Surveillance Australia Pty Ltd v McLennan [2005] HCATrans 603 (11 August 2005)

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Surveillance Australia Pty Ltd v McLennan [2005] HCATrans 603 (11 August 2005)

Last Updated: 26 August 2005

[2005] HCATrans 603

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Adelaide No A20 of 2005

B e t w e e n -

SURVEILLANCE AUSTRALIA PTY LTD

Applicant

and

BRIDIE McLENNAN

Respondent

Application for special leave to appeal

GUMMOW J
KIRBY J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT ADELAIDE ON THURSDAY, 11 AUGUST 2005, AT 10.50 AM

Copyright in the High Court of Australia

MR M.G. EVANS: May it please the Court, I appear with my learned friend, MR R.J. MANUEL, for the applicant in this matter. (instructed by EMA Legal)

MR H. BORENSTEIN, SC: If the Court pleases, I appear with my learned friend, MR W.L. FRIEND, for the respondent. (instructed by Bourne Lawyers)

GUMMOW J: Yes, Mr Evans.

MR EVANS: Your Honour, the issue in this matter is when does an agreement entered into between an employer and employee amount to a variation of a pre-existing Australian Workplace Agreement, such that the subsequent agreement requires approval under Part VID of the Workplace Relations Act.

In this matter, as your Honours would have seen from the application book, the applicant and respondent were parties to an Australian Workplace Agreement which had been entered into, and they then entered into a further agreement which has been referred to as the bond agreement.

GUMMOW J: What was the action?

MR EVANS: The action was an action for money pursuant to the bond agreement.

GUMMOW J: Exactly, and there is a defence.

MR EVANS: Yes.

GUMMOW J: What is the defence?

MR EVANS: The defence was that the bond agreement was invalid because it was a variation to the AWA which required approval under Part VID of the Act.

GUMMOW J: There is a provision which took the appeal out of the State court into the Federal Court, is there not?

MR EVANS: That is correct, your Honour.

GUMMOW J: What is that section?

MR EVANS: I am unaware of that section, your Honour.

MR BORENSTEIN: Section 422 of the Workplace Relations Act.

GUMMOW J: Yes, that is right, thank you.

MR EVANS: Your Honour, the matter started in the Magistrates Court in South Australia and, as my friend indicated, the appeal by the respondent went to the Full Federal Court, and then this matter comes before this Court.

Your Honours, the circumstances giving rise to the bond agreement being entered into are these, that the applicant conducted aerial surveillance of the borders of Australia pursuant to a contract with the Australian Customs known as Coastwatch. The respondent was a pilot employed by the applicant. The respondent had had a previous period of employment with the applicant. It is the second period of employment that concerns this matter. The respondent commenced employment in September 2001 and upon commencing employment - - -

GUMMOW J: What was the termination provision in the first contract, if I can call it that?

MR EVANS: In the AWA or the bond?

GUMMOW J: What was the initial termination provision?

MR EVANS: In the AWA itself? In the initial Australian Workplace Agreement, your Honour, it was an agreement for a period of three years and it would terminate on the respondent ceasing employment with the applicant, and then the Act has provisions for the continuation of the AWA.

HAYNE J: Was it an agreement for a term of years or was it terminable on notice - see page 30, clause 6.13.4.

MR EVANS: The contract of employment was terminable on notice. The AWA would remain in force whilst the respondent was an employee of the applicant, but the respondent could terminate on the provision notice the contract of employment, and on termination of the contract of employment the AWA itself had come to an end as between those parties.

HAYNE J: But as things then stood, the arrangements between the parties, using arrangements to encompass everything that governed their relationship, the arrangement was one terminable on a month’s notice by the employee?

MR EVANS: That is correct, your Honour, yes.

HAYNE J: When the bond was made, what was the position about bringing arrangements between the parties to an end?

MR EVANS: The respondent could still terminate the contract on the same basis except that the respondent would be responsible for the repayment of certain moneys to the applicant and those moneys were a sliding scale during a three-year period. The bond was structured and was referred to as a return of service, so that as between the applicant and the respondent they agreed that if the respondent were to apply for this higher position, being the Dash 8 certification, of course she could only do that if she was qualified to do that.

The applicant offered her training and the condition of that training was the entry into the bond agreement. The magistrate at first instance found that the dollar amount referred to in the bond agreement was a fair estimate of the actual cost of the training that the applicant - - -

KIRBY J: That is not to the point. In the AWA you agreed that there might be some training but it did not cover this particular incident nor the burden that you wanted to add to it, and secondly, you have agreed that the terms totally replace any previous agreement and it can be varied only in accordance with agreement between the parties. So you have turned your attention to training, you have provided something for it, and you said, “If we’re going to vary it, it has to be by explicit consent of both parties”.

MR EVANS: Insofar as the Australian Workplace Agreement specifically overrode any earlier agreement, that was an agreement as defined by the Workplace Agreement itself, and the definition of “agreement” within the Australian Workplace Agreement is in an earlier Australian Workplace Agreement, but that clause also went on and said that it replaced any other contract of employment. But, of course, that - - -

KIRBY J: I am only referring to clause 19 on training. It is on page 82 in the Full Court judgment:

all facilities and other costs associated . . . will be the responsibility of the employer.

Then you want to slip in another and very different provision.

MR EVANS: Your Honour, when one looks at the clauses which deal with training, they deal with training in relation to the person’s appointed position and, of course, the respondent was appointed to a position – and it is clear from the last page of the Australian Workplace Agreement, which is at page 33 of the application book, that she was classified as a BN2 islander pilot and she was at Horn Island. The training provisions at clause 5.1.2 provide:

We will provide reasonable access to training to afford you the opportunity to acquire all of the skills, competency and knowledge needed to perform work in your appointed position.

Then 5.1.3 is:

You are required to undertake training to enhance and broaden your work skills as required in your appointed position.

It then goes - - -

KIRBY J: This is like an articled clerk. He is in his appointed position, he is mainly doing conveyancing and then the boss says, “Well, I’m going to get you a bit more training and you’re going to do a few probate cases”.

MR EVANS: Except that, with respect, your Honour, here there would be no obligation on the applicant to provide training for the position of a Dash 8 pilot. The applicant wished to employ a number of people in the position of Dash 8 pilot. The applicant called for expressions of interest from existing employees - - -

KIRBY J: So there was an interest in the applicant in having a Dash 8 pilot qualification for the respondent?

MR EVANS: No.

KIRBY J: Potentially?

MR EVANS: Potentially, your Honour, but the respondent knew at the time that the call for expressions of interest was made that the practice of the applicant was to require any person who wished to undertake training through the applicant to qualify for Dash 8 qualification to enter into the bond agreement which the respondent did enter into, and that practice, in my submission, on a perusal of the Australian Workplace Agreement, there is a definition of “‘Policy”, “Practice” or “Procedure”’, and one sees that the word “practice” is used nowhere in the Australian Workplace Agreement other than with the word “policy”. When one looks at what the policy and the understanding of the parties was, both at the time that the AWA was entered into and at the time that the respondent exhibited the expression of interest to enter into the training, both parties understood that a requirement was the bond agreement.

The respondent if she had elected not to go into the Dash 8 training would, of course, have remained in her current position. There was never an obligation on the applicant to pay, for example, for the training in relation to Dash 8. So a similar position could - - -

HAYNE J: Accepting that to be so, did an employment terminable on a month’s notice become an employment for a term of years terminable only on payment of a sliding sum of money?

MR EVANS: Well, it was terminable still on a month’s notice but, yes, there was money to be paid. It is not different, your Honour, to a situation where a respondent wished to undertake training outside of the applicant’s establishment, it was in the applicant’s interest for that training to be undertaken and the applicant to lend money to the respondent for the purpose of undertaking that training where the applicant says to the respondent, “We will forgive that loan in relation to the training if you stay with us for a specified period”. In my submission, that could not be a variation of the Australian Workplace Agreement such as it comes within Part VID.

Your Honours, with respect, that the Full Court fell into was the error which can be identified at page 103 and 104 and 105 of the application book. At page 103 your Honours will see at line 5 the majority of the Full Court says that:

the Act prohibits the alterations of rights and obligations concerning a matter dealt with by an AWA -

The majority then goes on that page to have regard to old section 65 of the Conciliation and Arbitration Act which is now 152 of the Workplace Relations Act which deals with the question of inconsistency. What the Full Court then does – and it is apparent over the page at page 104 at line 22 following the passage that has been cited, the Court says:

These reasons led their Honours to take a fairly broad view of what was the matter dealt with by the industry award in question –

and then down in paragraph 52 at line 30 their Honours say:

what matters are dealt with by an AWA should not be viewed narrowly when determining its legal effect in relation to, amongst other things, State laws.

They go on and say:

However, if the matters an AWA deals with are not viewed narrowly for that purpose, there would be no apparent reason for treating more narrowly the matters an AWA deals with for the purpose of determining the circumstances in which contractual terms can be agreed between the employer and employee bound by an AWA without having to enter a variation agreement –

So they broaden the effect, in my submission, incorrectly, the provisions of a AWA so that if it deals with a matter, any other agreement subsequent to the AWA which deals with that matter in a different way will automatically require variation.

In my submission, if one continues through on page 105, the only example of training of the type that is in question is at line 18 where it says:

The latter type, training not required for the appellants appointed position, would not have created an entitlement in the appellant to a higher rate of pay unless it was completed and the skills obtained used in her employment.

So they were understanding that there is a differentiation between training for the position that the person is in and training for a higher position. That is the only matter that they really identified.

KIRBY J: That involves really giving the training clause a very narrow reading. I mean, in all employment people’s training is potentially useful to their employer, otherwise employers do not tend to engage in it.

MR EVANS: Of course, your Honour, and in all employment employees – not in all employment, but it is not uncommon for employees to undertake training apart from their employment. So that they go outside of their employment to undertake further training. It is not uncommon for employers to give people time off in relation to training, but that does not, in my submission, make an agreement in relation to an offer of a higher position which requires the repayment of the cost of the training should the person leave within three years, say, a variation to the underlying AWA.

GUMMOW J: What do you say as to paragraph 22 of your opponent’s submissions on page 137?

MR EVANS: The Full Court did get it wrong, and I submit that that is a necessary – I need to satisfy the Court that there is a prospect of success on the appeal, but the reasons that the Full Court got their judgment wrong, in my submission, is that they attempted to broaden the effect of the AWA when all they needed to do - - -

KIRBY J: Yes, but that is not meeting Justice Gummow’s question. The point at 22 is you might be right but this is just a very special factual situation in interpreting and evaluating a particular AWA and that is the business ultimately in the end of the Full Court of the Federal Court, not of the High Court of Australia.

MR EVANS: I accept that the interpretation of AWA is the Full Court of the Federal Court that is the court that is principally responsible on a day-to-day basis for dealing with that, and of course it is a matter of great importance because it affects the way that the employment advocate deals with matters, it affects the way the Industrial Commission - and of course the Federal Court itself, but, your Honour, what the Federal Court has done here is express a principle of general application, and that is that when considering whether a subsequent agreement amounts to a variation the court should, first of all, interpret broadly the matters which have been dealt with within the existing Australian Workplace Agreement for the purpose of seeing whether the subsequent agreement deals with the same matter.

Your Honours, that is an application of general principle. The correct approach is that there is no need to move to that inconsistency. In fact, the provisions within Part VID are different to the provisions in the other parts of the Act in relation to inconsistency. Your Honours will see that certainly in relation to the effect of an AWA overriding an award, whether it is Federal or State, there is no reference to inconsistency in that, unlike in the award provisions, and certainly it is different to Part VID dealing with certified agreements, there is no reference to inconsistency in relation to the overriding of the State or Federal award.

So it is my submission that it is a matter of general principle as to the interpretation. The Federal Court has expressed a view as to the correct method of interpreting whether a subsequent agreement varies an AWA and, with respect, they have taken a step too far, and all they needed to do was to look at the subsequent agreement and see whether it affects the rights that have been set out in the AWA. That is all they needed to do, and this was not a matter which was dealt with in the AWA.

KIRBY J: You referred to the majority reasons but in fact Justice Lander, though he wrote a separate opinion, was of the same view as the majority.

MR EVANS: I accept that, your Honour, yes, he was, he expressed that. The only other matter was the reference to the award that the Full Court had made in relation to the disadvantage test, but I do not need to expand on that.

GUMMOW J: Thank you. Mr Borenstein, we do not need to call on you but we note what you say on page 140 of the book in respect of costs.

MR BORENSTEIN: It is said with some regret, your Honour.

GUMMOW J: Without necessarily endorsing all of the reasoning of the Full Federal Court, the conclusion reached by the Full Court was correct. Accordingly, special leave is refused.

The Court will adjourn to Tuesday, 30 August 2005 at 10.15 am in Canberra.

AT 11.10 AM THE MATTER WAS CONCLUDED