided to the Commission. It immediately follows the 1999 Public Service Act, and if I could take the Commission to the 1922 Act, you will see that section 82AD provides for the employment of short term employees.
PN157
Indeed, if one looks at section 82AA, you will see that a person employed under Division 10 shall be employed in one of the following categories of employees, and then there are (b) short term employees, and that is explained further, or provision is made for that section 82AD.
PN158
This is the way in which that suggestion, or observation by Commander Loxton, could have been implemented, but that would have been employment properly created under the Public Service Act, 1922. It would have been engagements under an Act, and if a person had been engaged as a short term employee under section 82AD, then when that Act was repealed on 5 December 1999, and then replaced with the 1999 Act, that employee would have continued as an employee, and have been deemed to be an employee under the 1999 Act, by reason of transitional provisions in the Public Employment (Consequential and Transitional) Amendment Act, 1999.
PN159
That Act, the Consequential and Transitional Amendment Act, seems to be known in the trade as PECTA. PECTA is set out in the black folder also immediately after the 1922 Act, so it is - or the relevant bits of it are. It is at flag 5. Section 5 subsection (7) is the relevant transitional provision in PECTA which provides for term employees to be translated to the 1999 Act. So, I think that is the answer to your Honour's question about how Commander Loxton's suggestion could have been implemented.
PN160
SENIOR DEPUTY PRESIDENT O'CALLAGHAN: Thank you.
PN161
MUNRO J: There is a corollary though to his Honour's question that arises out of the passage to which he referred. As at 29 January 1999, you have Commander Loxton acknowledging that some medical officers or CHPs, would be common law employees according to reference B, which I take it is the departmental advising of some kind?
PN162
MR CROWE: It is the top of the minute. It is chapter 1 of DRB3.
PN163
MUNRO J: Yes, and could not be re-employed at the expiration of the current contracts. Presumably on SDP Drake's findings, Mr Arends would be in that class. Is there anything in the materials to indicate what was done with those classes, or was the problem just ignored, or is the answer to it the next H12, at page 80, that in December 2002, the problem that was posed in January 1999 was finally not addressed.
PN164
MR CROWE: It is unresolved.
PN165
MUNRO J: So nothing happened?
PN166
MR CROWE: Well, I would not go so far as to say nothing happened. Consideration was given to it, but as at 12 December last year, nothing had been resolved, no.
PN167
MUNRO J: So, I suppose, and I think it is raised on the material, when Lieutenant Thomas offered the final form of the contract, or perhaps the one that came in '99, I am just not sure which, I think there is evidence about both of them after this advice. If you were, leaving aside the point you take, dealing with people who were in the common law employment relationship with the Defence Health Service, and it was no longer within statutory or policy tolerance to keep them there, the method of extrication would be ordinarily one that directed their attention to the fact, well, you are an employee, or you have become an employee, in our eyes, and we no longer wish you to be an employee. Here is your new contract, and it will operate as a deed - not the only thing allowed, but one would think this is the way you would do it - in which you release us from all rights upon acceptance of the new contract.
PN168
I suppose it is arguable and, I think, you have argued that that was the effect of the last, or the last two contracts, but that contract does not seem to have been one in which there was a specific direction to the erstwhile employee of the new, or reinstated contractor, for services but this is what we are doing. Was anything of the kind attempted or could or possibly that this was, I suppose, cleaning ship to make sure that henceforth those that were on contracts of employment were no unequivocally on contracts for services.
PN169
MR CROWE: No I can't submit to the commission that any of the measures taken with the respondent were designed to, as your Honour put it, extricate us from a position that might be considered common law employment. The evidence is that on our side of the relationship we considered him to be an independent contractor and therefore we did nothing to seek to extricate - - -
PN170
MUNRO J: That evidence is a bit awkward isn't it, it sits awkwardly in its perspective the memorandum of 29 January. I accept your point is adamantly clear in form the relationship with Mr Owens was never other than a contract for services.
PN171
MR CROWE: Yes.
PN172
MUNRO J: I understand also the point I think you make with that that if informed that was the contract then in the peculiar circumstances of the Commonwealth Statutory Authority it could be nothing else whether that contract in common law amounted to employment is irrelevant because under the statute there was no authority to create a relationship of employment under any of the relevant statutes. At that point I can understand but the contention that no one in the negotiation or in the authorised chain of authority ever thought it was anything other than a contract for services stands a bit awkwardly with the recognition in your own documentation that these things aren't contract for services we've got to work our way out of it. Matters working their way out of it seem to be to ignore the problem or not ignore it come with no answer to it.
PN173
MR CROWE: Could I just check the references which I've given in my reply submission to the evidence of Lieutenant Bryant as to his understanding of that relationship to see if he actually knew about DIG Admin 24-1 which is where the risk of the common law employment relationship is mentioned. That is the document I understand that your Honour is saying is the one which creates the difficulty.
PN174
MUNRO J: Yes.
PN175
MR CROWE: I don't recall that anybody put that document to him but I just need to check that. Evidence is quoted in footnote 12.
PN176
MUNRO J: I think it is probably common ground that it wasn't Mr Crowe, because even document 8.9 I think it was incomplete and that was one of the reasons for directions that I think suggested it was desirable - preferably we have not incomplete documents but that we do have a perspective in which these matters are discussed. Can we take it that none of the material - there is no indication in the material that anybody had their position changed as a result of that perception of common law employment, there was no counterpart to the 1994 clean up the section 42 civilian appointees who were shifted across. Nothing like that happened for instance selectively that some of the medicos were offered employment?
PN177
MR CROWE: I can't think of any evidence of that. There is no evidence of that. The evidence is that the contract is made subsequent to the first inclusion in DIG Admin 24-1 of the warning about the risk that common law employment might flow for sufficient integration and supervision. Since that, further contracts were made in writing with the respondent in which it is either stated expressly that he was - - -
PN178
MUNRO J: Yes, they were tightened up in that sense and I think the subcontractor right was put in wasn't it?
PN179
MR CROWE: Actually your Honour, every one of his written contracts had a stipulation to that effect.
PN180
COMMISSIONER DEEGAN: Is that correct, I don' think it is for the early ones is it?
PN181
MR CROWE: Yes, if you look at - - -
PN182
COMMISSIONER DEEGAN: Well if it in the early ones - - -
PN183
MR CROWE: Could I take - the evidence about this is mentioned at footnote 11 of the reply submissions which is footnote in paragraph 21. Now if I take you to the evidence referred to in that footnote you will see the passages upon which we rely in the contracts - the first one clause 5.1 of the contracts of 11 July and 20 June and can I say that these were pro forma contracts flowing from the DIG. If you go to page 49 of volume 1 and this is the first contract 1994 clause 5.1 says:
PN184
The parties agree and declare that during the term of this agreement ...(reads)... employ of the commonwealth.
PN185
The second contract which is in volume 2 is to the same effect and I refer you to page 324 and at the top of page 324 of volume 2 there is the same clause, the typeface is different but the language is the same. Then the footnote refers to clause 6.1 of the contract of 12 January 1998 and that is back in volume 1 at page 43. Clause 6.1 says:
PN186
Tha parties agree and declare that during the term of this agreement ...(reads)... employ of the commonwealth.
PN187
COMMISSIONER DEEGAN: I will certainly accept it for the last few contracts. It is much clearer in the last few contracts which was in but it is there.
PN188
MR CROWE: Anyway the evidence is at footnote - but every one of the contracts we would say stressfully stipulated that he was an independent contractor and not an employee. Frankly we found the evidence that he gave that he believed himself to be an employee quite surprising or unconvincing. If indeed he had a belief that he was an employee despite these provisions of his contracts, we would submit that it was an irrationally held belief.
PN189
MR CROWE: Could I say that the directions that enjoined us, enjoined all parties to provide submissions of a very full nature and foreshadowed very limited opportunity for oral argument and we have endeavoured to - I am surprised I'm still here now your Honour and Commissioner but we have endeavoured to put everything that we want to say into our written submissions for fear that we wouldn't get much of a chance to say anything on out feet.
PN190
I don't, therefore, propose to read or go to the written submissions any further except to say that perhaps because of some gremlin in the editing process or the way the original submission evolved, a very important submission about the effect of section 67 of the Constitution was mentioned right at the end of the submissions in the context of the ground that relies upon 170CK. We do say that it applied equally to the earlier ground, harsh, unjust, unconscionable - harsh, unjust and unreasonable but, of course, I want to stress that or emphasise that. Even though it only came at the end it is a submission that applied equally to both grounds that the respondent relied upon in his application for relief and we develop it further in the reply submissions.
PN191
What we haven't been able to do in our written submissions, of course, is respond to the submissions of the intervener. Those were - firstly, we weren't sure he was going to get leave. That came very late so if the Commission would allow me I need to and I would seek to respond orally to the intervener's written submissions. If the Commission would go to those submissions, CPSU(1), in paragraph Z(5) the intervener submits that the Commonwealth's submissions are wrong because their effect is to substitute a different test of employment for public servants to that which applies generally.
PN192
Obviously, we deny that our submissions are wrong. We say that section 22 of the Public Service Act of 1999 establishes a different test for Commonwealth Public Servants. We say that the intervener's submission makes the same mistake as the respondent's submission did. It looked at what followed the engagement rather than the making of the engagement. The question whether a person comes within the definitions of Commonwealth public sector employee in the Workplace Relations Act depends on their satisfying those three limbs.
PN193
In so far as ANC are concerned under the Public Service Act or under the authority of another law of the Commonwealth and in that respect I confine myself to the Naval Defence Act, we say we establish that it requires a positive act of engagement. You can't have engagement by default during the course of a relationship which has commenced on some other basis. The submission for the respondent seems to be that at some time during the relationship the indicia in favour of common law employment accumulated to a point where they outweigh the indicia against it.
PN194
That seems to be her Honour's finding although her Honour's decision is contradictory as to when that occurred. As we note in our reply submissions she appears to suggest that it probably happened upon the expiry of the first written contract but then again she discusses, she seems to find as a positive fact that he was engaged under section 22 of the 1999 Act. Now, that came in long after the expiry of the first written contract so we say it's simply not clear what her Honour found as the time when the indicia accumulated to sufficient level for her finding of common law employment but it's plain that she at least found that it had happened before the relationship ended.
PN195
MUNRO J: As a matter of construction, Mr Crowe, what meaning should we place on a person in employment under or by authority those matters alluded to as to the source of authority. Does give employment mean engaged under the Public Service Act within its meaning or engaged by authority of the law of the Commonwealth in the manner provided for employment?
PN196
MR CROWE: I am sorry, your Honour, I am not sure I understand what you Honour is asking.
PN197
MUNRO J: I am afraid I have interrupted you. I know you are dealing with submissions from the CPSU but I'm looking at section 170CD and the question that was suggested to me by your line of argument was that SDP Drake has obviously looked to whether or not there was as common law employment relationship. She must have done that because she assumed it was common ground that employment when it's alluded to in section 170CD means common law employment.
PN198
Now, on that she would be on a fairly firm basis I think because Samatino at least, or the case of Samatino after the matter went to the Federal Court accepted that for some related part of the Act employment should be taken to mean the common law relationship as distinct from the approach adopted, I think it was in Conrad v The State of Victoria and as distinct from the suggestion that for he purposes of 170CK the meaning under the ILO Convention might be a bit wider than common law employment.
PN199
MR CROWE: Yes, I think you went a bit further than the common law basis in Samatino but not far enough to help Mr Samatino.
PN200
MUNRO J: We applied the common law approach but said the doctrine of control should be emanated or justified a conclusion that it was a common law employment for that purpose. The definition of what was being applied was common law employment. Given that preamble perhaps it's something you want to think about. I just want to know if we are safe in proceeding on the basis that employment means effectively whatever it does for the purposes of those Acts or the procedures that are incorporated by reference - - -
PN201
MR CROWE: Your Honour, I don't submit that anything in Samatino weakens or jeopardises the arguments that we put today.
PN202
MUNRO J: I am not suggesting that either.
PN203
MR CROWE: We would submit that after there has been an engagement of a person to be an employee under the Public Service Act or under the authority of some other Act, then that person is in employment and there will be a contractual foundation for that employment. Now, one has to have regard, of course, to what's said in Director-General of Education v Suckling in the well known passage of Justice Brennan. He seems to suggest a limited scope for the contract in a passage at page 437. I think I handed up a loose copy of it.
PN204
The paragraph starts just below the middle of the page. He suggests that members of, well in this case it was the Education Service of the New South Wales Public Service, but we submit that the observations are apt in the present case:
PN205
Members of the Service are appointed pursuant to the Act and their rights must be ascertained by reference to its provisions.
PN206
And then he discusses how there are some authorities saying the relationship is contractual and some saying it's not contractual. And at the very last line on the page he says:
PN207
To the extent the stature governs the relationship it's idle to inquire whether ...(reads)... controls the terms of service.
PN208
Now, the Samatino discussion, at least insofar as it considered Conrad of course, Conrad was a police officer in the Victorian Police, but the analysis of the Commission after it came back from the Federal Court is one in which it's still an employment relationship as a common law would understand it, if I correctly understand the decision.
PN209
And that's our submission in this case, that the relationship that ensues after the engagement may have all the indicia of common law employment, and will be employment. Indeed the Public Service Act describes it as employment, even the Public Service Act of 1922 in division 10 of Part 3 described it as employment. So we don't urge any novel meaning to be attributed to the word "employment" in that definition in section 170CD. There will be rights which are incapable of enforcement in contract if the employee was so minded.
PN210
MUNRO J: I think you're putting it that it's employment in the sense that the condition precedent to the employment is the exercising of the authority under the relevant Public Sector provisions.
PN211
MR CROWE: Yes.
PN212
MUNRO J: Is the case of Ioannou referred to in the matters to which you have taken us?
PN213
MR CROWE: No, it's not.
PN214
MUNRO J: I mention it because I think in context I note that it preceded Suttling by a couple of years and some of the Members of the Court were - I think among the majority in Suttling, without having checked verse and chapter number of it I thought that case went off on the basis that the relationship under section 82 of the then Act was not contractual but was appointment.
PN215
MR CROWE: Yes. At an early time in looking at this I did read the Ioannou cases and I came to the view that they weren't apt either way.
PN216
MUNRO J: It's rather difficult to follow because the ones at first instance did go on the existence of a contract but the matter was resolved at the High Court on in effect a concession that it wasn't, but it's consistent with the material to which you have alluded, or the reasoning of Brennan J in Suttling about the basis of the relationship being statute. I think I interrupted you again in relation to your dealing with Mr Rich's submissions.
PN217
MR CROWE: Yes. I think I've probably already in the course of answering your Honour dealt with the rest of what I wanted to say about his paragraph 5. Both the intervener and the respondent in our submission look too much upon the nature of the relationship that ensues after the engagement, and they fail to appreciate the significance of the engagement process in bringing the respondent within the jurisdictional fact which needs to be established to be able to claim the relief.
PN218
In paragraph 6 the intervener refers to an established principle of statutory interpretation that legislation is presumed not to alter common law doctrines without expressing its intention clearly. In relation to the Public Service Act of 1999 we would submit that section 6 clearly expresses an intention to alter common law doctrines. Insofar as it is possible for, as the respondent has it, employment by default, then that is altered by the effect of section 6 which expressly says that there has to be employment under this Act or under authority of another Act.
PN219
In paragraph 8 the intervener refers to a submission of the Commonwealth that the creation of an employment relationship under the Public Service Act requires the hiring agency head to intend at the time of hiring to engage the person as an employee under the Act. And that's more or less what we say, and we say that section 22 of the Public Service Act requires that and the reasons for that are developed at length in the written submissions.
PN220
And over the page they suggest that the Commonwealth's proposition is, "capricious, arbitrary and unfair and it should not be followed". We disagree obviously with that. We say that the procedures in the Public Service Act of 1999 are designed expressly to ensure regularity and fairness and method in the appointment of people. You will see that for example Part 3 of the Act contains such things as APS values, the Commissioner's directions about APS values: obligation on agency heads to promote APS values; the APS code of conduct; agency heads are bound by the code of conduct; there are provisions for breaches of the code of conduct; protection for whistle-blowers; prohibition on patronage and favouritism; promotion of employment equity.
PN221
And then there is provision later in the Act for the Merit Protection Commissioner and all the functions that he has. We submit that the procedures in the Act, the requirement for gazettal, all point to the force of what we've submitted about the need for a deliberate and conscious act of engagement, and point to the existence of a regime in the Public Service Act of 1999 which ensures engagement on fair processes, fair methods, following proper processes, and the antithesis of capricious, arbitrary and unfair.
PN222
In paragraph 9 they submit that the Commonwealth's interpretation leads to an absurdity, that if accepted it would base obligations that both the common law and the Workplace Relations Act impose on employers in respect of their employees on the Secretary's subjective intention, which they say would allow and encourage the Commonwealth to avoid its obligations to employees. Now, what we have to bear in mind is that the respondent was not engaged as an employee. He was engaged as an independent contractor. Even the Deputy President at first instance appears to find that he was effectively appointed as an independent contractor at least during the course of the first written contract.
PN223
And the evidence is of the succession of contracts that followed, which we say should have informed the respondent, and would have if he'd read them, that he was viewed as an independent contractor, and certainly the evidence of the witness for the appellant was that he was an independent contractor. And as I've said, those people would still have independent contractors, and the respondent would still have their rights to enforce the Commonwealth's obligations under their contracts at common law. Nothing we say is depriving them of that.
PN224
The Public Service Act section 6 compels the engagement of employees regularly. That is all we say is the impediment, or that is what we say is the impediment to the respondent's case because he wasn't engaged in the way required by the Public Service Act and therefore wasn't within the definition of a Commonwealth Public Sector employee, at least to the extent that engagement under the Public Service Act is one of the ways of bringing yourself within it.
PN225
Now, we say that the Public Service Act of 1999 and the provisions that I've mentioned answer any suggestion that there's a lack of fairness or lack of proper procedure. Those provisions are binding on agency heads and their delegates, and it provides a proper regime for employees who are engaged as employees. The difficulty for the respondent is he is seeking to change his characterisation after the event and of course the provisions of the Public Service Act dealing with merit protection and APS values and all those things weren't afforded to him because he was not understood that he was being engaged as an employee.
PN226
Paragraph 10 we don't understand. It is not explained by the intervener how the interpretation which the Commonwealth puts on the relevant provisions is contrary to Parliament's intention expressed in section 8 of the Public Service Act, and I don't deal any further that.
PN227
In paragraph 11 there is a submission that it is the "clear intention that the termination of employment provisions of the WR Act apply to Commonwealth employees". We agree with that, but we disagree with what follows when the intervener says:
PN228
If the Commonwealth's submissions in relation to section 22 are accepted then this general intention will not apply.
PN229
Now, that really is an extreme submission. There is nothing in what we've said that suggests that Commonwealth employees are not to have the benefit of the termination of employment provisions in the WR Act.
PN230
All we say is that section 6 must be observed if a person is to be properly employed under the Public Service Act or under the authority of some other Act. It just means that, in our submission, people recruited as independent contractors who may in retrospect be capable of being viewed as employees at common law, and we submit that could only be a very small category of people, would not have the access to the termination of employment provisions of the WR Act. But we say that they can't really have expected to have the benefit of them because - if they were engaged, as this respondent was, under contracts which expressly provided that they were independent contractors.
PN231
There are then some submissions about, or in response to what we said in our submissions about gazettal of appointments. The submission we make seems to have been misunderstood. Our submission was that the existence of an obligation to publish in the gazette notice of an appointment contra-indicates the submission by the respondent that you could have engagement by default. We didn't submit that the failure to publish that notice therefore invalidated the appointment. We're simply relying upon the gazettal requirement as an aid to the interpretation of the provision in section 22 which we say requires a conscious act of engagement.
PN232
On page 5 the intervener makes some submissions in support of the Commonwealth's position. Obviously we embrace those submissions at paragraphs 18 and 20. They are the submissions that the Commonwealth has no prerogative power to engage staff other than under the Public Service Act, although of course we would say that it's not only the Public Service Act. Section 6 allows for other acts we're forced to concede, although we think that the only other one raised against a section 42 has effectively been ruled out by the submissions we've made.
PN233
In paragraph 21 there are some submissions with which we disagree. It seems to be suggested that because there was no challenge to the Senior Deputy President's finding that Mr Arends was an employee, it follows that he must have been engaged under the Public Service Act. Parenthetically the intervener overstates the nature of the effect of our circumscribed appeal, but I think I've explained what we see as being the effect of the limitation we've made upon the scope of our appeal, but more fundamentally it does not follow that simply because he was an employee at common law, he must have been engaged under the Public Service Act in accordance with the powers contained therein.
PN234
Of course this is where we've been debating all morning. I think it's pretty clear that the submission we make is that the Public Service Act, if that's the Act that's being relied on, has to be complied with. You can't pretend or deem compliance which seems to be the intervener's contention. They say then that the only alternative is to suggest that Mr Arends' contract of employment was ultra vires and therefore void. Now, it is the case that if it is suggested that a contract of employment was made, then it is ultra vires and void. But nothing turns on it because he still has a valid contract as an independent contractor with rights under it which he can enforce a common law.
PN235
If he's sued for breach in an ordinary court it wouldn't matter and it wouldn't be open to him to argue that he was an employee at common law rather than an independent contractor. I mean he would be cutting off his nose to spite his face to say that perhaps, but the likelihood is it wouldn't be an issue that would arise. The contract is there in black and white. So we disagree with paragraph 21 and we say that Director General of Education v Suckling doesn't support the submission that they there make. In paragraph 22, we dispute this proposition that the Commonwealth is being allowed to avoid its obligations to employees.
PN236
We're not avoiding any obligations to a person we saw as a contractor. As I've said, he still has all his common law remedies in contract. All he's being deprived of by the submissions the Commonwealth here makes, is recourse to a specific statutory claim available to a limited or particular category of employee which we say he can't reasonably have ever expected to be amongst or within. In paragraph 23 the intervener submits that the Department of Defence led Mr Arends to believe that he was properly employed. There is simply no evidence of that. The terms of the contract are quite clear.
PN237
It says he signed a contract with the Department of Defence commenced performing work and received payment of wages and superannuation. He got superannuation in circumstances which I've mentioned, that doesn't involve an admission or concession that he was an employee at common law. He signed a contract as a contractor. He was paid an hourly rate, calling it wages, well, perhaps that's semantics. He was paid an hourly rate, but it didn't of its own mean that he was an employee. But having said that, as you know, we don't challenge the findings that her Honour made on the weight of the indicia.
PN238
They then, half way through paragraph 23, say Mr Arends believed that he was properly employed by the department. Now, if the evidence rises that high, we say that was an irrationally held belief and the department's witness certainly said he believed otherwise in the evidence that's noted in the submission. We strenuously assert no evidence of an inducement by us in such a belief by the respondent. Then the last sentence in paragraph 23 submits that there's no way that Mr Arends or any prospective employee of the Commonwealth for that matter, unless employed directly by the agency, can ever know whether a person who employs them has been properly delegated the authority to do so.
PN239
That submission is about prospective employees. Mr Arends was never a prospective employee. He was only ever a prospective contractor. Prospective employees would be in a different position because they could only be so if a person with a proper delegation was planning to engage them as an employee under the Public Service Act. Lastly, paragraph 26, this is in relation to the so-called de facto officer doctrine. They say it's relevant, "to decide otherwise would be to make uncertain the employment of each and every public servant currently employed by the Commonwealth". Well, this submission might have had some force if there had been an intention to employ the respondent, but there was never such an intention.
PN240
It was to do something else, to engage him as a contractor. It was at some later time that his status changed and that doesn't mean that the engaging officer was retrospectively acting without authority.
PN241
MUNRO J: There's no suggestion that the engaging officer was not appointed, though, is there? The highest it would be that he was acting beyond authority or delegation. I think the de facto officer doctrine applies to a person whose appointment is invalid or not there.
PN242
MR CROWE: Yes, I can't answer that, your Honour.
PN243
MUNRO J: Well, it was Lieutenant James who was in the hierarchy I think.
PN244
MR CROWE: Lieutenant Thomas.
PN245
MUNRO J: Lieutenant Thomas, I'm sorry.
PN246
MR CROWE: Yes, Lieutenant Thomas. Well he says he had no authority to engage a person as an employee. We didn't unfortunately ask him to depose to the authorities that he did have and that's the matter we've taken on board.
PN247
MUNRO J: Well, I think the principle is whether there's ostensible authority. It's either there's actual authority and if an ostensible authority can cover ultra vires activity.
PN248
MR CROWE: I can't give any firm information yet to the Commission in response to that question about these authorities. We'll try to do so. Those I think are all the submissions I need to make, if the Commission pleases.
PN249
MUNRO J: Thank you, Mr Crowe. I think Mr Rich, we might allow you to go until one o'clock. Can you deal with what you have to put in that time? Is everyone comfortable that we're going to finish easily within the time available?
PN250
MR RICH: I'll make an effort to finish my submissions before one o'clock or as soon as possible thereafter.
PN251
MUNRO J: Yes, that will give Mr Brady the opportunity to muster his thoughts over the lunch hour.
PN252
MR RICH: Yes, your Honour, thank you. As I said in the course of making submissions in relation to intervention, the CPSU will rely substantially on the submissions that have been faxed to the Commission and marked CPSU1. I take it that the bench has a proper copy of those submissions. I intend merely to summarise our position and boiled down it amounts to this, it amounts to an interpretation of section 22 subsection 1 which reads, rather than placing the emphasis upon the engagement - I might just turn to 22 subsection 1 in the black folder which would be behind tab 3 of that folder.
PN253
Just to remind the Commission, the subsection reads:
PN254
The agency had on behalf of the Commonwealth may engage persons as employees for the purposes of the agency.
PN255
Now, in our submission the Commonwealth places the wrong emphasis upon that clause. The purpose of the section is to indicate who may engage employees on behalf of the Commonwealth, not to indicate any procedural requirement for the formation of some positive intention at the time of the engagement as is submitted by the Commonwealth.
PN256
So in that sense they place - the emphasis of the section on the second half of the section rather than on the first half. The section is really about who may engage. All of the Commonwealth submissions follow from that initial one and are wrong because that initial submission that they make is wrong we say.
PN257
Section 22 subsection (1) empowers the agency head to engage persons as employees. The question then of whether a person is an employee depends upon established Commonwealth principles which her Honour, SDP Drake correctly identified below. Section 22 subsection (2) then provides for the types or categories of employment in which work in the Public Service can be performed. Whether or not someone is an ongoing employee or an employee for a specified term will depend upon the documents and in the absence of documents will depend upon an examination of the particular circumstances at hand. So you might as an example for a person who might have been employed on a fixed term one year contract without any further contracts thereafter but is still found to be employed 5 years later, it might be found that in fact they were an ongoing employee.
PN258
There is no requirement in those sections we say directly contrary to what the Commonwealth has submitted that employment in the Public Service depends upon the intention of the person employing at the time that the person was engaged. To put that spin on the words would, as we have put in our submissions, be directly contrary to the Commonwealth principles and there's no indication in the Public Service Act that that was the intention of the legislature. Certainly section 6, which Mr Crowe referred to, is indicating a contrary intention, we say doesn't go that far. To the extent there is any intention indicated there at all, it is certainly not that any - that the established common law doctrines in relation to employment be overturned in respect of whether a person working for the Commonwealth might be considered to be an employee or not.
PN259
MUNRO J: Are the regulations made under the Act silent on engagement?
PN260
MR RICH: The Commonwealth has referred to the gazette which requires that certain engagements be gazetted otherwise the regulations don't propose any procedure that the Commonwealth must follow in order to properly engage employees and that is the other significant limb I think of our argument is that we say the plain meaning of section 22 is as I've just indicated to the Commission, The only contrary indication in the legislation or regulations in any sort of explicit way is the requirement of regulation 3.12, I think it is, that requires that certain engagements be gazetted.
PN261
Now, the weight that should be given to that requirement we address in our submissions and say that as a matter of procedure it was never meant to be and can never be enough to be a fetter upon the exercise of the Commonwealth's power to engage staff. As such the weight that it should be given in lending or encouraging an interpretation of section 22 which would override established principles of common law in relation to the meaning of, you know, what an employee is, should be little if any.
PN262
Now, as we have put in our submissions we don't disagree that - well for me to put it more clearly - we agree with the Commonwealth that the power to engage employees lies under the Act. The Commonwealth's argument in response is that there was no intention to engage Mr Arends as an employee but there's no question that he was engaged. It has been recognised that at common law he was considered to be an employee. Essentially that as far as the common law is concerned that there was an employment relationship established between Mr Arends and the Commonwealth. However, outside of the Public Service Act the Commonwealth has now power to enter into or uphold such a common law contract.
PN263
So the question of what common law rights he might have would have to be quite significantly affected by the fact the Commonwealth has no other power outside of the Act to employ. So despite Ms Crowe's submissions about not disturbing Mr Arends rights at common law in relation to his contract of employment, certainly he could sue upon the contract he might have as a contractor, but to the extent that he might like to assert and have the court recognise that he was a common law employee, that particular contract the Commonwealth has no power to enter into except under the Act.
PN264
O'CALLAGHAN DP: Mr Rich, can I just clarify. In terms of section 22 of the Act, this is the Public Service Act, do you say that I should read 22(2) in the context of this matter on an ongoing basis or for a specified term?
PN265
MR RICH: As an ongoing APS employee. We say that the same indicators which her Honour SDP Drake accepted indicated the existence of employment relationship also indicate that Mr Arends was an ongoing employee.
PN266
O'CALLAGHAN DP: It would follow then, would it not, that you say I should discount any reference or weight at all to be attached to the duration of the contract, that is the last contract, 15 March one?
PN267
MR RICH: Yes, your Honour. We say that the nature of the employment, both whether or not Mr Arends is an employee or a contractor and also the particular type of employment which he may have been performing in terms of which category of employment he there fell into under section 22(2) depends upon a more holistic examination of the whole of his relationship with the Commonwealth.
PN268
O'CALLAGHAN DP: But effectively you're saying discount at least that part of that 15 March 2001 contract that sets a limit on what might be argued by you to be an employment pursuant to section 22.
PN269
MR RICH: Yes. So in the context of recognition that Mr Arends was engaged, and it was a positive intention to engage Mr Arends to perform work, to perform the work that he did perform in the way that he performed it over a number of years, in the context of that it has been admitted that at common law he is an employee. Given the interpretation we suggest naturally flows from the words in section 22. We say that Mr Arends was properly an employee employed under the Public Service Act and an ongoing employee in fact. In that respect SDP Drake was correct in the findings that she made.
PN270
The other aspect of our argument goes to whether or not the officer who engaged Mr Arends had proper delegated authority to do so. We refer in our submission to the de facto officer doctrine which really is an expression of some means of expressing a policy which lies behind the question of whether or not the officer had a sensible authority sufficient to engage Mr Arends and we say that the officer did.
PN271
Insofar as we refer in paragraph 23 of our submission to the ability that someone in Mr Arends position would have to otherwise inquire into the appropriate authority of the person who employed them the purpose is to indicate more broadly that the question of proper delegated authority is a question that will affect employees across the public sector whenever they are engaged. It is not appropriate in this circumstance for the Commonwealth to be able to argue that in every case where authority is represented to be held by the person engaging the employee, that employee might not be otherwise properly engaged unless there is a formal delegation; ostensible authority to employ is sufficient and to that extent we refer to the policy behind the de facto officer doctrine which applies equally in this case we suggest.
PN272
MUNRO J: I think, and I don't want to interrupt you, Mr Rich, but in the possible contingency that it may become relevant I should indicate that my understanding of the de facto officer doctrine is that it is applied in this way, that for a person who exercises or purports to exercise authority who in fact lacks it because of an invalid or non-appointment the de facto officer doctrine operates to allow enforcement or allow a remedy in relation to actions that would be within the authority of an officer who is actually appointed.
PN273
In other words if Lieutenant Thomas had not ever been appointed to his position he could do those things which are within the authority of the person who was validly appointed to a position. On the other hand the ostensible authority doctrine as it applies to public employment or to contracting runs to the effect that where a statutory power is in operation or being exercised ostensible authority will not in the ordinary course cover an action that would be ultra vires the person purporting to exercise the ostensible authority.
PN274
For that summary I am indebted to a very hasty reading of two other articles of Professor Campbell that have dealt with the subject. So far as I am aware nobody, I think other than perhaps Denis Rose has touched on the point but I don't want to be thought to elevate these doctrines to prominence but it is possible that we may have to apply our minds to it in which case I've simply given that appreciation of her understanding ..... and that somebody can perhaps correct us in whatever limited opportunity there may be for written submissions in reply.
PN275
MR RICH: To the extent, your Honour, that what you say is a proper interpretation of those cases, we would say that the doctrine - the same policy considerations underlie the existence of the doctrine and the way it may have been applied in those cases also applies in the present case.
PN276
MUNRO J: You may find some support from a lack of in Professor Campbell's views, writing to the view that the party dealing with the department is not necessarily put onto an exact examination of every source of authority but the case has to deal with the principle, certainly don't encourage any departmental officer or anybody dealing with the departmental officer to believe that if they acted well beyond their authority of a person occupying that sort of position that a power that the statute doesn't confer on an officer of that class can be exercised.
PN277
In other words after various overrides pretty well everything but not necessarily an inadequate delegation. Is that a convenient time to adjourn? I think you have concluded have you Mr Rich or have I anticipated wrongly?
PN278
MR RICH: Can I just confirm that I didn't want to respond to anything else that was said by Mr Crowe. In relation to the authorities we engage, the question raised by your Honour in relation to whether or not there was any power to engage Mr Arends evidence as a contractor seemed relevant. If it depends upon delegated authority as to whether or not the person is properly engaged then arguably, there is no evidence that Mr Arends was engaged by any authority whatsoever or that he was properly engaged at all which we say gives some more weight to our submissions in relation to the policy considerations and the application of the de facto officer doctrine and I will leave the submissions there.
PN279
MUNRO J: Thank you. We will resume at 2pm.
LUNCHEON ADJOURNMENT [1.10pm]
RESUMES [2.00pm]
PN280
MUNRO J: Mr Brady?
PN281
MR BRADY: Your Honour, you may recall that I made an application for further evidence to be called from Commonwealth witnesses, there was a temporary adjournment to that hearing in the matter was discussed between Mr Herd, Ms Henley and myself. I had understood, and the reason that I didn't pursue the request for the application for further evidence was because I had understood that the Commonwealth had accepted that Mr Arends was a common law employee. I know understand from the Mr Crowe's submissions that that is not the case which has prejudiced my position.
PN282
MUNRO J: Isn't the Commonwealth's position that even if the respondent was an employee according to common law tests that does not make him a common law public sector employee for purposes of the Act.
PN283
MR BRADY: Yes, your Honour.
PN284
MUNRO J: So there isn't a variance is there?
PN285
MR BRADY: Well the end result is probably the same your Honour, all I'm saying is that having just read through it at lunchtime, Mr Crowe's submissions, it seems that the position as I understood it between what has been agree between Mr Herd and myself has changed.
PN286
MUNRO J: Yes, in what respect though?
PN287
MR BRADY: Just in the fact that I didn't pursue the application for further evidence on the basis that the Commonwealth conceded that he was common law employee. I think in Mr Crowe's submissions he says in paragraph - - -
PN288
MUNRO J: I have some difficulty in seeing how much further you want to take the concession, the contract that Mr Arends had is clear, you are not in dispute about that?
PN289
MR BRADY: No, your Honour.
PN290
MUNRO J: You are not in dispute about, for these purposes, Senior Deputy President Drake's application of the common law tests to it - - -
PN291
MR BRADY: No, your Honour.
PN292
MUNRO J: - - - and the result it produces or what the Commonwealth says more or less by confession than avoidance is that well even conceding that to be the case that the contract for services operates in law as a contract of employment. Constitute employment under a proper reading of the definition of the Commonwealth public sector employee and the application of the relevant Act. So you are still left as it were with the finding that it is a to the extent that the common law operates on it, it is an employment relationship that you have to meet the position that that doesn't avail you for purposes of the Workplace Relations Act.
PN293
MR BRADY: Very well, your Honour.
PN294
MUNRO J: At least as I understand it.
PN295
MR BRADY: I had wanted to object to the two affidavits that went in this morning but I suppose it's a bit late for that now.
PN296
MUNRO J: Put your submission.
PN297
MR BRADY: Well I only received them late on Friday afternoon so in effect Monday. I had no time to investigate certainly the affidavit of Ms Henley which is COM2. The Commonwealth has had three weeks since my submissions went into to put in these affidavits and they were put in just before the hearing so.
PN298
MUNRO J: Could I suggest whether this might meet the position Mr Brady, we would reserve leave to you subject to what Mr Crowe says to put on a submission if you think it necessary going to the content of those affidavits. If there is a substantial contest as to a material circumstance tested in them then the better course would be I think that you put on an affidavit or a statutory declaration in reply. If it is more a matter of inflection or comment as to the particulars of the affidavit then that can be dealt with by submission. Would that meet the requirement that you have?
PN299
MR BRADY: Thank you, your Honour.
PN300
MUNRO J: Is there any objection to that course Mr Crowe?
PN301
MR CROWE: No objection but we would like to be given copies of whatever my friend does supply.
PN302
MUNRO J: Of course, yes. There may be a time limit to Mr Brady, we would be looking to within ten days or something like that.
PN303
MR BRADY: Thank you your Honour. The affidavit of Ms Henley which is COM2 does not state that a person - that a person can no longer be employed under a Naval Defence Act section 42. That Act has not been repealed and there is still power there to employ civilians under that Act. As far as the affidavit of Neil Westphalen is concerned which is COM3 states:
PN304
He never intended an employment relationship in any of the contracts he signed.
PN305
However DIG Admin 24-1, paragraph 14, page 268, volume 2 make it clear that contracts with independent contractors should only be for one year, two at the very most. If a relationship is allowed to continue for a longer period, then paragraph states on page 264 of volume 2 that the indication is that the contractors light has become a common law employee. Submitting that Mr Westphalen by ignoring the department's own guidelines has virtually guaranteed that Mr Arends will become a common law employee.
PN306
Then there is the 18 month period without a contract, one would have to assume that since all the indicia of common law employment for the present that Mr Arends was treated as and paid as an employee and I think there is no suggestion to the contrary. Mr Crowe has made much of the fact that Mr Arends agreed in the contract that he was an independent contractor. However, in all the contracts except for the very last contract, the clause dealing with independent contractors were contained under the heading "Indemnity and insurance".
PN307
It is submitted as quite clear that on the proper construction of the contract that any agreement on independent contractors contained in the earlier agreements related solely to the provision of indemnity insurance and was not a general proposition for the whole of the contract. I have dealt with the changing nature of the contractual relationship in the applicant's responses to the respondent's supplementary submissions at paragraph 1 of page 168 of volume 1.
PN308
In the appellant's submissions in reply which were handed up this morning in paragraph 8, the appellant states that:
PN309
Her Honour Deputy President Drake made not finding of the date or time when the contractor became an employee.
PN310
There are three possibilities that the appellant has submitted. A date when he first commenced providing services. There was no evidence to support this possibility and her Honour appears to have found against it. B, is the first dated in the gap and C is the date when the respondent became sufficiently integrated into the organisation of the appellant. Your Honour the applicant would submit that the date that Mr Arends became a common law employee was a date when he first commenced providing services.
PN311
From that date the factual relationship didn't change. The services he provided were the same. The pay he received was the same, none of the common law indicia of employment changed.
PN312
MUNRO J: When was the contract effectively terminated, the last one, that's March last year, is it?
PN313
MR BRADY: March last year or April.
PN314
MUNRO J: Is this the only proceeding in relation to the contractor? There are no proceedings in the State jurisdiction?
PN315
MR BRADY: No. Mr Arends was a 63 year old radiographer and had worked diligently for eight years. There were no complaints about his work. As far as he was concerned he was an employee being paid a wage and superannuation just like any other employee. Just two years shy of his retirement entitlement to long service leave his employment was terminated. No reason was given. He even had to ask whether he was still employed. Had the navy followed Department of Defence guidelines Mr Arends contract would have been terminated after one year and that would have been the end of the matter.
PN316
However, due to the navy's negligence or inadvertence he was allowed to carry on working for another seven years. Eventually someone on the base realised that Mr Arends was an employee and his entitlements were accumulating under the Public Service Act and the termination of his employment was the Commonwealth's way of avoiding their responsibilities and obligations under the Public Service Act. The Commonwealth has conceded that the respondent falls within the definition of common law employee and is likely to satisfy the indicia of the test.
PN317
However, it says that under PSA 1999 he cannot be a common law employee and had to be employed under the Public Service Act 1999 yet under another Commonwealth test, that of the Tax Office he was an employee and not a contractor. So it's an anomalous situation where the Commonwealth says that he cannot be an employee yet taxes him as an employee.
PN318
MUNRO J: How can that anomaly really help you?
PN319
MR BRADY: It's one branch of the Commonwealth saying that he's an employee and another branch of the Commonwealth saying that he is not an employee, he's an independent contract. They seem to be confused about what the relationship actually is.
PN320
MUNRO J: The Workplace Relations Act itself seems to have that anomaly built into it. The definition of Public Sector employment seems limited to employment of a person under the Public Service Act or by or in the service of a Commonwealth authority and then there is an extension of the Act's operation in relation to public sector employment and I will cut it off to those parts. It also covers in territories or by territory authorities and for purposes of section 170CD you have an entirely definition of Public Sector employee.
PN321
Under 170CD(1)(c) you have included in the definition of Commonwealth Public Sector employee employment by a person - sorry a person in employment by authority of a law of the Commonwealth. That class of employee is not within the definition of Public Sector employment and on one approach if there is such thing as a common law employee or if there is a class of employees in employment by authority of the law of the Commonwealth they are not within the definition f Public Sector employment for purposes of the Workplace Relations Act. In one sense the Act does not apply to them hence my question about is there proceedings in New South Wales.
PN322
MR BRADY: No.
PN323
MUNRO J: The anomaly could be that the Commonwealth has legislated to extend the Act to the Crown in the right of the Commonwealth generally but not to generally the class of employees who fall within 170CD(1)(c) and if there is such thing as employment under a common law contract with the Commonwealth or a minister of the Commonwealth the oddity would be that it would seem to be under the legislation of the State not under this. Hence my question, what difference does it make if there are anomalies for purposes of superannuation or tax? There are singular definitions of employment for the purpose of the particular Act and, indeed, in the case of the Workplace Relations Act for purposes of - I've got the part right at last - Part 6A. Do you understand the question I am putting.
PN324
MR BRADY: Yes, I accept that the anomaly does not help me in any way and I will move on, your Honour.
PN325
MUNRO J: Yes.
PN326
MR BRADY: Your Honour, if you accept the Commonwealth's submissions in relation to section 22 of the Public Service Act it will mean that the only test of employment is whether the agency had intended to employ a particular person who is or who is not an employee would be totally at the discretion of the agency head regardless of the particular relationship. It seems strange that the agency head could hire two persons at exactly the same time doing exactly the same job and treat one as an independent contractor and one as an employee and quite clearly this would give the Commonwealth carte blanche to circumvent the Public Service Act by hiring all persons as independent contractors rather than as employees.
PN327
MUNRO J: They will run the risk for the reasons I have just indicated that they will have section 106 applications under the New South Wales Act or State Tribunals finding that they are employees.
PN328
MR BRADY: Yes, your Honour, I think that's right.
PN329
MUNRO J: Qua independent contractors, out of the frying pan into the fire.
PN330
MR BRADY: Yes, your Honour. Section 22 states that ..... on behalf of the Commonwealth may engage persons as employees for the purposes of the agency. It doesn't say how the person is to be engaged and there doesn't seem to be any legislative bar under section 21 to a situation where an agency head ignores the agency's own rules and allows a contractor to continue with or without a contract after the first contract has expired. In this situation there is no positive act of engagement, rather engagement of an employee by default.
PN331
The appellant submitted that section 67 of the Constitution and section 6 of the Public Service Act provide exhaustively for the circumstances in which and the means by which the Commonwealth can engage employees to work in departments interstate. Section 67 of the Constitution deals with the appointment of civil servants. I would submit the respondent was not appointed, he became an employee by operation of a law and was deemed to be a common law employee and therefore section 67 does not apply.
PN332
Section 6 states that:
PN333
All persons engaged on behalf of the Commonwealth ...(reads)... authority of another act.
PN334
Section 6(1) does not apply retrospectively. Mr Arends was already employed either as a common law employee or under authority of another act being the Public Service Act 1922 or section 42 of the Naval Defence Act 1910 at a time when the Public Service Act 1999 came into effect.
PN335
I don't have any other submissions to make but this, I submit that Mr Arends was a common law employee from the start of the first contract. He carried out the same work for another seven years, nothing changed regarding the factual relationship, the Commonwealth accepts that on balance of probabilities under the indicia of common law employment that he is a common law employee but says that the Commonwealth has no power to employ common law employees after the Public Service Act 1999 came into effect.
PN336
I submit that nothing has changed, at the time of termination of his employment the applicant was either a common law employee, a Commonwealth Public Sector employee by virtue of the Public Service Act 1922 and 1999 the Public Employment ..... Transitional Amendment Act 1999 or an employed civilian under the Naval Defence Act 1910 or an employee by virtue of the power vested in the court under section 121 of the Workplace Relations Act. I respectfully request your Honour to dismiss the Commonwealth's appeal for the reasons set out in the written submissions and for the reasons just mentioned.
PN337
MUNRO J: Thank you, Mr Brady. Mr Crowe, did you wish to put anything in reply?
PN338
MR CROWE: Very briefly. In his closing comments my friend described our submission as that, among other things, there was no power to engage common law employees after the Public Service Act of 1999 took effect. As our written submissions will reveal we put it more broadly than that. It was not something that arose only out of the Public Service Act 1999 but it had been the previous position as well.
PN339
He also said earlier that he thought there was no dispute that his client was paid and treated as an employee by the appellant. We rely on all the evidence about that, we make no concession about it. The evidence from us was that he was an independent contractor and we rely upon the evidence consistent with the view that was held by the appellant's witness. The only other thing I want to say is in response to the submissions of the intervener.
PN340
There was a submission - I didn't make a note of it but those instructing me did who are not here at the moment - but it was something to the effect that the current Public Service regulations did not contain an engagement procedure in respect of ongoing employees. This might have been a response to a question from one of the members of the bench. Could I draw the Commission's attention to section 10 of the 1999 Act? It is true that this is not in the regulations but we think it does answer or goes part way to providing a procedure which the intervener denied.
PN341
The 99 Act is in tab 3 of the folder. Section 10 provides in subsection 1, clause B:
PN342
The APS values are as follows: B. the APS is a public service in which employment decisions are based on merit.
PN343
Over the page, subsection 2 provides:
PN344
For the purposes of paragraph 1B a decision relating to engagement or promotion ...(reads)... competitive selection process.
PN345
We submit that that does require an engagement procedure. We also submit it confirms it is further support for the view we have expressed that a decision to engage under this Act requires a deliberate or conscious decision to engage and further contra-indicates the suggestion of engagement under the Act by default. Indeed on the same point there are - I have a note that the intervener suggested that the regulations relevantly only talk about gazettal but if one does have a look at the regulations which are near the back of the - tab 7 of the black folder - the Commission will see that there is quite a lot of material which might indeed come within the scope of the question that was asked of the intervener concerning code of conduct, conditions of engagement and procedures such as that in clause 3.5, Engagement of Non-SES Employees.
PN346
Could I also say that I omitted to make a correction to the submissions we filed last December in COM1. We set out section 67 of the Constitution on page 13 but unfortunately we left two words out, it does not alter the submission that surrounds it but in paragraph 58 you will see the quotation in the first line of section 67, it should read:
PN347
Until the Parliament otherwise provides the appointment and removal of all other officers.
PN348
I apologise for that. MR CROWE: Would the Commission just excuse me for a moment because as I got to my feet those instructing me were outside dealing with some documents that may answer the question the you put to me earlier?
PN349
MUNRO J: Yes.
PN350
MR CROWE: We have received in the Registry's fax over lunch three extracts from a document which go towards answering the question about Lieutenant Commander Thomas's delegation. As I understand it, the Financial Management and Accountability Act, sections 44 and 53, confer authorities on persons in Commonwealth service rather than in the Commonwealth Public Service, to incur certain liabilities and expenses and to propose approval of certain expenditures. Those authorities are granted to certain job positions which are identified by a number.
PN351
Now, I have here extracts from DRB - Defence Reference Book - No 47 entitled Manual of Financial Delegations. The documents I have are pages 11 through 13 of that which contains a list of the numbers of the job positions to which is delegated the authority to sign a Commonwealth liability. In the list of job numbers which have that authority appears number 21529, Medical Officer, Navy Program. That is the position, I'm instructed, that Lieutenant Commander Thomas had when he was at HMAS Albatross - and he still is at HMAS Albatross. I'll hand that up in a minute with the other two and I'll describe them first.
PN352
The second document is pages 28 to 30 of the same DRB 47 which describes the job position numbers to which is delegated authority, under Financial Management and Accountability Regulation 9, to approve a proposal to spend public moneys except for official hospitality. Again, the position number of the position held by Lieutenant Commander Thomas, 21529, Medical Officer, Navy Program, appears in that document. In each document his position document has been marked in hand with a start or asterisk.
PN353
The third document is pages 46 to 48 of DRB 47 which lists the job position numbers to which is delegated, under Financial Management and Accountability Act, sections 4 and 53, the authority to decide on the method of procurement of goods and services. Again, Medical Officer, Navy Program, is in the list of those positions.
PN354
That's as much as we've been able to obtain since the question was asked of us this morning. It does seem to go a long way - - -
PN355
MUNRO J: Could we mark those, as it were, in advance? Pages 11 to 13 of DRB 47 we'll mark as COM6; pages 28 to 30, COM7; and pages 46 to 48, COM8.
EXHIBIT #COM6 PAGES 11 TO 13 OF DRB47
PN356
MUNRO J: Perhaps those might be uplifted and provided to our associates and we'll arrange for copies to be made and provided to Mr Brady and Mr Rich in due course and any comment on those we'll also reserve liberty to put in a written submission. Do you need those back. If we're adjourning shortly then we'll make copies and provide them back to you.
PN357
MR CROWE: Thank you, your Honour. So those are the only submissions I want to make in reply. We ask that leave be granted and the appeal be allowed.
PN358
MUNRO J: Yes. We will reserve our decision. Could I indicate on behalf of the bench that we have been assisted by the work that has been put in by each of the parties and interveners. We realise that the task has grown beyond that which left Drake SDP and, while you have each been subjected in one way or another to some interrogatories from the bench, I would not want it to be thought that we are unappreciative of the effort that has been put into a matter that in some sense does extend beyond Mr Arends' personal position.
PN359
The Commission will adjourn on the basis that the decision is reserved. Should the opportunity to put a written submission be exercised then it should be lodged within a time period expiring by close of business 28 February. Liberty to make any reply to such material is reserved as need be provided it is done within a reasonable time; and any material lodged with the Commission should be served upon the other party or intervener parties. The Commission will adjourn. Thank you.
ADJOURNED INDEFINITELY [2.40pm]
INDEX
LIST OF WITNESSES, EXHIBITS AND MFIs |
EXHIBIT #COM1 APPELLANT SUBMISSIONS LODGED ON 13/12/2002 PN20
EXHIBIT #COM2 AFFIDAVIT OF FRANCIS KIM HENLEY LODGED 14/02/2003 PN21
EXHIBIT #COM3 AFFIDAVIT OF NEIL WESTPHALEN LODGED 14/02/2003 PN21
EXHIBIT #A1 APPLICANT'S SUBMISSIONS IN RELATION TO AMENDED NOTICE OF APPEAL UNDER SECTION 45 PN22
EXHIBIT #A2 APPLICANT'S RESPONSES TO SUPPLEMENTARY PN23
EXHIBIT #CPSU1 WRITTEN SUBMISSION PN31
EXHIBIT #COM4 APPELLANT SUBMISSIONS IN REPLY DATED 30/1/03 PN48
EXHIBIT #COM5 TABLE HEADED CONTRACTS PN50
EXHIBIT #COM6 PAGES 11 TO 13 OF DRB47 PN356
EXHIBIT #COM7 PAGES 28 TO 30 OF DRB47 PN356
EXHIBIT #COM8 PAGES 46 TO 48 OF DRB47 PN356
AustLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.austlii.edu.au/au/other/AIRCTrans/2003/763.html