FEDERAL COURT OF AUSTRALIA

Australian Postal Corporation v Gorman [2011] FCA 975

ON APPEAL FROM FAIR WORK AUSTRALIA

THE COURT ORDERS THAT:

1.    A writ of certiorari issue quashing the decision made by Fair Work Australia on 16 December 2010.

2.    A writ of mandamus issue directing Fair Work Australia to hear and determine according to law the first respondent’s application for permission to appeal, and, if appropriate, appeal.

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

REASONS FOR JUDGMENT

Introduction

1    This is an application by the Australian Postal Corporation for constitutional writs directed to Fair Work Australia (‘FWA’). The applicant seeks to invoke the jurisdiction conferred on this Court by s 39B of the Judiciary Act 1903 (Cth). The decision under challenge is a decision of the Full Bench of FWA (‘Full Bench’) made on 16 December 2010. FWA has filed a submitting appearance save as to costs.

2    The other party to the proceeding before the Full Bench was Mr Brent Gorman and he is the first respondent to this application. He has appeared by counsel and he opposes the relief sought by the applicant.

The History of proceeding

3    The applicant employed the first respondent between 1989 and 14 July 2009. On 14 July 2009 the applicant terminated the first respondent’s employment. On 22 July 2009 the first respondent filed an application with FWA seeking a remedy for unfair dismissal pursuant to Chapter 3, Part 3-2, Division 3 of the Fair Work Act 2009 (Cth) (‘the Fair Work Act’).

4    On 6 April 2010 the first respondent’s application came on for arbitration before Senior Deputy President O’Callaghan. Both parties were represented by counsel. The first respondent was represented by Mr Richard Ward and Mr J Noblet as counsel. Mr David Ward of Morgan Ward, solicitors, was, as the Senior Deputy President put it in the reasons he subsequently published, ‘also involved with Mr Gorman’s representatives in the proceedings on 6 April 2010’. The applicant was represented by Mr Tom Martin who was an employee of Minter Ellison, Lawyers. Minter Ellison were acting for the applicant.

5    The Senior Deputy President was told by Mr Richard Ward that the parties were discussing a possible resolution of the application and that he sought a short adjournment of the hearing. That request was granted. On resumption of the hearing the following exchanges took place:

Mr Ward: Senior Deputy President, we have good news. There has been an outcome.

The Senior Deputy President: Yes, very good.

Mr Ward: So the hearing won’t need to proceed.

The Senior Deputy President: Won’t need to proceed? Very well.

Mr Ward: So we will need a little time to – for arrangements to be put in place to facilitate the outcome and we wondered whether you would like to – would adjourn it to a convenient date for mention in the anticipation that we would endeavour to have the matter discontinued prior to that date if possible rather than coming back if that is satisfactory to you or whether you wish it to come back in any event.

The Senior Deputy President: No, I wouldn’t anticipate coming back. If you tell me you’ve reached an agreement, Mr Ward, I would anticipate receiving a notice of discontinuance. If we work on the normal scheme of things, I’d anticipate that the parties will probably formalise that agreement over the next seven days or thereabouts.

MR WARD: Perhaps 14. There will be deed of some toing and froing.

THE SENIOR DEPUTY PRESIDENT: All right. Well, let’s work on a basis of 14.

MR WARD: Yes.

THE SENIOR DEPUTY PRESIDENT: Normally the execution of that deed would take something like seven days and I’d anticipate receiving a notice of discontinuance shortly after that. So within the three – maximum four week period.

MR WARD: Yes.

THE SENIOR DEPUTY PRESIDENT: If perchance you don’t send it in to me within that time you can expect the matter to be re-listed at short notice.

MR WARD: Yes. Very good, sir.

THE SENIOR DEPUTY PRESIDENT: Are you happy with that approach, Mr Martin?

MR MARTIN: Yes. Understood, Senior Deputy President. I think we can deal with it within that timeframe.

THE SENIOR DEPUTY PRESIDENT: Yes, I certainly hope so. All right. I’ll adjourn the matter on that basis.

MR WARD: Thank you, sir.

THE SENIOR DEPUTY PRESIDENT: Thank you.

6    On 27 April 2010 Mr Martin sent to Mr David Ward a draft Deed of Settlement and Release (‘draft Deed of Settlement’). However, the draft Deed of Settlement was not executed by the parties. A notice of discontinuance had not been filed by 17 May 2010 and the Senior Deputy President’s associate contacted the parties to ascertain whether the matter had been finalised. On or about 19 May 2010 Mr David Ward filed with FWA a notice indicating that he ceased to act for the first respondent. There was then correspondence from the first respondent’s wife, Ms Vanessa Gorman, to the Senior Deputy President’s associate in which it was said that the first respondent considered he had made a ‘rushed’ decision on 6 April 2010 and, in any event, that he did not consider that he agreed to all the terms which were in the draft Deed of Settlement.

7    The applicant then took the step of making an application to FWA for an order dismissing the first respondent’s application for a remedy for unfair dismissal on the ground that the application had been settled pursuant to a binding agreement between the parties. That application came on for hearing before Senior Deputy President O’Callaghan on 16 September 2010. The applicant was represented by Mr Andrew Short who is a partner of Minter Ellison. The first respondent appeared in person and his wife spoke on his behalf. A number of witnesses gave evidence before the Senior Deputy President. Those witnesses were Mr Tom Martin, Mr Richard Ward, Mr Nicholas Townsend and Ms Vanessa Gorman. Mr Townsend is the assistant branch secretary of the CEPU for South Australia and the Northern Territory. The first respondent did not give evidence.

8    The Senior Deputy President made an order dismissing the first respondent’s application for a remedy for unfair dismissal and he delivered reasons for his decision: Gorman v Australia Post [2010] FWA 7423. The Senior Deputy President reached the conclusion that the first respondent’s pursuit of his unfair dismissal claim was vexatious within s 587 of the Act because ‘an agreement was reached on 6 April 2010 such that the continued pursuit of the application in that context is improper’. The Senior Deputy President addressed the evidence put before him and said that to the extent necessary he preferred the evidence of Mr R Ward and Mr Martin ‘with respect to the proceedings on 6 April 2010’. He said that Ms Gorman’s construction of the agreement lacked commercial logic.

9    The Senior Deputy President referred to a decision of a Full Bench of the Australian Industrial Relations Commission in Zoiti-Licastro v Australian Taxation Office (2006) 154 IR 1 (‘Zoiti-Licastro v Australian Taxation Office’). In essence he reached the conclusion that there was a binding settlement agreement on 6 April 2010 and he accepted Mr Martin’s evidence ‘as to the essential components of that agreement’. He concluded that the draft Deed of Settlement reflected the essential terms of that agreement.

10    The first respondent was aggrieved by the Senior Deputy President’s decision and he sought permission to appeal from the decision pursuant to s 604 of the Fair Work Act and, if granted, to appeal from the decision.

11    The Full Bench granted the first respondent permission to appeal and upheld his appeal. It made an order that the decision of the Senior Deputy President be quashed and an order that the first respondent’s application be returned to the unfair dismissal panel so that it might be allocated to a member of FWA for hearing on the merits. That did not include a hearing on whether there was a binding settlement agreement between the parties which issue the Full Bench had decided adversely to the applicant (Gorman v Australia Post [2010] FWAFB 9413).

12    The applicant contends that in reaching its conclusions and making its orders the Full Bench made a jurisdictional error or errors. Before examining the reasons of the Full Bench it is convenient to examine the provisions of the Act which deal with applications for a remedy for unfair dismissal and with applications for permission to appeal and appeals from a single Member of FWA to the Full Bench of FWA.

The Relevant Legislative Provisions

13    Chapter 3 Part 3-2 of the Act provides for remedies for unfair dismissal. The object of the Part is stated in s 381:

(1)    The object of this Part is:

(a)    to establish a framework for dealing with unfair dismissal that balances:

(i)    the needs of business (including small business); and

(ii)    the needs of employees; and

(b)    to establish procedures for dealing with unfair dismissal that:

(i)    are quick, flexible and informal; and

(ii)    address the needs of employers and employees; and

(c)    to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.

(2)    The procedures and remedies referred to in paragraphs (1)(b) and (c), and the manner of deciding on and working out such remedies, are intended to ensure that a ‘fair go all round’ is accorded to both the employer and employee concerned.

Note:    The expression ‘fair go all round’ was used by Sheldon J in in re Loty and Holloway v Australian Workers’ Union [1971] AR (NSW) 95.

14    The two possible remedies for unfair dismissal are the reinstatement of the applicant or the payment of compensation (s 390). A person may seek permission to appeal from a decision made by FWA under Part 3-2, but there are restrictions both on the grant of permission to appeal and on the grounds upon which an appeal may be brought. Section 400 is in Part 3-2 and is in the following terms:

(1)    Despite subsection 604(2), FWA must not grant permission to appeal from a decision made by FWA under this Part unless FWA considers that it is in the public interest to do so.

(2)    Despite subsection 604(1), an appeal from a decision made by FWA in relation to a matter arising under this Part can only, to the extent that it is an appeal on a question of fact, be made on the ground that the decision involved a significant error of fact.

15    Chapter 5 of the Act deals with FWA. Section 575(1) establishes FWA and s 575(2) provides for the composition of FWA. Section 576 contains a description of FWA’s functions. Section 577 sets out guidelines as to the manner in which FWA is to perform its functions and exercise its powers:

FWA must perform its functions and exercise its powers in a manner that:

(a)    is fair and just; and

(b)    is quick, informal and avoids unnecessary technicalities; and

(c)    is open and transparent; and

(d)    promotes harmonious and cooperative workplace relations.

Note:    The President also is responsible for ensuring that FWA performs its functions and exercises its powers efficiently etc. (see section 581).

16    Section 578 sets out matters the FWA must take into account in performing its functions or exercising its powers:

In performing functions or exercising powers, in relation to a matter, under a part of this Act (including this Part), FWA must take into account:

(a)    the objects of this Act, and any objects of the part of this Act; and

(b)    equity, good conscience and the merits of the matter; and

(c)    the need to respect and value the diversity of the work force by helping to prevent and eliminate discrimination on the basis of race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin.

17    Chapter 5, Part 5-1, Division 3 deals with the conduct of matters before FWA and contains s 587 which is in the following terms:

(1)    Without limiting when FWA may dismiss an application, FWA may dismiss an application if:

    (a)    the application is not made in accordance with this Act; or

    (b)    the application is frivolous or vexatious; or

    (c)    the application has no reasonable prospects of success.

(2)    Despite paragraphs (1)(b) and (c), FWA must not dismiss an application under section 365 or 773 on the ground that the application:

    (a)    is frivolous or vexatious; or

    (b)    has no reasonable prospects of success.

    (3)    FWA may dismiss an application:

    (a)    on its own initiative; or

    (b)    on application.

18    Chapter 5, Part 5-1, Division 3, Subdivision E deals with appeals from FWA and contains s 604 which is in the following terms:

(1)    A person who is aggrieved by a decision:

(a)    made by FWA (other than a decision of a Full Bench or the Minimum Wage Panel); or

(b)    made by the General Manager (including a delegate of the General Manager) under the Fair Work (Registered Organisations) Act 2009;

may appeal the decision, with the permission of FWA.

(2)    Without limiting when FWA may grant permission, FWA must grant permission if FWA is satisfied that it is in the public interest to do so.

Note:    Subsection (2) does not apply in relation to an application for an unfair dismissal (see section 400).

(3)    A person may appeal the decision by applying to FWA.

19    Section 607 deals with the manner in which appeals may be conducted and the powers of FWA when dealing with an appeal:

(1)    An appeal from, or a review of, a decision of FWA or the General Manager may be heard or conducted without holding a hearing only if:

(a)    it appears to FWA that the appeal or review can be adequately determined without persons making oral submissions for consideration in the appeal or review; and

(b)    the persons who would otherwise, or who will, make submissions (whether oral or written) for consideration in the appeal or review consent to the appeal or review being heard or conducted without a hearing.

(2)    FWA may:

(a)    admit further evidence; and

(b)    take into account any other information or evidence.

(3)    FWA may do any of the following in relation to the appeal or review:

(a)    confirm, quash or vary the decision;

(b)    make a further decision in relation to the matter that is the subject of the appeal or review;

(c)    refer the matter that is the subject of the appeal or review to an FWA Member (other than a Minimum Wage Panel Member) and:

(i)    require the FWA Member to deal with the subject matter of the decision; or

(ii)    require the FWA Member to act in accordance with the directions of FWA.

20    Finally, the jurisdiction of the Full Bench to hear and determine an application for permission to appeal and appeal from a decision of a single member of FWA is dealt with in Chapter 5, Part 5-1, Division 4.

The Reasons of the Full Bench

21    In its written submissions to the Full Bench the applicant submitted that s 400 of the Act applied to the first respondent’s application for permission to appeal and his appeal. The Full Bench did not refer to s 400 of the Act in its reasons. It granted permission to appeal on the basis that the Senior Deputy President fell into error in dismissing the first respondent’s application. In dealing with the application for permission to appeal it did not make a finding that it considered that it was in the public interest to grant permission (subsection 400(1)). In overturning the Senior Deputy President’s finding that there was a binding settlement agreement it did not express itself in a way which suggests that it had in mind that the appeal to it, in so far as it was an appeal on a question of fact, was limited to a significant error of fact (subsection 400(2)).

22    The Full Bench addressed the Senior Deputy President’s reliance on subsection 587(1) of the Act and appears to have taken the view that the existence of a binding settlement agreement could not lead to a conclusion that an application was frivolous or vexatious within subsection 587(1). The Full Bench said (at [13]):

In our view the inquiry for the purposes of s. 587(1)(b) should be primarily directed to the substance of the unfair dismissal application. In the present matter it cannot be concluded that Mr Gorman’s application for relief against unfair dismissal is ‘frivolous or vexatious’ within the meaning of s. 587(1)(b) of the Act. This is because the substance of the application has not thus far been the subject of inquiry in proceedings before FWA. In this regard, we note that the merits of the application have not been the subject of evidence and submissions and indeed that any demonstrable lack of merit or substance in the initial application was not a ground relied upon in seeking that it be dismissed as being ‘frivolous or vexatious’. There is simply no basis on the material before FWA to conclude that the unfair dismissal application is ‘frivolous or vexatious’ in the sense that it lacks substance or is an abuse of process. (Emphasis added.)

23    As I read the Full Bench’s reasons it held that an application could only be frivolous or vexatious within subsection 587(1) where the features of the claim in terms of the elements of the claim as defined in Chapter 3, Part 3-2 of the Act meet that description. An accord and satisfaction is not relevant to the inquiry. Although the Full Bench does not expressly say so I think it can be inferred from its reasons that it held that an accord and satisfaction would not be an answer to an applicant’s claim even at a full hearing.

24    I should mention that as I understand it, the applicant had also relied on paragraph (c) of subsection 587(1), that is to say, that the application had no reasonable prospects of success. The Senior Deputy President did not rely on that paragraph, although having regard to his reasons it would have been open to him to do so. It may be inferred, I think, that the Full Bench would have rejected reliance on this paragraph for the same reasons it rejected reliance on paragraph (b) of subsection 587(1) which refers to an application which is frivolous or vexatious.

25    There was an alternative ground for the Full Bench’s decision. The Full Bench said that the Senior Deputy President erred in concluding that there was a binding settlement agreement between the applicant and the first respondent. The grounds for that conclusion were that the parties intended that their agreement be committed to writing in a deed of settlement and the reference before the Senior Deputy President to ‘toing and froing’. The Full Bench said (at [14]):

Given the intention for the agreement to be committed to writing in a deed of settlement and the reference made to possible ‘toing and froing’ between the parties in the formalisation of the agreement, we doubt that a binding agreement was concluded on that day. Rather a position was reached and the bones of an agreement identified on the basis that the agreement would be finalised, formalised and executed over the following 14 days. The outcome might be characterised in some respects as ‘an agreement to agree’ but it was an outcome that clearly contemplated the conclusion of the agreement with the preparation of a deed containing provisions beyond those specifically dealt with in the discussions on 6 April and the execution of that deed by the parties. In our view, in the circumstances of the present matter it cannot be concluded that a binding agreement was reached by the parties before formal execution of a deed of settlement.

26    The Full Bench made no reference to the other evidence in the case and, in particular, it made no reference to the evidence of Mr Martin and Mr Richard Ward.

Issues on the Application

27    The applicant’s case is that the Full Bench made a jurisdictional error or errors in making its decision. The applicant does not contend that there is an error of law on the face of the record.

28    The Full Bench of FWA is not a Court. Nevertheless, the authorities suggest that not all errors of law by FWA are jurisdictional errors: Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission (2000) 203 CLR 194 (‘Coal and Allied’); Coal and Allied Mining Services Pty Ltd v Lawler (2011) 192 FCR 78. It is still necessary to distinguish between jurisdictional and non-jurisdictional errors of law.

29    A convenient starting point is the applicant’s submission that the Full Bench erred in its construction of subsection 587(1). I can put to one side for the present the public interest requirement for permission to appeal in subsection 400(1) of the Act because the proper construction of s 587 is a question of law and even though the Full Bench did not address subsection 400(1) it might be said that the resolution of the proper construction of s 587 is in the public interest. In other words, if the Full Bench’s construction of s 587 is correct then even though the Full Bench did not address subsection 400(1) the applicant may be refused relief because to grant it would be futile.

30    The applicant’s case is that there was an accord and satisfaction between it and the first respondent. It is not suggested that the agreement constituted an accord executory (McDermott v Black (1940) 63 CLR 161 at 184 per Dixon J (as his Honour then was)). It would not matter if the accord and satisfaction was conditional as the applicant is prepared to carry out its obligations under the agreement (Seddon N and Ellinghaus M, Cheshire and Fifoot’s Law of Contract (8th Australian ed, LexisNexis Butterworths, 2002) [4.24]).

31    An accord and satisfaction extinguishes the existing cause of action and replaces it with a new cause of action based on the agreement. A valid accord and satisfaction is not a discretionary factor relevant to the subsequent litigation of the original claim; it is an answer to the claim.

32    It seems to me that the fact of an accord and satisfaction can either be raised under the Act at an ‘interlocutory’ stage and at the final hearing or it cannot be raised at all. As it is a complete answer to a claim there would be no reason why it could be raised at a final hearing but not at a preliminary stage under a section such as s 587.

33    There is nothing in the Act which suggests that an accord and satisfaction should not be recognised. At a general level the object of Chapter 3 Part 3-2 and the general statements of the manner in which FWA is to perform its functions and the matters to which it is to have regard are consistent with the recognition of an accord and satisfaction. Furthermore, the words of subsection 587(1) are wide enough to include the recognition of an accord and satisfaction. As I have said, a valid and effective accord and satisfaction extinguishes the pre-existing cause of action and continued pursuit of an application based on such cause of action is clearly capable of being considered to be frivolous or vexatious or without reasonable prospects of success.

34    Although the Australian Industrial Relations Commission was dealing with s 111(1)(t) of the Workplace Relations Act 1996 (Cth) in Zoiti-Licastro v Australian Taxation Office the considerations which led it to conclude that the Senior Deputy President had the power to dismiss an application on a summary basis on the ground that there was a binding settlement agreement apply with equal force under the Act.

35    In his reasons the Senior Deputy President drew a distinction between finding that there was a binding settlement agreement and a finding that ‘there had been an enforceable contract’. It is not entirely clear what he meant by that but I take him to mean that any action to enforce the contract may need to be taken in another jurisdiction and that is almost certainly so. However, that circumstance is not a reason to conclude that FWA cannot recognise a binding settlement agreement. It might mean that in a particular case FWA will adapt its remedies, that is, a temporary stay rather than a dismissal, to meet the particular circumstances.

36    In my opinion, the Full Bench misconstrued subsection 587(1) of the Act and that error went to its jurisdiction. That conclusion does not automatically lead to the grant of the relief sought by the applicant because there was an alternative basis for the Full Bench’s decision. It is to that alternative basis that I now turn.

37    The question of whether there was or was not a binding settlement agreement is a question of fact, although no doubt informed by legal principles. In this case in considering whether permission to appeal should be granted and in considering the appeal itself the Full Bench was required to apply s 400 of the Act. I did not understand the first respondent to contend otherwise. It seems to me that the Senior Deputy President’s decision was a decision made ‘under this Part’ within subsection 400(1) and a decision ‘in relation to a matter arising under this Part’ within subsection 400(2) despite the fact that s 587 is in Part 5-1 of the Act. The Senior Deputy President’s decision was a decision to dismiss the first respondent’s application made under s 394 for a remedy for unfair dismissal. That is a decision under Chapter 3 Part 3-2 in the same way as an order for re-instatement or compensation would be a decision under that Part. Even if FWA’s general power to dismiss is contained in subsection 587(3), it is part of FWA’s powers when it makes a decision under Chapter 3 Part 3-2. The same reasoning applies if regard is had not to the order but to the ground upon which the order was made, that is, that the continued pursuit of the application is frivolous or vexatious.

38    I do not think the Full Bench addressed either subsection 400(1) or subsection 400(2) of the Act. It makes no mention of either subsection and it makes no finding that it considers it to be in the public interest to grant permission to appeal. Nor is its analysis of the Senior Deputy President’s finding of fact that there was a binding settlement agreement such as to suggest that it had in mind that the first respondent’s appeal on this issue was limited to a significant error of fact.

39    The applicant submitted that the Full Bench had exceeded its jurisdiction by conducting what was in effect a hearing de novo. It submitted that the Full Bench had done no more than substitute its own view for that of the Senior Deputy President.

40    I think that there is sufficient similarity between s 607 of the Act and s 45 of the Workplace Relations Act 1996 (Cth) to draw the conclusion, based on the authority of Coal and Allied, that the nature of an appeal conducted by the Full Bench is a rehearing. It follows from that that the Full Bench can only interfere where there is error on the part of the primary decision-maker.

41    Subsection 400(2) provides an additional hurdle for an appellant in an unfair dismissal claim. While there is force in the applicant’s contention that the Full Bench considered that it could simply substitute its view for that of the Senior Deputy President I do not need to go that far because there is nothing to indicate that the Full Bench approached the issue with subsection 400(2) in mind. There is no detailed analysis of the evidence or any reference to the evidence of relevant witnesses.

42    As to the first of the two matters relied on by the Full Bench, reference to the fact that the parties intended that their agreement be committed to writing in a deed of settlement is the start of the relevant inquiry not its conclusion. The second matter, namely, the fact that the parties envisaged possible ‘toing and froing’, is relevant but by no means decisive. For present purposes it is sufficient for me to refer to the first category or class identified by Dixon CJ, McTiernan and Kitto JJ in Masters v Cameron (1954) 91 CLR 353 at 360:

Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect.

43    Furthermore, consideration may need to be given to the fourth category or class identified by McLelland J in Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 at 628.

44    I am not to be taken as suggesting any view as to the merits. That is not my function. It is my function to determine whether the Full Bench made a jurisdictional error. In my opinion it did because it did not apply, as it was obliged to do, the requirements in subsection 400(1) and subsection 400(2) of the Act. Both of those requirements are jurisdictional because both delineate the powers and functions of the Full Bench on hearing an application for permission to appeal and an appeal (Craig v South Australia (1995) 184 CLR 163; Kirk v Industrial Court of New South Wales (2010) 239 CLR 531 at 573-574 [72] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ).

45    The applicant sought a declaration under s 21 of the Federal Court of Australia Act 1976 (Cth) that the decision of the Senior Deputy President is correct. That is not an order which I can make. That is a matter to be determined in the manner provided for in the Act.

Conclusions

46    For the reasons I have given I will make orders that a writ of certiorari issue quashing the decision of Fair Work Australia made on 16 December 2010 and that a writ of mandamus issue directing Fair Work Australia to hear and determine according to law the first respondent’s application for permission to appeal and, if appropriate, appeal. I will hear the parties as to costs and any other orders.

Associate:

Dated:    25 August 2011