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NSW Crest

Court of Appeal
Supreme Court
New South Wales

Medium Neutral Citation:
State of New South Wales v NSW Nurses' Association [2012] NSWCA 179
Hearing dates:
8 May 2012
Decision date:
20 June 2012
Before:
Bathurst CJ at [1]; Basten JA at [41]; Hoeben JA at [42]
Decision:

Application dismissed with costs.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:
INDUSTRIAL LAW - Declaratory jurisdiction of Industrial Relations Court - Declaration of contractual right to voluntary redundancy payment - whether misinterpretation of contract - contractual principles - anticipatory breach - remedies.

INDUSTRIAL LAW - Declaratory jurisdiction of Industrial Relations Court - Declaration of contractual right to voluntary redundancy payment - misinterpretation of contract - whether jurisdictional error.
Legislation Cited:
Industrial Relation Act 1996, s 6, s 10, s 146, s 154, s 179, Ch 3
Supreme Court Act 1975, s 75
Cases Cited:
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission and Others [2000] HCA 47; (2000) 203 CLR 194
Craig v South Australia (1995) 184 CLR 163
Foran v Wight [1989] HCA 51; (1989) 168 CLR 385
Forster v Jododex Australia Pty Limited [1972] HCA 61; (1972) 127 CLR 421
Kirk v Industrial Relations Commission of NSW [2010] HCA 1; (2010) 239 CLR 531
Mahoney v Lindsay (1980) 55 ALJR 118
McDonald v Dennys Lascelles [1933] HCA 25; (1933) 48 CLR 457
Neeta (Epping) Pty Limited v Phillips [1974] HCA 18; (1974) 131 CLR 286
Peter Turnbull & Co Pty Limited v Mundus Trading Co (Australasia) Pty Limited [1954] HCA 25; (1954) 90 CLR 235
Re Australian Workers' Union; Ex parte Construction Forestry Mining and Energy Union [2002] FCAFC 150; (2002) 120 FCR 527
Category:
Principal judgment
Parties:
State of New South Wales (Appellant)
NSW Nurses Association (First Respondent)
Industrial Court of NSW (Second Respondent)
Representation:
Counsel
JJ Fernon SC and AM Mitchelmore (Applicant)
M Gibian (Second Respondent)
Solicitors
Maddocks Lawyers (Applicant)
New South Wales Nurses Association (Second Respondent)
File Number(s):
2011/299448
Decision under appeal
Citation:
[2011] NSWIRComm 111
Date of Decision:
2011-08-19 00:00:00
Before:
Boland J, Walton J, Haylen J
File Number(s):
IRC 163 of 2010

Judgment

1BATHURST CJ: In August 2009 and September 2009 various nurses employed by the applicant were offered voluntary redundancy. Twenty eight of these nurses, each of whom was a member of the first respondent union, expressed interest in the redundancy offered.

2The nurses who expressed interest in voluntary redundancy received two documents from the applicant. Those received by a Ms Michelle Roach were typical. The first was a letter addressed to her. That letter was in the following terms:

"As a result of your expression of interest in voluntary redundancy and recent discussions with the Area Health Service, I would like to offer you the opportunity to take voluntary redundancy. The components of the package are as follows:

Four (4) weeks notice or four (4) weeks pay in lieu of notice;

An additional one (1) weeks notice or pay in lieu of notice for employees aged 45 years and over with five (5) or more years of completed service;

Accrued annual leave loading, including Pro Rata (or shift penalties, if applicable) in respect of leave accrued at the date of termination

Additional severance payment component at the rate of three (3) weeks per year of continuous service, with a maximum of 39 weeks, with pro-rata payments for incomplete years of service to be on a quarterly basis;

Additional voluntary redundancy acceptance payment where the offer of voluntary redundancy is accepted within 2 weeks of the offer being made, or with extension of up to four (4) weeks at discretion of the employer;

Reimbursement of approved expenses associated with retraining (as detailed under Section 12.8 of PD2007_085 Managing Displaced Staff of the NSW Health Service. The details of an agreed basis of approving such expenses will be set out in separate correspondence;

Long service leave entitlements (if eligible); and

Additional Superannuation benefit that may be allowable as a contributor to a retirement fund.

Further if you accept this offer of voluntary redundancy within two (2) weeks of the offer being made and terminate employment within the time nominated by the employer [maximum of four (4) weeks] you will be entitled to the following payments:

Less than one (1) years service2 weeks pay
One (1) year and less than two (2) years service 4 weeks pay
Two (2) years and less than three (3) years service 6 weeks pay
Three (3) years service and over8 weeks pay

A condition of accepting this offer of redundancy is that should you obtain employment in any capacity (including employment in a temporary, part time or consultancy capacity) in the NSW Public Sector within the period to which the severance payment applies, that you will refund to the Sydney West Area Health Service, that portion that applies to the period of re-employment prior to commencing employment with the new Public Sector organisation.

If you are in receipt of workers compensation benefits acceptance of Voluntary Redundancy may result in cessation of weekly benefits.

This offer is made on the grounds that your position is excess to the staffing requirements of the Sydney West Area Health Service.

The proposed date for your termination is 9 October 2009. Any departure from this date should be discussed with the undersigned.

Find attached for your information:

A copy of Section 12 'Voluntary Redundancy' of NSW Health PD2007_085 Managing Displaced Staff of the NSW Health Service

Please Note: Your final payment details will be provided within 5 working days of acceptance of this offer. The exact dollar amount may vary with any changes in termination date, salary or leave liability. Supporting documentation is required of any prior service for long service leave and voluntary redundancy purposes. Once received this will be assessed and if you are eligible an adjustment will be made in the processing of your calculation.

Please consider and sign the attached and return via either facsimile, to Area Human Resources on 88xx xxxx or email to xx@xx.nsw.gov.au or internal mail to Belinda xx, Area HR Consultant, Building xx, xx Campus.

If you require any information in relation to Superannuation, please see the attached information sheet and either contact an advisor or attend a superannuation session.

If you require further information please contact Belinda xx on 88xx xxxx."

As the letter indicated, there was enclosed with it a document entitled "Confidential Memorandum - Acceptance of Offer". That document (again using Ms Roach as an example) was in the following form:

"l refer to your letter of 27 August 2009 concerning the offer of a voluntary redundancy.

I have considered the offer of Voluntary Redundancy by Sydney West Area Health Service.

I declare that:

I wish to accept the Voluntary Redundancy offer as attached and to voluntarily terminate my services with the Sydney West Area Health Service.

I acknowledge that my last day of service with the Sydney West Area Health Service will be 9 October 2009.

I acknowledge that I have been offered the following redundancy payments by Sydney West Area Health Service.

four weeks notice or four weeks pay in lieu of notice;

an additional one weeks notice or one weeks pay in lieu for employees aged 45 years and over with five or more years of completed service;

pro rata annual leave loading in respect of leave accrued at the date of termination;

accrued annual leave loading;

additional severance payment component at the rate of three (3) weeks per year of continuous service, with a maximum of 39 weeks, with pro-rata payments for incomplete years of service to be on a quarterly basis;

additional voluntary redundancy acceptance payment where the offer of voluntary redundancy is accepted within 2 weeks of the offer being made, or with extension of up to 4 weeks at discretion of the employer;

reimbursement of approved expenses associated with retraining (as detailed under Section 12.8 of PD2007_085);

long service leave entitlement (if eligible); and

the benefit allowable as a contributor to a retirement fund.

Should I obtain employment in any capacity (including employment in a temporary, part time or consultancy capacity) in the New South Wales Public Sector within the period to which the severance payment applies, I will refund to the Public Sector Organisation that made the payment, that portion which applies to the period of re-employment, prior to commencing employment with the Public Sector organisation.

I have read and understood the information relating to Voluntary Redundancy in Section 12 'Voluntary Redundancy' of PD2007_085 - Managing Displaced Staff of the NSW Health Service."

3Subsequent to receiving offers of acceptance for voluntary redundancy from various nurses, the applicant purported to withdraw the offer. On 4 September 2009, the applicant broadcast a communication indicating that as a result of a dispute notification lodged in the Industrial Relations Court, the progressing of any further voluntary redundancies was on hold. On 28 September or 29 September 2009, the applicant sent letters to affected nurses indicating that the offer had been withdrawn.

4Consequent on such withdrawal, the first respondent brought proceedings in the Industrial Relations Court seeking declarations under s 154 of the Industrial Relations Act 1996 ("the Act") that binding agreements for voluntary redundancy existed between the applicant and the 28 identified nurses who had accepted the offer. The nurses in question fell into three categories. First, nurses who ceased employment on the date nominated in their acceptance of the voluntary redundancy offer. (The Category A nurses.) In the proceedings in this Court, the right of the nurses in Category A to the voluntary redundancy payment was not disputed by the applicant. The second class were nurses who were on leave at the time of accepting the offer of voluntary redundancy and did not return to work thereafter. (The Category B nurses.) The third class were those who in fact remained in employment following both the withdrawal of the offer and the passing of the date nominated for them to retire upon their acceptance of voluntary redundancy. (The Category C nurses.) Because of the findings I have made below, it is unnecessary to distinguish further between these categories.

5By orders made on 19 October 2010, Marks J made certain declarations in favour of each of the nurses concerned. On appeal, the Full Bench of the Industrial Court ("the Full Court") refused leave to appeal (except on an irrelevant matter) but notwithstanding this, varied the declarations made by Marks J. The declarations made by the Full Court were relevantly to the following effect, omitting the names of the nurses:

"(a)That there exists a binding contract between the Director-General of the NSW Health Service and the following persons;

[There is then set out the names of all the nurses on whose behalf the declaration was sought.]

(b)That the terms of the contracts referred to in Order (a) hereof are those set out in the letters of offer dated 17 August 2009 and 27 August 2009 and the acceptance of that offer on various dates (as set out in the table at [4] of this judgment) by the persons referred to in Order (a).

(c)That the Director-General of the NSW Health Service wrongfully repudiated the contracts referred to in Orders (a) and (b) hereof.

(d)That the following persons who have left employment on the dates recorded in the table in [4] of this judgment are entitled to a redundancy payment in accordance with the terms of their contract with the Director-General of the NSW Health Service

[There is there set out the Category A and Category B nurses.]

(e)That in the event the Director-General continues to refuse to honour the contracts referred to in Orders (a) and (b) hereof the following persons, upon termination of their employment other than for cause, shall be entitled to a redundancy payment in accordance with the terms of their contract with the Director-General of the NSW Health Service:

[There is then set out the Category C nurses.]

(f)That the persons referred to in Orders (d) and (e) are entitled to have any redundancy payment payable to them calculated on the basis of their period of service as at the date their employment terminated or terminates."

6By summons filed on 16 September 2011, the applicant sought orders that the record of the Full Court be brought to this Court and an order in the nature of certiorari that the relevant orders made (the declarations) be quashed. It also sought orders that to the extent necessary the record of the proceedings at first instance be brought up to this Court and an order in the nature of certiorari quashing the declarations made by Marks J.

7The grounds relied on in support of the orders sought were that both the Full Court and Marks J at first instance misapprehended or disregarded the nature and limits of the functions and powers to make a declaration under s 154 of the Act and made orders that were outside the Court's jurisdiction under s 154.

The judgment of Marks J

8Marks J held that a contract came into existence between the applicant and the nurses concerned upon acceptance of the offer of voluntary redundancy, on the terms contained in the letters of offer and acceptance. He found that the applicant, by purporting to withdraw its offer of voluntary redundancy, had repudiated its obligations under the contract. He then stated, in reliance on decisions of the High Court in Peter Turnbull & Co Pty Limited v Mundus Trading Co (Australasia) Pty Limited [1954] HCA 25; (1954) 90 CLR 235 and Foran v Wight [1989] HCA 51; (1989) 168 CLR 385, that as the applicant had intimated that performance by the nurses of their part of the contract, namely ceasing employment, would be useless, they were absolved from such performance and were entitled to regard the contract as continuing on foot.

9In that context Marks J held he had jurisdiction to make declarations under s 154 of the Act. He held that the jurisdiction extended to making declarations in respect of the functions of the Industrial Court, which included industrial disputes and that the issue in question was an industrial dispute.

10In those circumstances Marks J reached the following conclusions (at [78]-[79]):

"[78]There is no reason why, in my opinion, the Commission could not make a recommendation that the voluntary redundancy package be paid to the relevant employees upon termination of employment or give a direction to this effect as contemplated by s 136(1)(a)...

[79]... The Court is empowered, if appropriate, to make binding declarations of right in relation to whether, in all the circumstances, the respondent should be required to pay to the relevant employees a voluntary redundancy package upon termination of their employment with the respondent. Expressed in this way, these proceedings do not concern the establishment of contractual agreements, the establishment of minimum conditions of employment or the circumstances in which redundancy payments might otherwise become payable, as asserted by the respondent. Nor is the Court engaged in a process in which it is ordering the termination of employment of employees or granting redundancy payments to persons still in employment whose employment positions are not redundant, as contended for by the respondent."

11Although his Honour had treated the matter as a contractual dispute in those portions of his judgment which led up to the paragraphs I have cited above, it is by no means clear whether or not in the paragraphs cited he was relying on the contract to reach his conclusion or on the Industrial Court's general power to resolve industrial disputes. This matter need not be resolved. The declarations made by Marks J having been set aside by the Full Court, it is only necessary to consider whether his declarations revealed jurisdictional error if those replacing them, made by the Full Court, are set aside. Because I have concluded that the declarations made by the Full Court should not be set aside, those made by Marks J will not be revived.

Judgment of the Full Bench

Boland P

12Boland P agreed with Haylen J as to the width of the power of the Industrial Court to make declarations and that the nurses on whose behalf the declarations were sought need not be parties to the proceedings and could instead be represented by the first respondent union.

13He also agreed with Haylen J and with the primary judge that there was a binding contract which had been repudiated and that because the applicant had intimated to the nurses that performance of their obligations under the agreement was futile, they were absolved from performing in order to take the benefit of the contract.

Walton VP

14Walton VP agreed with Haylen J's conclusions as to the operation of s 154 of the Act. He also agreed that a binding contract was entered into between the appellants and the nurses on the terms alleged by the first respondent. However, he said the declarations sought should not be made, at least so far as they involved those nurses who had not terminated their employment in accordance with the acceptance of the voluntary redundancy offer. He held that a declaration which would result in substantial payments to an employee for accepting voluntary redundancy, where the employee's position ultimately remains extant, was inconsistent with the notion of voluntary redundancy (at [111]).

15In those circumstances, his Honour would have ordered that leave to appeal be granted and that the declarations be varied to relate only to Category A nurses.

Haylen J

16Haylen J also concluded that a contract had come into existence between the individual nurses and the applicant for voluntary redundancy, which had been repudiated by the applicant. He considered that the Industrial Court had the power under s 154 of the Act to make declarations as to the existence of the contract. He further determined that it was not necessary for the individual nurses, as distinct from their union, to be a party to the proceedings.

17Haylen J held that the nurses who had not resigned on the agreed termination date were in no different position to those who had. He said that in each case there was a breach of contract by the applicant in refusing to pay the redundancy package, which was not accepted as repudiation, and the nurses were entitled to keep the contract on foot in the hope that the applicant would ultimately change its mind. He said that the contrary position would be an odd result, in that the applicant would avoid its liability by reason of its own unconscionable conduct (at [193]-[194]). He said that that conclusion contended for by the applicant relied on an assumption that the applicant could at any time change its mind about granting the redundancy package and that this was contrary to the terms of the contract (at [196]). In that context he also relied on the decision of the High Court in Peter Turnbull supra and Mahoney v Lindsay (1980) 55 ALJR 118, in concluding that the intimation by the applicant that it would not honour its contractual obligations absolved the nurses from counter-performance, namely, resignation on the nominated date.

The applicant's submissions

18In its written submissions the applicant accepted that the Industrial Court had jurisdiction under s 154 of the Act to make binding declarations of right in relation to the existence and content of a contract between the applicant and the nurses and that the declarations made by the Full Court which were referred to in subpars (a) and (b) of par [5] above fell within this category. Ultimately, senior counsel for the applicant seemed to concede that the declarations referred to in subpars (d) and (e) of par [5], when considered in isolation from subpar (f), were declarations which the Full Court was entitled to make. It is not clear that this concession was that the declarations accurately reflected the legal position that existed as between the applicant and nurses at the time the declarations were made or that they were erroneous but made within jurisdiction. The concession made was inconsistent with the written submissions of the applicant made in pars [26]-[28] so far as they related to declarations in subpars (d) and (e).

19In its written submissions the applicant contended that the declarations in subpars (d), (e) and (f) did not reflect the terms of the contract as declared in par (b) and were bad in law. It submitted that the orders did not in any way reflect the terms of the contract found to exist. In particular, it emphasised that declaration (f) extended the entitlement to payment under the contract to beyond 9 October 2009, which exceeded the limits of the contract found.

20In his submissions at the hearing senior counsel for the applicant emphasised that the terms of the contract required the relevant nurses to terminate employment on 9 October (unless an alternative date was agreed) and that if there was no performance on that date by reason of the conduct of the applicant, that would give the nurses a right to damages but not a right to have a redundancy payment calculated by reference to another termination date. He submitted that the declaration in subpar (f) in effect involved rewriting the contract, submitting that all the nurses who did not terminate employment by the nominated date were entitled to were damages for loss of the bargain.

The first respondent's submissions

21In its written submissions, the first respondent pointed to the fact that it had written to the applicant on 2 October 2009 indicating that it was investigating the position which had arisen by reason of the applicant's withdrawal of the offers of voluntary redundancy and stating that during the period of contractual examination any work performed by nurses did not constitute "a rejection of the contract already entered into". It further pointed to the fact that a number of individual employees wrote saying the continuation in employment was without prejudice to their contractual rights.

22It submitted that the Full Court did nothing more than make declarations as to the existence of a contract and the rights of the parties under that contract. It contended that the majority of the Full Court had decided that in the circumstances where there was a withdrawal of the offer, the nurses were excused from actual performance of the contract and it was sufficient that they were ready to perform. It stated that in these circumstances the contentions of the applicant were no more than a submission that the Full Court misconceived the terms of the contract or erred in its interpretation of rights arising under it. This, it said, was an error within jurisdiction.

23It also contended that the declarations made by the Full Court were correct in any event. It said that it was not disputed that the letters withdrawing the offers of voluntary redundancy amounted to an unequivocal indication by the applicant that it would not perform its part of the bargain by paying redundancy payment if the employees terminated their employment. It said that in those circumstances, the nurses were put to an election and that the majority of the Full Court were correct in finding that the nurses declined to accept the repudiation, kept the contract on foot and were ready to perform their part of the contract by terminating their services but only on receipt of the redundancy package.

24At the hearing counsel for the first respondent submitted that the entitlement to a redundancy payment arose only on termination of employment. He contended that although there had been anticipatory breach of the contract by the applicant, there would be no actual breach until the relevant nurses terminated employment and there was a refusal to pay the redundancy amount. He contended that the contract on its proper construction obliged the applicant to pay the redundancy package irrespective of the date of termination, with the exception of the additional payments said in the letter of 27 August to be payable if employment was terminated within the time nominated by the employer (the additional voluntary redundancy acceptance payment) (see par [2] above).

25The first respondent also submitted that so far as declaration (f) was concerned, even if there was jurisdictional error in making that declaration, the balance of the declarations could be severed.

Consideration

26The parties agreed that the effect of s 179 of the Act was that the decision of the Full Court and that of Marks J could only be quashed if jurisdictional error was established and that certiorari would not be granted for error of law on the face of the record.

27The parties also agreed that s 154 of the Act entitled the Industrial Court to make declarations of right in respect of matters over which the Industrial Court had jurisdiction, including the hearing and determination of industrial matters as defined in s 6 of the Act (s 146(1)(c)). The parties also accepted that the jurisdiction was limited to a declaration of existing rights and could not be used as a substitution for the award-making power in s 10 of the Act or as a substitution for the conciliation and arbitration powers in Ch 3 of the Act.

28In the present case there was no dispute that the Full Court had power to make declarations (a) and (b) (see [5] above). However, it should be noted in this context that the thrust of the applicant's submissions was that the nurses who remained in employment following the withdrawal of the voluntary offer and the passing of their respective termination dates in effect had accepted the repudiation of the contract by the applicant and were left with a claim for damages. If that is correct then it follows that the contract, at least so far as it was executory, had terminated: McDonald v Dennys Lascelles [1933] HCA 25; (1933) 48 CLR 457 at 476-477. The declarations in subpars (a) and (b) (see [5] above) are inconsistent with that principle. However, that point was not taken by the applicant on appeal.

29Declarations (c) was also not challenged. It seems to me that as a matter of power, a Court having jurisdiction such as that conferred by s 154 of the Act (or its equivalent provision in s 75 of the Supreme Court Act 1979), would have power to make such a declaration: Forster v Jododex Australia Pty Limited [1972] HCA 61; (1972) 127 CLR 421 at 435-436, 437-438. Whether it is appropriate to make such a declaration as a matter of discretion may be doubted: Neeta (Epping) Pty Limited v Phillips [1974] HCA 18; (1974) 131 CLR 286 at 307, but that is not in issue in the present case.

30In considering whether the Full Court was in error in making declarations (d)-(f), it is first necessary to have regard to the terms of the contract. The majority of the Full Court assumed as a matter of construction that the agreement reached required payment on the date the nurse in question was made redundant or otherwise left their employment other than for cause (having regard to the terms of declaration (e)), irrespective of whether that date was the nominated date for terminating employment. It is implicit in the Full Court's conclusions that the agreement to terminate employment on the nominated date was not a pre-condition to the entitlement to the redundancy payment but a term, albeit an essential term, which need not be complied with for the purpose of a claim for non-performance whether by damages for breach or wrongful repudiation, or for the purpose of an action for specific performance where, as here, the other party elected to keep the contract on foot: Peter Turnbull supra at 246-247, 250-251; Foran v Wight supra at 394-396, 420-421. On this construction, if the innocent party elected to keep the contract on foot, in those circumstances he or she was absolved from what Brennan J described in Foran v Wight supra at 420 as the temporal obligation (namely, to retire on the nominated dated) but not from the substantive obligation (namely, to accept voluntary redundancy) in order to obtain the benefit of the contractual promise.

31The alternative construction is that the contract made retirement on the nominated date a pre-condition to the entitlement to receive the payment. If that is the correct construction, a failure to retire on that date would mean that the nurse in question who had not fulfilled the pre-condition would not be entitled to receive the redundancy payment. However, in the present case, because the applicant had intimated that performance was useless, the nurse would remain entitled to damage for non-performance: see in particular Foran v Wight supra at 394-396 per Mason J and Peter Turnbull supra at 250-251 per Kitto J. These damages may or may not be equal in amount to the redundancy payment provided for in the contract.

32In the present case I am of the opinion that the latter construction is to be preferred. The agreement does not seem to me to contemplate what might be called a general variation of the conditions of employment but rather an offer of redundancy at a particular time, having regard to the conditions which then existed. That is consistent with the statement of the letter of offers that the positions of the relevant nurses were in excess of the staffing required, the acknowledgement in the acceptance letters of the last day of service and the condition that certain monies were to be refunded if employment was resumed in the NSW Public Sector.

33In these circumstances, in my opinion, the Full Bench erred in its construction of the contract. It follows that declarations (d)-(f) should not have been made, except in respect of those nurses who had retired on the nominated date.

34The question remains whether the error was a jurisdictional error.

35In Kirk v Industrial Relations Commission of NSW [2010] HCA 1; (2010) 239 CLR 531, the High Court reaffirmed, and expanded on, the explanation of jurisdictional error provided by the Court in Craig v South Australia (1995) 184 CLR 163 at 177-180. The Court in Kirk summarised what had been said in Craig as follows (at [72], citations omitted):

"[72]First, the Court stated, as a general description of what is jurisdictional error by an inferior court, that an inferior court falls into jurisdictional error 'if it mistakenly asserts or denies the existence of jurisdiction or if it misapprehends or disregards the nature or limits of its functions or powers in a case where it correctly recognises that jurisdiction does exist' (emphasis added). Secondly, the Court pointed out that jurisdictional error 'is at its most obvious where the inferior court purports to act wholly or partly outside the general area of its jurisdiction in the sense of entertaining a matter or making a decision or order of a kind which wholly or partly lies outside the theoretical limits of its functions and powers' (emphasis added). (The reference to 'theoretical limits' should not distract attention from the need to focus upon the limits of the body's functions and powers. Those limits are real and are to be identified from the relevant statute establishing the body and regulating its work.) Thirdly, the Court amplified what was said about an inferior court acting beyond jurisdiction by entertaining a matter outside the limits of the inferior court's functions or powers by giving three examples:

(a)the absence of a jurisdictional fact;

(b)disregard of a matter that the relevant statute requires be taken to account as a condition of jurisdiction (or the converse case of taking account of a matter required to be ignored); and

(c)misconstruction of the relevant statute thereby misconceiving the nature of the function which the inferior court is performing or the extent of its powers in the circumstances of the particular case.

The Court said of this last example that 'the line between jurisdictional error and mere error in the exercise of jurisdiction may be particularly difficult to discern' and gave as examples of such difficulties R v Dunphy; Ex parte Maynes, R v Gray; Ex parte Marsh and Public Service Association (SA) v Federated Clerks' Union."

36In Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission and Others [2000] HCA 47; (2000) 203 CLR 194 at [31], Gleeson CJ, Gaudron and Hayne JJ held that the Australian Industrial Relations Commission would only have committed jurisdictional error if it had:

" ... misconceived its role or if, in terms used by Jordan CJ in Ex parte Hebburn Ltd; Re Kearsley Shire Council, it 'misunder[stood] the nature of [its] jurisdiction...or 'misconceive[d] its duty' or '[failed] to apply itself to the question which [s 45 of the Act] prescribes' ... or '[misunderstood] the nature of the opinion which it [was] to form'."

37In the present case it seems to me that the Full Court was acting within jurisdiction in determining the contractual rights and liabilities of the parties in relation to the contract entered into by them. The declarations made were based on a particular construction of the contract which I have found to be erroneous. However, no misconception by the Full Court of its role or disregard of the limits of its functions or powers occurred. It did not, as the applicant would contend, seek to rewrite the contract. Rather, it preferred an erroneous construction. This was an error within jurisdiction.

38In Re Australian Workers' Union; Ex parte Construction Forestry Mining and Energy Union [2002] FCAFC 150; (2002) 120 FCR 527, the Full Federal Court held that a misconstruction by the Australian Industrial Relations Commission of the eligibility rules of the relevant organisation would not constitute a jurisdictional error. The Court held (at [48]):

"[48]An error in construing the pre-existing eligibility rules and the alteration when ascertaining who were the relevant employees would be an error within jurisdiction at least as long as it was apparent that the decision-maker ... understood the task required by the subsection and addressed the pre-existing eligibility rules and the alternation in determining who were the relevant employees and applied accepted principles of construction in ascertaining the meaning of the rules."

39The same may be said of the approach of the Full Bench in the present case.

40It follows that the application should be dismissed with costs.

41BASTEN JA: I agree that the application should be dismissed with costs, for the reasons given by Bathurst CJ.

42HOEBEN JA: I agree with the orders proposed by Bathurst CJ for the reasons he has expressed.

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Decision last updated: 20 June 2012