CITATION : 2013 WAIRC 00781 CORAM : COMMISSIONER S M MAYMAN HEARD : THURSDAY, 11 APRIL 2013 DELIVERED : FRIDAY, 30 AUGUST 2013 FILE NO. : B 118 OF 2012 BETWEEN : DAVID ERNEST ELEY Applicant AND POTATO MARKETING CORPORATION OF WESTERN AUSTRALIA Respondent CatchWords : Industrial law (WA) - Termination of employment - Entitlements under contract of employment - Jurisdiction considered - Principles applied - Whether contractual relationship had been entered into - application dismissed Legislation : Industrial Relations Act 1979 (WA) s 29(1)(b)(ii), s 29AA(3), s 29AA(3)(a), s 29AA(4)(a), s 29AA(A)(b) Marketing of Potatoes Act 1976 (WA), s 18(1), s 18(4) Public Sector Management Act (WA) s 64(1)(b) Result : Order issued 1394 WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 93 W.A.I.G. Representation: Applicant : Mr Eley (in person) Respondent : Mr Lethbridge (of counsel) Case(s) referred to in reasons: Amalgamated Collieries of WA Ltd v True (1938) 59 CLR 417 Appleton v Director General, Department of Education (2012) WAIRC 00381; (2012) 92 WAIG 910 BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 Genovesi v Affluence Pty Ltd t/as Swan Districts Real Estate (2005) WAIRC 00828; (2005) 85 WAIG 1314 Millar v JB and BL Nominees Pty Ltd t/as Southern Cross Traders (2005) WAIRC 02857; (2005) 85 WAIG 3797 Quinn v Kalgoorlie Consolidated Gold Mines Pty Ltd (2006) WAIRC 05220; (2006) 86 WAIG 2725 Springdale Comfort Pty Ltd v Building Trades Association of Unions of Western Australia (Association of Workers) (1987) 67 WAIG 325 Trigwell v Brereton t/as Aircraft Cleaner Extraordinaire (2012) WAIRC 331; (2012) 92 WAIG 624 Waring v WorkCover WA (2010) WAIRC 00914; (2010) 90 WAIG 1664 Case(s) also cited: Byrne v Australian Airlines Ltd [1995] HCA 24 Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (Cth) (1981) 147 CLR 297 Griffith v Marston and Cook Pty Ltd PR 918518 Harward v Griffin Coal Mining Company Pty Ltd (2004) WAIRC 11512; (2004) 84 WAIG 1412 Hocking v Western Australian Bank (1909) 9 CLR 738 Remedios v Oceaneering Australia Pty Ltd (2005) WAIRC 01929; (2005) 85 WAIG 3161 Shields v WMC Resources Ltd (2004) WAIRC 10787; (2004) 84 WAIG 3378 Reasons for Decision 1 The substantive claim in this matter is brought by Mr David Ernest Ely (the applicant) against the Potato Marketing Corporation of Western Australia (the respondent) in which the applicant claims on 14 May 2012 he is owed payment for the balance of his three year term of employment as chief executive officer (the CEO). At the time this matter was considered the unfair dismissal claim had been heard and dismissed by Kenner C. The application was filed in the Registry on 28 May 2012 pursuant to the Industrial Relations Act 1979 (WA) (the Act). The particulars of claim prescribe at [17] of the application that the applicant's gross wages and salary were $152,337 per annum. At the time of submitting his application no further particulars on the applicant’s wages were provided. 2 Kenner C in his decision (2013) WAIRC 00096; (2012) 93 WAIG 213 issued on 22 February 2013 said at [44] and [45]: Furthermore, by its notice of answer and counter–proposal, the Corporation contends that whilst Mr Eley purported to act as the Chief Executive Officer of the respondent between 7 and 11 May 2012, as at 14 May 2012, on Mr Eley’s, summary dismissal, the terms of his contract with the Corporation were still in dispute. The Corporation contends that Mr Eley's appointment as Chief Executive Officer was conditional upon the approval of the Minister under s 18(4) of the MP Act, which approval was never given. The Corporation therefore denies there was any contractual relationship entered into between it and Mr Eley, capable of enforcement under s 29(1)(b)(ii) of the Act. There is no evidence before the Commission as to these matters. To enable the issue of whether there was an enforceable contract of employment in place between the Corporation and Mr Eley, and if so, Mr Eley’s relevant salary for the purposes of s 29AA(5)(b) of the Act to be determined, the Commission will re-list Mr Eley's contractual benefits claim for further hearing and determination. 3 The file was re-allocated. On 11 April 2013 a directions hearing was scheduled between the parties out of which an order issued requiring the applicant to file and serve an affidavit evidencing the employment contract upon which Mr Eley relied and the composition of the applicant’s salary as it appeared in his particulars of claim on 28 May 2012. In addition the applicant was to file and serve written submissions relating to whether or not the Government Officers Salaries, Allowances and Conditions Award 1989 (the GOSAC award) applied and the relevant agreement applying to the employment of the applicant for the purposes of s 29AA(4)(a) of the Act. The respondent was to file and serve written submissions relating to the same matters in reply. Relevant to the preliminary issue is whether or not the applicant's claim can be considered by the Commission given the terms of s 29AA(3) and (4) of the Act, which prescribe that an applicant raising this aspect of the Commission's jurisdiction must not earn a salary in excess of $134,100 per annum on the basis that the employee is not covered by an industrial instrument for the purposes of that section. The relevant rate applying at the time was $134,100, the salary cap as published in the Western Australian Industrial Gazette, (2011) WAIRC 00468; (2011) 91 WAIG 995. The amount is adjusted each year on 1 July. 4 Prior to considering that question is the jurisdictional question raised by the respondent in their Notice of Answer and Counter Proposal (Form 5), that being the applicant's appointment as the CEO had never been approved by the minister under s 18(4) of 93 W.A.I.G. WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 1395 the Marketing of Potatoes Act 1946 (WA) (MP Act). The respondent contends there was never any contractual relationship entered into capable of enforcement under s 29(1)(b)(ii) of the Act. Applicant’s Written Submissions 5 The applicant submits in relation to s 29AA(5) the relevant amount to be considered by the Commission is $134,100 as set at 1 July 2011 and reset as at 1 July, each year. The application was filed on 28 May 2012. The Industrial Relations (General) Regulations 1997 (WA) (the General Regulations) prescribe how to determine reg 5(2)(c) the salary of an employee who has been employed for a period of less than 12 months. The formula specified is: remuneration received x 365 days employed. 6 The applicant submits he was employed for eight days, from 7 – 14 May 2012 inclusive, therefore falling into the category of less than 365 days of consecutive employment. Relevant also is the sworn affidavit submitted by the applicant as filed on 2 May 2013 and a matter conceded by the respondent, that being that no remuneration was ever received. Applying the relevant figures relating to the applicant’s salary together with the prescribed formula the result is less than the prescribed salary amount of $134,100 that applied at that time. That is, given the applicant's salary received was nil. The applicant refers to the case of Genovesi v Affluence Pty Ltd t/as Swan Districts Real Estate (2005) WAIRC 00828; (2005) 85 WAIG 1314 where it was stated by the then Smith C [62]: It is my opinion the meaning of the reg 5(2)(c) is clear and unambiguous. For the purposes of ascertaining whether the salary of an employee who has been employed for less than 12 months exceeds the prescribed amount, the Commission is only required to take into account the remuneration received by the employee, that is, remuneration actually received and not the salary the employee or the employer claims the employee was entitled to receive. In my view the Applicant's counsel correctly contends in written submissions: “Whilst this result may seem unusual, on closer analysis, reg 5 is structured in a way that is clearly intended to differentiate between employees who have been employed for less than 12 months and those who have been employed continuously for 12 months or more. Compare reg 5(2)(a) (which provides for the prescribed amount to be the greater of the salary entitled to be received and the salary actually received) with reg 5(2)(c) (which is based on remuneration received).” In Genovesi the applicant had received no remuneration and the actual claim was dismissed for other non-related jurisdictional issues. 7 The applicant submits that the Genovesi decision was considered again in the matter of Millar v JB and BL Nominees Pty Ltd t/as Southern Cross Traders (2005) WAIRC 02857; (2005) 85 WAIG 3797 where the proportion of Genovesi was upheld for the purposes of reg 5(2)(c) of the General Regulations to the Act. The applicant in his submissions attached an unsigned employment contract dated 7 May 2012 or (the contract) as an annexure DEE-2B to his affidavit (sworn 2 May 2013). The applicant does not agree that the said contract specifies all of the terms as agreed between himself and the respondent however it is submitted that most matters are contained within the employment contract as to what was agreed. The applicant specifically submitted that: [12] … the Applicant's position was covered by the Government Officers Salaries, Allowances and Conditions Award 1989 (“GOSAC”) including subsequent amendments referred to as General Agreements, with the latest General Agreement (GA–5) which took effect from 15 April 2011. The General Agreement of 15 April 2011 is more fully known as the Public Service and Government Offices General Agreement 2011(“General Agreement 2011”). … [14] Despite the finding by Commissioner S J Kenner that the Respondent is a constitutional corporation as defined in s.12 of the Fair Work Act 2009 (Cth) and the Commissioner’s finding that the Respondent cannot be covered by or subject to the terms of an award or industrial agreement of the Commission, it is the Applicant’s contention that an award or industrial agreement can nonetheless still “apply” to the employment of the Applicant employee, as that term is used in s 29AA(4)(a): [15] The Employment Contract specifies in the second paragraph that its purpose was to “formally acknowledge the GOSAC award and to include additional or overriding conditions specific to this position. At all times of the conditions contained herein shall override the related conditions of GOSAC”. 8 The applicant submitted that the employment contract subsumed the GOSAC award and the Public Service and Government Officers General Agreement 2011 into the employment relationship with the exception of variations by additional or overriding terms. In the decision of the Full Bench in Quinn v Kalgoorlie Consolidated Gold Mines Pty Ltd (2006) WAIRC 05220; (2006) 86 WAIG 2725 the phrase ‘apply to the employment of the employee’ as it appears in s 29AA(3) of the Act was considered. The applicant submitted the reasons as reflected in Quinn apply equally to the same phrase used in s 29AA(4) of the Act as the phrase as used in a similar context and for a similar purpose in both sections. 9 The applicant submitted that in the current application the GOSAC award and the General Agreement have an impact on the terms and conditions of the applicant in setting out the majority of the employment relationship. The industrial instruments cannot be enforced in a manner that binds the respondent in the Industrial Magistrate’s Court it does not mean that the same instruments cannot apply to the employment of an employee and can therefore be enforced by the Commission by way of an application made pursuant to s 29(1)(b)(ii). The applicant submitted these were the circumstances of the particular application. There is no requirement under s 29AA(3)(a) or s 29AA(4)(a) that the relevant industrial instrument is unable to be enforced but merely that the instruments apply to the employment of the applicant. The applicant submitted that the Commission should 1396 WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 93 W.A.I.G. find that neither of the conditions set out in s 29AA(4)(a) or s 29AA(4)(b) are encountered and therefore there is no jurisdictional bar to the Commission hearing the application. Respondent’s Submissions 10 To the extent that the terms of the applicant's contract of employment were decided, the employment contract provided for a salary of $152,337 per annum (as per [8] of the affidavit of David Ernest Eley sworn 2 May 2013). The applicant worked eight days prior to his dismissal and for that period received no wages. 11 The respondent submits what remains at issue is whether or not the salary figure of $152,337 is exceeded. It is the applicant's view that the application of reg 5(2)(c) produces a salary of nil and it is this figure which is to be compared with the prescribed amount for the purposes of s 29AA(4)(b). This is opposed by the respondent. 12 It is the view of the respondent: (a) reg 5(1) provides for the “prescribed amount” such that reg 5(2) need not be considered; or (b) reg 5(2)(c) is ultra vires and cannot be applied; or (c) reg 5(2) cannot be applied in the way contended for by the applicant. ([8] of the respondent’s submissions) Supplementary Submissions 13 The Commission on 6 June 2013 wrote to the parties providing them with the opportunity to provide further submissions in accordance with the provisions of s 26(3) of the Act, in light of Kenner C’s comments at [44]. Applicant’s Supplementary Submissions 14 The applicant submitted that; There is no evidence before the Commission in relation to ‘the question of the consent of the Minister to the appointment of the Applicant as Chief Executive Officer of the Respondent. (applicant’s supplementary submissions) 15 Although the respondent suggests there was no consent given there is no evidence to confirm such a suggestion. For example, was the minister asked and did he refuse. Whether it was customary for the minister to provide his approval or alternatively if a person acted in a position of the CEO pending the conclusion of the approval process. The applicant raised the issue of the refusal and whether it occurred after or before the applicant's employment was terminated. In terms of the statutory construction of the MP Act s 18(4) states: Of the Officers appointed under this section one shall, subject to the approval of the Minister, be appointed as chief executive officer of the Corporation who – (a) shall, subject to the control of the members of the Corporation, administer the day to day operations of the Corporation; and (b) may be a person who is a member of the Corporation Section 18(1) of the MP Act states: The Corporation may appoint such inspectors and other officers and employees, subject to any relevant instrument, as it requires to assist it – (a) in the administration of this Act; (b) if the collection, handling, examination, grading, treatment, storage, distribution and sale of potatoes and other services incidental or auxiliary to any of the foregoing matters. 16 In the view of the applicant approval by the minister can be retrospective. To assert that the applicant was not appointed because the minister had not given his approval is contrary to the provisions of s 18(1) and s 18(4) of the MP Act. 17 The applicant submits that it would be in accordance with the provisions of s 26 for the Commission to find that the applicant was appointed by the respondent as acting CEO. 18 The respondent was aware of the need for ministerial approval and even so entered into a contract of employment with the applicant and prior to obtaining the necessary ministerial approval allowed the applicant to commence working for the respondent. Prior to obtaining the necessary approval the respondent seemingly seeks to excuse itself from its contractual obligations and seeks to ‘rely upon its deliberate failure to obtain the requisite approval’. The applicant relies on an implied term of common law as set out by the majority in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266. Respondent’s Supplementary Submissions 19 The respondent submitted that the application filed initially by the applicant on 28 May 2012 should be dismissed for want of jurisdiction because: (a) the contract of employment is invalid by reason of the absence of ministerial approval for the applicant to be appointed CEO; and (b) the applicant accordingly has no standing to refer the s 29(1)(b)(ii) application to the Commission and the Commission has no jurisdiction to hear and determine it. The applicant’s occupation as identified on the application was ‘Chief Executive Officer’. In the main he managed the operations of the organisation (Question 12) and he commenced work on 7 May 2012 and was terminated on 14 May 2012 (Question 14). His 93 W.A.I.G. WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 1397 employment was permanent, full-time and fixed term. The applicant indicated on his application that the number of hours he worked per week was ‘37.5’ and that ‘his gross wages/salary (including any salary package benefits value) was ‘$152,337 per year’ (Question 17). 20 The respondent indicates that a basic tenet of the applicant’s application is that the alleged contract was for a fixed term of three years, as claimed by the applicant ‘Payment for the balance of my three year contractual term’ (Question 20). The respondent is a statutory corporation and as such the question of whether the assumed contract exists must be considered within the statutory framework that permits the respondent to employ persons, in particular the CEO. The respondent's authority to allow for the provision to employ the CEO is expressly provided for in s 18 of the MP Act as earlier referred to. 21 The respondent submits that the employing authority is required to seek the approval of the minister to employ the CEO. In the case of Mr Eley there was no formal appointment nor was there a contract of employment as detailed in the application ever finally agreed between the parties. The respondent submitted: Even if the respondent did purport to formally appoint the applicant as CEO and a contract in the terms alleged by the applicant was agreed, there was a procedural irregularity in the exercise of the power to appoint because a condition upon the exercise of that power was not satisfied. The Minister has never approved the appointment of the applicant as the CEO of the respondent. ([12] respondent’s supplementary submissions) 22 The respondent referred to the decision in the matter of Waring v WorkCover WA (2010) WAIRC 00914; (2010) 90 WAIG 1664 that was considered by the Public Service Appeal board. The particular case involved the consideration of whether the power to appoint arbitrators as fixed term officers under s 64(1)(b) of the Public Sector Management Act 1994 (WA) had been validly exercised. It transpired the board found that the appointments were not validly made. Although it did not expressly say so, the board appeared to agree with WorkCover. At [47] the Board stated: In this case, the power to appoint is set out in a statute to include a requirement to meet a test set out in an award, that is s 64 of the PSM Act requires that the test for fixed term appointments set out in the Award be complied with. The employer is required to exercise their employing authority to appoint officers in accordance with that test. In this case it has been demonstrated that the purported exercise of statutory power, to appoint, has been made contrary to the statutory requirements and therefore the decision to appoint was invalid from the date it was made (See Wattmaster Alco Pty Ltd v Button (1986) 13 FCR 253). While the Award requirement is binding on the employer by virtue of s 64 of the PSM Act, the Award does not at this point apply to the employee because no valid contract yet exists (emphasis added). The Board then went on to quote Latham CJ in Amalgamated Collieries of WA Ltd v True (1938) 59 CLR 417. 23 The creation of the relation of employer and employee depends upon an agreement between them and not upon any award. The existence of obligations under an award in relation to a particular employer and employee always depends on the existence of a contract between them. The respondent submits the Commission has the power to make a finding that the alleged contract was invalid and that it is appropriate to exercise such power in this case. 24 The law relating to denial of contractual benefits is summarised by Harrison C in the decision of Trigwell v Brereton t/as Aircraft Cleaner Extraordinaire (2012) WAIRC 331; (2012) 92 WAIG 624. The claimed benefit must be a contractual benefit to which there must be an entitlement under the applicant's contract of service. The obligation is on the Commission considering the matter to act according to equity, good conscience and the substantial merits of the case. 25 The respondent submits that the Commission should follow the logic of the board in the Waring judgment in relation to the exercise of legal power upon the presence of the legitimacy of the contract of employment and make a finding that if the contract was ever agreed between the parties which the respondent says it was not it must now be treated as unsound by reason of the absence of ministerial approval as is required by s 18(4) of the MP Act. In the event the alleged contract does not exist due to being invalid then, the respondent submits, the applicant has no standing to refer the claim to the Commission as the Commission’s jurisdiction under s 23 of the Act fails to be enlivened. The respondent referred to s 29(1)(b)(ii) of the Act in that an industrial matter can be referred to the Commission in matters where a claim by an employee in circumstances where he had not been allowed by their employer a benefit, which was not a benefit under an award or order. The respondent referred to the decision by the Court of Appeal in HotCopper Australia Ltd v Saab (2002) WASCA 190 at [18]: The section is a source of power in a very limited sense only in that its purpose is to furnish the Commission with the authority in certain cases to entertain a reference to it by an individual employee rather than by a registered organisation. It does so by expressly conferring standing on an employee himself or herself to refer to the Commission a claim of the kind described in the subsection. 26 Any claim for contractual benefits before the Commission must have one primary factor in existence and that is a contract of employment. In this case the respondent submits even if the alleged contract was agreed it is invalid and therefore the applicant has no standing to refer the claim in the application to the Commission. In the decision of Scott ASC in Appleton v Director General, Department of Education (2012) WAIRC 00381; (2012) 92 WAIG 910 in circumstances where there is no standing for an applicant to file the application and the Commission is without jurisdiction to hear and determine the matter the application should be dismissed for want of jurisdiction. Accordingly the respondent seeks the Commission declare the alleged contract invalid and the application be dismissed for want of jurisdiction. Conclusion 27 The substantive task of the Commission is to assess whether the applicant’s salary pursuant to his agreed contract of employment exceeds the prescribed amount in s 29AA of the Act. On the face of it that appears to be the case as $152,337 the class one salary (that was purportedly agreed between the applicant and the respondent) exceeds the prescribed amount applying at the time the application was filed, (the cap that applied as at 1 July 2011) being $134,100. However, before 1398 WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 93 W.A.I.G. considering that matter the Commission needs to address the preliminary issue raised by the respondent in its Notice of Answer and Counter Proposal. Preliminary Issue 28 It is quite clear that if the jurisdiction of the Commission is challenged, that challenge must be determined before the merits of the application are determined as per the decision in Springdale Comfort Pty Ltd v Building Trades Association of Unions of Western Australia (Association of Workers) (1987) 67 WAIG 325. 29 On the day the applicant was terminated (14 May 2012) the respondent raised the jurisdictional issue submitting the terms of the applicant's contract remained in dispute. Also raised was the appointment of a CEO to the respondent's organisation as conditional upon the approval by the minister, which had never been granted. The specific provision requiring ministerial approval is to be found at s 18(4) of the MP Act. 30 Conversely, the applicant considers there is no evidence before the Commission which would support the question that the minister consented to the appointment or alternatively did not consent to the appointment of the applicant as the CEO of the respondent. 31 The applicant commenced work with the respondent on 7 May 2012 and on 14 May 2012 the respondent terminated the applicant with immediate effect. 32 The Commission finds the terms of the applicant's employment contract had yet to be finalised/agreed upon by 14 May 2012, the day the applicant was terminated. 33 Considering the structure of the MP Act (in particular s 18(4) and 18(1)) together with the supplementary submissions of the applicant and the respondent and having regard for equity good conscience and the substantial merits of the case in accordance with the provisions of s 26 of the Act, it is the view of the Commission that the appointment of the applicant as CEO required the approval of the minister in accordance within s 18 (4) of the MP Act. 34 The Commission finds: the applicant’s appointment was never submitted to the minister for approval; and the applicant’s appointment as CEO under the terms of the MP Act is required to receive ministerial approval. 35 The Commission therefore considers the applicant was never appointed as CEO of the respondent. Accordingly, the Commission will issue an order dismissing the application. 2013 WAIRC 00780 WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION PARTIES DAVID ERNEST ELEY APPLICANT -v- POTATO MARKETING CORPORATION OF WESTERN AUSTRALIA RESPONDENT CORAM COMMISSIONER S M MAYMAN DATE FRIDAY, 30 AUGUST 2013 FILE NO/S B 118 OF 2012 CITATION NO. 2013 WAIRC 00780 Result Application dismissed Representation Applicant Mr D Eley (in person) Respondent Mr T Lethbridge (of counsel) Order HAVING heard Mr D Eley (the applicant) and Mr T Lethbridge on behalf of the respondent and having received written submissions, the Western Australian Industrial Relations Commission (the Commission), pursuant to the powers conferred on it under the Industrial Relations Act 1979 (WA), hereby orders: THAT this application be, and is hereby, dismissed. (Sgd.) S M MAYMAN, [L.S.] Commissioner. 93 W.A.I.G. WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 1399 2013 WAIRC 00779 WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION