2012 WAIRC 00319
APPEAL AGAINST A DECISION OF THE INDUSTRIAL MAGISTRATES COURT GIVEN ON 23 NOVEMBER 2011 IN CLAIM NOS. M 33, M 34 AND M 35 OF 2011

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

FULL BENCH

CITATION : 2012 WAIRC 00319

CORAM
: THE HONOURABLE J H SMITH, ACTING PRESIDENT
COMMISSIONER S J KENNER
COMMISSIONER J L HARRISON

HEARD
:
TUESDAY, 17 APRIL 2012

DELIVERED : THURSDAY, 24 MAY 2012

FILE NO. : FBA 8 OF 2011

BETWEEN
:
UNITED VOICE WA
Appellant

AND

THE MINISTER FOR HEALTH
Respondent

ON APPEAL FROM:

JURISDICTION : WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT
CORAM : INDUSTRIAL MAGISTRATE G CICCHINI
CITATION : [2011] WAIRC 01065; (2011) 91 WAIG 2337
FILE NO : M 33 OF 2011, M 34 OF 2011 AND M 35 OF 2011

CatchWords : Industrial Law (WA) - claims dismissed on grounds that they did not disclose a reasonable cause of action - interpretation of industrial agreement - cl 11.13 of the WA Health - LHMU - Support Workers Industrial Agreement 2007 prohibits contracting out and privatisation - no arguable case before the Industrial Magistrate on which a finding could be made that the functions and duties performed at hospitals covered by the agreement had been, or are intended to be contracted out, or privatised, within the meaning of the provisions of the industrial agreement - principles to be applied when determining a summary dismissal application considered.
Legislation : Industrial Relations Act 1979 (WA) s 7, s 41, s 41(4), s 41(6), s 41(7), s 44, s 44(6a), s 82, s 83, s 83(4), s 83(5), s 83(7), s 84(2)
Hospitals and Health Services Act 1927 (WA) s 7, s 7(1), s 7(2), s 15, s 15(3), s 18, s 18(1)(a)(i), s 19, Part IIIA
Workplace Relations Act 1996 (Cth)
Result : Appeal dismissed
REPRESENTATION:
Counsel:
APPELLANT : MR T J HAMMOND
RESPONDENT : MR G T W TANNIN SC AND MR R BATHURST
Solicitors:
RESPONDENT : STATE SOLICITOR FOR WESTERN AUSTRALIA

Case(s) referred to in reasons:
Actew Corporation Ltd v Pangallo [2002] FCAFC 325; (2002) 127 FCR 1
AK v Western Australia (2008) 232 CLR 438
Amcor Ltd v Construction, Forestry, Mining and Energy Union [2005] HCA 10; (2005) 222 CLR 241
Beaudesert Shire Council v Smith (1966) 120 CLR 145; [1966] ALR 1175
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission [2001] HCA 16; (2001) 203 CLR 645
Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87
General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 124
George A Bond & Co Ltd (in liquidation) v McKenzie [1929] AR (NSW) 498
Hospitals Contribution Fund of Australia v Hunt (1983) 44 ALR 365
Kucks v CSR Ltd (1996) 66 IR 182
Liquor Hospitality and Miscellaneous Union, Western Australian Branch v The Minister for Health [2010] WAIRC 01210; (2010) 90 WAIG 1868
Liquor, Hospitality and Miscellaneous Union, West Australian Branch v The Minister for Health [2011] WAIRC 00192; (2011) 91 WAIG 291
Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014
Robe River Iron Associates v Amalgamated Metal Workers and Shipwrights Union (1987) 67 WAIG 1097
Talbot & Oliver (a firm) v Witcombe [2006] WASCA 87; (2006) 32 WAR 179
United Firefighters' Union of Australia v Metropolitan Fire and Emergency Services Board [2003] FCA 480; (2003) 198 ALR 466
Case(s) also cited:
Bride v Peat Marwick Mitchell [1989] WAR 383
Liquor Hospitality and Miscellaneous Union, Western Australian Branch v Minister for Education [2010] WAIRC 00305; (2010) 90 WAIG 1542
Metwally v University of Wollongong (1985) 60 ALR 68
Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355
Quinlivan v Austal Ships Pty Ltd (2003) 83 WAIG 3684
United Voice WA v Minister for Health [2011] WAIRC 01065; (2011) 91 WAIG 2337

Reasons for Decision
SMITH AP:
1 This is an appeal instituted under s 84(2) of the Industrial Relations Act 1979 (WA) (the Act). The appeal is against orders of the Industrial Magistrates Court made on 23 November 2011 dismissing claims M 33 of 2011, M 34 of 2011 and M 35 of 2011.
The applications before the Industrial Magistrates Court
2 Each of the claims are brought under s 83 of the Act. In each application, the appellant alleges that the respondent breached cl 11.13 of the WA Health – LHMU – Support Workers Industrial Agreement 2007 (2007 industrial agreement) and seeks that the respondent pay a penalty to the appellant pursuant to s 83(4) of the Act. The appellant also seeks an order pursuant to s 83(5) of the Act, that the respondent be prevented from any further contravention or failure to comply with cl 11.13 of the 2007 industrial agreement.
3 Clause 11.13 of the 2007 industrial agreement 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.
(c) Subject to successfully negotiating an efficiency and quality agreement between the parties to this Agreement, the Employer will not re-tender contracts for service currently in place which can be carried out by directly employed workers.
(d) Negotiations to successfully return in house those functions or duties currently out-sourced will include the following factors;
(i) Whether the product delivered under the contract for services meets the expected outcomes in terms of efficiency, quality and safety;
(ii) Public interest considerations such as quality of services and the safety of patients;
(iii) Cost, in particular the wages differential (if any) between the rates of pay for employees current contracts and directly employed employees; and
(iv) The impact the contract has on the job security and career development for employees subject to this agreement.
(e) Any agreement reached between the parties as a result of this process will be written up into a document and signed by both parties. The parties agree to be bound by the agreement as recorded in this document. The document will then be binding and enforceable between the parities [sic].
Background
4 By force of various statutory instruments made under the provisions of the Hospitals and Health Services Act 1927 (WA) the respondent to this appeal is deemed to be the board of the Peel Health Services Board, the Metropolitan Health Service Board and the WA Country Health Service. As the board of these health services the respondent is responsible for the management and control of various public hospitals, including Royal Perth Hospital, Fremantle Hospital, Kaleeya Hospital and Swan District Hospital; and in this capacity is a party to the 2007 industrial agreement. In essence, the claims before the Industrial Magistrate allege the respondent breached cl 11.13(b) of the 2007 industrial agreement by contracting out or privatising services at those hospitals, by transferring services from Royal Perth Hospital and Fremantle Hospital and Health Service to Fiona Stanley Hospital and from Swan District Hospital to the Midland Health Campus.
5 The 2007 industrial agreement was entered into by the appellant when it was then known as the Liquor, Hospitality and Miscellaneous Union, Western Australian Branch. Pursuant to cl 4.1(a)(ii) of the 2007 industrial agreement, one of its aims is to 'enable the parties to develop and implement strategies which enhance job satisfaction, security and remuneration'.
6 On 31 July 2010, the term of the 2007 industrial agreement expired. However, pursuant to s 41(6) of the Act, the 2007 industrial agreement continues in force until a new agreement or award is made in substitution for the industrial agreement, or a party retires upon giving 30 days' notice under s 41(7) of the Act.
7 In 2010, the parties entered into negotiations with a view to entering into an industrial agreement to replace the 2007 industrial agreement. Whilst the parties could not agree on the terms of a replacement industrial agreement, following a series of compulsory conferences convened by the Commission, the parties agreed to an order being made under s 44 of the Act. Under s 44(6a)(b) of the Act the Commission is empowered to make an interim order to vary the terms of an award or industrial agreement.
8 The agreement to consent to an order was reduced to writing in a document. The document was executed by the appellant and the respondent's representative on 24 October 2010 and titled 'Heads of Agreement'. The clauses of the Heads of Agreement relevant to this appeal are as follows:
1. WA Health - LHMU - Support Workers Industrial Agreement 2007 continues in its current form (an expired industrial agreement which continues to apply unless cancelled or replaced). The Director General of Health has advised the LHMU in writing that the Department of Health has no plans to withdraw from the 2007 Industrial Agreement while the order cited at paragraph 2 is in force.
2. The parties will consent to an Order being made under Section 44 which is limited to setting out alternative wage rates, for prescribed classifications, to be paid to employees of the Minister for Health in his incorporated capacity under Section 7 of the Hospitals and Health Services Act 1927 (WA) as the hospitals formerly comprised in the Metropolitan Health Service Board, the Peel Health Services Board and the WA Country Health Service and of the Western Australian Drug and Alcohol Authority and whose contracts of employment are regulated by the Hospital Workers (Government) Award No. 21 of 1966.
…
4. The parties agree that the percentage wage increases will likewise apply to wage rate related allowances. Non-wage related allowances whether in the Award or in the Agreement will be increased in accordance with established custom and practice.
5. The parties will consent to amendment of the Hospital Workers (Government) Award No. 21 of 1966 to add classifications currently only prescribed in the expired industrial agreement.
6. The parties agree to make no further claims until after 31 July 2012.
7. The parties agreed to commence negotiations for an Industrial Agreement by no later than 1 February 2012.
9 On the same day the Heads of Agreement was executed, an order was made by the Commission in C 41 of 2010 ([2010] WAIRC 01064). The order varied the rates of pay in the Hospital Workers (Government) Award No 21 of 1966 to provide for increments payable on or between 24 October 2010 to 31 July 2011 and from 1 August 2011 to 31 July 2012 and thereafter. Relevantly, the terms of the order did not vary the provisions of the 2007 industrial agreement.
10 When Fiona Stanley Hospital is completed in 2014 it will be operated by a new hospital board to be established under s 15(3) of the Hospitals and Health Services Act. It will be independent of other existing hospital boards, in particular the Metropolitan Health Service Board. The board of Fiona Stanley Hospital will be responsible for employing employees to perform various functions not already contracted out. The State has announced that some services which are currently performed at Royal Perth Hospital, Fremantle Hospital and Kaleeya Hospital will be transferred to Fiona Stanley Hospital. This will result in job losses at Royal Perth Hospital and at Fremantle Hospital and Health Service. After the Heads of Agreement was signed by the parties and the order in C 41 of 2010 was made, in 2011 the State entered into a contract with Serco Australia Pty Ltd (Serco) for the provision of facilities management services at Fiona Stanley Hospital. It is anticipated that a substantial number of the functions and duties of persons who will be engaged by Serco will be undertaken by persons who are eligible to be members of the appellant.
11 In 2011, the State also announced the closure of Swan District Hospital and the opening of a new hospital to be known as the Midland Health Campus. The Midland Health Campus is scheduled to open in 2015. It will be considerably larger than Swan District Hospital and will provide additional services to those currently available at Swan District Hospital. At the time the application to dismiss was heard by the Industrial Magistrate the State had not made a decision as to whether the Midland Health Campus will be a public hospital or a private hospital that accepts public patients operated by a private corporation under Part IIIA – Private hospitals of the Hospitals and Health Services Act. If the Midland Health Campus is opened as a public hospital it will be operated by a new board. That board will be a separate legal entity to the existing board of the Metropolitan Health Service Board which operates Swan District Hospital. If the Midland Health Campus is opened as a private hospital which accepts public patients, then the corporation conducting it will be a separate organisation.
The originating claims
12 To properly consider merits of the appellant's grounds of appeal, it is necessary to review the basis of the appellant's case as set out in its pleadings.
(a) M 33 of 2011
13 In this claim an allegation is made that the transfer of services from Fremantle Hospital and Kaleeya Hospital, which form Fremantle Hospital and Health Service, to Fiona Stanley Hospital, constitutes a breach of cl 11.13 of the 2007 industrial agreement. In the statement of claim, the appellant states in paragraph 7 that the Heads of Agreement extended the lifetime of the 2007 industrial agreement for a further three years on 24 October 2010. It is then pleaded in paragraph 8 that, as pleaded in paragraph 7, pursuant to the Act and cl 6 of the 2007 industrial agreement, the 2007 industrial agreement continues in force beyond 2013, unless cancelled or replaced. The appellant also pleads in paragraph 12:
The Respondent is transferring and relocating to FSH some public hospital and health services currently provided at FHHS.
PARTICULARS
(a) FHHS will be reduced from its current allocation of 552 to 339 beds.
(b) FH will no longer operate as a tertiary facility.
(c) FH will no longer provide emergency services.
(d) The diving and hyperbaric medicine until [sic] will be transferred to FSH.
14 In paragraph 13 it is stated by virtue of the matters pleaded in paragraph 12, the functions and duties currently being performed by directly employed workers at Fremantle Hospital and Health Service will be contracted out and/or privatised.
15 Paragraph 14 states that as a result of the facts pleaded at paragraph 13, the functions or duties associated with the matters pleaded at paragraph 12 and currently performed by direct employees at Fremantle Hospital and Health Service will be transferred to a private contractor.
16 Paragraph 15 pleads as a consequence of the matters pleaded, the respondent is in breach of cl 11.13 of the 2007 industrial agreement.
17 In paragraph 16 the appellant pleads in the alternative, the respondent is in breach of the following implied terms of the 2007 industrial agreement:
(a) It was an implied term of the Agreement that even if the functions and duties of directly employed workers were transferred to another location, clause 11.13 of the Agreement would continue to bind the parties.
(b) It was an implied term of the Agreement that where existing positions of directly employed workers are made redundant, but the functions and duties are preserved, that clause 11.13 of the Agreement would continue to bind the parties.
(c) By virtue of the conduct of the Respondent as pleaded at paragraph 13 of the Statement of Claim, the Respondent has demonstrated a failure to comply with the meaning and intent of the clause, which precludes the Respondent from contracting or privatising the functions or duties currently performed by directly employed workers.
18 During the course of proceedings before the Industrial Magistrate the implied terms pleaded in paragraph (16)(b) and (16)(c) of the statement of claim were abandoned and the following alleged implied terms were raised in their place:
(b) 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 Act;
(c) Where a transfer of functions and duties was to occur to another (work) site, directly employed workers would continue to be covered by the Agreement, as they would continue to be directly employed by the Minister, given the prohibition of contracting out functions and duties in cl 11.13 of the 2007 Agreement.
(b) M 34 of 2011
19 Like M 33 of 2011, the appellant pleads in M 34 of 2011 the facts and issues which it seeks to raise in respect of the transfer of services from Royal Perth Hospital to Fiona Stanley Hospital. The issues which are pleaded in respect of the transfer of services between these two hospitals are substantially the same as the issues raised in relation to Fremantle Hospital and Health Service. The particulars of the services which are to be transferred from Royal Perth Hospital to Fiona Stanley Hospital are set out in paragraph 12 of the statement of claim as follows:
The Respondent is transferring and relocating to FSH some public hospital and health services currently provided at RPH.
PARTICULARS
(a) The RPH - Wellington Street Campus will be reduced from its current allocation of 662 beds to a 410 bed tertiary hospital.
(b) The RPH - Shenton Park Campus, which currently has 208 beds allocated to it, will be closed.
(c) The State Rehabilitation Unit at the Shenton Park Campus will be transferred to FSH.
(d) Further particulars will be provided following discovery and/or the provision of interrogatories by the Respondent.
(c) M 35 of 2011
20 This originating claim in M 35 of 2011 also sets out the appellant's allegations of what it says is a breach of the 2007 industrial agreement in respect of the transfer of services from Swan District Hospital to the Midland Health Campus. Whilst the issues raised are substantially the same, the particulars of the services are different to M 33 of 2011 and M 34 of 2011 in that Swan District Hospital is to be closed in its entirety and all of the services which are currently being provided by that hospital will be transferred to the Midland Health Campus. In addition, it is not known whether the hospital will be established as a public hospital or a private hospital. However, it is pleaded in paragraph 13 of the statement of claim, that on 27 January 2011 the respondent announced that Ramsay Health Care Ltd and St John of God Health Care Inc were shortlisted as preferred providers of services for the Midland Health Campus.
History of litigation
21 This is the second appeal which comes before the Full Bench which concerns the transfer of services from the Metropolitan Health Service Board to Fiona Stanley Hospital.
22 On 19 October 2010, the Liquor, Hospitality and Miscellaneous Union, Western Australian Branch filed claim M 117 of 2010 in the Industrial Magistrates Court seeking interim and substantive relief. The interim relief sought was an order pursuant to s 83(5) and s 83(7) of the Act for orders restraining the Minister for Health from entering into a contract with Serco in relation to Fiona Stanley Hospital. The application was dismissed by the Industrial Magistrate: Liquor Hospitality and Miscellaneous Union, Western Australian Branch v The Minister for Health [2010] WAIRC 01210; (2010) 90 WAIG 1868. The order dismissing the claim was appealed to the Full Bench and subsequently dismissed on 11 March 2011: Liquor, Hospitality and Miscellaneous Union, West Australian Branch v The Minister for Health [2011] WAIRC 00192; (2011) 91 WAIG 291 (Fiona Stanley Hospital [No 1]).
The orders the subject of this appeal
23 On 15 September 2011, the respondent filed applications in the Industrial Magistrates Court seeking orders that each claim be summarily dismissed because, in each instance, the claims did not disclose a reasonable cause of action. The appellant opposed the applications.
24 After hearing the parties, the Industrial Magistrate found that the claims put forward by the appellant were not tenable.
25 For the purposes of the applications to summarily dismiss the claims, the respondent put forward a submission to the Industrial Magistrate that the following facts must be assumed:
(a) The respondent (that is, the Minister for Health in his incorporated capacity under s 7 of the Hospitals and Health Services Act) is constructing Fiona Stanley Hospital (which is denied);
(b) The respondent is transferring the medical services in question from Royal Perth Hospital, Fremantle Hospital and Kaleeya Hospital to Fiona Stanley Hospital (which is denied);
(c) The functions or duties performed by employees covered by the 2007 industrial agreement at Royal Perth Hospital, Fremantle Hospital and Kaleeya Hospital (for example, cleaning and gardening) will be performed by employees of Serco Australia Pty Ltd at Fiona Stanley Hospital when it opens in 2014 (which is admitted);
(d) The respondent is constructing the Midland Health Campus (which is denied);
(e) The Midland Health Campus will be operated by a private corporation who will employ all the staff at the hospital (a matter which has not yet been decided); and
(f) All medical services provided at Swan District Hospital will in the future be provided at the Midland Health Campus (which is admitted).
The Industrial Magistrate's reasons for decision
26 After setting out the submissions made on behalf of the parties, the Industrial Magistrate made the following findings:
(a) The issue to be determined with respect to each of the applications is whether the respondent has succeeded in establishing that there is no basis for the legal conclusion contended by the appellant and that in each instance the claim is completely untenable.
(b) The power to order summary judgment must be exercised with due care and should never be exercised unless it is clear that there is no real issue of fact or law to be tried.
(c) There is no dispute as to the facts and the facts are assumed on the basis most favourable to the appellant.
(d) The proper interpretation of cl 11.13(b) of the 2007 industrial agreement is that it prevents the contracting out or privatisation, at existing hospitals, of functions or duties performed by employees of the respondent in his incorporated capacity at those hospitals.
(e) 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 cl 11.13 of the 2007 industrial agreement: Fiona Stanley Hospital [No 1] (Smith AP, with whom Scott ASC agreed) [85].
(f) The same reasoning applies with respect to the transfer of services from Swan District Hospital to the 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.
(g) Clause 11.13(b) of the 2007 industrial agreement does not apply to the transfer of services to a separate legal entity. It only prevents the contracting out, or privatisation at existing hospitals, of functions or duties performed by employees at those hospitals.
(h) Implied terms cannot be implied into industrial agreements on the basis of fact or law. Industrial agreements exist independently of contract and operate with statutory force: Amcor Ltd v Construction, Forestry, Mining and Energy Union [2005] HCA 10; (2005) 222 CLR 241. Private law contractual principles do not apply to them: Actew Corporation Ltd v Pangallo [2002] FCAFC 325; (2002) 127 FCR 1.
(i) Even if terms can be implied into an industrial agreement, based either in fact or law, when regard is had to all five of the conditions set out in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 (283), the terms sought to be applied by United Voice WA do not satisfy these conditions.
(i) The first alleged 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. The Minister's involvement in the creation of new hospitals and the transfer of services contra-indicates that. Nor is the alleged implied term necessary to give business efficacy to the 2007 industrial agreement. It is a comprehensive agreement effective without the alleged first implied term. The Full Bench in Fiona Stanley Hospital [No 1] clearly found that the express terms of the 2007 industrial agreement do not apply to a transfer of services to separate legal entities. Consequently, the alleged implied first term would be in conflict with the express terms of the 2007 industrial agreement. It is impermissible to imply a term which is in conflict with the express terms of an agreement.
(ii) Like the first alleged implied term, the third alleged implied term appears to attempt to contradict the legal position that a transfer of services to a new separate legal entity is not covered by the 2007 industrial 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 industrial agreement is effective without it.
(iii) The second alleged implied term is difficult to understand. If it relates to the conduct of the Minister with respect to the 2010 interim arrangement it cannot be seen how it had any bearing on the 2007 industrial agreement. However, what the alleged bargaining relates to is not discernible. In any event, there is a statutory scheme for good faith in bargaining. There is no need for the alleged implied term in these circumstances. The term is not so obvious that it goes without saying. In addition, insofar as its implication is based in law, its necessity has not been demonstrated.
27 When the application to dismiss the claims was heard by the Industrial Magistrate the appellant put forward an unpleaded proposition that the 2007 industrial agreement placed an obligation on the Minister to take all reasonable steps to prevent the contracting out of functions and duties covered by cl 11.13(b). This argument was also rejected by the Industrial Magistrate. He found that whatever the knowledge of the Minister in his incorporated capacity under s 7 of the Hospitals and Health Services Act was in 2009, that knowledge did not prevent the transfer of medical services from an existing hospital to a new hospital. In particular, the Industrial Magistrate found:
(a) 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: s 18 of the Hospitals and Health Services Act; and
(b) Even if it could be said that the Minister owed a fiduciary duty to employees it could not alter the meaning of cl 11.13(b) of the 2007 industrial agreement, nor the statutory provisions of the Hospitals and Health Services Act.
28 In conclusion, the Industrial Magistrate found the difficulties with the appellant's claims were insurmountable and there was no basis for the legal conclusions being contended, and in each instance, no reasonable cause of action.
The evidence
29 The evidence before the Industrial Magistrate was in affidavit form. When the application for summary dismissal was heard, neither party sought to cross-examine the deponents of the affidavits. The affidavits were made by:
(a) Carolyn Smith, the Assistant Secretary of the appellant;
(b) Elyane Palmer, Team Lead – Industrial for the appellant;
(c) Robert Bathurst, a solicitor employed in the Office of the State Solicitor for Western Australia who was assisting in the conduct of the claim on behalf of the respondent; and
(d) Marshall Kingsley Warner, the Director, Health Industrial Relations Service in the Western Australian Department of Health.
(a) Ms Smith's affidavit evidence
30 In Ms Smith's affidavit made on 26 October 2011 she sets out the history of the making of a number of industrial instruments from 2002 until 2007 which were made between the parties to this appeal. These industrial instruments contained anti-privatisation and contracting out provisions. The first of these industrial instruments was negotiated and certified pursuant to the provisions of the Workplace Relations Act 1996 (Cth) and the later instruments were registered under the provisions of the Act. Prior to the first agreement being made in 2002, privatisation and outsourcing of hospital services had occurred in public hospitals. A change in government at the State level in 2001 enabled the appellant to address this issue. From 2001 to 2010 all services that had been privatised or outsourced in public hospitals were brought back in-house, except for the contracts which had been entered into at the Joondalup and Peel Health Campuses where whole hospitals had been privatised on 20-year contracts. These included cleaning and catering at Royal Perth Hospital (two separate contracts), non-ward cleaning at Fremantle Hospital, support services (including cleaning, catering, orderly services and sterilisation services) at Swan District Hospital and Bentley Hospital.
31 Between 27 May 2010 and 9 September 2010, when the parties began negotiating for a replacement industrial agreement to the 2007 industrial agreement, the issue of privatisation and contracting out of functions and duties was discussed at some length. During those meetings Mr Warner told Ms Smith on a number of occasions that the respondent was seeking to expand its ability under cl 11.2 of the 2007 industrial agreement, to use fixed-term contracts in place of permanent employment contracts at Royal Perth Hospital and Swan District Hospital, as there was an intent to privatise services. Mr Warner indicated to Ms Smith that it did not make sense to offer permanent employment where jobs were going to be lost. During these meetings Mr Warner was asked to identify which services were to be privatised. In response, Mr Warner said that the Shenton Park Campus of Royal Perth Hospital would be closed and that a number of positions available at the Wellington Street Campus would be reduced because those functions and duties were being transferred to Fiona Stanley Hospital. He also said that Swan District Hospital would be closed and its services (and accordingly the functions and duties of the appellant's members employed there) would be transferred to the Midland Health Campus.
32 During the negotiations for a replacement agreement in 2010, the parties discussed proposals put forward on behalf of the respondent for a replacement industrial agreement to:
(a) delete cl 11.13; or
(b) retain cl 11.13, with the scope of the clause restricted to exclude the operation of the clause in connection with the construction and/or operations of all or part of the Midland Health Campus (replacing Swan District Hospital), the State Rehabilitation Centre (replacing Royal Perth Hospital – Shenton Park Campus), a new children's hospital (replacing Princess Margaret Hospital) and Fiona Stanley Hospital.
However, negotiations for a replacement agreement failed and on 24 October 2010 the parties signed the Heads of Agreement which led to the consent order being made by the Commission in C 41 of 2010.
(b) Ms Palmer's affidavit evidence
33 Ms Palmer made two affidavits on 30 October 2011.
34 In Ms Palmer's first affidavit, she sets out in substantial detail the services and functions that are to be transferred from Royal Perth Hospital and Fremantle Hospital and Health Service to Fiona Stanley Hospital. Her evidence is drawn from a number of documents that emanated from representatives of the State that contain information that the soft facilities management services to be transferred include patient catering services, linen, cleaning, internal and external transport services, sterilisation services and ground maintenance. These duties and functions are currently performed at Royal Perth Hospital and Fremantle Hospital and Health Service by directly employed workers employed pursuant to the 2007 industrial agreement.
35 In July 2011, the Department of Health, South Metropolitan Area Health Service issued a document entitled 'Fiona Stanley Hospital Facilities Management Services – Contract Announcement, July 2011' which identified that Serco would be responsible for the provision of these services at Fiona Stanley Hospital.
36 Ms Palmer's first affidavit also sets out a number of facts which the appellant says provides evidence of the impact of the transfer of services from Royal Perth Hospital to Fiona Stanley Hospital. These are as follows:
(a) The State Rehabilitation Unit is a unit of Royal Perth Hospital that is currently located at the Shenton Park Campus. The Shenton Park Campus primarily provides rehabilitation services. It also provides satellite dialysis, orthopaedic, urology and plastic surgery services. The State Rehabilitation Unit will be closed and replaced with a new State Rehabilitation Centre to be located at Fiona Stanley Hospital. According to a briefing note dated 5 November 2009 from the Executive Director, Fiona Stanley Hospital, the impact will be that approximately 90 full-time equivalent positions (FTE) that are involved in facilities management and support service functions at the Shenton Park Campus will not have an opportunity to transfer to Fiona Stanley Hospital as government employees, if a private contractor is appointed to manage these services at Fiona Stanley Hospital.
(b) As a result of the transfer of services from Royal Perth Hospital to Fiona Stanley Hospital, the Wellington Street Campus of Royal Perth Hospital will be reduced in size as bed numbers will be reduced from 662 to 410 beds by 2014. Certain services will cease to be provided at the Wellington Street Campus and the complexity level of a number of current services will be downgraded upon the opening of Fiona Stanley Hospital in 2014. When Fiona Stanley Hospital opens it will have a total of 783 beds.
(c) According to a document provided to the appellant by the State Solicitor's Office, as at July 2011 there were 647.51 FTE (headcount 816) support worker positions at Royal Perth Hospital. It is unknown how many of these positions are at either, or both, the Wellington Street Campus and/or the Shenton Park Campus and what proportion of these positions will be affected by the transfer of services to Fiona Stanley Hospital.
37 Ms Palmer's first affidavit also sets out what the appellant says is the impact on the transfer of services from Fremantle Hospital and Health Service to Fiona Stanley Hospital. She says these are as follows:
(a) Fremantle Hospital is a tertiary facility providing general and specialist services including 24-hour emergency, medical, surgical and ambulatory care. It is the State referral centre for diving and hyperbaric medicine. Kaleeya Hospital provides obstetrics and gynaecological services, rehabilitation, endoscopy and elective surgery.
(b) By 2014, Fremantle Hospital and Health Service will no longer be a tertiary facility. It will reduce in size from 552 to 359 beds. It will no longer provide emergency services. The diving and hyperbaric medicine unit will move to Fiona Stanley Hospital.
(c) A number of hospital and health services currently provided by Fremantle Hospital and Health Service will be provided at Fiona Stanley Hospital. The provision of these services at Fiona Stanley Hospital will result in a downsizing, if not a complete replacement, of the services currently provided by Fremantle Hospital and Health Service. The service complexity level of all of the services that will remain to be provided at Fremantle Hospital and Health Service will be downgraded upon the opening of Fiona Stanley Hospital in 2014.
(d) According to a document provided to the appellant by the State Solicitor's Office, as at July 2011 there were 306.27 FTE (headcount 405) support worker positions at Fremantle Hospital and Health Service. It is unknown what proportion of these positions will be affected by the transfer of services to Fiona Stanley Hospital.
38 In the second affidavit made by Ms Palmer, she sets out the factual circumstances the appellant relies upon in respect of the transfer of services from Swan District Hospital to the Midland Health Campus. These are as follows:
(a) The respondent is planning to build a new hospital, the Midland Health Campus. Construction is due to start in 2012 and open in 2015. It is planned that the Midland Health Campus will replace Swan District Hospital and all hospital and health services currently provided at that hospital will be transferred to the Midland Health Campus. Swan District Hospital will close.
(b) The strategy to build a new hospital began in at least March 2010 by the Department of Health. On 9 June 2010, Dr Peter Owen, the Executive Director, Swan Kalamunda Health Service and NMAHS Contract Management Unit, prepared a briefing note for information for the Minister for Health. The briefing note stated that the government will engage the private sector in the design, construction and operation of the new Midland Health Campus and discussed the industrial relations position and potential issues regarding the delivery of the Midland Health Campus as a public-private partnership. The briefing note also identified that as a consequence of private sector delivery, permanent staff at Swan District Hospital will have the option to resign or be redeployed within WA Health; while fixed-term and contract staff will have the option to seek employment with WA Health or the private operator.
(c) In other documents which have been made available as FAQ sheets and media responses, current employees of Swan District Hospital have been informed that current permanent employees of the respondent will have the option of seeking employment with the private provider or, if they wish to remain employed by the respondent, being redeployed elsewhere within the public hospital system.
(d) By May 2011, the government had shortlisted two proponents to design, build and operate the new Midland Health Campus. These companies are Ramsay Health Care Ltd and St John of God Health Care Inc.
(e) Swan District Hospital employs approximately 121 support service employees (81.2 FTE).
(c) Mr Bathurst's affidavit evidence
39 Mr Bathurst in his affidavit made on 15 September 2011 sets out and annexes a number of documents. These include copies of the claim in M 117 of 2010 which was dismissed by the Industrial Magistrate on 7 December 2010, together with the notice of appeal in that matter and reasons for decision given by the Full Bench of the Commission, dismissing the appeal on 11 March 2011. Mr Bathurst's affidavit also annexes copies of documents that passed between the parties and the appellant's barrister which deal with the particularisation of the alleged implied terms in these claims and a copy of the respondent's outline of submissions in support of its application to dismiss each of the claims in these appeals.
(d) Mr Warner's affidavit evidence
40 In Mr Warner's affidavit made on 15 September 2011 he refers to and annexes a number of notices made under the provisions of the Hospitals and Health Services Act which constituted the board of the Metropolitan Health Service Board. This board was in existence until 9 March 2001 when it was abolished. Upon the abolition of the Metropolitan Health Service Board, pursuant to s 7 of the Hospitals and Health Services Act, the Minister for Health was deemed to be the board and to be incorporated under the name of the Metropolitan Health Service Board and to have all the duties, powers and functions of the board. Mr Warner also in his affidavit sets out the history of the notices which created the WA Country Health Service. That board too was abolished on 27 July 2006 and the Minister has been deemed to be that board since that date pursuant to s 7 of the Hospitals and Health Services Act.
41 Mr Warner was involved in negotiations with the appellant in 2010 which culminated in the making of the settlement set out in the Heads of Agreement made on 24 October 2010.
42 Mr Warner sets out in his affidavit the following circumstances which the respondent says are relevant matters in respect of each of the hospitals dealt with in the claims:
(a) When Fiona Stanley Hospital commences services in 2014, it will be a public hospital. No board has yet been constituted in respect of Fiona Stanley Hospital. The board of Fiona Stanley Hospital will, under s 15(3) of the Hospitals and Health Services Act, be a body corporate with a separate legal entity to any other current hospital board.
(b) Kaleeya Hospital, until its purchase by the State in January 2005, was a private hospital. Since that time it became part of Fremantle Hospital and Health Service and is a public hospital.
(c) Swan District Hospital is a public hospital located in Middle Swan, Western Australia. When the Midland Health Campus opens in 2015, Swan District Hospital will be closed. The Midland Health Campus will be considerably larger than Swan District Hospital and will provide additional services to those currently available at Swan District Hospital. No decision has yet been made by the State as to whether the Midland Health Campus will be:
(i) a public hospital; or
(ii) a private hospital, operated by a private corporation, under Part IIIA of the Hospitals and Health Services Act, that accepts public patients.
If the Midland Health Campus is opened as a public hospital, the Midland Health Campus will have a new hospital board which will be a separate legal entity to the existing board of the Metropolitan Health Service Board that operates the Swan District Hospital. If, however, the Midland Health Campus is opened as a private hospital that accepts public patients, the corporation conducting the private hospital will be a separate legal entity to the Metropolitan Health Service Board.
Grounds of appeal
43 In ground 1(a) of the grounds of appeal the appellant says that:
(a) The Industrial Magistrate erred in applying previous findings of the Full Bench in Fiona Stanley Hospital [No 1] to the pleadings and evidence in the claims in these matters; and
(b) In applying those findings, the Industrial Magistrate arrived at the incorrect conclusion as to whether these actions were reasonably arguable.
44 In the particulars to ground 1(a), the appellant puts forward an argument that the Industrial Magistrate:
(a) Erred in applying the findings of the Full Bench in Fiona Stanley Hospital [No 1] in particular at [85]; and
(b) In concluding that those findings caused the appellant insurmountable difficulty, the Industrial Magistrate either disregarded or failed to recognise:
(i) the different nature of the claims put in these matters as opposed to Fiona Stanley Hospital [No 1]; and
(ii) the additional evidence filed in support of these claims that was not otherwise before the court in Fiona Stanley Hospital [No 1].
45 In these circumstances, the appellant says that the pleadings and evidence considered in Fiona Stanley Hospital [No 1] were capable of being distinguished from the claims in these matters.
46 In ground 1(b) the appellant puts an argument in the alternative, that even if the Industrial Magistrate was correct in the manner in which he applied the findings of the Full Bench in Fiona Stanley Hospital [No 1] to the pleadings and evidence in the claims the subject of this appeal, he erred in the manner in which he applied the findings of the Full Bench. In the particulars the appellant takes issue with the finding made by the Industrial Magistrate applying the reasoning of the Full Bench in Fiona Stanley Hospital [No 1] with respect to the transfer of services from Swan District Hospital to the Midland Health Campus. In making this finding, the appellant says that the Industrial Magistrate either disregarded, or failed to recognise:
(a) The different nature of the claims put in M 35 of 2011 as opposed to Fiona Stanley Hospital [No 1]; and
(b) The additional evidence filed in this matter that was not otherwise before the court in Fiona Stanley Hospital [No 1].
47 In ground 2 the appellant argues that the Industrial Magistrate erred in failing to find that it was arguable that the respondent owed obligations or duties to the appellant to prevent functions and duties of directly employed workers covered by the 2007 industrial agreement being contracted to the private sector, and thereby breached the agreement, giving rise to a remedy pursuant to s 83 of the Act. In the particulars to this ground of appeal, the appellant directly attacks the Industrial Magistrate's finding that the submissions in relation to obligations or duties conferred on the parties arising out of the 2007 industrial agreement (and the signing of the Heads of Agreement) were not reasonably arguable. The appellant contends that the Industrial Magistrate erred in arriving at this finding, having regard to:
(a) A generous approach to interpretation of agreements being permissible (especially if the term in question is ambiguous): George A Bond & Co Ltd (in liquidation) v McKenzie [1929] AR (NSW) 498 and Robe River Iron Associates v Amalgamated Metal Workers and Shipwrights Union (1987) 67 WAIG 1097 at 1098;
(b) The provisions of the agreement, especially cl 4 and cl 11.13(a);
(c) The intention of the parties, both in relation to the signing of the 2007 industrial agreement and the signing of the Heads of Agreement, which served as a formal acknowledgment that all parties were committed to honouring the terms of the agreement; and
(d) The evidence before the Industrial Magistrate.
48 In ground 3 the appellant puts forward an argument the Industrial Magistrate applied the incorrect legal test to the respondent's application to seek summary judgment. In written submissions filed by the appellant on 11 April 2012 the appellant informed the Full Bench that it does not press the third ground of appeal.
The appellant's submissions
49 The appellant in its written submissions points out that there are a number of arguments ventilated before the Industrial Magistrate that are not pressed on appeal. Firstly, the appellant no longer presses the allegation that implied terms can be read into the 2007 industrial agreement which give rise to obligations on behalf of the Minister to act in a certain way. Secondly, the appellant no longer presses the assertion that the 2007 industrial agreement gives rise to a claim in equity that can be pursued in this jurisdiction.
50 In essence the appeal raises two issues. Firstly, the appellant submits that it is incorrect to assert that the reasons for decision in Fiona Stanley Hospital [No 1] caused the appellant insurmountable difficulties in the claims. This argument relies upon an assessment of the basis on which the claims are pleaded and the evidence before the court in these matters that were not before the court in Fiona Stanley Hospital [No 1]. The second issue the appellant says is raised is that as the pleadings and the evidence in the claims currently stand, there is an arguable case that the respondent is in breach of cl 11.13 of the 2007 industrial agreement.
51 The appellant points out that evidence of the contracting out and/or privatisation of functions and duties otherwise performed by directly employed workers at each of the hospitals is contained within the affidavits of Ms Palmer and is before the court. The appellant also argues that the respondent has previously admitted for the purpose of these applications that current functions and duties of directly employed workers:
(a) who are covered by the 2007 industrial agreement; and
(b) who are currently employed at either Royal Perth Hospital, Fremantle Hospital and Health Service or Swan District Hospital
will be functions and duties otherwise contracted out and/or privatised: AB 88 – 90.
52 The appellant says the significant points of difference between the claims in this matter and the pleadings in Fiona Stanley Hospital [No 1] include:
(a) The applicant in Fiona Stanley Hospital [No 1] argued that the 2007 industrial agreement applied to functions and duties performed at Fiona Stanley Hospital: AB 55. Nowhere in the claims, the subject of this appeal, is such a case pleaded.
(b) The applicant in Fiona Stanley Hospital [No 1] argued that the Minister as employer of directly employed workers pursuant to the 2007 industrial agreement was acting in the same capacity in relation to the tendering of functions and duties to a private company at Fiona Stanley Hospital. This is also not a matter which is pleaded in these claims.
53 In Fiona Stanley Hospital [No 1] no particulars were provided about any functions or duties being contracted out or privatised. However, in these matters the appellant says there is evidence that demonstrates that the functions and duties performed at Royal Perth Hospital, Fremantle Hospital and Health Service and Swan District Hospital are being contracted out and/or privatised. Of particular importance it says the respondent concedes that the transfer of functions and duties to the private sector has occurred or is about to occur.
54 Having regard to the evidence before this court, when read with the language of the 2007 industrial agreement, the appellant contends that the respondent has an obligation pursuant to the 2007 industrial agreement to prevent the privatisation of functions and duties of directly employed workers. On the basis that such a submission is reasonably arguable, it says the Industrial Magistrate erred in not granting the appellant leave to plead such a cause of action. This is, in essence, the appellant's ground of appeal in ground 2.
(a) Ground 1(a)
55 The appellant argues that in Fiona Stanley Hospital [No 1] I found that on the basis of a forensic evidentiary issue, there was a paucity of evidence about what was due to occur by way of privatisation of functions and duties of directly employed workers at Royal Perth Hospital and that job losses did not establish privatisation of functions and duties of directly employed workers: [85]. I also found that a breach of cl 11.13 of the 2007 industrial agreement had not occurred because the services will in the future be transferred to a separate legal entity; that is to the future board of Fiona Stanley Hospital (which the appellant refers to as the legal transfer issue).
56 The appellant claims that in these matters neither a finding supportive of the evidence issue, nor the legal transfer issue, was open to the Industrial Magistrate or is open to be made by this Full Bench.
57 In respect of the evidentiary issue the appellant contends that the first affidavit sworn by Ms Palmer clearly identifies those functions and duties that are being transferred offsite from Royal Perth Hospital and/or Fremantle Hospital and Health Service to Fiona Stanley Hospital and that those functions and duties will be performed by employees in the private sector. It also points to the fact that it is now common ground that in July 2011 the Minister for Health signed an agreement confirming that Serco, a private entity, would provide operational services to Fiona Stanley Hospital. Ms Palmer in her second affidavit also clearly identified functions and duties currently being performed by directly employed workers at Swan District Hospital and identifies that all those functions and duties are being transferred from Swan District Hospital to the Midland Health Campus. The appellant says that the Industrial Magistrate erred as he failed to refer to this evidence. Nor did he consider whether anything turned on the fact that the claim in M 35 of 2011, which deals with facts in relation to the Midland Health Campus and Swan District Hospital, are different to the claims in M 33 and M 34 of 2011 which deal with the facts relating to a transfer of services from Royal Perth Hospital and Fremantle Hospital and Health Service to Fiona Stanley Hospital.
58 As to the legal transfer issue, the appellant says that the finding made by me at [85] of Fiona Stanley Hospital [No 1] is in error. The appellant points out that contracting out of services must, by their very nature, be transferred from the public sector to the private sector. This must involve by necessity the transfer of functions and duties to a separate legal entity and it matters not whether these functions and duties are transferred to an entity within the relevant hospitals, or outside of them. It is not the location of the transfer that is important, rather it is the transfer in itself.
59 The appellant also points out that when functions and duties are contracted out or privatised it will always be the case that such duties will be transferred to a separate legal entity. Finally, it says it follows that if these submissions are accepted, the characterisation of transfer of services to a separate legal entity not being a breach of cl 11.13 of the 2007 industrial agreement, cannot be sustained.
(b) Ground 1(b)
60 The appellant argues there is a key difference in respect of the evidence before the court in M 35 of 2011 which deals with functions and duties of directly employed workers at Swan District Hospital. This is because the respondent has conceded that the Midland Health Campus will be operated by a private corporation and may in fact be constituted as a private hospital under Part IIIA of the Hospitals and Health Services Act that accepts public patients: AB 90 and 114. Even if the argument that the transfer of functions and duties in this case does not constitute a contracting out as argued in respect of ground 1(a) in relation to claims M 33 and M 34 of 2011 (which is not conceded), the argument that a transfer from one public hospital board to another is not privatisation cannot be sustained if the transfer is directly to a private entity, as it is in the case of M 35 of 2011. Consequently, the appellant argues that the findings made by me in Fiona Stanley Hospital [No 1] at [85] have no application to this claim and was a matter not considered by the Industrial Magistrate. Such an error it says is one which fails to expose the process of reasoning undertaken by the Industrial Magistrate and therefore distracts from the integrity of the decision-making process: AK v Western Australia (2008) 232 CLR 438 (Heydon J) [89].
(c) Ground 2
61 In this ground, the appellant contends that the pleadings and evidence make it clear that at the very least the appellant has an arguable case that the respondent has breached the terms of the 2007 industrial agreement by failing to comply with his obligations created by the language of the agreement. In support of this submission the appellant relies on its submissions in respect of the privatisation and transfer of functions and duties as set out in Ms Palmer's first and second affidavits and concedes that if this ground is to succeed, ground 1(a) and/or ground 1(b) must first be upheld. The appellant says when one has regard to the orthodox principles of interpretation of industrial agreements there was evidence before the Industrial Magistrate of a clear breach on behalf of the respondent in relation to privatising functions and duties of directly employed workers at Royal Perth Hospital, Fremantle Hospital and Health Service and Swan District Hospital.
62 The appellant argues that the aim of the agreement in cl 4 to enhance job security when read together with cl 11.13(a) of the 2007 industrial agreement, which provides that the parties are to recognise the importance of promoting long term job security for employees, is that these provisions are protected in nature and carry with them an express obligation to protect employees from job insecurity. When regard is had to the purpose, general policy and context of these provisions and not interpreted in a vacuum divorced from industrial realities it is clearly arguable that the Minister is in breach of his obligations under the 2007 industrial agreement. The appellant also argues that such an interpretation applies when one has regard to the conduct of the Minister at the time of negotiating the Heads of Agreement. It says the Minister as the employer of directly employed workers at Royal Perth Hospital and Fremantle Hospital and Health Service knew, or ought to have known, at all times throughout the course of signing the Heads of Agreement, that the Fiona Stanley Hospital negotiations would directly affect directly employed workers performing functions and duties in their capacity as public sector employees. It also makes the same submission in relation to the establishment of the Midland Health Campus.
63 The appellant says on the basis of the affidavits and evidence, it is submitted that the appellant demonstrated:
(a) There was a sound basis for the legal conclusion that the Minister was in breach of cl 11.13(b) of the 2007 industrial agreement thereby triggering the provisions of s 83(5) of the Act.
(b) There remains a real question of fact or law which affects the rights of the parties that is still yet to be tried.
(c) A finding against the respondent at this stage of the proceedings would risk stifling the development of law by summarily disposing of an action in respect of which there is a reasonable possibility it will be found in the development of the law, still embryonic, that a cause of action does lie.
64 The appellant seeks orders to set aside the orders of the Industrial Magistrate dismissing each of the claims. In its place, the appellant seeks an order that the respondent's applications for summary dismissal of the claims be dismissed and the claims be programmed to hearing before the Full Bench pursuant to s 82 of the Act.
Principles to be applied when determining a summary dismissal application
65 Exceptional caution is required by courts and tribunals when exercising the power to summarily dismiss. A claim should not be dismissed other than when it is clear there is no real question of fact or law to be tried: General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87. President Steytler in Talbot & Oliver (a firm) v Witcombe [2006] WASCA 87 summarised the applicable principles as follows:
[21] … An action should only be dismissed as frivolous or vexatious if it cannot possibly succeed. Moreover, in deciding whether an action could possibly succeed, a court of first instance should be astute not to risk stifling the development of law by summarily disposing of actions in respect of which there is a reasonable possibility that it will be found in the development of the law, still embryonic, that a cause of action does lie: Hospitals Contribution Fund of Australia v Hunt (1983) 44 ALR 365 at 373.
[22] Similar principles apply in the case of an application to strike out a statement of claim as not disclosing a reasonable cause of action: Kimberley Downs Pty Ltd v State of Western Australia unreported; SCt of WA; Library No 6414; 25 August 1986 at 6–7. In Dalgety Australia Ltd v Rubin unreported; FCt SCt of WA; Library No 5485; 24 August 1984, it was held that it is only in cases in which it can be seen from the outset that, however the facts be found, there is no basis for the legal conclusion contended for by the plaintiff that the pleading should be struck out. It has also been held in this jurisdiction that, in a case in which an application for summary judgment is combined with an application to the Court's inherent jurisdiction and with an application under O 20 r 19(1)(a) to strike out a pleading upon the basis that it discloses no reasonable cause of action, the Court is not confined by the manner in which the plaintiff has formulated his or her case on the pleadings and may consider not only the undisputed facts but also facts which are in dispute: Bride v Peat Marwick Mitchell [1989] WAR 383 at 394; and see, generally, Seaman Civil Procedure Western Australia (Vol 1) at [16.0.1] and [20.19.6].
Is there a real question of fact or law to be tried
66 The issue to be determined in this appeal is whether the appellant's arguments when analysed contain a real question of law or fact to be tried, or raise the basis of a cause of action that may be developed in the law. For a reasonable possibility that a cause of action may be found in the development of law, the arguments put forward in the matters pleaded must raise an area of the law that is uncertain or has yet to be developed. This is what Master Allen meant in Hospitals Contribution Fund of Australia v Hunt (1983) 44 ALR 365 (373), when he spoke of allowing for the 'development of the law, still embryonic'. In that matter the plaintiff's claim pleaded a cause of action in tort enunciated by the High Court in Beaudesert Shire Council v Smith (1966) 120 CLR 145; [1966] ALR 1175. Master Allan in Hunt found the ambit of the Beaudesert tort had been left without substantial exposition and was more a signpost as to where the High Court considered the law might be heading rather than a definitive statement of what the law is (373).
67 In this appeal, the only area of law raised in the Industrial Magistrate's reasons for decision that could be argued to be uncertain is whether terms can be implied into a registered industrial agreement. In the light of the brief observations of the High Court in Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission [2001] HCA 16; (2001) 203 CLR 645 [34] and the discussion that followed in Pangallo and United Firefighters' Union of Australia v Metropolitan Fire and Emergency Services Board [2003] FCA 480; (2003) 198 ALR 466 whether an industrial agreement made between an employer and a union is enforceable in the law of contract and the consequent issue of whether there is scope for the implication of terms in such an agreement, is an area of the law that could be said to be in an embryonic state. However, the appellant in this appeal does not press its contention that implied terms can be read into the 2007 industrial agreement.
68 Other than the pleadings and argument raised at first instance in respect of the implication of terms, there is no matter pleaded or put in argument that raises an area of the law that can be said to be in an embryonic state or is ripe for development.
69 Turning to the issue whether there is a real question of law or fact to be tried, Mr Hammond on behalf of the appellant conceded that for ground 2 to succeed, ground 1(a) and/or ground 1(b) must also be upheld, as ground 2 principally goes to the issue whether there was factual evidence before the learned Industrial Magistrate that the respondent had breached cl 11.13(b) of the 2007 industrial agreement in 2010 and 2011.
70 In grounds 1(a) and 1(b), the appellant argues that the reasons for decision of the Full Bench in Fiona Stanley Hospital [No 1] is distinguishable because the evidence and the pleadings in that appeal are different to the matters pleaded and the evidence before the Industrial Magistrate in these matters. Alternatively, the appellant argues that the finding made by me at [85] of my reasons for decision in Fiona Stanley Hospital [No 1] is wrong and should not be followed.
(a) Was the evidence before the Industrial Magistrate different in these matters
71 Whilst it is the case that the services to be transferred from Royal Perth Hospital, Fremantle Hospital and Health Service and Swan District Hospital are particularised in some detail in the statements of claim and in the affidavits of Ms Palmer, it is not the case that the evidence and particulars demonstrate that the functions and duties of employees currently employed at these hospitals are to be contracted out or privatised. In that respect, in my opinion, there is no material difference between the evidence before the Industrial Magistrate at first instance in Fiona Stanley Hospital [No 1] and in these claims.
72 The uncontroverted evidence contained in the affidavits of Ms Palmer establishes that particular services will cease or be downgraded at Royal Perth Hospital and Fremantle Hospital and Health Service and all services will cease to be provided at Swan District Hospital. It does not follow that because the services in question will be offered at hospitals that are not, or will not be, hospitals that formerly comprise the Metropolitan Health Service Board, Peel Health Services Board or the WA Country Health Service, the functions and duties of specific employees will be transferred. Firstly, although the services in question are to be provided by employees of the new entities that will operate Fiona Stanley Hospital and the Midland Health Campus, a contract of employment cannot be transferred from one employer to another without consent of the employee: Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014, 1020, 1026. Secondly, and of greater significance, is that cl 11.13 of the 2007 industrial agreement only prohibits contracting out or privatisation of functions and duties performed by directly employed employees of the hospitals that comprise the Metropolitan Health Service Board, the Peel Health Services Board and the WA Country Health Service at or for those hospitals. The evidentiary material set out in the affidavits of Ms Palmer goes no further than to provide evidence that contracting out and privatisation of particular services is to occur at and for Fiona Stanley Hospital, and for all services at the Midland Health Campus. This was in essence the substance of the evidence considered in Fiona Stanley Hospital [No 1].
73 In [85] of my reasons for decision in Fiona Stanley Hospital [No 1] I said that the evidence of Mr Warner was vague and without further information did not disclose privatisation or contracting out of the functions and duties of persons who are covered by the 2007 industrial agreement. This finding must be considered in its context. In [79] of my decision I observed that the pleadings did not specify any particulars which related to an intention to privatise services at Royal Perth Hospital or Swan District Hospital. What I meant to convey in [85] was that there was no evidence or material before the Industrial Magistrate on which a finding could be made that contracting out or privatisation was to occur at those hospitals, in the sense that, the services provided at those hospitals, were to be provided by a third party at those hospitals. In other words, there was no evidence that 'in-house' services would be contracted out or privatised.
(b) Interpretation of the 2007 industrial agreement
74 Turning to the provisions of the 2007 industrial agreement and an assessment of the evidence in light of a proper interpretation of the obligations placed on the respondent in cl 11.13 of the 2007 industrial agreement, it is firstly necessary to consider the modern principles that govern interpretation of industrial instruments and the statutory framework that enables the registration of agreements.
75 It is settled that the terms of an industrial agreement should be interpreted broadly and a too literal adherence to the technical meaning of words should be avoided: Robe River Iron Associates v Amalgamated Metal Workers and Shipwrights Union (1100) (Kennedy J). In Amcor Kirby and Callinan JJ adopted a broad contextual approach to the construction of an industrial agreement enunciated by Madgwick J in Kucks v CSR Ltd (1996) 66 IR 182 wherein his Honour observed (184):
It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.
76 After quoting this passage, Callinan J in Amcor said [131]:
An industrial agreement has a number of purposes, to settle disputes, to anticipate and make provision for the resolution of future disputes, to ensure fair and just treatment of both employer and employees, and generally to promote harmony in the workplace
77 Whilst a broad contextual approach to the interpretation of the 2007 industrial agreement must be applied, the terms of the 2007 industrial agreement must also be interpreted within the statutory framework that provides the capacity for the parties to enter into a binding industrial agreement. This is part of the context and purpose of the contested text of cl 11.13 of the 2007 industrial agreement.
78 Section 41 of the Act authorises, among others, an organisation (of employees) and an employer to enter into an agreement with respect to any industrial matter. What constitutes an 'industrial matter' is broadly defined in s 7 of the Act.
79 Industrial agreements may apply to a single enterprise or more than a single enterprise if it applies to more than one business, project or undertaking or the activities carried on by more than one public authority. Of importance to this matter is s 41(4) which provides:
(4) An industrial agreement extends to and binds — 
(a) all employees who are employed — 
(i) in any calling mentioned in the industrial agreement in the industry or industries to which the industrial agreement applies; and
(ii) by an employer who is — 
(I) a party to the industrial agreement; or
(II) a member of an organisation of employers that is a party to the industrial agreement or that is a member of an association of employers that is a party to the industrial agreement;
and
(b) all employers referred to in paragraph (a)(ii),
and no other employee or employer, and its scope shall be expressly so limited in the industrial agreement.
80 The provisions of the 2007 industrial agreement must be construed in light of the statutory command in s 41(4) of the Act that the scope of the agreement and thus its binding force does not extend beyond the employees mentioned in the callings in the agreement and the employer who is a party to the agreement. The respondent is the employer party to the agreement, but only in his capacity as the corporate deemed boards of management of the hospitals formerly comprised in the Metropolitan Health Service Board, the Peel Health Services Board and the WA Country Health Service: cl 5.2(b) of the 2007 industrial agreement and s 7 of the Hospitals and Health Services Act. It is only in that capacity and no other capacity that he is bound by the terms of the 2007 industrial agreement. It follows therefore that any conduct by him or his delegates that will constitute contracting out or privatisation within the meaning of cl 11.13 can only be such action if undertaken in the capacity of those boards of management set out in cl 5.2(b) of the 2007 industrial agreement.
81 The Hospitals and Health Services Act provides the Minister for Health with extensive powers to provide for the establishment, maintenance and management of public hospitals and the licensing and regulation of private hospitals. The Minister for Health is also a representative of the Crown. However, he is not bound to observe the provisions of the 2007 industrial agreement in respect of any of his functions other than as a board of management of the hospitals comprised in the boards set out in cl 5.2(b) of the 2007 industrial agreement: (see my observations in Fiona Stanley Hospital [No 1] [69], [71] – [74]).
82 Section 7 of the Hospitals and Health Services Act provides:
(1) Where in relation to any public hospital the Governor does not appoint any person to constitute a hospital board in accordance with the provisions of section 15, or where a board is abolished in accordance with the provisions of section 8 the management and control of the hospital is vested in the Minister.
(2) Whilst the Minister is so controlling any hospital he shall be deemed to be the board thereof and to be incorporated under the name of such board, and shall have all the duties, powers and functions of a board, and all property which would vest in a board of such hospital shall vest in the Minister.
83 Pursuant to s 7(2) the Minister is incorporated under the names of each board to which s 7(1) applies and is obliged to constitute each board in accordance with s 15 of the Hospitals and Health Services Act. As a board the Minister may engage employees or contractors to perform the functions of the board: s 19 of the Hospitals and Health Services Act. Under s 18(1)(a)(i) the Minister is responsible for the control, management and maintenance of the public hospitals for which he has been appointed as a board.
84 As I observed in Fiona Stanley Hospital [No 1], the Hospitals and Health Services Act establishes a statutory scheme whereby each board of a public hospital is established as a separate employer: [66].
85 It is plain the words 'contracting out' and 'privatisation' should be construed broadly. In Fiona Stanley Hospital [No 1] I said [87]:
The concept of 'contracting out' and 'privatisation' are words of wide import. The words 'contracting out' connote and encompass the entire process of entering into a contract, which would include the contractual processes such as issuing of expressions of interest, the calling of tenders and selecting a preferred tenderer. By including the word 'privatisation' is to extend the meaning of the prohibition to include the process and incidents of privatisation which would also include issuing an expression of interest, selection of a preferred tenderer or other pre-contractual processes. The prohibition in cl 11.13(b) is not simply on the entering into a contract but is something more than an intention to commence a process of privatisation or contracting out.
86 Although the words 'contracting out' and 'privatisation' must be construed broadly, they must also be construed within the context of the entire agreement. Whilst an interpretation of the 2007 industrial agreement requires an interpretation with the purpose of such an agreement is to use the words of Callinan J in Amcor 'to ensure fair and just treatment' towards both parties: [131], such an interpretation must be considered in the context of the purpose of cl 11.13 in its entirety together with its statutory context. When regard is had to the context of the prohibition in cl 11.13 it is notable that cl 11.13(c), cl 11.13(d) and cl 11.13(e) specifically deal only with the prohibition of contracting out and privatisation of 'in-house' services that were in place when the parties entered into the 2007 industrial agreement. When regard is had to these provisions and their statutory context it is apparent that the prohibited conduct in cl 11.13(b) is directed to and includes only contracting out and privatisation of services that are in-house services provided to or for the hospitals that comprise the Metropolitan Health Service Board, the Peel Health Services Board and the WA Country Health Service and no other board established under the provisions of the Hospitals and Health Services Act.
87 Despite the valiant submissions made by Mr Hammond on behalf of the appellant there is not a shred of evidence or nothing in the pleadings or averred to in argument upon which a proper inference could be drawn that the respondent has, or is intending to, contract out or privatise services, at or for any of the hospitals which form the three boards named in cl 5.2(b) of the 2007 industrial agreement.
88 For these reasons, I am of the opinion an order should be made that the appeal be dismissed as I am not persuaded that the appellant's arguments contain a real question of law or fact to be tried, nor raise any basis of a cause of action that may be developed in the law.
KENNER C:
89 The importance to the appellant Union of protecting job security for its members is readily accepted. This is one of the reasons for the existence of registered organisations under the Act. Indeed, the industrial agreement the subject of the present dispute between the parties to this appeal, the WA Health – LHMU – Support Workers Industrial Agreement 2007, contains, at cls 4 and 11.13(a), an express affirmation of the importance of job security of employees and the role of the Union in this regard.
90 This appeal from a decision of the learned Industrial Magistrate is a further attempt by the Union to assert that the terms of the Agreement in relation to contracting out and privatisation, preclude the Minister for Health from redeploying hospital staff from Royal Perth Hospital and Fremantle Hospital to the new Fiona Stanley Hospital and from the Swan Districts Hospital (to be closed), to a new Midland Health Campus. The decision of the learned Industrial Magistrate arose from three separate claims commenced by the Union, that in each case, the proposed transfer of staff by the Minister constituted a contravention of cl 11.13(b) of the Agreement. The learned Industrial Magistrate upheld an application by the Minister for the court at first instance to summarily dismiss the union's claims, on the basis that none of them disclosed a reasonable cause of action.
91 The background to the dispute is set out in the reasons of the learned Industrial Magistrate at first instance, and also in an earlier decision of the Full Bench dealing with similar issues, which need not be repeated in any detail: (2011) 91 WAIG 2337; (2011) 91 WAIG 291. The first Full Bench decision dismissed an appeal by the Union from a decision of the Industrial Magistrate's Court, which refused the Union interim relief under s 83(7) of the Act. The interim relief sought in those proceedings was to prevent the Minister from entering into any contracts with Serco Australia Pty Ltd, which is the provider of facilities management services at the new Fiona Stanley Hospital, which is due to open in 2014. The provision of facilities management services by Serco will entail the employment by Serco of employees to perform work the same as, or substantially similar to, the work performed by employees at hospitals covered by the Agreement.
92 Insofar as the closure of the Swan Districts Hospital is concerned, the services previously performed will be transferred to a new and expanded hospital, the Midland Health Campus, from 2015. Those services will include work presently performed by staff covered by the Agreement. From the evidence at first instance in these proceedings, no final decision has yet been made by the State Government as to whether the new Midland Health Campus will be a public or private hospital facility. However, for reasons which I will shortly refer to, that distinction is not material to the conclusions I have reached in the disposition of this appeal.
Grounds of appeal
93 Ground one is in two parts, (a) and (b). By the first part in (a), the Union contended that the pleaded cases in the three claims at first instance, and the evidence led in support of them, meant that these claims were materially distinguishable from the first set of proceedings. Thus, the conclusions of the first Full Bench, in particular as expressed in the reasons of Smith AP at par 85 (Scott ASC agreeing), and as adopted by the learned Industrial Magistrate as the basis for upholding the summary dismissal application, did not apply to the circumstances of these claims. As to the second part in (b), even if the learned Industrial Magistrate did not err as alleged in (a), he failed to recognise that the claim in relation to the Midland Health Campus was materially different to the two claims dealing with Royal Perth and Fremantle Hospitals.
94 Without hopefully doing any injustice to the detailed and helpful submissions of the Union, they are summarised as follows. It was contended that the previous case brought before the Industrial Magistrate was significantly different to the present proceedings. In failing to recognise the difference, and considering himself bound by the findings of the first Full Bench decision, the learned Industrial Magistrate was in error. Specifically, in the first proceedings, it was alleged that the Agreement applied to functions and duties to be performed at the new Fiona Stanley Hospital and secondly, as the employer, the Minister was acting in that capacity when engaging in the tender process for functions and duties to be contracted out at the Fiona Stanley Hospital. Neither of these two allegations were made in these proceedings.
95 Furthermore, and significantly in the Union's view, was the fact that in these proceedings, the Union put on detailed evidence through two affidavits of Ms Palmer, an officer of the Union, evidencing the extent to which functions and duties of employees employed at the hospitals covered by the Agreement, were being contracted out to the Fiona Stanley Hospital. The second affidavit of Ms Palmer, specifically identifies that all functions and duties performed by employees at the Swan Districts Hospital will be transferred to the new Midland Health Campus. It is also said by Ms Palmer that these employees will be employed by a private sector employer. Ms Palmer's evidence also referred to July 2011, when the Minister formally entered into an agreement confirming the provision by Serco of facilities management services at the Fiona Stanley Hospital.
96 The Union submitted that none of this evidence was before the first Full Bench for consideration. It was also contended by the Union, that the evidentiary distinction between the circumstances applying to the transfer from Royal Perth and Fremantle Hospitals to The Fiona Stanley Hospital, and the transfer of services from the Swan Districts Hospital to the Midland Health Campus, was not considered by the learned Industrial Magistrate. All of these matters were broadly described as "evidentiary issues".
97 A further submission was made by the Union that was broadly described as "the legal transfer issue". This turned upon the conclusion said to be arrived at by Smith AP at par 85 of the first Full Bench decision, dealing with the functions and duties of employees of the hospitals under the Agreement being transferred to a separate legal entity, that being the future board of the Fiona Stanley Hospital. The submission was that this conclusion was seemingly based upon the proposition that services being transferred to a separate legal entity cannot be considered as being contracted out or privatised. The proposition put by the Union, allied to this submission, was that it is axiomatic that a contracting out of services will involve a transfer of the provision of those services from the public to the private sectors. Thus a separate legal entity transfer will occur.
98 On the construction of the Agreement advanced by the Union, it matters not in its submission, as to where the location of the transferred services will be. It is said the fact of the transfer is what is significant. On this footing, the submission was that the location of the transfer of services at a particular hospital covered by the Agreement is not decisive. If this be so, then in short the Union contended that the conclusions of Smith AP (with Scott ASC agreeing) at par 85 of the first Full Bench decision were erroneous and should not be followed.
99 As to part (b) of this ground of appeal, the Union submitted that a crucial difference between the evidentiary case concerning the Swan Districts Hospital, and the other claims, was that it was accepted by the Minister that the new Midland Health Campus will be run by a private entity. Thus, it followed, according to the Union, that a contracting out of functions and duties from a public hospital to a private hospital is materially different, which difference was not considered by the learned Industrial Magistrate.
100 As to ground two, it was contended by the Union that the learned Industrial Magistrate, on a proper construction of the terms of the Agreement, failed to find that it was arguable that the Minister owed a general duty to prevent functions and duties of employees covered by the Agreement, from being contracted out to the private sector. In referring to various parts of the Agreement, the Union contended that its terms express a general prohibition on contracting out. Applying the generous approach to the interpretation of industrial instruments, on this basis, the terms of the Agreement constitute a general duty on the Minister to not jeopardise job security of employees covered by the Agreement by contracting out and privatising duties and functions to any extent at all. The Union contended that in permitting the contracting out and privatisation, as is common ground, the Minister is clearly in breach of his obligations under the Agreement in this regard.
101 This very broad approach to the interpretation of the Agreement is, on the Union's case, supported by the negotiation by the parties in 2010, of a "Heads of Agreement', which dealt with various commitments about the future renegotiation of the Agreement, and the making of a consent order by the Commission concerning wage rates. It was said that the Minister at the time this process was occurring, knew or should have known, that the effect of the negotiations with Serco for the provision of facilities management services at the Fiona Stanley Hospital, would affect the job security of employees covered by the Agreement.
102 For the Minister, again in summary, it was submitted as to grounds 1(a) and (b), that there was no error by the learned Industrial Magistrate in dismissing the claims. It was submitted that the interpretation of cl 11.13(b) of the Agreement is confined to contracting out of services only at the hospitals covered by the Agreement. This view of the Agreement is entirely consistent with the decision of the first Full Bench in the context of the facts as found then before it.
103 Insofar as the claims concerning Royal Perth Hospital and Fremantle Hospital are concerned, the Minister assumed factual findings most favourable to the Union. Those being that there will be a transfer of medical services from those two hospitals to the Fiona Stanley Hospital, which will involve the performance of functions or duties of employees covered by the Agreement being undertaken by employees of Serco. On the basis of the first Full Bench decision, it was contended that no breach of the Agreement could arise. This was because, properly understood, the first Full Bench held that the terms of cl 11.13(b) are limited to contracting out or privatisation of functions or duties at hospitals covered by the Agreement.
104 In relation to the closure of the Swan Districts Hospital and the opening of a new Midland Health Campus, the Minister accepted that the new facility will be operated by a private corporation, which will provide the same medical services formerly provided at the Swan Districts Hospital. It was submitted that again, this could not, on the application of the first Full Bench decision, constitute a breach of the Agreement. This is because the first Full Bench held that the transfer of medical services from an existing hospital covered by the Agreement to a new hospital with a private operator does not amount to a breach of cl 11.13(b). On these bases the learned Industrial Magistrate, according to the Minister's submission, was correct in holding that the different characterisation of the claims, and the adducing of further evidence, could not alter the inevitable outcome that the claims had no reasonable prospect of success.
105 As to ground two, the Minister submitted that the Union's contention as to the terms of the Agreement, providing what is in essence a blanket prohibition on preventing the contracting out of functions and duties covered by clause 11.13(b), is unsupported by the terms of the Agreement. It was submitted that the Union has failed to articulate exactly how it is that the specific language of the terms of the Agreement would give rise to such a construction. In relation to the suggestion that the 2010 Heads of Agreement in some way influenced the outcome, the Minister submitted that all this arrangement did was ensure that employees covered by the Agreement received wage rises, following the parties' inability to agree upon a replacement agreement on its expiry.
106 There was no dispute between the parties either at first instance or on the appeal, as to the power of the Industrial Magistrates Court to summarily dispose of a claim on the basis that it discloses no reasonable cause of action, or for other good reason. The power relied on by the learned Industrial Magistrate was Reg 5 of the Industrial Magistrates Courts (General Jurisdiction) Regulations 2005. The test to apply is that an action should only be dismissed if it "cannot possibly succeed", as was said by Steytler P in Talbot & Olivier (a firm) v Witcombe and another (2006) 32 WAR 179. Whilst the Union initially complained by appeal ground three that the learned Industrial Magistrate erred by applying the wrong test to the Minister's summary judgment application, this ground was abandoned at the outset of the hearing of the appeal.
Consideration
107 The starting point is cl 11.13 of the Agreement. It is as follows:
"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.
(c) Subject to successfully negotiating an efficiency and quality agreement between the parties to this Agreement, the Employer will not re-tender contracts for service currently in place which can be carried out by directly employed workers.
(d) Negotiations to successfully return in house those functions or duties currently out-sourced will include the following factors;
(i) Whether the product delivered under the contract for services meets the expected outcomes in terms of efficiency, quality and safety;
(ii) Public interest considerations such as quality of services and the safety of patients;
(iii) Cost, in particular the wages differential (if any) between the rates of pay for employees current contracts and directly employed employees; and
(iv) The impact the contract has on the job security and career development for employees subject to this agreement.
(e) Any agreement reached between the parties as a result of this process will be written up into a document and signed by both parties. The parties agree to be bound by the agreement as recorded in this document. The document will then be binding and enforceable between the parities (sic)."
108 I adopt, without repeating, what I said at pars 101 – 104 of the first Full Bench decision, as to the principles to apply in the interpretation of industrial instruments: (2011) 91 WAIG 291 at 308. The controversial provision is cl 11.13(b) referred to above. The learned Industrial Magistrate concluded, in referring to the reasons of Smith AP at par 85 of the first Full Bench decision (Scott ASC agreeing), that the prohibition on contracting out only extends to work to be performed at the hospitals covered by the Agreement. It does not preclude the Minister from transferring services from a hospital covered by the Agreement, to a separate legal entity, where the work is to be performed at another, in this case, new hospital, not party to the Agreement. That conclusion was with respect, for the following reasons, plainly correct, and in accord with the first Full Bench decision.
109 In my view, the terms of cl 11.13(b) cannot have the effect of prescribing an all-encompassing prohibition on the work of employees covered by the Agreement from ever being performed by an alternative provider anywhere else. The terms of cl 11.13(b) must be construed within the four corners of the Agreement. Whilst the approach to the construction of industrial instruments is to avoid a too literal interpretation of provisions, nonetheless, the task is essentially a text based activity: Amcor Ltd v Construction, Forestry, Mining, and Energy Union and Ors (2005) 222 CLR 241 per Kirby J at par 67.
110 The parties to the Agreement are set out in cl 5.2 and it was not suggested that the Agreement extends to persons other than the Union and the Minister in his incorporated capacity under s 7 of the Hospital and Health Services Act 1927. By cl 11.13(a), there is an "aspirational" provision, reflecting the objective of the parties to the Agreement, to promote long term job security and career development. The last part of the sub-clause refers to "for the employees covered by this Agreement". By the combined effect of cl 5 – Area, Incidence and Scope and cl 19 – Rates of Pay of the Agreement, when read with s 41(4) of the Act, that can only mean those employees employed in the classifications specified in the Agreement and employed at the hospitals set out in cl 5.2(b) of the Agreement.
111 By cl 11.13(c), the Agreement refers to an agreed commitment for no "re-tendering" of then on foot contracts for services, for work that can be performed by "directly employed workers". The obligation to not re-tender is on the "Employer", which, by cl 3 – Definitions, is the named employer parties to the Agreement, being the hospitals the Agreement covers and applies to. Clause 11.13(c) is, of itself in my view, a strong textual indicator that the parties, by the language they have used in the Agreement, intended to limit the scope of the contracting out and privatisation term to the existing hospitals covered by the Agreement. Again, for the purposes of this subclause, the "directly employed workers" can only be sensibly read as those then, or in the future, employed by the hospitals as employer parties to and bound by the Agreement.
112 The textual support for this construction to be applied to the clause of the Agreement becomes stronger when one considers the language of subclause (d). This provisions says in the introductory part "Negotiations to successfully return in house those functions or duties currently out-sourced will include the following factors …" Consistent with the evident purpose of cl 11.13 as a whole, the reference to "return in house" can only mean the restoration of the provision of services in a hospital covered by the Agreement by employees of the hospital, as the employer. Again, to be consistent with the first part of subclause (d), the words "currently out-sourced" must mean work done at the hospital by an entity providing services in the form of functions and duties that would otherwise be performed by employees of the hospital, under the Agreement.
113 For the purposes of applying the obligation to negotiate in subclause (d) a range of factors is set out in pars (i) to (iv). In par (iii) there is again reference to the words "directly employed employees", with regard to cost differentials. In par (iv) reference is made to the impact a contract for services has on job security and career development, no doubt intended to be consistent with the purpose of the clause as expressed in subclause (a). Again, this provision is confined to "employees subject to this Agreement".
114 In light of these parts of the clause, one then returns to subclause (b), the controversial subclause. In my view, when read with the remainder of the clause in the context of the interpretation I have placed on it, the conclusion is inevitable that subclause (b) is limited to a restraint on any further contracting out of functions or duties at the hospitals covered by the Agreement. When regard is had to the specific language used in subclause (b), this meaning becomes evident. The reference to "contracts for services in existence" can only sensibly be read as referring to those "contracts for services currently in place" in subclause (c) and the "functions or duties currently out-sourced" in subclause (d).
115 When read as a whole in this way, the scheme intended by cl 11.13 of the Agreement, is that at hospitals covered by the Agreement, the parties have agreed that there would, for the duration of the Agreement, be no further contracting out. Where services were, at the time the Agreement was made, contracted out at a hospital, it was intended that at the conclusion of those contracts, there would be a negotiation process entered into between the parties to the Agreement, to ascertain whether the services performed at the hospital by a contractor should be returned to be performed by employees of the hospital instead. If those negotiations are successful, then the parties to the Agreement, they being the Union and the Minister in his capacity as the employer hospitals concerned, will, under subclause (e), formally document the arrangement, which arrangement is intended to be binding.
116 The scope and terms of the Agreement constituted a fundamental barrier to the Union succeeding in the first set of proceedings, leading to the first Full Bench decision. Despite the reformulation of the separate claims, and the adducing of further substantial evidence in these proceedings at first instance, that fundamental barrier remains. I am not persuaded that the decision of the learned Industrial Magistrate to exercise the power of summary dismissal of the proceedings before him was in error.
117 In my view, the differently pleaded cases advanced by the Union, and the evidence led by it at first instance, make no difference to the outcome of this case. The affidavit evidence of Ms Palmer in particular, descends to considerable detail as to the nature and scope of the proposed transfer of services from Royal Perth Hospital and Fremantle Hospital to the new Fiona Stanley Hospital. Ms Palmer's evidence also deals with, again in some detail, the proposed closure of the Swan Districts Hospital and the transfer of services to the new Midland Health Campus. However, none of this evidence alters the fact that on its proper construction, the Agreement, in relation to contracting out and privatisation, is limited to those events at the hospitals covered by the Agreement. The Union's evidence does not go to this issue.
118 The learned Industrial Magistrate concluded, at pars 60-65 of his reasons, as follows:
"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."
119 Consistent with the authorities, an action should only be summarily dismissed if it is clear that no question of fact or law arises. The power should be exercised with great care. In this case no error has been demonstrated in the conclusions reached by the learned Industrial Magistrate. It was correctly concluded that the pleaded case, and the evidence led in support of it, did not disclose tenable claims, in view of the proper interpretation of cl 11.13 of the Agreement. There was no error expressed by the first Full Bench in its reasons as to the scope of cl 11.13 of the Agreement.
120 Ground 2 must also fail, given the preceding discussion and also the concession by the Union that for this ground to be maintainable, grounds (1a) and (1b) must succeed.
Conclusion
121 Accordingly, I would dismiss the appeal.
HARRISON C:
122 I have had the benefit of reading a draft of the reasons for decision of the Acting President. I agree and have nothing to add.