FEDERAL COURT OF AUSTRALIA

Weeks v Commissioner of Taxation [2013] FCAFC 78

FEDERAL COURT OF AUSTRALIA

Weeks v Commissioner of Taxation [2013] FCAFC 78

CORRIGENDUM

1    On page 2 of the coversheet, in the second last row, the name “Ms M Brennan” should read “Mr C Murdoch”.

Associate:

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    If the respondents seek their costs of the appeal they must lodge and serve written submissions not exceeding five pages in support of such an application within seven days and the appellant may respond by lodging and serving written submissions not exceeding five pages within a further seven days after receiving the respondents’ submissions.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT

Introduction

1    This is an appeal from an order made by the Federal Magistrates Court on 12 April 2012. On that day the Federal Magistrates Court made an order that an application brought by Ms Cheryl Weeks under the Fair Work Act 2009 (Cth) (“FW Act”) against the Commissioner of Taxation and the Commonwealth of Australia be dismissed: Weeks v Commissioner of Taxation [2012] FMCA 502. The appellant, Ms Weeks, appeals against that order.

2    The appellant was formerly an employee of the Australian Taxation Office. The first respondent, the Commissioner of Taxation, was appointed under s 4 of the Taxation Administration Act 1953 (Cth), and, by virtue of s 4A of that Act, is the head of the statutory agency known as the Australian Taxation Office. The statutory agency is comprised of the Commissioner of Taxation together with the staff engaged under the Public Service Act 1999 (Cth) (“PS Act”) to assist the Commissioner. The second respondent is the Commonwealth, which is a “national system employer” as defined in s 14(1)(b) of the FW Act. We have referred to the respondents collectively except where necessary to distinguish between them.

3    The appellant’s employment with the respondents was terminated on 30 March 2010 following a negotiated redundancy. She did not complain of the decision that she be made redundant, but rather she claimed that in the course of the process leading to her redundancy the respondents contravened the FW Act in three separate respects. She alleged that in each case the respondents contravened s 50 of the FW Act. In her Amended Statement of Claim, she alleged that the acts and omissions said to contravene s 50 also contravened other sections of the FW Act, but the focus on appeal was the alleged contraventions of s 50 of the FW Act. That section provides that a person must not contravene a term of an enterprise agreement. It is a civil remedy provision. The appellant claimed declarations of the contraventions, compensation and pecuniary penalties.

4    It was common ground that the appellant’s contract of employment was governed by, among other things, an enterprise agreement known as the “ATO (Executive Level 2) Agreement 2009”. For convenience, we will refer to this agreement as “the Agency Agreement”. There was no dispute that the Agency Agreement was an enterprise agreement within s 50 of the FW Act. During the hearing of the appeal counsel for the respondents raised the point that as the Agency Agreement appears to have been executed on 19 June 2009 and as that date was before the Workplace Relations Act 1996 (Cth) repeal day as defined in the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (“Transitional Act”) (that is, 1 July 2009), the relevant “contravention provision” was Schedule 16 clause 2 of the Transitional Act and not s 50 of the FW Act. The point made by the respondents is, as they acknowledged, largely one of form rather than substance as the clause and the section are, in material respects, in similar terms. It seems to us that as the criterion is the date the Agency Agreement was made (Schedule 3 clause 2(3)) the Transitional Act is the applicable legislation. However, it is not necessary for us to consider any application to amend because we have reached the conclusion that the Federal Magistrate did not err in concluding that the respondents did not contravene the Agency Agreement in any of the three respects alleged.

5    The first contravention alleged by the appellant was a contravention of clause 107.8 of the Agency Agreement. Under that clause, the appellant could notify her National Program Manager (“NPM”) in writing that she was in dispute with the Commissioner about the application or interpretation of the Agency Agreement. The appellant sent a “Notification of Dispute” addressed to her NPM and dated 9 November 2009. Under clause 107.8 the NPM was required, within seven days of receipt of the notification, to arrange a conference which the clause provides should take place as soon as practicable. In this case, the NPM did not arrange a conference in response to the notification either within seven days or at any time thereafter. There are two issues in relation to the first alleged contravention. First, there is an issue as to whether the Federal Magistrate erred in finding as he did that the NPM did not actually receive the notice until 20 November 2009. Secondly, assuming that the Federal Magistrate did not err in relation to the first issue, there is an issue as to whether he erred in concluding that, as a result of action taken by the appellant on 27 November 2009, there had been a waiver of the obligation on the NPM to arrange a conference within the terms of clause 107.8 of the Agency Agreement.

6    The second contravention alleged by the appellant was a contravention of clause 5 of the Agency Agreement and this was said to have occurred in the preparation of a document in connection with the appellant’s redundancy. This document was referred to as a “Business Case” and we will use that description. The appellant claimed that the Business Case made serious allegations about her performance and conduct which had not been raised with her, and that she was denied procedural fairness in connection with it. Further, she claimed that the making of serious allegations in the Business Case without providing fairness to her amounted to a breach of what is defined in the PS Act as the APS Code of Conduct (s 13) and therefore a breach of clause 5 of the Agency Agreement. Clause 5.1 h) states as a principle underpinning all provisions of the Agency Agreement “behaving ethically and with integrity in accordance with the APS Values and Code of Conduct.” The Federal Magistrate rejected those claims and the issue is whether he erred in doing so.

7    The third contravention alleged by the appellant was a contravention of clauses in the Agency Agreement in connection with the fact that the respondents did not pay the appellant her normal salary and benefits between 25 December 2009 and 30 March 2010. The respondents claimed that the appellant was on leave without pay during that period. The appellant claimed that the provisions of the Agency Agreement were such that the respondents did not lawfully place her on leave without pay during the period. The Federal Magistrate found that the appellant did not want to return to work and that she was offered the opportunity of taking leave without pay. He found that in the circumstances there was no obligation on the respondents to pay her. The issue is whether he erred in so concluding.

The Relevant Provisions of the Appellant’s Contract of Employment

8    In August 1999, the appellant was employed by the respondents under s 22 of the PS Act. In addition to the provisions of the FW Act, the appellant’s employment was governed by the PS Act and, as we have said, the Agency Agreement. The appellant’s employment was terminated by the respondents on 30 March 2010 after they had followed, or purported to follow, the procedure in clause 97 of the Agency Agreement. Her employment was terminated on the ground that she was excess to the requirements of the Agency (PS Act s 29(3)(a)).

9    Clause 97 appears in Part 7 of the Enterprise Agreement. That Part appears under the heading of “Workforce planning”. The heading to clause 97 is “EL2 employees whose services cannot be effectively utilised”. The clause is divided into a number of parts including “General” and “The Process”. For present purposes the following are the relevant provisions:

97.    EL2 employees whose services cannot be effectively utilised

General

97.1    This clause only applies to ongoing EL2 employees who are no longer on probation.

An EL2 employee whose services can no longer be effectively used in their current job because of changes in technology or work methods or changes in the nature, extent or organisation of the ATO will be given support in considering career alternatives or will be able to leave the ATO with dignity and respect for the contribution they have made in the past.

97.2    These procedures are only to be used where an individual EL2 employee’s job is still required and the EL2 employee will be replaced subsequent to action under this clause. Where the actual job is no longer required, the arrangements under clause 98 must be used.

The Process

97.3    If clause 97.1 applies to an EL2 employee the appropriate manager will advise the EL2 employee that it is considered their services can no longer be effectively utilised.

97.4    The EL2 employee will be given an opportunity to comment. Any discussions may involve the employee’s nominated representative, if that is what the employee has chosen.

97.5    The EL2 employee will be invited to discuss possible options, if any, for redeployment or retraining that could allow the employee to be retained in gainful employment:

a)    If an EL2 employee agrees to a reduction to a lower classification, the EL2 employee will maintain the income level they had immediately prior to the reduction for either 7 or 13 months.

b)    If an EL2 employee is redeployed within the same city they are eligible for any relocation assistance applicable under clause 101.

For the purposes of clause 97 only, “reduction in classification” includes movement from one EL2 position to a lower paid EL2 position, except where the EL2 employee’s salary is not reduced to the [sic] applicable to the lower paid position.

97.6    Where redeployment or retraining is not feasible, an EL2 employee may be formally notified in writing that they can no longer be gainfully employed by the ATO.

10    The Agency Agreement also provided as follows:

5.    Employment Principles

5.1    The ATO is primarily an employment based organisation. The following principles underpin all provisions in this Agreement.

…

h)    behaving ethically and with integrity in accordance with the APS Values and Code of Conduct.

11    The PS Act makes provision for Values and a Code of Conduct. Relevantly, it provided as follows:

10.    APS Values

(1)    The APS Values are as follows:

…

(d)    the APS has the highest ethical standards;

…

(i)    the APS establishes workplace relations that value communication, consultation, co-operation and input from employees on matters that affect their workplace;

(j)    the APS provides a fair, flexible, safe and rewarding workplace;

…

(o)    the APS provides a fair system of review of decisions taken in respect of APS employees.

…

13.    The APS Code of Conduct

(1)    An APS employee must behave honestly and with integrity in the course of APS employment.

(2)    An APS employee must act with care and diligence in the course of APS employment.

(3)    An APS employee, when acting in the course of APS employment, must treat everyone with respect and courtesy, and without harassment.

…

(11)    An APS employee must at all times behave in a way that upholds the APS Values and the integrity and good reputation of the APS.

12    Before the trial the respondents made an application for an order striking out parts of the appellant’s Amended Statement of Claim. On that application the Federal Magistrate was asked to determine whether it was arguable that a failure to comply with the Values and Code of Conduct in the PS Act constituted a breach of the Agency Agreement and, in turn, a contravention of s 50 of the FW Act. He decided that question in the affirmative. He said (at [30]):

In this case, as in the ATO case [Australian Municipal, Administrative, Clerical and Services Union v Australian Taxation Office [2005] AIRC 700], there is a clear linkage between the APS Values and Code of Conduct in the PS Act and the obligation arising under the enterprise agreement, as they are expressed to be the “principles that underpin all provisions in the agreement.” In my view, they form part of the agreement as by their expression there is plainly a commitment to their performance. Accordingly, a breach of their performance could constitute a contravention of the agreement, which could in turn constitute a contravention for the purposes of s.50.

Weeks v Commissioner of Taxation and Anor [2012] FMCA 188.

13    As to that matter the Federal Magistrate said in his reasons disposing of the appellant’s proceeding the following (Weeks v Commissioner of Taxation [2012] FMCA 502 at [16]):

I have earlier identified the various subclauses of s.13 which appear to apply, and beyond that make no further observation as those matters are not the subject of express submission. If a breach can be demonstrated then a breach of s.5 of the Enterprise Agreement can be shown and if so then, of course, in turn a contravention is established pursuant to s.50 of the Fair Work Act. However, for reasons that follow I am not satisfied that there was any breach of the Enterprise Agreement or of s.13 in this instance.

14    As we understand it, the Federal Magistrate took the view that if breaches of provisions of s 13 of the PS Act were established, then a breach of clause 5 of the Agency Agreement was established, and, in turn, a breach of s 50 of the FW Act.

15    The respondents did not challenge those particular conclusions by way of a notice of contention.

16    Finally, we should identify other provisions of the Agency Agreement which are relevant to the issues on the appeal.

17    First, clause 107.8 which is relevant in relation to the first alleged contravention provides, relevantly:

Dispute Settlement Procedures

107.8    The following procedure will apply in the event of any disagreement about the application or interpretation of this Agreement between the Commissioner and an affected EL2 employee or a group of affected EL2 employees (hereafter referred to as “the parties to the dispute”).

Where the parties to a dispute agree that it is appropriate, some or all of the steps in these procedures may be bypassed.

Step 1

The EL2 employee(s) should notify their National Program Manager (NPM) in writing that they are in dispute about the application of the Agreement. Within 7 days of receipt of that advice from the employee(s) the NPM shall arrange a conference which should take place as soon as practicable. The conference will be between the appropriate level of ATO management and the employee(s) and, where they choose, their representative.

18    Secondly, clauses 18, 29 and 40 which are relevant to the third alleged contravention provide relevantly:

Applications for Leave

18.3    EL2 employees are required to apply for leave. In all cases of planned leave such application should be forwarded to the EL2 employee’s manager. The EL2 employee must ensure the application for leave has been approved before that leave is taken.

…

29.    Miscellaneous Leave

29.1    Miscellaneous Leave may be granted for any purpose that is in the interests of the ATO. The Commissioner has issued guidelines on the granting of Miscellaneous Leave (including the release of community service volunteers for emergency services duty and Defence Reservists for peacetime training and deployment).

29.2    The leave granted may be:

a)    for the period requested or another period;

b)    with or without pay;

c)    subject to conditions; and

d)    if leave is granted without pay – it may count as service for some or all purposes.

29.3    EL2 employees must be given a written notice of the decision to grant, or refuse to grant, leave.

…

40.    Fortnightly payments

40.1    EL2 employees will be paid fortnightly according to the formula:

Fortnightly pay = Annual Salary x 12/313

The Facts

19    For the purposes of considering the issues on the appeal, the relevant events occurred between October 2009 and 30 March 2010. It is necessary to set out the facts in some detail in order to understand the context in which the issues on the appeal arise. Most of the facts are established by documents which are not in dispute. Oral evidence was given in the Federal Magistrates Court and in relation to that evidence the Federal Magistrate said that he preferred the respondents’ witnesses to the appellant, who gave evidence on her own behalf. He said that the appellant was not “entirely reliable”. As we understand it, the appellant does not challenge that finding. Even if she did, she did not point to any evidence which would suggest that the finding was made in error.

20    For reasons which were discussed by the Federal Magistrate, but which it is unnecessary for this Court to relate, by October 2009 the appellant had decided to raise with the respondents a possible redundancy under clause 97 of the Agency Agreement. On 23 October 2009, she wrote to her manager, Mr Michael O’Rourke, in the following terms, relevantly:

Naturally retirement would presently be an attractive option for me, if it were financially feasible. However, I recently received my 2009 PSS superannuation statement and learned that I have taken a hit in relation to transfer values (the amounts I transferred into PSS on joining ATO in 1999) because of the economic downturn.

Consequently I have concluded that for financial reasons I must return to work at the end of my leave, which means that I will be back on 1 December 2009.

I thought I should advise you immediately of this as it raises a number of practical management issues to be addressed prior to my return, including identifying appropriate work at the EL2 level, linking me up to a team, arranging for skilling in Siebel, finding me a permanent desk and computer, and so on.

However, I believe there is an alternative which would be in everyone’s interest. I consider that recent events and circumstances demonstrate that my EL2 services can no longer be effectively utilised. As you are aware I am geographically remote from Excise IA, have no team in Brisbane and no direct relationship with the other Excise officers in Terrica Place. Due to personnel issues, it is not viable for me to interact with the Excise compliance team in Brisbane. The situation is largely due to the evolution of the Excise organisational structure as the ATO has responded to external and internal changes.

My considered assessment is that my circumstances fall within Clause 97 of the current EL2 Agency Agreement relating to employees whose services cannot be effectively utilised.

Would you therefore please treat this email as a request for a voluntary redundancy and refer the matter to the relevant HR area for consideration?

If a redundancy cannot be negotiated, I will of course report for duty on 1 December at Terrica Place.

I look forward to hearing from you in this regard.

(Emphasis added.)

21    On 4 November 2009, Mr O’Rourke wrote to the appellant in the following terms:

I have discussed and considered your request with Wayne [Barford] and we do not believe that there is justification for any type of redundancy payment.

We would like you to return to your EL2.1 position in the litigation and legal support area as well as taking a greater leadership responsibility in some additional areas that will ensure a full job at the EL2.1 level.

I am happy to discuss these with you.

(Emphasis added.)

22    Mr O’Rourke’s correspondence refers to “Wayne”. That is a reference to Mr Wayne Barford, who, during the period from November 2009 to April 2010, was the Assistant Commissioner, Excise Compliance and Interpretive Assistance in the ATO.

23    In view of Mr O’Rourke’s response of 4 November 2009, the appellant decided to engage the provisions of clause 107.8 of the Agency Agreement. On 9 November 2009, she sent a Notification of Dispute to the NPM, Excise, GPO Box 9990, Sydney, NSW, 2001. The notice was in the following terms, relevantly:

Specifically, the dispute relates to the decision of Wayne Barford and Michael O’Rourke in relation to my request for a voluntary redundancy pursuant to Clause 97 of the Agreement. That clause provides for voluntary redundancy where an EL2 employee’s services cannot be effectively utilised. The decision was notified to me by email on 4 November 2009, and a copy is attached.

I am concerned that due process was not followed in considering my application, and that the decision-makers failed to take into account a number of relevant considerations, of which, as my immediate managers, they were well aware.

24    The appellant did not receive a response from the NPM and, on 18 November 2009, she wrote to Mr O’Rourke in the following terms, relevantly:

You may not be aware that I have served by mail a notice of a dispute under the Agency Agreement in relation to my request for a voluntary redundancy. A copy is enclosed. I have not received an acknowledgement from the ATO, so I would be grateful if you would look into the status of it.

In the circumstances, I consider it is premature to return to work in December, as it will be so close to Xmas and, given the lack of progress on the redundancy issue, it seems unlikely the dispute will be resolved by then.

I consider the better alternative is to remain on LWOP [leave without pay] up to and including 24 December 2009 and to start afresh in the new year.

25    Mr O’Rourke responded to the appellant’s correspondence on the same day, saying that he was not aware of the appellant’s notice and that he would follow it up with Mr Barford. He said that he thought that Mr Barford would have told him “about this”.

26    The appellant did not receive a response from the NPM before 27 November 2009, and on that day she purported to exercise a right of review that she alleged that she had under s 33 of the PS Act. She posted an “Application under Section 33 for Review of Action” to the Commissioner of Taxation, the first respondent. She asked him to review the action of the NPM, Excise “in the issue described below relating to the application of clause 97 of the ATO (Executive Level 2) Agreement 2009”. In her application she made certain allegations and then said:

In the absence of any attempt by the relevant National Program Manager to resolve the dispute, and because the delay constitutes a breach of the Agency Agreement, I request that the Commissioner of Taxation now undertake a review in accordance with regulation 5.27 of the Public Service Regulations 1999.

27    It seems that in the meantime Mr O’Rourke was advised that the appellant’s Notification of Dispute had been received because, on 27 November 2009, he wrote to the appellant in the following terms:

This email is to confirm the message I left on your mobile telephone a short time ago.

Wayne has now advised me that Tim Dyce has now received your notice of dispute and will acknowledge receipt to you shortly. Your request for Leave without pay up [sic] and including 24 December 2009 has been approved.

28    The Federal Magistrate found that the NPM did not actually receive the Notification of Dispute until 20 November 2009.

29    The appellant received Mr O’Rourke’s email of 27 November 2009 and she responded on the same day. She said the following, relevantly:

It was good to get your advice that the notice of dispute has been received. Unfortunately, I heard your voicemail only a short time after I had posted off a formal request for review of the matter under section 33 of the Public Service Act.

I was concerned that I had not heard anything from the NPM and, given your email of 18 November, I was certain you would have contacted me if there was anything to report.

As you would be aware Clause 107.8 of the EL2 Agency Agreement mandates specific actions to be taken by the NPM within seven days of receipt of the notice of dispute. As that action apparently was not taken, it appeared to me that, prima facie, there has been a breach of the Agency Agreement. Consequently, I sought an alternative avenue of review.

Obviously, I do not wish this matter to drag on. It seems that it is in everyone’s interest to vigorously pursue a resolution.

As a matter of courtesy, would you please inform the NPM about the content of this email?

(Emphasis added.)

30    Ms Deborah Valente, who at the time was employed by the respondents in Health and People Management, was the appellant’s contact officer for her review of action. She wrote to the appellant on 15 and 16 December 2009 advising her that she was looking into the matter. On 17 December 2009, she wrote to the appellant in the following terms, relevantly:

Your request for a review of action regarding a redundancy payment is actually not a reviewable action under the Public Service Act 1999. Schedule 1 of the Public Service Regulations discusses non reviewable actions, in particular “Action about the policy, strategy, nature scope, resources or direction of the APS or an Agency”. Offers of redundancy fall under this aspect as they are not an entitlement.

I can confirm that I spoke with Wayne Barford today who informed me that they are still considering your request for redundancy. They intend to have an answer for you by 24 December 2009.

31    On 22 December 2009, the appellant had a telephone conversation with Mr Barford. The Federal Magistrate said that the appellant’s evidence about this telephone conversation was “slightly different by nuance” to the evidence of Mr Barford. He preferred Mr Barford’s evidence. His findings as to the content of the telephone conversation are important and we set them out in full:

38.    On 22 December 2009, the applicant received a phone call from Mr Barford. In that conversation Mr Barford indicated that he supported the proposal that was offered, that she be offered a voluntary redundancy, and in his affidavit he noted the exchange as follows. He said:

“I have reconsidered your request for a voluntary redundancy and discussed it with Tim Dyce, the delegate. I will support your request for a voluntary redundancy and make a submission to the delegate recommending that a voluntary redundancy be approved. Whilst I cannot confirm approval, it is likely that the submission will be approved by the delegate.”

39.    He continued:

“I wish to have a without prejudice conversation with you to commence a Clause 97 process. A Clause 97 voluntary redundancy allows people to leave the ATO with dignity and respect for the contribution they’ve made in the past. This sort of redundancy is to be used in situations where the job is still required, and the person will be replaced. I need to advise you that it is considered that your services can no longer be effectively utilised. I need to provide you with an opportunity to comment. This can involve an employee representative.”

40.    He says the applicant responded, “I agree, and I don’t need a representative.” Mr Barford continued:

“We need to briefly discuss whether there are any redeployment or retraining options. You may wish to simply agree that you are unable to be redeployed or retrained.”

41.    He says the applicant responded, “I agree.” He then continued further:

“Following this meeting, a business case will be submitted to the delegate, Tim Dyce, to obtain approval to proceed and make a formal offer. The business case needs to address how the employee’s circumstances fit into the requirements of clause 97.1- what has changed in the ATO or Excise that has meant that the employee is no longer coping. Assuming that the business case is approved the next steps are:

We then need to notify the employee in writing that they can no longer be gainfully employed by the ATO, if redeploying/retraining is not feasible.

We need to provide the employee with information such as severance benefits, leave pay outs, taxation rules and superannuation figures.

We have a template that is sent to Payroll Services for this aspect and I can get this happening.

When the information has been provided to the employee, a formal offer of redundancy can be made. The employee has 2 weeks to consider the offer, however, it can proceed more quickly by agreement.

If the employee accepts the offer, the redundancy proceeds as if they were an excess employee under clause 99.”

42.    He continued:

“You will be entitled to 2 weeks pay for every continuous year of public service - up to 48 weeks pay. How many years do you have in the public service?”

43.    He said the applicant noted, “I have ten years service.” He continued:

“It is almost Christmas and little or nothing would progress until my return to work following the Christmas New Year break. When I get back from leave I will make the submission to the delegate. What do you want to do about your leave?”

44.    He says the applicant responded, “I don’t want to come back into the office.” He said:

“Do you want to extend your leave without pay until the matter is resolved?”

45.    He says that the applicant replied, “Yes.” He said:

“We’ll extend your leave until the end of January and see what happens then.”

46.    He says the applicant responded, “Yes.” The conversation then ended with the exchange of pleasantries. I will address matters of credit in due course, but I have detailed that conversation at this point simply because the applicant, in her evidence, says that Mr Barford stated to her during the course of a telephone conversation:

“My services can no longer be utilised. He also said I was not able to be retrained or redeployed.”

47.    While words to that effect may have been stated, the import of the applicant’s evidence is, I think, slightly different by nuance to that which is related by Mr Barford in his statement which, for reasons I will explain later, I prefer.

32    After this telephone conversation Mr Barford commenced the process for termination under clause 97 of the Agency Agreement. Arrangements were made to extend the appellant’s leave without pay and she remained on leave without pay until her redundancy took effect on 30 March 2010. Mr Barford was injured during the Christmas break and that delayed his return to work.

33    On 11 January 2010, Ms Valente wrote to the appellant in the following terms:

Further to our previous discussions, I have confirmed today with Michael O’Rourke that your business line is considering a business case for your clause 97 request. Given this, and the fact that as previously explained the matter is of itself non reviewable, I now require a reply email from you stating that you are withdrawing your request for review of employment action.

34    On or about 20 January 2010, Mr Barford prepared the Business Case. The Business Case included a number of statements which were significant in terms of the appellant’s case before the Federal Magistrates Court. They are as follows:

Summary of Recommendation

This submission outlines the background and current work situation of Cheryl Weeks and seeks approval to make an offer of a voluntary redundancy in terms of Clause 97 of the ATO (Executive Level 2) Agreement 2009 (“EL2 Employees Whose Services Cannot Effectively Be Utilised”). This would enable Ms Weeks to leave the ATO with dignity and respect for the contribution she has made in the past.

…

I have reviewed my earlier decision and am concerned with four aspects of Cheryl’s work performance and attendance to the office. The fourth is of serious concern.

1.    Cheryl, at times, will ignore her job obligations and undertake work that is more to her liking rather than that expected of her position. An example is when she suddenly decided that she would no longer manage her two direct report Adelaide staff (her only staff) and take on other duties. Before this event occurred she had not taken any role in mentoring and developing those staff.

2.    Cheryl will have a level of difficulty in coping with the recent introduction of Siebel to her Interpretive Assistance work environment.

3.    Cheryl has worked in Excise for ten years and has sought jobs in other business lines without success. At least once, she has been overlooked (as a long term EL2.1) in favour of person(s) being promoted from the EL1 to the EL2.1 level.

4.    During mid 2009, an incident occurred between Cheryl and an Excise Compliance Officer at a Friday after work gathering of some staff at a hotel. This was followed by Cheryl attending work on the following Monday and making extremely loud accusations to the other staff member that could be heard by most of the staff on the floor. Both staff members took leave and both took further actions in relation to the matter. Cheryl has not been interested in a mediated outcome. Plus, the other officer to the event took stress leave and a number of other Excise Compliance officers (there is only one team in Brisbane site) were affected by the Monday morning incident. The situation that occurred has made it impossible for Cheryl to continue working with the Excise Compliance staff (this is part of her expected duties). Morale suddenly hit bottom for staff within Excise Compliance. That morale has improved but any reappearance of Cheryl will affect Compliance staff generally and will, in particular, affect the wellbeing of both Cheryl and the other staff member who was directly involved in the incident.

Given the above information, I believe that both the ATO and employee will benefit by Cheryl being offered a voluntary redundancy. The employee’s services can no longer be effectively utilised in their current job, nor is there capacity to place her into another business line where she could perform effectively.

35    On 25 January 2010 the Acting Deputy Commissioner, Excise, approved the Business Case.

36    The Business Case was not given to the appellant at the time it was prepared or for some considerable time thereafter. As we understand it, she received it in the course of her proceeding before the Federal Magistrates Court and it caused her to expand her claim from a small claim for an amount of $20,000 to the claim that was eventually considered by the Federal Magistrate.

37    On 18 February 2010, Mr Barford wrote to the appellant in the following terms, relevantly:

Recently I advised you that it is considered that your services can no longer be effectively utilised in the ATO, and this was discussed in a telephone conversation with you on 22 December 2009.

I am now satisfied that, under the provisions of Clause 97 of the ATO (Executive Level 2) Agreement 2009, you can no longer be gainfully employed in the ATO.

As discussed with you during our phone conversation on 22 December 2009, redeployment or retraining are not options.

The next stage in this process will be the making of a formal offer of redundancy but in the interim, you will have a period of two weeks during which you will be provided with the following advice in accordance with Clause 97.8 of the ATO (Executive Level 2) Agreement 2009:

a)    severance benefits, pay in lieu of notice and leave credits

b)    accumulated superannuation contributions

c)    options open to you in relation to your superannuation benefits

d)    taxation rules applicable to the various payments.

38    On 11 March 2010, Mr Barford wrote to the appellant confirming that her services could not be effectively utilised by the ATO in her current position and that alternative employment for her within the ATO was not available. Mr Barford made a formal offer to the appellant of voluntary redundancy pursuant to clause 97 of the Agency Agreement. On 17 March 2010, the appellant signed a response to that formal offer advising that she wished to accept it.

39    Throughout this period the appellant was writing to the respondents expressing her concern about the delay in dealing with her voluntary redundancy. In a document dated 23 March 2010, she wrote to the respondents and said the following, amongst other things:

WHY THE MATTER IS OF CONCERN

As stated in my email to Mr O’Rourke on 23 October 2010, I would have chosen to resign if my financial circumstances permitted it. With only 10 years service, my accumulated superannuation is not large.

It has also been clear to me that a decision by me to retire would have been welcomed by my business line.

Due to the length of time that the redundancy process has taken, the value of the redundancy has been dissipated.

I have been on leave without pay since 1 December 2009. During that time I have had to finance my day-to-day living expenses by borrowing on my mortgage and making purchases with my credit card. I have had to borrow against my mortgage in order to make the fortnightly payments on the same mortgage.

I have borrowed $11,000 from the mortgage account. I have used up the $4,000 I had in my savings account and $5,000 from my (retired) husband’s savings account. I have a credit card debt of more than $2,000. These expenses total $21,000 to date, so a considerable portion of the redundancy payment will be used in simply paying back the debts I incurred while waiting for the ATO [sic] progress the matter.

In addition, we have needed to delay house repairs and other outlays due to our lack of income.

Obviously this is causing me considerable concern.

I have great difficulty understanding why the process has, to date, has [sic] taken more than five months.

THE OUTCOME SOUGHT

As the delays which occurred were entirely due to inactivity by the ATO, it seems that the just and equitable outcome would be for the ATO to redress the situation. It could do this by taking steps to restore the value which the redundancy would have had if it had been efficiently processed.

If it is lawful to do so, the date of termination might be backdated, thus giving me access to the income I would have had from my super fund if I had been terminated earlier.

Alternatively, it would not be unreasonable for my leave while awaiting the processing of the redundancy, to be treated as paid leave.

40    On 26 March 2010, the appellant was sent a Notice of Termination of Employment under s 29(1) of the PS Act. The notice stated that the termination took effect at the expiration of the date that the appellant received the notice via post. The appellant wrote to the respondents on 31 March 2010 stating that she had received the notice on 30 March 2010 and that she would send a signed acknowledgment form “today by Express Post”. The appellant acknowledged receipt of the Notice of Termination of Employment on 30 March 2010.

Issues on the Appeal

The First Alleged Contravention

41    With respect to the first alleged contravention, the Federal Magistrate found that the respondents had not contravened clause 107.8 of the Agency Agreement. The principal steps in his reasoning were as follows:

(1)    The NPM did not actually receive the Notification of Dispute until 20 November 2009;

(2)    The latest time for compliance with the requirements of cl. 107.8 of the Agency Agreement was the close of business on 27 November 2009;

(3)    Before that time the appellant waived her right to proceed under cl. 107.8 by seeking a review under s 33 of the PS Act; and

(4)    In any event, any breach of the Agency Agreement “merged” into the later redundancy.

42    The respondents did not seek to support the Federal Magistrate’s reason in paragraph (4).

43    We do not understand the appellant to challenge the conclusion that the NPM did not actually receive the Notification of Dispute until 20 November 2009.

44    The appellant submits that the finding as to when the NPM actually received the Notification of Dispute is irrelevant because, having regard to ss 28A and 28 of the Acts Interpretation Act 1901 (Cth), the Federal Magistrate ought to have found that the NPM received the Notification of Dispute dated 9 November 2009 well before 20 November 2009. This submission was not addressed by the Federal Magistrate, and it is not clear whether it was put to him. Although the Federal Magistrate did not make an express finding there was evidence before the Federal Magistrates Court to the effect that the Notification of Dispute was scanned into the ATO’s electronic database on 13 November 2009.

45    The appellant’s alternative submission was that, even if the NPM did not receive the Notification of Dispute until 20 November 2009, there could be no waiver of the right which had accrued to her when she gave the Notification of Dispute. She referred to a case in which this Court has said that it is not open to an employee to waive rights he or she has under an award: Metropolitan Health Service Board v Australian Nursing Federation [2000] FCA 784; 99 FCR 95 at 105 [22]-[24] per French J (as his Honour then was) and at 114 [60] per Lee and Carr JJ.

46    The provisions of the Acts Interpretation Act (ss 28A and 28) are not relevant as they only apply to Acts and delegated legislation (Acts Interpretation Act s 46; Legislative Instruments Act 2003 (Cth) s 13).

47    We see no reason to construe clause 107.8 of the Agency Agreement as providing that notice of a dispute is given when received at the respondents’ offices. The clause refers to notification being given to the employee’s NPM and for the NPM to take certain action within a certain period of receipt of that advice. That means, we think, actual receipt by the NPM.

48    We think the Federal Magistrate was correct to conclude that the appellant had, on 27 November 2009, elected to take an alternative course of action by seeking a review under s 33 of the PS Act and that she had evinced an intention no longer to press the dispute provisions of clause 107.8. Whether that was a waiver in the strict sense may be debated, but it was certainly a choice by the appellant, objectively ascertained, to proceed by way of a review under s 33 of the PS Act. The appellant’s principal concern was with the decision conveyed to her by Mr O’Rourke on 4 November 2009 to the effect that there was no justification for a voluntary redundancy and with having that decision reviewed or reconsidered and overturned. Because the effect of the appellant’s conduct is to be ascertained objectively, the fact that a senior officer or employee of the respondents may have considered in late January 2010 that the formal dispute resolution process under clause 107.8 was still running does not alter this conclusion. The appellant does not gain any assistance from this Court’s decision in Metropolitan Health Service Board v Australian Nursing Federation. That is quite a different case from the present case. It would be analogous perhaps if in this case the appellant had purported to waive the right to lodge a Notification of Dispute in the future. The appellant did not do that; all she did was withdraw from a procedure which she had a discretion to invoke in the first place. Furthermore, we note that in the case the appellant referred to, French J said (at 107 [25]) nothing he had earlier said “should be taken as stating any principle affecting agreements involving the selection of dispute resolution mechanisms …”. We also note that, as we have set out at [17] above, by clause 107.8 the parties to a dispute may agree to bypass some or all of the steps in those procedures.

49    Having found that there was no contravention, the Federal Magistrate did not need to consider what, if any, relief was appropriate. We do not need to consider that question. We would, however, observe that had a contravention been found the consequences were soon overtaken by events in the second half of December 2009.

50    The challenge to the Federal Magistrate’s conclusion with respect to the first alleged contravention must be rejected.

The Second Alleged Contravention

51    With respect to the second alleged contravention, the Federal Magistrate found that the respondents had not contravened clause 5.1 h) of the Agency Agreement. The principal steps in his reasoning were as follows:

(1)    Mr Barford was under an obligation in preparing the Business Case to comply with s 13(1), (2), (3) and (11) of the PS Act and a failure by him to do so would constitute a breach of the Agency Agreement by the respondents and, in turn, of s 50 of the FW Act.

(2)    There was nothing to suggest any breaches by Mr Barford. The Business Case was a document prepared to support the outcome which the appellant sought, and there was nothing to suggest that it was not prepared in good faith or without due care or diligence or without respect or courtesy to the appellant.

(3)    There was no obligation on the respondents to ask the appellant for input in response to the detail incorporated in the Business Case. The Federal Magistrate said (at [72]):

Indeed, in the absence of the applicant seeking review of the decision arising from the business case, that is, to have that decision set aside, there would be no basis for judicial review of the decision.

(4)    In any event, even if there was a requirement of procedural fairness, it was, in the circumstances, waived by the appellant. She was kept informed at every stage and at no time sought the respondents’ reasons for concluding that her case fell within clause 97.1 of the Agreement.

52    The thrust of the appellant’s challenge to the Federal Magistrate’s reasons was a challenge to the conclusions in paragraph (2) above. She contended that the preparation of the Business Case was dishonest, unfair and improper, unlawful, lacking in integrity and disrespectful of her. In support of those contentions, she advanced two key propositions:

(1)    The circumstances identified in clause 97.1 of the Agency Agreement had nothing, or little to do, with performance, and yet, the Business Case highlighted matters of poor performance by the appellant; and

(2)    The allegations of poor performance are incorrect and this can be seen quite clearly from the fact that her annual appraisal by Mr O’Rourke dated August 2009 gave her a “fully effective” rating.

53    The respondents submit that the appellant’s case before the Federal Magistrates Court in relation to the second alleged contravention was restricted to a claim that she was denied procedural fairness. The respondents complain that she seeks to expand her case on appeal by alleging that the Business Case contained allegations that were “untrue and misleading”.

54    The respondents referred the Court to an exchange which occurred between the Federal Magistrate and the appellant when judgment on the respondents’ strike-out application was delivered (that is, on 24 February 2012). We have considered the transcript. The appellant made it clear to the Federal Magistrate that she was not asking the Court to make findings as to whether the allegations about her in the Business Case were true or untrue.

55    In the result, we think it is clear enough that the appellant claimed in the Court below that she had not been accorded procedural fairness in connection with the Business Case. Her reference to her annual appraisal in August 2009 is to be considered in that context, that is to say an item of evidence which she contends should have been but was not considered in assessing or commenting on her performance.

56    The appellant also appears to have argued under the rubric of an allegation that Mr Barford was required to act ethically, that Mr Barford acted dishonestly and without the required level of care in connection with the preparation of the Business Case. Again, the annual appraisal could be relevant in that context. The Federal Magistrate considered these matters and decided them against the appellant. We will consider whether he erred in doing so.

57    The first point to note about the alleged denial of procedural fairness is that this is not an application for judicial review of a decision in respect of which the Business Case was a relevant step. The appellant wanted voluntary redundancy under clause 97.1 of the Agency Agreement and she obtained it. The respondents’ decision under clause 97 of the Agency Agreement did not destroy or prejudice the appellant’s rights, interests or legitimate expectations: Annetts v McCann (1990) 170 CLR 596 at 598 per Mason CJ, Deane and McHugh JJ; Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 at 258 [11] per French CJ, Gummow, Hayne, Crennan and Kiefel JJ; Plaintiff M61/2010E v The Commonwealth (2010) 243 CLR 319 at 352 [74]. Nor is judicial review sought in relation to the Business Case itself. There would be a number of difficulties with such a claim, not the least of which is that the Business Case was not intended for publication in the same sense, for example, as the report of the Criminal Justice Commission in Ainsworth v Criminal Justice Commission (1992) 175 CLR 364. None of this is to deny the possibility that the obligations in the APS Code of Conduct might not in a particular case require a decision-maker to consult with a person who is the subject of the proposed decision. Considerations of fairness and integrity may in a particular case require such a course. The difficulty for the appellant in this case is that to the extent there was a duty to consult it was discharged by Mr Barford during his telephone conversation with the appellant on 22 December 2009. The terms of that conversation are set out above (at [31]) and we do not propose to repeat it. He consulted the appellant on the matters he was required to raise with her.

58    We also reject the challenge to the Federal Magistrate’s conclusion that Mr Barford acted in good faith and with care and diligence. There are two reasons for our conclusion.

59    First, we do not think that the matters in paragraphs 1 to 4 inclusive of the Business Case are foreign or so foreign to the subject of a redundancy under clause 97.1 as to suggest a lack of good faith or a lack of care and diligence. The matter identified in paragraph 2 of the Business Case is clearly relevant to the considerations identified in clause 97.1 of the Agency Agreement. The matter in paragraph 4 could also be considered relevant to clause 97.1 and in fact there is, we think, a reference or at least an allusion to it in the appellant’s letter dated 23 October 2009 (see [20] above). The matters in paragraphs 2 and 3 of the Business Case might be more relevant to whether redeployment or retraining was practicable but that is a relevant consideration under clause 97 (see clauses 97.5 and 97.6).

60    Secondly, the Federal Magistrate had the advantage of seeing and hearing Mr Barford. He drew conclusions about Mr Barford’s intention and care and diligence and nothing has been put to us to suggest that those conclusions should be disturbed.

61    The challenge to the Federal Magistrate’s conclusion with respect to the second alleged contravention must be rejected.

The Third Alleged Contravention

62    The third alleged contravention is a contravention of clause 40.1 of the Agency Agreement. On the face of it, this clause seems to be directed to the timing of payments of annual salary but, at all events, there was no doubt an obligation on the employer to make payments of salary to the employee. It seems that the appellant identified the contravention as involving a failure to comply with this clause because one of the remedies she seeks is compensation for the loss she has suffered “because of the contravention” (FW Act s 545(2)). It is difficult to see how she could claim lost salary were she to allege that the contravention was, for example, a failure by the respondents to give written notice of the decision to grant leave. At all events, we agree with the Federal Magistrate that there was an agreement between the appellant and the respondents whereby the former took leave without pay during the period from 25 December 2009 and 30 March 2010. That agreement was evidenced by the telephone conversation between the appellant and Mr Barford on 22 December 2009 (see [31] above), the fact that she clearly knew she was on leave without pay during the said period and the fact that she never offered to return to work. There is no reason to disturb the Federal Magistrate’s conclusion that the appellant was anxious to avoid a return to work “at almost any cost, except as an absolute last resort”. The fact that the parties agreed that the appellant be on leave without pay is also confirmed by the fact that were it otherwise the appellant would presumably have been in breach of her obligation to present herself for work. It is true that the appellant complained of the delay associated with the processing of her redundancy and she contended that the delay should mean that her leave, or at least some part of it, should be treated as paid leave, but none of that is to gainsay the fact that the appellant and the respondents agreed that the appellant be on leave without pay from 25 December 2009 to 30 March 2010.

63    The appellant contended that there was a breach of clauses 18.3 and 29.3 of the Agency Agreement. Those clauses are set out above (at [18]). In the circumstances as we have related them we do not think that it can be said that the appellant did not apply for leave within clause 18.3. Furthermore, we think that it was open to the parties to agree, as they did, that the appellant take leave without pay without written notice of the decision being given by the respondents to the appellant. Alternatively, written notice was given by Mr O’Rourke on 27 November 2009 and thereafter there were simply extensions of the original decision pending the processing of the appellant’s application for voluntary redundancy. Finally, and in any event, we see no reason to read a failure to comply with clause 29.3 as converting the appellant’s leave without pay into leave with pay, with the result that the respondents thereby contravened clause 40.1.

64    The appellant’s challenge to the Federal Magistrate’s conclusion with respect to the third alleged contravention must be rejected.

Conclusions

65    The appeal must be dismissed. The respondents acknowledge that there are limits on this Court’s power to award them their costs of the appeal (FW Act s 570; Workplace Relations Act 1996 (Cth) s 824). They have asked for an opportunity to consider the Court’s reasons before deciding whether to apply for costs. We will order that if they seek their costs of the appeal they must lodge written submissions not exceeding five pages in support of such an application within seven days, and the appellant may respond by lodging and serving written submissions not exceeding five pages within a further seven days after receiving the respondents’ submissions.

Associate:

Dated:    15 February 2013