WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

PARTIES UNITED VOICE WA

CLAIMANT

-v-

THE MINISTER FOR HEALTH

RESPONDENT

CORAM  INDUSTRIAL MAGISTRATE G. CICCHINI

HEARD  THURSDAY, 3 NOVEMBER 2011

DELIVERED WEDNESDAY, 23 NOVEMBER 2011

CLAIM NOS. M 33 OF 2011, M 34 OF 2011 AND M 35 OF 2011

CITATION NO. 2011 WAIRC 01065

CatchWords : Alleged failure to comply with the WA Health – LHMU – Support Workers Industrial Agreement 2007 (the 2007 Agreement); Applications by the Respondent to dismiss Claims because they disclose no reasonable cause of action; Whether terms should be implied in the 2007 Agreement; Whether the alleged implied terms disclose causes of action; Whether the 2007 Agreement created an obligation on the Respondent to take all reasonable steps to prevent contracting out or privatisation; Whether the Claimant should be granted leave to plead other grounds not already pleaded

Legislation : Industrial Relations Act 1979, sections 42, 42B, 81A, 81AA, 81CA,

   83(1), 83(2), 83(4), 83(5) and 83(7)

Hospitals and Health Services Act 1927, sections 5A, 7, 15(2) and 18

Industrial Magistrates Courts (General Jurisdiction) Regulations 2005, regulations 5 and 7

Industrial : WA Health – LHMU – Support Workers Industrial Agreement 2007,

Instruments  clauses 3, 4.1(a)(ii), 5.2(b), 5.2(c) and 11.13

LHMU – Union Recognition and Job Security Agreement – Department of Health Support Workers 2004

Cases Cited  : Quinlivan v Austal Ships Pty Ltd (2003) 83 WAIG 3684

General Steel Industries Inc v Commissioner for Railways (NSW) and Others (1964) 112 CLR 125

Australian Licensed Aircraft Engineers Association v Qantas Airways Limited [2009] AIRC 268

Jackson Nominees Pty Ltd v Hanson Building Product Pty Ltd [2006] QCA 126

Construction Forestry, Mining and Energy Union v Henry Walker Eltin Contracting Pty Ltd [2001] FCA 1009

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337

Colliers Jardine (NSW) Pty Ltd v Balog Investments Pty Ltd (1996) Federal Court of Australia BC 94 00 247

Riverwood International Australia Pty Ltd v McCormick [2000] FCA 889

Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226

General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125

Fancourt v Mercantile Credits (1983) 154 CLR 87

Green v Daly [2002] WADC 109

Hospitals Contribution Fund of Australia v Hunt (1983) 44 ALR 365

Talbot & Olivier (a firm) v Glenys June Whitcombe and Another [2006] WASCA 87

Bride v Peat Marwich Mitchell [1989] WAR 383

Kucks v CSR Ltd (1996) 66 IR 182

Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1

Cases Referred to : Liquor Hospitality and Miscellaneous Union, Western Australian

in Decision  Branch v the Minister for Health (2010) 90 WAIG 1868. 

Liquor Hospitality and Miscellaneous Union, Western Australian v The Minister for Health (2011) 91 WAIG 291

B.P. Refinery (Western Port) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266

Byrne v Australian Airlines Ltd (1995) 1985 CLR 410

Farrell v Royal King’s Park Tennis Club (INC) [2006] WASC 51).

Amcor Ltd v Construction, Forestry, Mining and Energy Union and Others (2005) 222 CLR 241

Actew Corporation Ltd v Pangallo (2002) 127 CLR 1

Result : Applications granted

Representation : Mr T.J. Hammond (Counsel) appeared for the Claimant

  Mr G.T.W. Tannin, SC (Counsel) with Mr R. Bathurst (Counsel), appeared for the Respondent             

REASONS FOR DECISION

BACKGROUND

The Capacity of the Minister for Health (Western Australia)

1          The Minister for Health (the Minister) is, by force of various statutory instruments, deemed to be the Board of the Peel Health Services Board, the Metropolitan Health Services Board and the WA Country Health Service.  He is responsible for the management and control of various public hospitals within those Boards including Royal Perth Hospital, Fremantle Hospital and Swan Districts Hospital.

2          The Minister has delegated his functions in his incorporated capacity as the Boards of the hospitals formerly comprised in the Metropolitan Health Services Board, the Peel Health Services Board and the WA Country Health Service to the Director General of the Department of Health.

The 2007 Agreement

3          In early October 2007 United Voice WA which was then known as the Liquor Hospitality and Miscellaneous Union, Western Australian Branch (LHMU) and the Minister, by his delegate, entered into an industrial agreement.  That agreement was registered by the West Australian Industrial Relations Commission (WAIRC) on 12 October 2007 and is known as the WA Health – LHMU – Support Workers Industrial Agreement 2007 (the 2007 Agreement).  It replaced the LHMU – Union Recognition and Job Security Agreement – Department of Health Support Workers 2004.

4          One of the aims of the 2007 Agreement was to enable the parties to develop and implement strategies which “enhance job satisfaction, security and remuneration” (clause 4.1(a)(ii)). 

5          Clauses 11.13(a) and (b) of the 2007 Agreement set out the terms of the Agreement with respect to “contracting out” and “privatisation”, which provides:

“11.13 Contracting Out and Privatisation

(a) The parties recognise the importance of promoting long term job security and career development for employees subject to this Agreement.

 (b) With the exception of those contracts for services currently in existence, there will be no contracting out or privatisation of functions or duties performed by directly employed workers during the life of this Agreement.”

6          The 2007 Agreement expired on 31 July 2010.  Upon its expiration the parties entered into negotiations for a replacement industrial agreement but were unable to agree on terms.  On    24 October 2010, in the absence of agreeable terms for a replacement agreement, the parties agreed to the following interim arrangement:

(a) That no new industrial agreement would (at that stage) be made; and

(b) The 2007 Agreement would continue in its current form as an expired agreement which would continue to apply unless cancelled or replaced; and

(c) The Director General of Health confirm in writing that the Department of Health had no plans to withdraw from the 2007 Agreement; and

(d) A consent order would issue from the Western Australian Industrial Relations Commission providing for wage increases for employees covered by the 2007 Agreement; and

(e) Negotiations for a new agreement would commence no later than 1 February 2012.

Construction of New Hospitals

7          In 2009 the State of Western Australia (the State) commenced building the new Fiona Stanley Hospital at Murdoch which is due to be completed in about May 2014.  The State has entered into a contract with Serco Australia Pty Ltd (Serco) for the provision of most of the facilities management services at that hospital.  It is not in dispute that the functions or duties performed by employees covered by the 2007 Agreement at Royal Perth Hospital and at Fremantle Hospital will be performed by employees of Serco at Fiona Stanley Hospital.

8          When complete, the Fiona Stanley Hospital will be run by a new hospital Board.  That Board, a separate legal entity which is yet to be created, will be responsible for employing employees to perform various functions not already contracted out.  It will be independent of other existing hospital Boards.

9          The State has also recently announced the closure of the Swan Districts Hospital and the opening of a new hospital to be known as the Midland Health Campus.  Those events are scheduled to occur in 2015.  The Midland Health Campus will be considerably larger than Swan Districts Hospital and will provide additional services to those currently available at the Swan Districts Hospital. 

10       Marshall Kingsley Warner, Director, Health Industrial Relations Services in the West Australian Department of Health deposed in his affidavit sworn 15 September 2011 that the State is yet to make a decision as to whether the Midland Health Campus will be a public hospital, or a private hospital that accepts private patients operated by a private corporation under Part IIIA – Private hospitals of the Hospitals and Health Services Act 1927.

11       If the Midland Health Campus is opened as a public hospital it will be run by a new Board.  That Board will be a separate legal entity to that of the existing board of the Swan Districts Hospital.  If it is opened as a private hospital which accepts private patients then the corporation conducting it will be separate.  Either way, the legal entity which will run the Midland Health Campus will be separate to the Board of the Swan Districts Hospital.

These Claims

12       On 28 June 2011 United Voice WA lodged three claims in this Court, being M 33, M 34 and M 35 of 2011. 

13       The allegation made in Claim M 33 of 2011 is that the transfer of certain medical services provided at Fremantle Hospital (which includes Kayeela Hospital) to Fiona Stanley Hospital constitutes both an express and implied breach of clause 11.13 of the 2007 Agreement.

14       The allegation made in Claim M 34 of 2011 is almost identical to that in M 33 of 2011, save that it relates to the transfer of medical services currently provided at Royal Perth Hospital (which includes Shenton Park Rehabilitation Centre) to Fiona Stanley Hospital.

15       The allegation made in claim M 35 of 2011 is that the planned closure of Swan Districts Hospital and the opening of the new Midland Health Campus constitute both an express and implied breach of clause 11.13 of the 2007 Agreement.

16       In each Claim, United Voice WA seeks the following relief:

“(a) An order pursuant to section 83(4) of the Act that the respondent pay a penalty, to be determined by the Court, for the contravention of the Agreement, to be paid to the Applicant;

(b) An order pursuant to section 83(5) of the Act that the respondent be prevented from any further contravention or failure to comply with Clause 11.13 of the Industrial Agreement.  Further particulars will be provided as to the suggested form of such an order prior to the pre-trial conference of this matter.

(c) Any further order that the Court deems fit.”

History of Litigation

17       There is a history of litigation between the parties in relation to the construction of the Fiona Stanley Hospital. 

18       On 19 November 2010, the LHMU lodged Claim M 117 of 2010 with this Court seeking  interim and substantive relief.  The nature of the substantive relief sought in that matter is similar to that which is sought in these matters.  The interim relief sought was an Order, pursuant to subsections 83(5) and 83(7) of the Industrial Relations Act (the IR Act), that pending the outcome of the substantive Claim, the Minister for Health be restrained from entering into any contract with Serco in relation to the Fiona Stanley Hospital. 

19       The application for interim relief was heard on 1 December 2010, and subsequently dismissed on 7 December 2010 for reasons outlined in Liquor Hospitality and Miscellaneous Union, Western Australian Branch v the Minister for Health (2010) 90 WAIG 1868. 

20       The LHMU appealed that decision to the Full Bench of the WAIRC.  That appeal was subsequently dismissed on 11 March 2011 (see Liquor Hospitality and Miscellaneous Union, Western Australian Branch v Minister for Health (2011) 91 WAIG 291). 

21       In dismissing the appeal Her Honour Smith AP, with whom Scott ASC agreed, considered the issue of the privatisation of services at Royal Perth Hospital and Swan Districts Hospital and said at paragraph 85 of the decision of the Full Bench:

“The evidence about the statements Mr Warner is said to have made about what is planned to occur at Royal Perth Hospital is vague and does not without further information, disclose a privatisation or contracting out of the functions or duties of persons whose employment is covered by the Industrial Agreement.  Statements that the Shenton Park Campus will be closed and there will be job losses at the Wellington Street site of Royal Perth Hospital because those services will be transferred to Fiona Stanley Hospital does not establish a contracting out or privatisation of functions and duties of employees at Royal Perth Hospital as the services will in the future be transferred to a separate legal entity, that is to the future board of Fiona Stanley Hospital.”

APPLICATIONS FOR ORDERS

22       On 15 September 2011 the Minister lodged Applications with this Court seeking that these Claims be summarily dismissed because, in each instance, they do not disclose a reasonable cause of action. 

23       United Voice WA opposed the Applications.

24       It is not in issue that this Court has power to dismiss a Claim in a circumstance where the Claim is hopeless or otherwise does not disclose a cause of action. 

25       This Court’s duties in dealing with cases is set out in regulation 5 of the Industrial Magistrates Courts (General Jurisdiction) Regulations 2005 (the Regulations) which provides:

“5. Court’s duties in dealing with cases

(1) A Court is to ensure that cases are dealt with justly.

(2) Ensuring that cases are dealt with justly includes ensuring –

that cases are dealt with efficiently, economically and expeditiously;

so far as is practicable, that the parties are on an equal footing; and

that a Court’s judicial and administrative resources are used as efficiently as possible.”

26       Regulation 7 of the Regulations sets out what this Court may do for the purpose of controlling and managing cases and trials. Those powers are extensive as is evident in sub-regulation 7(1)® which provides that this Court may, in addition to the powers specified, “take any other action or make any other order for the purpose of complying with regulation 5”. 

27       This Court has the power to make the orders sought if it concludes that the Claims are so clearly untenable that they could not possibly succeed. If that circumstance exists then it will be incumbent for this Court to dismiss the Claims so as to avoid further costs and to prevent a waste of the Court’s resources.

28       The power to order summary judgment should be exercised with great care and should not be exercised unless it is clear there is no real question of fact or law to be tried.  A Court at first instance should not risk stifling the development of law by summarily disposing of an action where there is a reasonable possibility that a cause of action does lie.  Only in cases in which it can be seen from the outset that there is no basis for the legal conclusion being contended should summary judgment be entered.

The Minister’s Submissions

29       For the purpose of these Applications the Minister accepts that it can be assumed for current purposes that, as alleged by United Voice WA and in part denied by the Minister, that the Minister is:

“ (a) constructing Fiona Stanley Hospital;

(b) transferring the medical services in question from Royal Perth Hospital and Fremantle Hospital to Fiona Stanley Hospital; and

(c) constructing the Midland Health Campus.”

Decision of the Full Bench

30       The Minister argues that in view of what Her Honour Smith AP, with whom Scott ASC agreed, said at paragraph 85 of the decision of the Full Bench of the WAIRC in Liquor Hospitality and Miscellaneous Union, Western Australian Branch v Minister for Health (supra) the proper interpretation of clause 11.13(b) of the 2007 Agreement is that it prevents the contracting out, or privatisation, at existing hospitals of functions or duties performed by employees of the Respondent at those hospitals.

31       The transfer of medical services from Royal Perth Hospital and Fremantle Hospital to a separate legal entity that is the future Board of Fiona Stanley Hospital cannot be a contracting out or privatisation prohibited by clause 11.13 of the 2007 Agreement.  Similarly, the transfer of services from the Swan Districts Hospital to a separate legal entity, whether it be the future Board of the Midland Health Campus or a private corporation appointed under Part IIIA - Private hospitals of the Hospitals and Health Services Act 1927, cannot be a contracting out or privatisation prohibited by the 2007 Agreement.

32       The Minister contends that irrespective of any evidence that may be lead at trial the primary allegation that there has been a breach of an express term of the 2007 Agreement has no reasonable prospect of success.

Alleged Implied Terms

33       The Minister also says there is no basis for United Voice WA’s contention that there has been a breach of the terms which it says ought to be implied into the 2007 Agreement.  

34       United Voice WA suggests that the following three terms are implied into the 2007 Agreement:

“1) Even if the functions and duties of directly employed workers are transferred to another location, clause 11.13 of the 2007 Agreement will continue to bind the parties.

2) Bargaining would be undertaken in good faith in accordance with the employer’s duties at common law and/or pursuant to section 42B of the Industrial Relations Act.

3)  Where any transfer of functions and duties of directly employed workers would be transferred to another site, they would continue to covered by the 2007 Agreement because they would continue to be directly employed by the Minister, given the prohibition on contracting out or privatisation explicit in clause 11.13 of the 2007 Agreement.”

35       The Minister points out that an industrial agreement is a creature of statute having statutory force. Accordingly, private law importing contractual principles does not apply to it.  The Minister says that given the nature of the industrial agreements and the scheme of the IR Act, terms cannot be implied into the 2007 Agreement.

36       The Minister argues that even if terms could be implied into an industrial agreement, which is denied, the grounds for the implication of terms into the 2007 Agreement, whether based in fact or in law do not exist in any event. 

37       Firstly, with respect to the implication of terms based on fact the Minister says that United Voice WA has failed to satisfy all of the five conditions required (see BP Refinery (Western Port) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266). 

38       Secondly, with respect to the implication of terms based in law the Minister says that such cannot apply to a singular agreement as terms implied in law are implied in all agreements of a particular class, or which answer a particular description (see Byrne v Australian Airline Ltd (1995) 185 CLR 410 at 448).  Further, and in any event, the terms sought to be implied are both unnecessary and inconsistent with the express terms of the 2007 Agreement.

Minister’s Alleged Breach of Fiduciary Duty and Common Law Duty of Good Faith

39       In its submissions in opposition to these Applications, United Voice WA introduced a new and as yet unpleaded proposition, that the 2007 Agreement placed an obligation on the Minister for Health in his incorporated capacity under section 7 of the Hospitals and Health Services Act 1927 to take all reasonable steps to prevent the contracting out of functions and duties covered by clause 11.13(b).  It says that the Minister failed to comply with that obligation and therefore is in breach of the 2007 Agreement. 

40       The Minister says that this ground has no reasonable prospects of success because it is the duty of the State and the Minister for Health in his capacity as a Minster of State, to decide how hospital accommodation and services are to be provided.  A hospital Board cannot, and has no duty to, override a decision of the State as to how hospitals will be organised.  Whatever the knowledge of the Minister in his incorporated capacity, clause 11.13(b) of the 2007 Agreement does not prevent the transfer of medical services from an existing hospital to a new hospital not covered by the Agreement. 

41       Further, and in any event the Minister in his incorporated capacity under section 7 of the Hospitals and Health Services Act 1927 cannot be said to owe a fiduciary duty to employees.

42       The Minister argues also that in any event a claim based on an alleged breach of common law or fiduciary duty is outside this Court’s jurisdiction (refer sections 81A and 81AA of the IR Act). 

43       It is submitted that this new and unpleaded proposition is not reasonably arguable and that United Voice WA should not be given leave to plead it.

United Voice WA’s Submissions

Decision of the Full Bench

44       United Voice WA argues that what Her Honour Smith AP said at paragraph 85 of Liquor Hospitality and Miscellaneous Union, Western Australian Branch v Minister for Health (supra) must be read in its entirety. Her Honour’s remarks in the second sentence of that paragraph must be read in conjunction with what she said in the first sentence concerning the evidence that was then before the Full Bench.  United Voice WA submits that the evidence which is now before this Court, found in the affidavits of Elyane Palmer, identifies specific functions and duties that will be affected by the transfer of services.  The existence of that new evidence has the effect of distinguishing these Claims from the matter decided by the Full Bench because more is now known about the specific duties and functions being transferred to other locations.

45       United Voice WA says that the substance of the Full Bench’s decision in Liquor Hospitality and Miscellaneous Union, Western Australian Branch v Minister for Health (supra) is not at paragraph 85, but rather found at paragraph 76 of the decision where it held that the Claimant failed because it attempted to assert that the Minister for Health, in his capacity as the principal of the contract between the State and Serco in relation to administering services to Fiona Stanley Hospital, should be bound by the Agreement.

46       United Voice WA accepts having regard to the reasons of the Full Bench in Liquor Hospitality and Miscellaneous Union, Western Australian Branch v Minister for Health (supra) that the Minister’s conduct in relation to which administrative functions are implemented at Fiona Stanley Hospital has no direct bearing on United Voice WA’s ability to enforce the 2007 Agreement at Royal Perth Hospital, Fremantle Hospital and Swan Districts Hospital.   However, that is not what is being put in these matters.  These matters are different in that there is, in each instance, an allegation of express and implied breach of the 2007 Agreement.

47       With respect to the express breach United Voice WA says that the evidence dictates that the functions and duties currently undertaken by directly employed workers will be contracted to a private entity.  The functions and duties covered by the 2007 Agreement have not disappeared.  They have been transferred.  They have been contracted out or privatised and the Minister for Health has allowed it to happen.  The breach could not be clearer.

Alleged Implied Terms

48       Turning to the alleged breach of implied terms United Voice WA says that those terms are capable of being read into the 2007 Agreement.  That is particularly so having regard to the agreement reached in 2010 extending the terms of the 2007 Agreement. 

49       Although it is accepted that the decision Byrne v Australian Airline Ltd (supra) appeared to reject the notion that one could treat a provision of an agreement as a crystallised custom and imply a term to its effect into a contract of employment, the facts of Byrne v Australian Airline Ltd (supra) were different.  Further, it was accepted in that case that it was possible to imply a term into a contract of employment where it was reasonable to assume the parties contracted on the basis of custom.

50       More specifically, with respect to the first implied term United Voice WA says that it is quite clear that the 2007 Agreement would be continue to bind directly employed workers irrespective of the location in which they work.

51       With respect to the second implied term United Voice WA says that it was within the contemplation of the parties to the 2007 Agreement that the functions and duties captured by clause 11.13(b) were to be transferred to the private sector.  Therefore even if the Minister was not acting in his capacity as employer when transferring functions and duties to a private contractor, his knowledge of the transfer gave rise to an obligation to disclose in accordance with section 42B of the IR Act.  Instead, the Minister agreed to terms knowing full well that functions and duties covered by the 2007 Agreement were going to be privatised.

52       As to the final implied term, United Voice WA says that it is necessary to ensure that the Minister lives up to his obligations agreed under the 2007 Agreement.  Without the existence of the implied term nothing would prevent the Minister from creating mirror hospitals and transferring functions, thereby avoiding obligations created by the Agreement. 

53       United Voice WA submits that where existing functions and duties previously covered by the 2007 Agreement are being relocated elsewhere but otherwise remain unchanged, the terms of the 2007 Agreement ought to prevail as it applies to current directly employed workers performing their functions and duties.

Minister’s Alleged Breach of Fiduciary Duty and Common Law Duty of Good Faith

54       The final ground upon which United Voice WA resists these Applications is the yet unpleaded proposition that there is an obligation on the part of the Minister to take all reasonable steps to prevent the contracting out of functions and duties covered by clause 11.13(b) of the 2007 Agreement.

55       The aim of 2007 Agreement is to enhance job security as is specifically recognised in clause 11.13(a) of the 2007 Agreement.  Clause 11.13 of the 2007 Agreement created an express obligation to protect employees from job insecurity.  Clause 11.13(b) obliged the Minister to take all reasonable steps to prevent functions and duties being contracted out.  A failure to take all reasonable steps to prevent contracting out amounts to a failure to comply with the 2007 Agreement which “triggers” section 83 of the IR Act.

56       United Voice WA seeks to amend the pleadings to incorporate this fresh ground and says that the ground has sufficient merit so as to defeat the Minister’s contention that it has no reasonable cause of action.

CONCLUSIONS

57       The issue to be determined with respect to each of these applications is whether the Minister has succeeded in establishing that there is no basis for the legal conclusion contended by United Voice WA and that in each instance the Claim is completely untenable.

58       The power to order summary judgment must be exercised with great care and should never be exercised unless it is clear that there is no real issue of fact or law to be tried.

59       For the purpose of these Applications there is no dispute as to the facts.  The facts are assumed on the basis most favourable to United Voice WA. 

60       Having regard to the undisputed facts, are the Claims tenable? The answer to that question is no.

61       The proper interpretation of clause 11.13(b) of the 2007 Agreement is that it prevents the contracting out or privatisation, at existing hospitals, of functions or duties performed by employees of the Minister in his incorporated capacity at those hospitals.

62       The transfer of medical services from Royal Perth Hospital and Fremantle Hospital to a separate legal entity that is the future Board of Fiona Stanley Hospital is not and cannot be a contracting out or privatisation prohibited by clause 11.13 of the 2007 Agreement.  Her Honour Smith AP (with whom Scott ASC agreed) made that explicitly clear in Liquor Hospitality and Miscellaneous Union, Western Australian Branch v Minister for Health (supra).

63       The same reasoning applies with respect to the transfer of services from Swan Districts Hospital to Midland Health Campus.  Irrespective of whether the services are to be transferred to a future board of the Midland Health Campus or a private corporation, the transfer will be to another separate legal entity.

64       In my view Her Honour Smith AP’s comments are unequivocal.  They cause insurmountable difficulty for United Voice WA in these Claims. 

65       Clause 11.13(b) of the 2007 Agreement does not apply to the transfer of services to a separate legal entity.  It only prevents the contracting out of or privatisation at existing hospitals, of functions or duties performed by employees at those hospitals.

66       In view of what was said by the Full Bench in Liquor Hospitality and Miscellaneous Union, Western Australian Branch v Minister for Health (supra) United Voice WA cannot succeed and that is irrespective of any evidence that it might lead at trial.

67       I now move to consider the alleged existence of implied terms in the 2007 Agreement.  The existence of alleged implied terms was not raised before the Full Bench and therefore was not considered.

68       Industrial agreements exist independently of contract and operate with statutory force (see Amcor Ltd v Construction, Forestry, Mining and Energy Union and Others (2005) 222 CLR 241). Private law contractual principles do not apply to them (see Actew Corporation Ltd v Pangallo (2002) 127 CLR 1).  I accept the Minister’s submission that given the statutory nature of industrial agreements and the scheme of the IR Act, terms cannot be implied into industrial agreements on the basis of fact or law. 

69       Even if I am wrong in that regard, I find that in these matters the necessary foundation for the implication of the alleged terms based either in fact, or law or a combination of both does not exist.  Further, there is nothing in the evidence which suggests that the terms should be implied by custom as permitted by Byrne v Australian Airline Ltd (supra). 

70       United Voice WA alleges that the first and third terms are to be implied on the basis of fact and that the second term is to be implied on the basis of both fact and law.

71       If a term is to be implied on the basis of fact then all five of the following conditions must be satisfied:

“(a) the term must be reasonable and equitable;

(b) the term must be necessary to give business efficacy to the agreement, so that no term will be implied if the agreement is effective without it;

 (c) the term must be so obvious that “it goes without saying”;

 (d) the term must be capable of clear expression; and

 (e) the term must not contradict any express term of the agreement.”

(See BP Refinery (Western Port) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266 at 283 and Farrell v Royal King’s Park Tennis Club (INC) [2006] WASC 51.)

72       The first alleged implied term is:

“Even if the functions and duties of directly employed workers are transferred to another location, clause 11.13 of the 2007 Agreement will continue to bind the parties.”

73       It appears that United Voice WA is attempting to expand the prohibition on contracting out or privatisation at existing hospitals to include the transfer of medical services to new hospitals.  That implied term is not so obvious that it goes without saying.  It cannot be said that the Minister would have consented to such a term that would remove from the State and the Minister the option of having some or all of the services transferred to new hospitals whether it be public or private.  Indeed, the Minister’s involvement in the creation of new hospitals and the transfer of services contra-indicates that.

74       Further, the alleged implied term is not necessary to give business efficacy to the 2007 Agreement.  The 2007 Agreement is a comprehensive agreement effective without the alleged first implied term.  Clause 11.13 prohibits the contracting out or privatisation of the functions or duties performed by employees covered by the 2007 Agreement at those existing hospitals.  The Full Bench of the WAIRC has clearly found that the express terms of the 2007 Agreement do not apply to a transfer of services to separate legal entities.  The alleged implied first term would therefore be in conflict with the express terms of the 2007 Agreement as construed by the Full Bench.   It is impermissible to imply a term which is in conflict with the express terms of the Agreement.

75       The third alleged implied term is:

“Where any transfer of functions and duties of directly employed workers would be transferred to another site, they would continue to covered by the 2007 Agreement because they would continue to be directly employed by the Minister, given the prohibition on contracting out or privatisation explicit in clause 11.13 of the 2007 Agreement.”

76       The same reasoning as is discussed in paragraph 74 above also applies to this third alleged implied term.  Like the first alleged implied term it appears to attempt to contradict the legal position that a transfer of services to a new hospital (i.e. a separate legal entity) is not covered by the 2007 Agreement.  It cannot be said that the implied term goes without saying.  Given the current situation with respect to the creation of new hospitals it could not possibly be reasonably argued that the Minister has consented to the term.  In any event the 2007 Agreement is effective without it. 

77       Neither the first or third alleged implied terms meet the requirements for the implication of a term based on fact.

78       The second alleged implied term is:

“Bargaining would be undertaken in good faith in accordance with the employer’s duties at common law and/or pursuant to section 42B of the Industrial Relations Act.”

79       This second alleged implied term which is said to be implied in law and fact, is in my view difficult to understand.  If it relates to the conduct of the Minister with respect to the 2010 interim arrangement I fail to see how that has any bearing on the 2007 Agreement.  I do not know what the alleged bargaining relates to.  If it is meant to relate to future bargaining then it will be of no assistance.  In any event there is a statutory scheme for good faith in bargaining.  There is no need for the alleged implied term in those circumstances.  The term is not so obvious that it goes without saying.  In so far as its implication is based in law its necessity (being one of the prerequisites required) has not been demonstrated.  There is no reasonable argument for its implication.

80       Finally, in dealing with the unpleaded proposition made by United Voice WA that the 2007 Agreement puts an obligation on the Minister to take all reasonable steps to prevent the contracting out of functions and duties covered by clause 11.13(b) it is obvious that whatever the knowledge of the Minister (in his incorporated capacity under section 7 of the Hospitals and Health Services Act 1927) was in 2009, that knowledge does not prevent the transfer of medical services from an existing hospital to a new hospital. 

81       A hospital Board has no duty to override a decision of the State or the Minister for Health as to how hospitals will be organised (refer section 18 of the Hospitals and Health Services Act 1927).  Even if it could be said that the Minister owed fiduciary duty to employees (which I do not accept) it cannot alter the meaning of clause 11.13(b) of the 2007 Agreement, nor the statutory provisions of the Hospitals and Health Services Act 1927, as has been found by the Full Bench of the WAIRC.

82       The Minister’s further submission is that sections 81A and 81AA of the IR Act prevent this Court from making findings that a party has an obligation either at common law or by fiduciary relationship in relation to the enforcement of an industrial agreement under section 83 of the IR Act. 

83       In view of the reasons already given it will not be necessary for me at this time to determine whether sections 81A and 81AA of the IR Act prevent this Court from making findings relating to the alleged obligations of the Minister.  I observe however that this Court does not have an equitable jurisdiction.  Insofar as United Voice WA argues its case in equity in this jurisdiction, it cannot succeed.

84       The new as yet unpleaded proposition is not reasonably arguable.  I would not give leave to plead it.

85       The difficulties with United Voice WA’s Claims are in my view, insurmountable.  There is no basis for the legal conclusions being contended. There is in each instance no reasonable cause of action. 

86       To allow these Claims to proceed would not be in keeping with the requirements of regulation 5 of the Regulations.  It follows that each of the Applications succeed and Claims M 33, M 34 and M 35 of 2011 will be dismissed.

G. CICCHINI

INDUSTRIAL MAGISTRATE