Federal Court of Australia

Clarke v Pacific National Services Pty Ltd [2023] FCA 699

ORDERS

THE COURT ORDERS THAT:

1.    The proceeding be dismissed.

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

REASONS FOR JUDGMENT

KATZMANN J:

Introduction

1    This is a dispute about whether an employer entered into a contract with a number of its employees which required the employer to terminate their employment and pay them severance pay.

2    The employer, Pacific National Services Pty Ltd, operates a freight rail business in NSW, including a freight depot at Werris Creek. Each of the eight applicants is, and has been at all relevant times, an employee of Pacific National engaged at Pacific National’s Werris Creek depot and covered by the Pacific National Bulk Rail NSW Enterprise Agreement 2018.

3    The applicants allege that Pacific National entered into binding contracts with each of them for voluntary redundancy and that they are entitled to severance payments in accordance with the terms of the Enterprise Agreement. By their amended originating application they seek an order under s 543 of the Fair Work Act 2009 (Cth) (FW Act) “enforcing the Safety Net Contractual Entitlements” by requiring Pacific National to terminate their employment “on notice” and pay them redundancy pay and accrued leave entitlements in the amounts specified in the application with interest. In the alternative, they seek orders requiring Pacific National to pay them damages in the same amounts. By consent, an order was made requiring liability to be determined as a separate question.

4    Pacific National denies the existence of any contract and any entitlement to redundancy pay. In its defence it complained that the applicants did not plead “the elements essential [to] the formation of the alleged contracts” and pleaded specifically that there were no contracts because there was no consideration and no intention to create legal relations. Alternatively, Pacific National says that if such contracts were made, they were subject to a condition precedent to its obligation to perform them, which was never, and is now incapable of being, fulfilled.

5    It was common ground that the applicants’ case turned on the proper construction of the parties’ correspondence during the period of consultation required by the Enterprise Agreement. The parties agreed that, if contracts were formed, Pacific National repudiated them by demonstrating an unwillingness to render substantial performance.

6    For the reasons that follow, the proceeding must be dismissed.

The Enterprise Agreement

7    The parties agreed that the Enterprise Agreement covered and applied to each of the applicants and Pacific National.

8    The relevant provisions appear in Pt A17.

9    “Redundancy” is defined in cl A17.1 in the following way:

A redundancy occurs in a circumstance where Pacific National Bulk Rail decides that it no longer requires the position that an Employee has been doing to be done by anyone and there is no suitable alternative position for the Employee. A redundancy is not triggered by the ordinary and customary turnover of labour.

10    “Suitable alternative position” is defined in cl A17.2.

11    Clause A17.4 provides:

Where Pacific National Bulk Rail decides that it no longer requires the position an Employee has been doing to be done by anyone, Pacific National Bulk Rail:

(a)    Shall undertake consultation, as outlined in clause A31 of this Agreement;

(b)    Shall explore opportunities for suitable alternative employment;

(c)    Shall call for expressions of interest in suitable alternative employment and/or voluntary redundancy, where appropriate, from other Employees. Pacific National Bulk Rail has the right to accept or reject expressions of interest from individual Employees.

12    Clause A17.8 provides:

Subject to clause A17.4(c), Pacific National Bulk Rail shall make offers to Employees for suitable alternative employment, voluntary redundancy and/or initiate involuntary redundancy, as appropriate, following consideration of all of the criteria outlined in this clause.

13    The criteria for selection for redundancies appear in cl A17.9, which is in the following terms:

Selection for redundancies shall be made having regard to the following criteria:

(a)    Pacific National Bulk Rail's needs for competencies;

(b)    Employee qualifications;

(c)    Employee past work performance and experience;

(d)    An Employee's suitability for Pacific National Bulk Rail's future needs; and

(e)    Any expressions of interest for voluntary redundancy.

14    Clause A17.10 requires that severance payments be made “upon termination on account of redundancy” and that those payments are in addition to notice or payment in lieu and payment for any accrued, but untaken, leave or days in lieu payable on termination. Clause A17.11 details the method by which severance payments are to be calculated.

15    Clause A31 provides for notification and a process of consultation where Pacific National has made “a definite decision that it intends to proceed with any significant change, or proposes to introduce a change to the regular roster or ordinary hours of work”. Paragraph A31.1(i) provides that, after the consultation process has concluded, Pacific National “may implement change after a further fourteen (14) days”.

The relevant facts

16    Most of the relevant facts were agreed.

17    On 23 April 2020, Pacific National wrote to all its employees at the Werris Creek depot informing them that it had made a “definite decision” to reduce the number of roles based at that depot and, pursuant to para A31.1(c) of the Enterprise Agreement, it would be undertaking a consultation process. Pacific National wrote again to its employees at Werris Creek on 22 May 2020, 27 May 2020, 8 July 2020 and 13 August 2020 updating them on the consultation and implementation process and inviting them to submit non-binding expressions of interest for alternative roles, job swaps and/or voluntary redundancy.

18    Each of the applicants submitted to Pacific National a non-binding expression of interest in voluntary redundancy. On or around 11 September 2020 Pacific National wrote to each of the applicants (the 11 September letters) inviting them to make a binding expression of interest in voluntary redundancy and provided a form by which to do so (the binding EOI form). The salient parts of the letters read as follows:

Further to our recent communications regarding operational changes in North West NSW, Pacific National can confirm that it may be forced to move to redundancies at Werris Creek due to the level of interest expressed in alternate roles in the region. We also acknowledge receipt of your non-binding Expression of Interest for Voluntary Redundancy (EOI).

As your initial EOI was non-binding, we would like to confirm that you are still interested in the potential option of a Voluntary Redundancy. To do this, please complete the attached form …

Please be aware that even if you confirm your EOI, there is no guarantee that your position…will be made redundant. Pacific National retains the right to accept or reject applications for voluntary redundancy at its discretion.

In conjunction with making decisions regarding the EOIs, we also need to confirm we have adequate resourcing in the Coal depots in the region… and the Bulk NSW depots to meet the current and expected demand in the North West, including for the upcoming grain season. These resourcing issues will affect the termination dates of those employees whose EOIs are accepted.

A severance calculation estimate outlining your final payments as per the Pacific National Bulk Rail NSW Enterprise Agreement 2018 will be provided, if requested, once we receive your binding EOI nomination. Again, please note that this does not represent an acceptance of your EOI and you must not assume that your role will be made redundant until Pacific National has notified you that your application has been accepted. If you are one of the candidates for redundancy, we will also provide you with the date your employment is expected to terminate at this time.

(Emphasis added.)

19    Each of the applicants returned a completed binding EOI form. In doing so, each of them ticked a box containing the following text:

I confirm my EOI for Voluntary Redundancy. I acknowledge and understand this means that, should Pacific National determine that my role is surplus to requirements in the new North West NSW operational structure, my employment may terminate for reasons of redundancy.

(Emphasis added.)

20    The form submitted by Jason Clarke is dated 19 September 2020, one day after the deadline for return indicated in the letter, but Pacific National was not apparently troubled by that.

21    Pacific National wrote to each of the applicants on 1 October 2020 confirming that it had accepted their expressions of interest and advising that they would be provided severance payments in accordance with the Enterprise Agreement (the 1 October letters). Pacific National confirmed that the latest date voluntary redundancy was to occur was 31 December 2021, unless another course of action was agreed. Pacific National also stated:

Following a period of consultation regarding operational changes in North West NSW, Pacific National has concluded that we will have more employees than we require at the Werris Creek depot once the Willow Tree and Gunnedah depots are fully resourced and the impending grain harvest ends. Your role … is one of those affected and it is anticipated your position will become redundant in the future.

During the consultation process, Pacific National has explored opportunities for suitable alternative employment for employees who will be affected by the changes. As part of this process, you were offered the opportunity to express interest in available roles at Willow Tree and Gunnedah. However, as we have discussed, it is acknowledged that these roles may not be suitable having regard to your personal circumstances.

Additionally, you were offered the opportunity to express an interest in Voluntary Redundancy in accordance with clause 17 of the [Enterprise Agreement]. You notified us that you wished to express a non-binding expression of interest in Voluntary Redundancy. On 19.9.20, you confirmed that you wished to confirm and make binding your expression of interest.

Having concluded there are no available suitable alternative positions into which you can be redeployed (either at the two other depots in the region or elsewhere), I confirm that your expression of interest in Voluntary Redundancy has been accepted.

Please be aware that your employment will not terminate until such time as your role actually becomes redundant, which will not occur until such time as we no longer require you to perform work which is within the scope of your skills, expertise and qualifications.

As such, we must be very clear that this letter does not serve as notice of termination. As you have been advised throughout this process, we must still ensure we have adequate resourcing in the Coal and Bulk depots in the region to meet current and expected demand in the North West, including for the upcoming grain season. We appreciate this creates some uncertainty, but we wanted to ensure employees had as much advance notice of our plans for the North West as reasonably practicable.

You will be notified as soon as your role becomes redundant and provided at this time with notice of your termination date in accordance with clause 15 of the Enterprise Agreement, or with payment in lieu. We can confirm the latest date upon which your role will become redundant is 31 December 2021, unless another course of action is agreed with you (for example, if a role becomes available in this period into which you agree to be redeployed).

(Emphasis added.)

22    On 23 August 2021 Pacific National announced that it had made “a definite decision” to retain all present Werris Creek staff and that it would be “going to market for additional resources”. Less than 2 weeks later, on 3 September 2021, the Australian Rail, Tram and Bus Industry Union raised a dispute on behalf of the applicants under cl A32 of the Enterprise Agreement.

23    On 13 September 2021, Pacific National informed the Union by letter that it had decided to maintain all positions at Werris Creek and confirmed that it had given no formal notice of termination or redundancy to any employees.

24    Pacific National did not terminate the employment of any of the applicants on or before 31 December 2021, has at all material times continued to provide work to and required the performance of work by each of the applicants, and has not dismissed any employee at the Werris Creek depot on the basis of redundancy.

The applicants’ case

25    The applicants alleged that a contract was formed between each of them and Pacific National which in its terms “entitled and obliged” Pacific National to terminate their employment by reason of redundancy by no later than 31 December 2021; required each of the applicants to accept the termination; and entitled each of the applicants, on termination, to receive redundancy payments in accordance with the Enterprise Agreement. They referred to these contracts as “the Redundancy Contracts”.

26    The allegation rests on the following foundation, set out in paras 4–8 of the Amended Statement of Claim:

4.    On 23 April 2020, Pacific National informed its employees at the Werris Creek Depot that it:

a.    had made a definite decision to reduce the number of roles based at that Depot; and

b.    would be starting a consultation process per cl. A31.1(c) of the [Enterprise] Agreement.

5.    During the consultation process, Pacific National received a number of non-binding expressions of interest in voluntary redundancy, including from each of the Employees.

6.    On or around 11 September 2020, Pacific National wrote to each of the Employees:

a.    inviting them to make a binding expression of interest in voluntary redundancy;

b.    providing a form by which to do so; and

c.    stating that Pacific National retained the right to accept or reject any such application.

7.    Each of the Employees returned the form confirming their expression of interest in voluntary redundancy.

8.    On or around 1 October 2020, Pacific National wrote to each of the Employees:

a.    confirming that their expression of interest in voluntary redundancy had been accepted;

b.    stating that their employment would be terminated by reason of redundancy by no later than 31 December 2021; and

c.    further stating that on termination they would be provided with severance payments in accordance with the Agreement.

27    The entitlement was described in paras 9–19. While I have already referred to the terms of the alleged contracts, I should set out in full the next two paragraphs:

9.    In the premises pleaded above, a contract was formed between Pacific National and each of the Employees, which in its terms:

a.    entitled and obliged Pacific National to terminate the employment of each of the Employees by reason of redundancy by no later than 31 December 2021;

b.    required each of the Employees to accept this termination; and

c.    entitled each of the Employees, on termination, to receive redundancy payments in accordance with the [Enterprise] Agreement,

(the Redundancy Contracts).

10.    The terms of these contracts as pleaded at [8] above:

a.    relate to a subject matter described in s.61(2) of the Fair Work Act, being notice of termination and redundancy pay;

b.    are thus safety net contractual entitlements for each of the Employees within the meaning of that Act; and

c.    per s.542 of that Act, have effect as an entitlement under that Act,

(the Safety Net Contractual Entitlements).

28    The applicants went on to claim that, by its letter to the Union of 13 September 2021, Pacific National confirmed that it did not consider the so-called redundancy contracts binding on it and therefore did not intend to comply with them. In this way, Pacific National is said to have repudiated the redundancy contracts. The applicants pleaded that they did not accept the repudiation of their respective contracts and remained ready and willing to perform their obligations under those contracts, namely to accept termination of their employment in exchange for a redundancy payment. They alleged that, by maintaining their employment past 31 December 2021, Pacific National would fail to provide them with their safety net contractual entitlements and would breach the terms of the redundancy contracts, thereby causing them loss and damage.

The agreed issues

29    The parties agreed that the following questions arise for consideration:

(1)    Was there a binding contract between Pacific National and any of the applicants of the kind pleaded in the amended statement of claim (the redundancy contract)?

For this purpose:

(a)    Did the applicants commit to providing valuable consideration to Pacific National in the form of an agreement to accept the termination of their employment by no later than 31 December 2021?

(b)    Did Pacific National and each applicant intend to create binding legal relations by the applicant making and Pacific National accepting a binding expression of interest in voluntary redundancy?

(2)    If the answer to (1) is yes:

(a)    Were any terms of any redundancy contracts “safety net contractual entitlements” within the meaning of the FW Act?

(b)    Was the effect of the terms of any redundancy contract that there was a condition precedent that Pacific National would not be required to terminate the relevant applicant’s employment until it no longer required the applicant to perform work within the scope of his skills, expertise and qualifications, with this to occur on or before 31 December 2021?

(c)    If so, was the condition satisfied?

30    There was also an issue about whether, in the event the Court were to find there were binding (redundancy) contracts capable of performance and which the Court could enforce, Pacific National repudiated those contracts by failing to dismiss the applicants on or before 31 December 2021. But the parties agreed on the answer. Pacific National accepted that in those circumstances they would have repudiated the contracts.

31    The final question on liability was this: if Pacific National did repudiate the contracts in this way, did the applicants accept the repudiation by continuing to attend work and/or access paid leave entitlements on and after 1 January 2022?

Did the relevant correspondence create a binding contract between Pacific National and any of the applicants?

Some preliminary observations

32    Before a binding contract can be formed, it is generally necessary for one party to have made an offer which the other party accepts (whether expressly or by conduct) in circumstances in which they intended to create legal relations provided there is consideration. Only a person who has given consideration may enforce a contract not under seal: Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847 at 853 (Viscount Haldane LC).

33    I say “generally” for the reasons given by Allsop J in Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 at [369] (Drummond and Mansfield JJ agreeing at [1] and [2] respectively). See also Heydon on Contract: The General Part (LawBook Co, 2019) at [2.100]. That said, there is no dispute that in the present circumstances that there can be no contract unless there was an offer which was accepted by Pacific National; an intention to create legal relations; and consideration.

34    As explained in Heydon at [2.10]:

An offer… is conduct which a reasonable person in the position of the offeree would understand to be an expression of willingness to contract on specified terms with the intention that those terms are to become binding as soon as the offer… is accepted by the offeree, or at some other stipulated time. An acceptance is conduct which, to a reasonable person in the position of the offeror, is a final and unqualified assent to the terms of the offer…

35    What a reasonable person in the position of the parties would have understood by their communications must be considered in the context in which they were made, by reference to the language the parties used, the surrounding circumstances and the purposes and objects of the putative agreements: Rinehart v Hancock Prospecting Pty Ltd (2019) 267 CLR 514 at [44] (Kiefel CJ, Gageler, Nettle and Gordon JJ). As Edelman J put it in the same case at [83]:

Every clause in a contract, no less arbitration clauses, must be construed in context. No meaningful words, whether in a contract, a statute, a will, a trust, or a conversation, are ever acontextual.

36    Leeming JA (with whom Bathurst CJ and McCallum JA agreed at [1] and [122] respectively) similarly observed in Wollongong Coal Ltd v Gujarat NRE India Pty Ltd (2019) 100 NSWLR 432 at [51] that “[t]here is always the possibility that the seeming clarity and absence of ambiguity of the plainest language is falsified by some other provision in the document, or something else in the context” (original emphasis).

37    The applicants argued that each of the 11 September letters which attached the binding EOI form was an invitation to treat and the offers were made when each applicant returned the form. Each of the 1 October letters from Pacific National to the applicants accepting their expressions of interest was said to constitute the acceptance of those offers. Since no distinction was drawn between any of the applicants, there is no reason to examine each applicant’s particular circumstances. In any event, there is no evidentiary basis to enable such an examination to take place.

38    Pacific National contended that no binding contracts were formed because the terms in the documents alleged to constitute offer and acceptance did not accord with each other, no consideration was provided by the applicants, and the parties did not intend by their correspondence to enter into legally binding agreements.

39    It was common ground that an employer and employee may enter into multiple contracts relating to the same employment relationship: see, for example, Lacson v Australian Postal Corporation (2019) 268 FCR 314 at [106]–[108] (Mortimer J). In a note filed after the hearing, the applicants raised the possibility that the correspondence between the parties effected a variation of their existing employment contracts. But this was not the applicants’ pleaded case. In substance, the pleaded case was that there were “redundancy contracts” which were collateral to the employment contracts.

Was there an offer? If so, what was it?

40    Pacific National did not dispute that each of the applicants made an offer for relevant purposes by submitting his signed expression of interest to Pacific National.

41    On the assumption that each of the applicants made an offer, the first question raised by the dispute is what was the offer? What were the applicants offering to do by signing and returning the binding EOI forms?

42    That question is one of construction, to be determined from the viewpoint of a reasonable person in the position of the putative offeree (here, Pacific National): Heydon at [2.130]. In other words, the answer does not turn on what either the applicants or Pacific National thought at the time.

43    Having regard to the terms of the applicants’ offers, as evinced by the terms of their signed acknowledgments in the binding EOI forms, I conclude that a reasonable person in the position of Pacific National would understand that each of them offered to accept a voluntary redundancy if and when his position or role became redundant.

Did the terms of the offer and acceptance align?

44    Acceptance is “a communication to the offeror of an unqualified assent to both the terms of the offer and to the implied invitation … that the offeree commit himself or herself to a contract”: Seddon NC and Bigwood RA, Cheshire & Fifoot Law of Contract (11th ed, LexisNexis Butterworths, 2017) at [3.22]. It is common ground that there can be no contract between an offeror and an offeree unless the terms of the offer and acceptance align: RA Brierley Investments Ltd v Landmark Corporation Ltd (1966) 120 CLR 224 at 232–234 (Barwick CJ, Kitto and Windeyer JJ). Consequently, if the acceptance purports to include a new term or terms inconsistent with or additional to those contained in the offer, the acceptance is merely a counter-offer: Goodman Fielder Consumer Foods Ltd v Cospack International Pty Ltd [2004] NSWSC 704 at [45] (Macready M). In practice, however, the position is not always clear-cut.

45    In the present case Pacific National contended that some of the terms of the purported contracts only “arise” in the documents said to constitute the acceptance, that is to say the 1 October letters.

46    It will be recalled that the applicants pleaded that there were three terms of the contract: the entitlement and obligation of Pacific National to terminate their employment by reason of redundancy by no later than 31 December 2021; the obligation of each applicant to accept the termination; and the entitlement of each applicant to receive severance pay on termination in accordance with the Enterprise Agreement.

47    Pacific National pointed out that the first mention of the 31 December 2021 date was in the purported acceptance. Until that time no statement had been made that redundancies would occur before notice of termination was given. Pacific National also noted that there was no reference to severance pay in any of the earlier correspondence. Thus, Pacific National argued, the correspondence said to constitute the acceptance “contained most of the pertinent terms of the contract – being terms that were not included in the offer” with the result that the “acceptance” was in materially different terms than the “offer” and no contract containing those terms was formed.

48    The applicants submitted that the differences were immaterial. They argued that the date for termination and the entitlement to severance payments were not newly raised in the 1 October letters. They pointed to the letters of 23 April 2020 and 13 August 2020 to show that there was never certainty as to timing and to the 11 September letters in particular, which stated that the applicants would be provided with the dates their employment was expected to terminate and an estimate of their entitlements to severance payments once their binding EOI forms were received.

49    The applicants argued that, even if the terms were new, the 1 October letters constituted counter-offers which they accepted by their conduct in not querying their contents, continuing to work as required, and immediately challenging Pacific National via the Union once it became clear that the voluntary redundancies would not proceed.

50    In oral argument, Pacific National attacked this alternative characterisation of the effect of the correspondence, arguing that:

(1)    the 1 October letters were not offers capable of acceptance, but communications to the applicants as to future events;

(2)    the applicants were required to continue performing work under their existing contracts, irrespective of whether some other offer was made to them; and

(3)    on this characterisation, the 1 October letters were counter-offers which necessarily rejected the earlier offers made by the applicants in their binding EOI forms, with the consequence that the applicants provided no consideration because the checkbox was the only place they had theoretically agreed not to dispute their terminations.

51    I accept the applicants’ argument that there was nothing substantially new in the 1 October letters.

52    Taking the applicants’ original contention that the return of the binding EOI forms constituted the offer, the terms of that offer are its objective meaning, in the context of the correspondence, anticipated redundancies at Werris Creek, and the Enterprise Agreement.

53    The text next to the checkbox in the binding EOI form to which each of the applicants indicated their assent did not specify an outer limit to the date for termination or make any reference to severance pay, but instead provided that “should Pacific National determine that my role is surplus to requirements… my employment may terminate for reason of redundancy”.

54    The 11 September letters to which the binding EOI forms were attached stated that resourcing issues would affect the termination dates of those employees whose offers to take voluntary redundancy were accepted, and that upon receipt of each applicant’s binding EOI form Pacific National would provide an expected termination date and an estimate of each applicant’s entitlement to severance payments under the Enterprise Agreement.

55    The offer each applicant made was to accept termination of their employment by reason of redundancy on a date of Pacific National’s choosing in the event that Pacific National determined that their role was “surplus to requirements”. As the applicants submitted, that date was always uncertain.

56    On the other hand, I do not accept that it was a term of the offers that Pacific National would be obliged to pay each applicant severance payments in accordance with the Enterprise Agreement, as the applicants pleaded. The only reference to severance pay in the 11 September letters and the binding EOI form is a statement that, on request, each applicant would be provided with an estimate of their entitlements when they returned their form. The obligation to make severance payments to the applicants arises under the Enterprise Agreement and (it appears from the terms of the 1 October letters) the applicants’ employment contracts. The offers did not contain any statement capable of giving rise to a separate contractual obligation to that effect. The offers were to accept termination by reason of redundancy, which attracts severance pay under the Enterprise Agreement.

57    In the 1 October letters, Pacific National stated that it had accepted the applicants’ offers to take voluntary redundancy, that each applicant would be made redundant by notice issued at some future date, and that each applicant would be entitled to severance payments in accordance with the Enterprise Agreement. These were not new terms when the 1 October letters were issued. Properly understood, Pacific National’s reference to 31 December 2021 as the latest date they would be made redundant was not an attempt to introduce a new term but the provision of the date by which their employment was expected to terminate, as foreshadowed in the 1 September letters.

Did the applicants provide valuable consideration to Pacific National?

58    Consideration has been defined as the act or promise provided by one party as the price of the other’s promise. The rule is that consideration must move from the promisee. Thus, in an action for breach of a contractual promise made by a respondent (the promisor), the applicant (the promisee) must show that the relevant promise is part of a bargain to which he or she (the applicant) has contributed. See Cheshire & Fifoot at [4.2]–[4.6].

59    Consideration for this purpose may come in a variety of forms. In Currie v Misa (1875) LR 10 Exch 153 at 162, Lush J said:

A valuable consideration, in the sense of the law, may consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other…

See also Searle v Commonwealth of Australia (2019) 100 NSWLR 55 at [161] per Bell P (Bathurst CJ and Basten JA agreeing at [1] and [246] respectively).

60    In Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 at 271 Bowen LJ accepted the following definition of consideration:

Any act of the plaintiff from which the defendant derives a benefit or advantage, or any labour, detriment, or inconvenience sustained by the plaintiff, provided such act is performed or such inconvenience suffered by the plaintiff, with the consent, either express or implied, of the defendant.

61    Here, the applicants submitted that they provided valuable consideration in that, in exchange for severance pay, they promised to accept the termination of their contracts of employment on or before 31 December 2021 without dispute or demur. In the event of a dispute, they argued, Pacific National could hold the applicants to their promises. This agreement was said to bring obvious benefits to Pacific National, in the form of avoiding restrictions on its ability to select employees for redundancy contained in the Enterprise Agreement and potential challenges to its decision to make employees redundant and/or the selection of employees for redundancy which might otherwise be the subject of a dispute in the Fair Work Commission. Clause A32.2 of the Enterprise Agreement, for example, contains a process for dispute resolution in which a matter may ultimately be referred to the Commission for conciliation, and cl A31.3 and cl A31.4 respectively confer a right on employees to commence conciliation or arbitration in the Commission in relation to breaches of consultation requirements.

62    The applicants submitted that, in an industrial context, the provision by the promisee of certainty, including the avoidance of present or future disputation is capable of constituting valuable consideration, citing Rudge v Secretary, Department of Customer Service [2020] NSWSC 1422; 300 IR 92 at [92]–[93]. In that case two employees brought proceedings against the Crown seeking declaratory relief to the effect that the government had an obligation to provide them with a motor vehicle for their private use as part of their jobs as safety inspectors under the relevant enterprise agreement. When the Department gave notice of its intention to terminate the enterprise agreement which contained the motor vehicle provision, the Public Service Association initiated an industrial dispute. The parties agreed to settle the dispute. It was a term of the settlement that the union agree to discontinue the proceedings in return for the Department maintaining the motor vehicle benefit under the enterprise agreement for the two employees. Adamson J held at [92]–[93] that the agreement to discontinue the proceedings in exchange for accepting the condition of payment provided the necessary consideration.

63    As Pacific National submitted, however, Rudge is easily distinguishable as here, there was no dispute on foot at the time the contracts were allegedly made or any express agreement not to bring a dispute or settle a dispute. It argued that none of the correspondence contains a statement to that effect. In any case, it contended that any such promise would be so uncertain as to be unable to constitute valuable consideration: Ryan v Textile, Clothing & Footwear Union of Australia [1996] 2 VR 235 at 249–50 (Brooking JA). Pacific National distinguished this case from classes of case in which there was an anticipated dispute and the consideration was the agreement to not pursue the dispute: Stevens v Spotless Management Services Pty Ltd [2016] VSCA 299 at [180]–[182] (Kyrou and McLeish JJA and Elliott AJA).

64    Still, I accept the applicants’ contention that the contract included a term requiring them to accept termination without dispute. Although the binding EOI forms did not contain an express statement by the applicants to that effect, an objective reading of the language used in context would lead a reasonable person to that conclusion. If it were open to any of the employees who had given a “binding” expression of interest to dispute the right of Pacific National to terminate their employment by reason of voluntary redundancy if their roles had become redundant, their offers to Pacific National would be meaningless. A reasonable person reading the 11 September and 1 October letters would have understood the applicants’ agreement to be made redundant would have precluded any later challenge to that position. By the terms of their offers, the applicants signified their unconditional consent to the termination of their employment by reason of redundancy at the option of Pacific National should it determine that their positions were surplus to requirements.

65    In any event, the applicants’ offers to accept voluntary redundancies provided an obvious benefit to Pacific National. It relieved the company of the burden of selecting employees for redundancy against their will according to criteria set out in the Enterprise Agreement. A foreseeable, if not likely, consequence of such selection was industrial disputation. The obvious purpose of providing a process for voluntary redundancies was to minimise disputes by permitting those employees who were content to leave Pacific National’s service in exchange for severance pay to do so, while reducing the risk of involuntary redundancies for those employees who wished to remain.

66    It follows that I accept that valuable consideration passed from the applicants to Pacific National.

Did Pacific National and each relevant applicant intend to create binding legal relations?

67    It is “of the essence of contract” that there be a “voluntary assumption of a legally enforceable duty”. Without it, there is no true “offer”: Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424 at 457 (Dixon CJ, Williams, Webb, Fullagar and Kitto JJ).

68    Pacific National claims that the correspondence does not demonstrate that the parties intended to create binding legal relations, emphasising that the law is not concerned with the parties’ real intentions but with the outward manifestations of them: Taylor v Johnson (1983) 151 CLR 422 at 428 (Mason ACJ, Murphy and Deane JJ); Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).

69    Pacific National submitted that the objective intentions of the parties as revealed by the correspondence were as follows, indicating that neither party demonstrated the necessary intention to enter into binding legal relations.

70    First, the binding EOI forms were returned to “influence” Pacific National to decide that the applicants’ positions were redundant having regard to the fact that the Enterprise Agreement required Pacific National to “[have] regard to” any expressions of interest in voluntary redundancy in “selections for redundancy” (cl A17.9).

71    Second, the offers were made on the express acknowledgment and understanding by each of the applicants that “should Pacific National determine that [his] role is surplus to requirements in the new North West NSW operational structure, [his] employment may terminate for reason of redundancy” (emphasis added). Pacific National submitted that this language hardly appears designed to create legal relations, particularly since Pacific National was empowered under the Enterprise Agreement to make positions redundant. Consequently, it argued, the Court should conclude that “binding” in this context means that Pacific National would hold the applicants to their expressions of interest for the purpose of determining which positions should be selected for redundancy in accordance with the Enterprise Agreement.

72    Third, the purpose of the 1 October letters was to provide information about Pacific National’s plans or proposals for redundancies but it is clear from its terms that Pacific National was unable to provide certainty about termination of the applicants’ positions.

73    In oral argument, Pacific National sought to distinguish between correspondence passing between employer and employee in the course of the employment relationship, which was not related to binding contractual terms (such as correspondence relating to disciplinary proceedings or promotions), and correspondence which was intended to be contractually binding. It argued that the correspondence in the present case was sent in the context of consultation regarding potential redundancies and is to be viewed through that prism.

74    The applicants submitted that there was a general presumption that agreements reached between employers and employees are intended to be legally binding, that this presumption is only rebutted “with difficulty”, and that the matters relied on by Pacific National were insufficient to displace the presumption, citing Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235; 12 BPR 23,021; Aust Contract Reports ¶90-215 at [48] (Young CJ in Eq) and Shahid v Australasian College of Dermatologists (2008) 168 FCR 46 at [211] (Jessup J). In Helmos at [48] Young CJ in Eq said:

Generally in commercial agreements there is a strong presumption in favour of an intention to create legal relations, a presumption that will only be rebutted with difficulty: Edwards v Skyways Ltd [1964] 1 WLR 349, 355; Toyota Motor Corp Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106, 177.

In this case it is fairly clear that the parties intended to create legal relations, particularly because the parties communicated via their solicitors and employed language usually associated with commercial contracts.

75    The applicants’ submission is problematic. In Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at [26] Gaudron, McHugh, Hayne and Callinan JJ observed:

In this context of intention to create legal relations there is frequent reference to “presumptions”. It is said that it may be presumed that there are some “family arrangements” which are not intended to give rise to legal obligations and it was said in this case that it should not be presumed that there was an intention to create legal relations because it was a matter concerning the engagement of a minister of religion. For our part, we doubt the utility of using the language of presumptions in this context. At best, the use of that language does no more than invite attention to identifying the party who bears the onus of proof. In this case, where issue was joined about the existence of a legally binding contract between the parties, there could be no doubt that it was for the appellant to demonstrate that there was such a contract. Reference to presumptions may serve only to distract attention from that more basic and important proposition.

(Emphasis added.)

76    In Helmos no reference was made to Ermogenous. In Shahid the parties accepted that the effect of Ermogenous was that the question of whether the parties to an agreement intended to create legal relations was not to be determined by reference to presumptions (at [210]). Nevertheless, in obiter dicta at [211] Jessup J said that he would not wish it to be taken that he would necessarily accept the correctness of the parties’ position. His Honour went on to say:

The principle for which Edwards [1964] 1 WLR 349 stands (ie that, in a business context, and where the requirements of a contract are otherwise established, the person proposing that the parties did not intend to create legal relations bears the onus of so proving) has stood the test of time, is consistently referred to in the standard texts on contract law and has the authority of the English Court of Appeal (see Orion Insurance Company plc v Sphere Drake Insurance plc [1992] 1 Lloyd’s Rep 239). I would pause before regarding it as self-evident that in Ermogenous 209 CLR 95 — a proceeding concerned not with business affairs but with the engagement of a member of the clergy — the High Court had, without reference either to Edwards [1964] 1 WLR 349 or to the cases dealing with commercial situations, dispensed with the presumption. While I note that, in Pirt [2001] WASCA 96 (a case decided before Ermogenous 209 CLR 95), Murray J, with the agreement of Ipp and Owen JJ, took the view that the principle referred at most to the locus of the evidentiary onus, I also note that, in Helmos Enterprises Pty Ltd v Jaylor Pty Ltd (2005) 12 BPR 23,021, the NSW Court of Appeal referred to the presumption as a strong one, which would “only be rebutted with difficulty” [at 48]).

77    It is also true, as Pacific National argued, that not every aspect of employment is regulated by contract. Where there is an award the legal relations between employer and employee are determined partly by the award and partly by the contract of employment but “[t]he award governs their relations as to all matters with which it deals”: Amalgamated Collieries of WA Ltd v True (1938) 59 CLR 417 at 423 (Latham CJ), cited with approval in Visscher v Giudice (2009) 239 CLR 361 at [71] (Heydon, Crennan, Kiefel and Bell JJ). The same must be said of an enterprise agreement.

78    Be that as it may, I am satisfied that the requisite intention existed in the present case.

79    The question is whether the parties’ conduct reveals an intention to be bound by the terms of their agreement: Branir at [369] (Allsop J, with whom Drummond and Mansfield JJ agreed at [1] and [2] respectively). Pacific National sought to distinguish this case from Helmos and Shahid on the basis that those decisions concerned “commercial agreements”, not “employment contracts”. No such distinction was made in Edwards v Skyways Ltd [1964] 1 WLR 349; [1964] 1 All ER 494, for example. In that case the court was concerned with an agreement struck between the board of an airline company and representatives of a trade union that pilots declared redundant and leaving the company would be given an ex gratia payment equivalent to the company’s contribution to their pension fund. The plaintiff, who had been a pilot employed by the company, was declared redundant and left the company’s service but the company refused to make the ex gratia payment. The plaintiff sued the company to recover the amount of the ex gratia payment. The company conceded there was consideration for its promise but argued that the plaintiff had no legally enforceable right to the payment because there was no intention to enter into legal relations. The trial judge, Megaw J, rejected the argument, observing that the subject-matter of the agreement was “business relations, not social or domestic matters” ([1964] 1 WLR 349 at 355). And it so was here. The distinction Pacific National sought to draw is an artificial one.

80    In any case, it is difficult to imagine what the purpose of the correspondence between each of the applicants and Pacific National would be if not to create some arrangement binding on the parties relating to redundancy. After all, why else would Pacific National choose to describe the expressions of interest as “binding”? That is not a term used in the Enterprise Agreement. And why would the applicants make the offers in the terms they did if they did not intend to be held to them? As counsel for the applicants put it in his written submissions (emphasis in original):

The agreement is in otherwise formal, specific terms, governing an established aspect of the existing employment contract between the parties. There is nothing hortatory about it. The agreement arose in the context of an employment relationship which is inherently contractual – what other kind of relations would these parties have intended to create?

81    The real issue is what the parties actually agreed to. That brings me to the next question.

Was there a condition precedent to the formation of a binding contract?

82    It is well established that the rights and obligations of parties to a contract are determined objectively. As the High Court said in Toll at [40]:

It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.

83    Conditions precedent fall into two classes. In Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 at 551–2 Mason J said:

There is an obvious difference between the condition which is precedent to the formation or existence of a contract and the condition which is precedent to the obligation of a party to perform his part of the contract and is subsequent in the sense that it entitles the party to terminate the contract on non-fulfilment.

In the first category the transaction creates no rights enforceable by the parties unless and until the condition is fulfilled. In the second category there is a binding contract which creates rights capable of enforcement, though the obligation of a party, or perhaps of both parties, to perform depends on fulfilment of the condition and non-fulfilment entitles him to terminate.

Conditions precedent within the first category may produce different consequences. In most cases, but perhaps not in all, a party may be able to withdraw from the transaction before fulfilment of the condition. But in each class of case, the transaction creates no enforceable rights in respect of the subject matter of the transaction unless the condition is fulfilled because, until the occurrence of that event, there can be no binding contract.

…

Generally speaking the court will tend to favour that construction which leads to the conclusion that a particular stipulation is a condition precedent to performance as against that which leads to the conclusion that the stipulation is a condition precedent to the formation or existence of a contract. In most cases it is artificial to say, in the face of the details settled upon by the parties, that there is no binding contract unless the event in question happens. Instead, it is appropriate in conformity with the mutual intention of the parties to say that there is a binding contract which makes the stipulated event a condition precedent to the duty of one party, or perhaps of both parties, to perform. Furthermore, it gives the courts greater scope in determining and adjusting the rights of the parties. For these reasons the condition will not be construed as a condition precedent to the formation of a contract unless the contract read as a whole plainly compels this conclusion.

84    Pacific National argued that, if the Court were to find there was a contract which required it to pay the applicants severance pay and other entitlements on termination, it was subject to a condition precedent that the roles the employees were performing were actually redundant and their employment was in fact terminated. That contention must be accepted. It is clear that Pacific National’s obligations to pay severance pay and accrued annual leave entitlements only arose on termination of employment for redundancy. As the 1 October letters stated:

[Y]our employment will not terminate until such time as your role actually becomes redundant, which will not occur until such time as we no longer require you to perform work which is within the scope of your skills, expertise and qualifications.

85    Read in context, the confirmation that 31 December 2021 was “the latest date upon which your role will become redundant” does not constitute a promise to terminate the applicants’ employment on the ground of redundancy by 31 December 2021. Rather, it is a representation that, if their roles actually became redundant, termination would occur by that date.

86    The terminology in the correspondence largely reflects the consultation process mandated by the Enterprise Agreement. Although the notification and consultation process in cl A31.1 is expressed to be engaged only where Pacific National has made a “definite decision” that it “intends to proceed with any significant change” (para A31.1(c)), it imposed no requirement on Pacific National to implement the change. Circumstances may arise which make the change unnecessary or undesirable such that the intention may never be realised, as common sense indicates and the Enterprise Agreement contemplates. Paragraph A31.1(i) provides that Pacific National may implement change after the notification and consultation process has satisfactorily taken place. In other words, Pacific National was only entitled to implement the proposed change if it first followed the notification and consultation process set out in the Enterprise Agreement. Once that process concluded, it was under no obligation to do so.

87    On the other hand, the applicants submitted that there was no condition precedent and that the contracts required Pacific National to make the applicants redundant by 31 December 2021 and terminate their employment on that basis so as to attract severance payments under the Enterprise Agreement. To the extent that any condition precedent existed, they argued that condition was the acceptance of the binding expressions of interest in voluntary redundancy submitted by the applicants.

88    In support of this construction, the applicants relied on the same passage of the 1 October letters as Pacific National. They submitted that the phrase “the latest date upon which” provided 31 December 2021 as the outer limit of the time by which Pacific National was to perform. Any ambiguity in that phrase, the applicants submitted, could be resolved in favour of their construction because:

    the full text of the 1 October letters was “replete with certainty as to termination occurring at some point”, as opposed to merely suggesting its possibility;

    the surrounding documentary context was “equally certain”;

    the contracts were negotiated in the context of Pacific National having communicated a “definite decision” to reduce the number of roles at Werris Creek; and

    it is inherently unlikely, having regard to the significance of termination in an employment relationship, that either party would have agreed to a term as uncertain as one which made performance subject to an actual decision by Pacific National to make the applicants redundant.

89    The applicants submitted that the contracts were made in a context where Pacific National had already decided to make the applicants’ positions redundant and that the only outstanding question was precisely when that would occur. They characterised Pacific National’s construction as conferring upon it a “general discretion to perform”, and as having the result that “the contracts imposed no real obligations on Pacific National at all”. This construction was said to be “inherently unlikely”.

90    Yet the 1 October letters offered no certainty that the positions the applicants occupied would become redundant by 31 December 2021 or at all — whether the statements in the letters are read on their own or in the context of the earlier correspondence.

91    The 11 September letters to which the binding EOI forms were attached included two firm indications that binding expressions of interest in voluntary redundancy would not necessarily lead to redundancies. They were the following statements:

    “Pacific National can confirm that it may be forced to move to redundancies at Werris Creek”; and

    “Please be aware that even if you confirm your EOI, there is no guarantee that your position… will be made redundant.”.

92    The binding EOI form itself, which the applicants characterised as the offer, required each of the employees to “acknowledge and understand” that, confirming his expression of interest for voluntary redundancy meant that “should Pacific National determine that my role is surplus to requirements… my employment may terminate for reason of redundancy” (emphasis added).

93    I recognise that in the covering letter the applicants were advised that they were not to assume that their roles would be made redundant “until Pacific National has notified you that your application has been accepted” and that the 1 October letters informed them that their applications had been accepted. Read in isolation, the applicants could be forgiven for thinking that, upon the acceptance of their applications, they could assume that their roles would become redundant. But these statements cannot be read in isolation.

94    Not only did the 11 September letters offer no assurance of redundancy but it is also clear that the 1 October letters merely advised the applicants of the expectations held by Pacific National at the time. They advised the applicants in no uncertain terms that their positions were not then redundant and may not become redundant. For example, the letters state:

    “… it is anticipated your position will become redundant in the future”;

    “… your employment will not terminate until such time as your role actually becomes redundant, which will not occur until such time as we no longer require you to perform work which is within the scope of your skills, expertise and qualifications”;

    “… we must be very clear that this letter does not serve as notice of termination” (original emphasis);

    “[y]ou will be notified as soon as your role becomes redundant and provided at this time with notice of your termination date”;

    “[a]s stated above, your role has not yet become redundant”; and

    “[y]ou will only be eligible for, and receive, a severance payment if your employment ceases due to the redundancy of your role”.

95    It is true that the 1 October letters advised that each applicant’s “expression of interest in Voluntary Redundancy ha[d] been accepted”, that the “latest date upon which [their] role[s] will become redundant is 31 December 2021”, and that each applicant “will be entitled to a severance payment”. I also accept that the use of the modal verb “will” in some of these phrases suggests certainty. But certainty as to what? It does not follow that Pacific National had made an irreversible commitment to going through with the proposed redundancies. Read in context, a reasonable person would understand these references to be subject to Pacific National deciding that the roles were in fact redundant and advising the applicants that it no longer required their services by issuing a notice of termination. In other words, if the company’s expectations were realised and the applicants’ positions became redundant, then the latest date that would occur would be 31 December 2021. In the context of the other statements contained in the 1 October letters and the earlier correspondence, I find that a reasonable person would have understood that performance of the contracts was conditional upon the applicants’ roles becoming redundant and that that condition has never been met.

96    It is tolerably clear that the agreement the parties made was that the applicants would accept voluntary redundancies if Pacific National determined at some future date that their roles were surplus to requirements and decided to terminate their employment for that reason. Similarly, read in context, a reasonable person would understand statements that the applicants “will be entitled to severance payments”, to mean that, in the event that their positions are made redundant, they would be paid severance as required by the terms of the Enterprise Agreement.

97    No significance should be attached to the use in the correspondence of the phrase “definite decision”. Paragraph A17.4(a) of the Enterprise Agreement provides that where Pacific National decides it no longer requires a position to be filled, it must undertake consultation in accordance with cl A31. Paragraph A31.1(c) requires that Pacific National issue a notification once it has made a “definite decision” that it intends to proceed with any significant change, and that notification marks the commencement of the consultation procedure set out in the remainder of cl A31.1. Paragraph A31.1(i) provides that Pacific National “may” implement change once the notification and consultation process has satisfactorily taken place, and accordingly Pacific National is not required to implement change even where it has made a “definite decision”. In this context, the phrase was being used to invoke the notification and consultation process under the Enterprise Agreement, not to communicate to the applicants that it was obliged to terminate their employment on the basis of redundancy. That conclusion is supported by the statements in the correspondence that the applicants’ positions were anticipated to become redundant and that they would only be terminated when Pacific National determined to issue a notice of termination to each applicant.

98    I reject the applicants’ contention that Pacific National’s construction would confer on it a general discretion to perform. There is nothing unusual about the fulfilment of a condition precedent being within the control of one party to a contract or the condition precedent being a particular state of mind of one contractual party only. Neither type of condition precedent confers upon the party, who is required to take the action or have the state of mind, a general discretion to perform. Contracts for the sale of land, for example, are commonly expressed to be subject to finance on satisfactory terms, that is, conditional upon the purchaser successfully obtaining finance on terms they consider satisfactory. This condition is in two parts: that the purchaser successfully obtains finance (which is entirely within the purchaser’s control as the vendor has no ability to apply for finance on the purchaser’s behalf) and that the terms of the finance obtained be satisfactory to the purchaser (again, entirely a matter for the purchaser). A condition precedent of this kind provides little certainty to the vendor that performance will occur but it does not confer on the purchaser a discretion to perform. The purchaser is at least required to act honestly in attempting to obtain finance and in determining whether its terms are satisfactory: Meehan v Jones (1982) 149 CLR 571 at 589–90 (Mason J). It would not be open to the purchaser to simply declare that they could not obtain satisfactory finance.

99    Here, Pacific National was required to act honestly in assessing whether it no longer required the services of the applicants, and if it concluded that this was the case, to terminate the applicants’ employment with their consent and pay them severance pay and their accrued statutory leave entitlements. The contracts still imposed real obligations on Pacific National.

100    The applicants argued that the exchange of correspondence and the careful solicitation of employees for voluntary redundancy told against such a “one-sided” construction, given that the process would be rendered “largely inutile” by it. But that is not the case. Both parties to the contracts benefited from the careful selection of applicants for voluntary redundancy, even if performance of the contract was conditional on Pacific National no longer requiring the applicants to perform work. The applicants secured certainty that they would be selected for redundancy and receive severance pay if their roles were made redundant and, as I have already observed, Pacific National minimised the risk of disputation by making redundant only the positions occupied by those employees who agreed to accept redundancy.

101    The existence of the condition is also consistent with the objective purpose of Pacific National’s obligations under cl A17.11 of the Enterprise Agreement, namely to make severance payments to employees whose positions have become redundant. The purpose of severance pay, as explained nearly 40 years ago by the Full Bench of the Australian Conciliation and Arbitration Commission in the Termination, Change and Redundancy Case (1984) 8 IR 34 at 73 (and essentially confirmed in the Redundancy Case (2004) 129 IR 155 at [133] by the Australian Industrial Relations Commission per Giudice J, Ross VP, Smith and Deegan CC) is to compensate “for non-transferable credits and the inconvenience and hardship imposed on employees” by providing temporary income maintenance while the retrenched employee searches for other employment, and to allow for the possibility of retraining or relocation to take up a new job. “Non-transferable credits” are accrued benefits like sick leave, long service leave, loss of seniority, and employer contributions to pensions or superannuation. The financial position of employees who continue to be employed is assured by the continued payment of wages in return for their labour. Construing the contracts as requiring Pacific National to terminate the applicants’ employment when ample amounts of work are available for them is antithetical to the purpose of severance pay.

Were any of the contractual terms safety net contractual entitlements under s 541 of the FW Act?

102    Section 12 of the FW Act defines “safety net contractual entitlement” as “an entitlement under a contract between an employee and an employer that relates to any of the subject matters described in [s 61(2) or s 139(1)]” (emphasis added).

103    One of the subject matters listed in s 61(2) is “notice of termination and redundancy pay (Division 11)”. Section 117 in Div 11 contains the requirement for notice of termination or payment in lieu and s 119 the right to redundancy pay in certain circumstances, including, relevantly, where employment is terminated “at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour”. Another is “annual leave (Division 6)”. Section 90(2) in Div 6 imposes an obligation on employers to pay an employee who has a period of untaken paid annual leave when the employment ends the amount that would have been payable if the employee had taken that period of leave.

104    The phrase “relates to”, like the cognate expression “in relation to”, is unquestionably of “broad import”: O’Grady v Northern Queensland Co Ltd (1990) 169 CLR 356 at 374 (Toohey and Gaudron JJ). Taken out of context it is “wide enough to cover every conceivable connexion”: O’Grady at 367 (Dawson J). The connection required in any particular case will depend on the statutory context. See also Workers’ Compensation Board of Queensland v Technical Products Pty Ltd (1988) 165 CLR 642 at 653–4 (Deane, Dawson and Toohey JJ), which concerned the similar expression “in respect of”. Subject to any contrary intention, derived from that context or the drafting history, all that is required is “a relationship, whether direct or indirect, between two subject matters”: O’Grady at 376 (McHugh J, who dissented in the result).

105    Certainly the representations made in the 1 October letters about entitlements to severance pay and accrued statutory leave relate to subject matters described in s 61(2). On the face of things, those matters are therefore “safety net contractual entitlements”. As Pacific National submitted, however, the entitlement to severance pay arose from the Enterprise Agreement and the employment contracts, not from the contracts created by the exchange of correspondence. That is abundantly clear from the terms of the 1 October letters (“[y]ou will be entitled to a severance payment in accordance with the Enterprise Agreement and your contract of employment”). Counsel for Pacific National submitted that the entitlement did not arise from any contract but the Enterprise Agreement and no allegation is made that there was a contravention of the Enterprise Agreement. According to the terms of the 1 October letters, however, it was also a term of the applicants’ employment contracts, which indicates that the entitlements in question were also entitlements under a contract though not the contract formed by the exchange of correspondence.

106    But I fail to see how that matters in the present case. It seems to me that the only purpose served by the pleading with respect to safety net contractual entitlements was to invoke the jurisdiction of this Court which would also give the Court accrued jurisdiction to hear the contractual claims. It was never suggested that the assertion of federal jurisdiction was colourable. No claim has been made for civil penalties. Regardless of whether redundancy pay, accrued leave and other entitlements mentioned in the 1 October letters were entitlements created under any contract created by the exchange of correspondence, each of the applicants was entitled to severance pay if their employment had been terminated for redundancy and to the value of their accrued leave if their employment came to an end. True it is that the applicants did not plead that there had been a breach of their contracts of employment. But the applicants do not allege that their employment has been terminated. Their case is that it should have been. For this reason, I consider it unnecessary to decide whether the references to the safety net contractual entitlements is sufficient to create the relationship required by the statutory definition of that term in s 12 of the FW Act.

Was the condition precedent satisfied?

107    On 23 August 2021 Pacific National wrote to all employees at Werris Creek informing them that it had decided to “maintain all positions” at that location and would be “going to market for additional resources”. Each of the applicants continued to be employed by Pacific National in their previous roles at Werris Creek after 31 December 2021 and Pacific National has not since made any other employees at Werris Creek redundant. Pacific National has continued to require the applicants to perform work within the scope of their skills, expertise and qualifications.

108    Accordingly, the condition precedent to Pacific National’s obligation to perform was never fulfilled.

109    It follows that, if, as I have concluded, the parties did enter into binding contracts when Pacific National sent the 1 October letters, it did not breach its obligations under the contracts. In these circumstances the final question regarding repudiation does not arise.

Conclusion

110    The application filed on 17 December 2021 must be dismissed.

111    Pacific National did not seek an order for costs in the event that it was successful. Having regard to the fact that the application sought an order under s 543 of the FW Act to enforce safety net contractual entitlements to redundancy pay and leave entitlements on termination, this is a proceeding “in relation to a matter arising under [the FW Act]” within the meaning of that expression in s 570, notwithstanding that the case was essentially fought on the alternative basis that the applicants were entitled to damages for breach of contract See, for example, Joseph v Parnell Corporate Services Pty Ltd (2021) 284 FCR 546 at [116]–[121] (Logan, Katzmann and Snaden JJ). Section 570 only gives the Court the power to order one party to pay another party’s costs in limited circumstances. In the absence of any submission that any of those circumstances apply in this case, there should be no order as to costs.

Associate:

Dated:    27 June 2023

SCHEDULE OF PARTIES