Walsh, David Jonathon v Health Insurance Commission [1998] FCA 1227

IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY ACT G 46 of 1998

BETWEEN: DAVID JONATHAN WALSH

Applicant

AND: HEALTH INSURANCE COMMISSION

Respondent

JUDGE: FINN J

DATE OF ORDER: 28 September 1998

WHERE MADE: CANBERRA

THE COURT ORDERS THAT: 1. there be no order as to costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY ACT G 46 of 1998

BETWEEN: DAVID JONATHAN WALSH

Applicant

AND: HEALTH INSURANCE COMMISSION

Respondent

JUDGE: FINN J

DATE: 28 September 1998

PLACE: CANBERRA

REASONS FOR JUDGMENT There is a regrettably long and, it would seem, increasingly adversarial history to the matter in which this proceeding takes its place. The present application comes before me only on the issue of costs, the application itself having been dismissed on 9 July 1998 on the giving of certain undertakings by the respondent. On 6 May 1998 in a related proceeding (Walsh v Garrett and Kelly, AG 22 of 1998, unreported) I delivered reasons for judgment in which I indicated that the then – and present – applicant, Mr Walsh, had been denied procedural fairness in the making of the decision to transfer his employment from the Health Insurance Commission ("the HIC") – the present respondent – to Medicare Private Ltd ("MP Ltd") under s 21 of the Health Insurance Commission (Reform and Separation of Functions) Act 1997 (Cth) ("the Separation Act") consequent upon the corporatisation of the Medibank Private function of the HIC. On 11 June 1998 orders were made in that matter setting aside that transfer decision and from that date the HIC treated Mr Walsh as an unattached officer of the HIC. Mr Walsh had for some time made plain his desire to stay with the HIC. He had in consequence applied for several positions in the HIC one of which (of present relevance) was that of Manager, Parliamentary, Privacy and Freedom of Information ("the FOI position"). In the period between 6 May and 11 June there had been no resolution of the question as to the substantive position, if any, that Mr Walsh would occupy in the HIC on his return. I would note, though, that in that period Mr Walsh had ascertained from apparently appropriate sources that a short-list of persons had been prepared for the FOI position. He had in consequence caused his solicitors to write to the HIC's solicitors asserting that as an employee of the HIC he was "entitled to be appointed to the [FOI] position". The solicitors' letter went on: "We have been instructed to make an application to the Federal Court to restrain the Health Insurance Commission from appointing any person other than our client." No written reply was ever received to this letter notwithstanding that a further letter of 11 June to the HIC's solicitors noted the lack of a reply. On 11 June at the hearing at which I made orders in AG 22 of 1998, counsel for the then respondents (senior officers of the HIC) advised that Mr Walsh was still under consideration for the FOI position. In consequence Mr Walsh instructed his solicitors to withhold filing the proposed application. Nonetheless on 12 June 1998 his solicitors were asserting by letter (for reasons I need not explore here) that "a complete lack of bona fides" had been demonstrated by the HIC towards Mr Walsh. Mr Walsh was informed by a letter of 12 June that, on his return to work with the HIC on 15 June 1998, he should report to Mr Kelly (who was, coincidentally, a respondent in AG 22 of 1998). I would note in passing that Mr Walsh has deposed that, by the date of that meeting, he had consulted the provisions of the relevant Enterprise Agreement and had sought legal advice thereon. In light of that advice he took the view that the Health Insurance Commission Enterprise Agreement (Efficiency and Productivity Component) 1994, cl 2 (Staff Selection Procedures) ("the Agreement") did not require a formal interview or similar process for a direct transfer to be made. That clause provided: "2. DIRECT TRANSFER 2.1 A direct transfer may occur if it would assist in the efficient functioning of the Commission (e.g. some positions may best be filled by someone already experienced at the level). 2.2 A direct transfer may also occur if an officer: (a) is excess to needs; (b) is unattached; or (c) would benefit for developmental reasons." The 15 June meeting with Mr Kelly was attended as well by a Mr Mien, Human Resources Manager of the HIC. While there is some disagreement as to what transpired at that meeting, it seems clear that Mr Walsh was informed (as recorded in a record of Mr Mien) that: (i) "Your solicitors' letter of 12 June requesting your immediate direct transfer to the Manager, Parliamentary job will be answered solicitors to solicitor later today." (ii) "The Commission's position is that the 1994 Enterprise Agreement does not compel a direct transfer in a situation such as yours but permits an appropriate management discretion to do so to ensure the overall efficient functioning of the Commission and the relative suitability of an employee for any position as required by Condition 11 of the HIC Terms and Conditions of Employment." (iii) "In order to meet your situation as an unattached officer, however, we propose to convene a panel to consider your suitability for the Manager, Parliamentary, Privacy and Freedom of Information position. Thus, there will be no merit selection process unless you are found not to be suitable for the position. We expect to be able to convene the panel before the end of this week." (iv) "Mr Walsh was still subject to the application of the National Staffing Policy process ("the NSP") (on which see generally my reasons of 8 May 1998 in AG 22 of 1998) the outcome of which could be his transfer to MP Ltd." I would again note in passing that the importance to Mr Walsh of his remaining in the HIC was the advantage it gave of being able to be a beneficiary of the "Direct Transfer" provision I have earlier set out. I should add that at the 15 June meeting Mr Walsh was not provided with the criteria to be applied in the assessment to be made of him by the selection panel – a matter of which he was to complain in this proceeding. He was, in any event, of the view that the assessment was unnecessary in light of what others had told him was usual HIC practice and this in turn aroused his suspicions as to his likely fate in his application. He did not believe he was to be transferred to the FOI position, and that the NSP would be used to transfer him to MP Ltd. His apprehension, he deposes, was strengthened by his experience of being transferred to MP Ltd in February 1998 and its circumstances. On 15 June, after this meeting, the present application was filed. I will note its terms below. Two days later Mr Walsh was provided with a memorandum advising him of the arrangements for the interview "to consider your competency" for the FOI position. That memorandum stated (inter alia): "2. The Staff Selection Procedures, as detailed in the Enterprise Agreement of 9 June 1994, state: 12.2 The selection committee will comprise two members: (a) a personnel representative with a knowledge of EEO principles who will act as a Chairperson; and (b) a representative with a thorough knowledge of the subject matter area. 12.3 Where it is impractical for a personnel representative to participate in the selection process (e.g. country branch offices) the Chairperson must possess a thorough knowledge of EEO principles. 3. The interview has now been arranged for 10am Tuesday 23 June 1998. The interview is to be held in the Commissioner's Lounge on the third floor of the Millar Building. The proposed selection committee is: Ms Anne Stumpf (Chairperson) Mr Doug Hall … 5. You are to be considered in isolation from, and not in competition with, other applicants for the advertised vacancy. If you are rated competent against all of the selection criteria, you will be appointed to the position." Mr Walsh did not attend this meeting. His disagreement with the manner of his treatment was growing and this was reflected in correspondence with the HIC and its solicitors. On 29 June 1998 Mr Kelly sent Mr Walsh the following memorandum (omitting formal parts): "Subject: Competency Assessment for position of Manager, Parliamentary, Privacy and Freedom of Information I refer to previous correspondence and, in particular, your memorandum to me dated 23 June 1998 and a letter from Sneddon Hall & Gallop to the HIC's solicitors dated 22 June 1998 a copy of which has been passed to me. I note that you did not attend the interview with the selection committee to determine your competency for the above position which was arranged for 10.00 am, Tuesday 23 June 1998. Under Attachment D to the Health Insurance Commission Enterprise Agreement (Efficiency and Productivity Component) 1994 ("the 1994 EBA") paragraph 2 of the policy and clause 2 of the staff selection procedures make it clear that direct transfers are subject to an assessment of the competency of officers to carry out the functions of a relevant position. The selection committee is tasked with determining that precondition and, as was made clear, in George Mein's memorandum of 17 June 1998, there will be no merit selection process unless you are not found competent. I note in this context that you have on several occasions (eg paragraph 5 of your memorandum of 23 June 1998) asserted that you have been "proved suitable" to undertake the functions of the position. The HIC does not accept that you have been proved suitable to carry out the functions of this particular position or that you have participated in any process to determine that fact. It is for this reason, that I now wish to set out the steps that the HIC proposes to take in order to determine whether, I, as the appropriate delegate, should approve your transfer to the position under subclause 2.3 of the Staff Selection Procedures in Attachment D to the 1994 EBA. 1. The selection committee will reconvene to consider your competency for the position on Wednesday, 1 July 1998 at 10.00am in the Commissioner's Lounge, 3rd Floor Millar Building. You are invited to attend that meeting to demonstrate your competency and to make any further submissions you wish as to your claim for the position. The Committee will also question you about your claims that you are competent and seek such further appropriate information as it sees fit. 2. Given the view expressed by your solicitors in their letter of 22 June 1998, we understand that you may see attendance at such an interview as detrimental to your present legal proceedings. The HIC, however, must be able to fill the position at the earliest opportunity. Accordingly, the HIC wishes to determine whether to transfer you to the position so that either the proceedings on 9 July 1998 will be resolved if you are transferred to the position or, alternatively, a merit selection procedure can occur immediately thereafter if you are not transferred and are not successful in obtaining an injunction. Accordingly, if you do not attend, the Committee will consider whatever material you have submitted to it in the light of the selection criteria and the job description. Moreover, the Committee will be obliged to make such further inquiries as it considers appropriate in order to assess your claims of competency for the position. I would expect this to include an inspection of your personnel file, contact with your referees and contact with further persons in accordance with clause 15.2(b) and (c) of Attachment D to the 1994 EBA. The Committee will then produce a report in draft form and supply you with a copy. You will have 3 working days in which to comment on the draft. The Committee will consider your comments (if any) and make its final report to me as the appropriate delegate. 3. If the report recommends that you be transferred to the position, I will then proceed in accordance with the transfer provisions of Clause 2 of Attachment D of the 1994 EBA. If you are not transferred to the position, subject to the current legal proceedings, the merit selection process will proceed."

The Application In short form, the application was one under s 6 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act") to review the respondent's conduct in relation to the proposed making of a decision to appoint the FOI position. The grounds of the application were: "1. There has been a denial of natural justice and/or there is likely to be a breach of the rules of natural justice in that: (i) there has been a failure to inform the applicant of the selection process for the position of Manager, Parliamentary, Privacy and Freedom of Information; (ii) the applicant has a legitimate expectation from the terms of his employment that he would be appointed to the position; (iii) the respondent has not considered, or has not properly considered, the application of the applicant for appointment to the position. 2. The procedures that are required to be observed by law to be observed in respect of the conduct have not been, and are not being, and are likely not to be, observed in that the respondent has failed to transfer the applicant to the position of Manager, Parliamentary, Privacy and Freedom of Information in accordance with clause 2 of Attachment D to the Health Insurance Commission Enterprise Agreement (Efficiency and Productivity Component) 1994. 3. That the making of the proposed decision to appoint a person, other than the applicant, to the position would be an improper exercise of the powers conferred by the Health Insurance Commission Act 1973 (Cth) in pursuance of which the decision is proposed to be made in that: (i) the relevant considerations are not being taken into account namely the qualifications and experience of the applicant and the terms of the applicant's employment; (ii) the exercise of the power would be so unreasonable that no reasonable person could so exercise the power, namely that the relevant considerations were not taken into account as particularised in paragraph (i) above. 4. That the making of the proposed decision would be otherwise contrary to law in that it would cause a breach of the contract of employment between the applicant and the respondent." The relief sought was: "1. an order that the respondent be restrained from taking any action to appoint a person other than the applicant to the position of Manager, Parliamentary, Privacy and Freedom of Information until further order; 2. an order that the respondent be restrained from applying the provisions of Section 21 of the Health Insurance Commission (Reform and Separation of Functions) Act 1997 (Cth) to the applicant until further order; 3. an order that the applicant be appointed to the position of Manager, Parliamentary, Privacy and Freedom of Information. 4. an order that the respondent pay the applicant's costs of and incident to this application; 5. such further orders as to the Court seem proper." On 29 June the respondent filed an objection to competency on the ground that the conduct impugned, being conduct leading to the making of a decision under an instrument under the Workplace Relations Act 1996 (Cth), was not conduct to which the ADJR Act applied: item (a) Sched 1 of the ADJR Act.

The 9 July Hearing When the matter came on before me the parties announced that it had been resolved, save as to costs, and that on the giving of undertakings by the respondent the application should be dismissed. The undertakings were: "1. To proceed with the selection process for the position of Manager, Parliamentary, Privacy and Freedom of Information as outlined in the memorandum of 29 June 1998 being annexure D to the affidavit of Adrian Kelly sworn 9 July 1998 with the following variation, namely that the Applicant will be given a further opportunity to appear personally before the selection panel. 2. Should the Applicant not be appointed to the above position, the Respondent will assess the suitability of the Applicant for any substantively vacant position in the Respondent in which the Applicant express an interest within the period ending at the close of business five working days after the Delegate makes the decision that the Applicant is not to be appointed to the position referred to in undertaking No 1 and the Respondent will notify the Applicant within one working day of the decision of any vacant positions at his level or any other level that the Applicant advises to the Respondent. 3. If the Applicant is not appointed to any position referred to in undertakings 1 or 2 above, the Respondent reserves the right to proceed to apply the National Staffing Policy in accordance with the method set out in the memorandum from Mr George Mein to the Applicant dated 18 June 1998. 4. Until the process referred to in undertaking 1 is complete the Respondent will not appoint anyone other than the Applicant to that position. 5. Until the process referred to in undertakings 1 and 2 is complete, the Respondent will not take any step other than that referred to in paragraph no. 1 of the memorandum referred to in undertaking 3 to implement the National Staffing Policy is set out in undertaking no. 3 or otherwise."

The Costs Issue Both parties seek an order for costs against the other: the applicant, because, notwithstanding the formal dismissal of the application, he obtained more than he was seeking; the respondent, because in its view the application was premature, unnecessary and hopeless. As I indicated at the hearing the only real questions to be determined were whether the applicant ought pay the respondent's costs because the application itself was unreasonably brought in the circumstances or else was obviously incompetent. The circumstances simply were not ones in which an order should be made against the respondent. It acted responsibly in giving the undertakings it did to avert a further round of litigation the defence of which it may well have been able successfully to mount. It should not be punished in costs for its preparedness to engage in responsible compromise. Considered in isolation the application may well appear to be both precipitate and unreasonable. But as I noted at the outset, the matter has a history that provides a context – albeit an unhappy one – in which the bringing of Mr Walsh's application should be judged. Ordinarily one would have expected that discussion and questioning would have provided the appropriate vehicles for the resolution of doubt and uncertainty between Mr Walsh and his superior officers in relation to his desired appointment to the FOI position. Such, though, would presuppose the existence of a level of trust and understanding between them that was regrettably lacking. The solicitor's letter had replaced direct dialogue as the medium of significant communication at least from Mr Walsh's side and his superiors knew this. They should, in my view, have been alert to the possible constructions likely to be placed upon, and the suspicions entertained of, their actions in these circumstances and of the likely responses thereto. Given the earlier proceedings and the continuing involvement of solicitors in the matter, the matter needed to be approached with more than usual sensitivity. It was not. While Mr Walsh's renewed resort to legal proceedings was regrettable it was not in all the circumstances unreasonable. The gulf of distrust that separated the various actors in this matter provided its explanation. I am not prepared to accept that its bringing of itself should for that reason result in a costs award against Mr Walsh. Distinct from unreasonableness in the above sense, Mr Walsh's initiation of the proceedings has been questioned on another ground. On 29 June 1998, the respondent filed an objection to competency on the ground that I was without jurisdiction to grant an order of review under the ADJR Act in that the conduct impugned was conduct leading to a decision under an instrument (the Agreement) made under the Workplace Relations Act 1996 and as such was not conduct to which the ADJR Act applies: ADJR Act Shed 1, item (a). There is no doubt that this objection was properly open to the respondent to agitate. And on full argument it may have proved to be well founded. Both parties have addressed me on the substantive question of competency while each has asserted that for present purposes it is unnecessary for me to decide the question. Having already dismissed the application subject to the issue of costs – a dismissal and an issue both premised upon my having jurisdiction in relation to the application – it is inappropriate for me collaterally to deal with the matter (in a sense hypothetically) simply for the purpose of awarding costs in the application itself. The essence of the objection is that the source of the power to make the decision challenged was the Agreement. The Agreement itself derives from the regime of Part V1B of the Workplace Relations Act 1996. And to the extent that the applicant relies upon the Health Insurance Commission Terms and Conditions of Employment ("the Conditions") made under the Health Insurance Commission Act 1993 (Cth) that reliance is (a) misconceived for reasons relating to the applicant's actual status, or else (b) unavailing, as the condition 8 of the Agreement provides (inter alia): "The determinations made by the Commission under s 28 of the Health Insurance Commission Act in relation to the Terms and Conditions of Employment, as in force on the date of certification of this Agreement shall form part of this Agreement except where the determinations are inconsistent with the terms of this Agreement, in which case this Agreement shall prevail." (emphasis added) Further it is said that the Agreement "covered the field". Reliance was placed upon such decisions as Hudson v Australian Telecommunications Corporation (1990) 27 FCR 97 and Marr v Australian Telecommunications Corporation (1991) 34 FCR 82. The applicant in contrast claims he actually was being dealt with under the Conditions; that despite condition 8 of the Agreement, the Conditions retained independent, continuing existence; and that a decision under the Conditions was, for ADJR Act purposes, a decision under an enactment: Chittick v Ackland (1984) 1 FCR 254. The relevant condition was said to be Condition 20. It provides: "Excess Officers If at any time the Commission finds that: (i) an officer is included in a class of officers employed in the Commission's service, which class comprises a greater number of officers than is necessary for the efficient and economical working of the Commission's service; (ii) the services of an officer cannot be effectively used because of technological or other changes in the work methods of the Commission's service or changes in the nature, extent or organisation of the functions of the Commission's service; or (iii) where the Commission has determined duties usually performed by an officer are to be performed at a different locality and the officer is not willing to perform duties at that locality, the Commission may transfer the officer to such other duties of equal classification within the service of the Commission as the officer is competent to fill. If no such position is available, the officer may be transferred to a position of lower classification. If no position is available for the officer he/she may be retired from the service of the Commission." It is the case that the applicant would have confronted a formidable hurdle in establishing jurisdiction under the ADJR Act. But I am not satisfied on the state of the materials before me that his response to the objection is simply unarguable (I refrain from expressing a view on matters of factual contention in this), or that his application was obviously doomed at the time it was brought. In these circumstances, and given the course the respondent has taken of not, in the event, contesting competence but of giving undertakings in the application, the appropriate order is that there be no order as to costs. I certify that this and the preceding ten (10) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. Associate: Dated: 28 September 1998 Counsel for the Applicant: Mr J Hilton SC Solicitor for the Applicant: Snedden Hall & Gallop Counsel for the Respondent: Mr R Refshauge Solicitor for the Respondent: Deacons Graham & James Date of Hearing: 28 August 1998 Date of Judgment: 28 September 1998