The Public Service Association v Director of Public Employment
The Industrial Relations Commission of NSW (Commission) is established by the Industrial Relations Act 1996 (NSW) (IR Act). The Commission has the power to make an award in accordance with the IR Act setting fair and reasonable conditions of employment for employees. In March 2011 the Public Service Association (PSA), a trade union, filed an application in the Commission seeking two new awards. With these claims, the PSA adduced evidence of inflation, changes in the cost of living etc. While the two matters were being attended to, the IR Act was amended to insert s 146C. Section 146C requires the Commission when making or varying any award or order, to give effect to any policy on public sector employee conditions that is declared by the regulations to be an aspect of government policy to which the Commission must give effect. The requirement in s 146C takes precedence to the more general duty to make fair awards. The IR Act also provides for a general regulation making power in the Governor. The Governor would be able to make policy, and that policy would be given explicit force by s 146C.
Under the IR Act, there are two types of Commission members, “Presidential” and non-Presidential. Of the former, they may include the President, a Vice-President, and any number of Deputy Presidents. Importantly, Presidential Members may be appointed as a “Member of the Commission in Court Session”. If so appointed, they are “judicial members” of the Commission and they constitute the what is known as the Industrial Court. The NSW Constitution provides that there are three superior courts of record. These are the Supreme Court, the Land and Environment Court, and the Industrial Court.
The PSA challenged the validity of s 146C of the IR Act. The PSA argued that s 146C imposes on the judicial members of the Commission to give effect to government policy while they are not sitting as the Industrial Court. In this way, it is argued, the judicial integrity of the Industrial Court is undermined because the judicial officers of the Court are also involved in implementing executive policy.
All scholars of Federal Constitutional Law are familiar with the Boilermaker doctrine. Basically, the text and structure of the Federal Constitution is such that the judicial power of the Commonwealth is vested exclusively in what are called Chapter III courts. These courts are defined by s 72 of the Constitution and include the High Court, the various Federal Courts, and a State court invested with Commonwealth jurisdiction. As French CJ said, “The doctrine of the separation of judicial from executive and legislative powers, which is derived from the text and structure of the Commonwealth Constitution, has the consequence that a body like the Commission, combining non-judicial and judicial functions, could not be established by a law of the Commonwealth.”
However, the Commission is a body established by a State Parliament. Save for the Kable principle, State judicial power is not so exclusively confined. Thus French CJ set out the constitutional context and said that the legislative history of the Industrial Relations Acts since Federation reflect:
The constitutional authority of the State legislature in structuring the regulatory and judicial institutions of the State unconstrained by the doctrine of separation of executive and judicial powers applicable to federal courts. There are, however… limits upon the powers of State legislatures to make laws imposing on State courts functions which are incompatible with their institutional integrity as courts. A State legislature cannot subject State courts to direction by the executive government of the State, nor enlist a court of the State to implement decisions of the executive in a way that is incompatible with the court’s institutional integrity. Nor can it confer upon a judge of a State court a non-judicial function which is substantially incompatible with the functions of the court of which the judge is a member.
These can be taken to be a comprehensive summary of the principles of State Constitutional law since Kable v Director of Public Prosecutions as applied and interpreted since 1996.
The appeal was dismissed and it was held that s 146C was not unconstitutional. Notwithstanding the French CJ gave the leading judgment. The appeal was disposed of by answering two questions;
1. What is the proper construction of the word “policy” as it is used in s 146C?
2. What is the constitutional character of a regulation made under s 407 with its effect amplified by s 146C?
The first question was resolved by construing the word policy to not mean policy which is ambulatory. As an example from the case law, the word policy as it is used in the IR Act would not encompass the type of policy subject to litigation in Green v Daniels. Thus, “policy” as used in s 146C “does not extend to a direction as to the outcome of a particular matter before the Commission which leaves the Commission with nothing to do but to translate the direction into its order.” French CJ continued however and said “the term does, however, encompass principles of the kind embodied in the Regulation.” The consequence appears to be that where the government has announced a policy in the same manner as that in Green v Daniels, s 146C does not mandate the Commission to inflexibly apply that policy. When that policy is made the subject of a regulation, then s 146C would apply. Furthermore, the Chief Justice held that s 146C does not extend “to a regulation incorporating by reference a policy which consists simply of a direction about the outcome of a particular case before the Commission.”
Similarly the majority of Hayne, Crennan, Kiefel and Bell JJ said:
Those requirements (described in s 146C(1)(a) and cl 4 of the Regulation as “government policy”) are fixed by law, for they take effect only when fixed by regulation. The fixing of those requirements, by regulation, is an exercise of legislative power
As to the second question, the Chief Justice answered:
A regulation of the kind referred to in s 146C declares a policy in the sense explained above and attaches legal consequences to it, including the Commission’s duty to give effect to it. The policy becomes part of the body of law which the Commission is required to apply in the proceedings before it.
In short, the combined effect of ss 146C and 407 is as follows:
The application by the Commission of a regulation of the kind contemplated by s 146C does not involve the Commission in giving effect to an executive direction. It is simply required to apply the law as set out in the IR Act and the relevant regulation, which incorporates by reference the principles set out in a policy declared by the regulation. Such a policy could be embodied in the text of the regulation itself without any need to separately identify it as a “policy”.
Notwithstanding the cogency of the construction given by the Chief Justice, we might still resist the Chief Justice’s construction. This is because the construction apparently makes s 146C redundant because the policy becomes part of the body of law by reason of s 407 and effect must be given to it regardless of s 146C. Wherefore is there a need for s 146C? The answer lies in the subordinate role of delegated legislation. The effect of s 146C is then to elevate any regulations made under s 407 to override s 10 and other sections of the principal Act (the IR Act), essentially by piggybacking the Regulations on the primacy of s 146C. In conclusion then, s 146C simply requires the Commission to give primacy to policy that is the subject matter of the Regulations validly made under s 407. The judicial members of the Commission are asked to apply the law and to do so does not impugn their institutional integrity.
Given that the case was disposed of by way of statutory construction the case does not provide much by way of State constitutional jurisprudence. Kable was referred to by the Chief Justice and the majority but only Heydon J commented on it (below). Let us first comment on Heydon J’s separate judgment before turning to the merits of the PSA’s submissions.
Heydon J of course again gave a separate, though concurring, judgment. There are two things to take away from his judgment. First, Heydon J makes Kable the focal point of his judgment. Unfortunately his reductio ad absurdum does little more than show his dissatisfaction for Kable in less than ambiguous terms. His Honour remarked;
The Kable statements cannot possibly be applied to invalidate regulations merely on the ground that the courts are obliged to apply them. If they did, there would be a fatal flaw at their heart. That flaw is that the enactment of a s 146C(1)(a) regulation as part of an Act of Parliament would be equally vulnerable to invalidity on Kable grounds. Vulnerability of that kind would destroy the legislation-making power of the States.
After giving a brief civics lesson on how policy is drafted into a Bill and the process by which a Bill becomes an Act of Parliament, he then said:
Once that “policy” is reflected in statutes and regulations, it is binding as a matter of law. The judicial branch of government declares and enforces the law. In that sense, the judiciary gives effect to government policy dictated by the Executive. If the Kable statements invalidate legislation giving effect to government policy on that ground alone, they are wrong for that reason. They do not. Whether the Kable statements are wrong for other reasons need not be investigated in this appeal. [Emphasis added] That is because the statements will not bear the weight which the appellant places on them.
Thus in less than ambiguous terms, Heydon J continues his crusade against the Kable doctrine.
The second thing to take from his Honour is the beauty of his prose. Ever since the publication of court reports, the judicial officers of this country and elsewhere have recognised that they are the authors of literature. In that vein phrases such as “The customer pays his money and gets a ticket. He cannot refuse it. He cannot get his money back. He may protest to the machine, even swear at it. But it will remain unmoved” have been quoted time and time again by impressionable law students. And so his Honour writes:
In 1996, Kable v Director of Public Prosecutions (NSW) cut into that concept of the Australian federation by reducing the legislative freedom of the States… The Kable statements have received a remarkably chilly reception from some academic lawyers – a class usually keen to salute and foster modernity in constitutional law. They have been questioned by experienced constitutional law practitioners. But sections of the Bar have been more enthusiastic. If a modern equivalent to Pope Leo X were alive and well and practising law in Australia today, he might say: “We have been given Kable’s case; now let us enjoy it.”… A harsher critic still might reflect on Tom Lehrer’s dictum that when his erstwhile faculty colleague at Harvard, Professor Henry Kissinger, received the Nobel Peace Prize, political satire became obsolete. That critic might conclude that legal satire became obsolete when Kable’s case referred to the need to keep State courts as fit receptacles for the exercise of the judicial power of the Commonwealth, untainted by powers repugnant to or incompatible with that exercise, as if those State courts were inferior institutions, uncouth, uncultured and coarse, needing always to be scrutinised to prevent pollution of the snow-white purity of federal jurisdiction… The solemn and impressive trappings attending the appeal suggested a “great” constitutional case resting on a contest between evenly balanced arguments of a fundamental kind. But the appeal must be dismissed as hopeless. If there had been sufficient force in the appellant’s arguments to justify allowing the appeal, it would have cast grave doubt on the correctness of the Kable statements. It may sometimes be wrong to blame the parents for the sins of their children. But that so much time, money and effort could be wasted on an empty point suggests difficulties and flaws in the statements from which the point is derived.
If we are to find the constitutional significance of this case we must now critically analyse the merit of the PSA’s submissions. French CJ recounted:
As an element of its incompatibility argument the PSA pointed out that seven of the eight Presidential Members of the Commission had also been appointed as judicial members. A member of the Commission could, on the one day, hear proceedings (other than in Court Session) in which the Commission would be required to give effect to a government policy declared by regulation and on the same day, in the same courtroom with the same staff, sit as the Industrial Court to determine judicial proceedings involving the Government as a party. The PSA submitted that an intelligent observer would find no basis upon which to distinguish between the two proceedings, or to have confidence that the member of the Commission would, as required, give effect to government policy when sitting other than in Court Session but bring an impartial and independent mind to bear when sitting as a member of the Industrial Court.
Recalling now the line of cases from Kable up to Wainohu v NSW and the received cases from Federal jurisdiction (Wilson v Minister for Aboriginal and Torres Strait Islander Affairs and Grollo Palmer),repugnancy could arise by the conferral of non-judicial functions upon a State judicial officer in persona designata. Incompatibility is likely to arise if the exercise of those functions could diminish public confidence in the judicial officers concerned or the judiciary generally.
Let us then advance a version of the facts most favourable to the appellants. There are seven Presidential Members of the Commission. These seven are also judicial members of the Commission. They therefore hold judicial office in a superior court of record. They therefore hold two offices, one as judicial officers, and one as members of the executive. Turning this around the question could be asked, ought the judicial officers be invested with the power to make awards upon which they may later adjudicate? It should not make any difference whether judicial office is precedent or subsequent to executive office. The judicial officers in their non-judicial capacity are asked to implement policy. The policy is found in the Regulations. In their non-judicial capacity, they are being asked to interpret the Regulation and identify the policy therein. Should there be a dispute, in their judicial capacity they are asked to judicially interpret the Regulation and identify government policy. Upon identifying the appropriate government policy, they are called upon to adjudicate on whether the makers of the award interpreted the Regulations correctly. Any semblance of judicial independence from the executive is lost. This was, admittedly, not the version of facts accepted by the High Court. This version of the facts and its conclusion is sufficiently proximate to the disposition of the case to warrant explicit consideration. The High Court’s failure to consider more deeply this line of argument casts a shadow on the breadth and limits of the Kable principle.
In the end the case is quite unremarkable. The majority and the Chief Justice affirmed Kable but did not apply it or comment on it any further. Heydon J as usual continued his crusade against Kable. The case was disposed of narrowly by way of statutory construction. In the paragraph above I showed how the High Court could have dealt with the PSA’s submissions more directly, even if in the alternative. The case could have explored other high constitutional issues as well. After all, the Chief Justice did find it necessary to engage us in a history of the Industrial Court and industrial relations law in NSW. A curious student might then ask, although the Industrial Court might be invested with Federal jurisdiction, how might judges of the Industrial Court differ from judges of the Supreme Court in our system of an integrated Australian judiciary? This is especially after the comments made in Kirk v Industrial Relations Commission that “There is but one common law of Australia” and that the Constitution requires that “there be a body fitting the description “the Supreme Court of a State”, [with] the constitutional corollary that “it is beyond the legislative power of a State so to alter the constitution or character of its Supreme Court that it ceases to meet the constitutional description”. Only one lone reference was made to Kirk by the majority for the proposition that the separation of powers does not apply to the States. It is not a grave uncertainty, but until another test case comes along we will remain in suspense as to the shape of our one common law of Australia.