FEDERAL COURT OF AUSTRALIA Buckingham v Pan Laboratories (Australia) Pty Limited (in liquidation) [2004] FCA 597 CORPORATIONS – whether unfair contract claims for redundancy compensation are provable claims in a winding up Corporations Act 2001 (Cth) ss 471B, 500, 553 & 556 Industrial Relations Act 1996 (NSW) ss 83 - 85, 89, 106, 145, 149 & 153 Commercial Banking Co of Sydney Ltd v George Hudson Pty Ltd (in Liq) (1973) 131 CLR 605 referred to Fisher v Madden (2001-2002) 54 NSWLR 179 referred to Hansen v Namoi Enterprises [2004] NSWSC 65 referred to Hewlett Packard Australia Pty Ltd v GE Capital Finance Pty Ltd (2004) 203 ALR 51 referred to In the matter of ACN 050 541 047 Ltd [2002] NSWSC 586 referred to Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1992) 28 NSWLR 443 referred to Mullins v Peoplebank Australia Pty Ltd [2003] NSWIRComm 457 not followed Nommack (No 100) Pty Ltd v FAI Insurances Ltd (in Liq) (2003) 45 ACSR 215 referred to Ogilvie-Grant v East (1983) 7 ACLR 669 referred to Re A J Benjamin (In Liq.) and The Companies Act (1969) 90 WN (Pt 1) (NSW) 107 referred to Re Sydney Formworks Pty Ltd [1965] NSWLR 646 referred to Reynolds v Southcorp Wines Pty Ltd [2002] FCA 712 referred to Silbermann v One.Tel Ltd (2002) 20 ACLC 846 followed Silbermann v One.Tel Ltd [2001] NSWSC 895 referred to Vanguard Pty Ltd (in Liq) v Fielding (1992-93) 10 ACSR 373 referred to J J Macken et al, The Law of Employment, 5th edn, Lawbook Co, Sydney, 2002 COLIN BUCKINGHAM, SAMUEL ELIA, SOHRAB SIDHWA and KEN WARREN v PAN LABORATORIES (AUSTRALIA) PTY LIMITED (in liquidation) N47 of 2004 JACOBSON J 13 MAY 2004 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N47 of 2004 BETWEEN: COLIN BUCKINGHAM, SAMUEL ELIA, SOHRAB SIDHWA and KEN WARREN APPLICANTS AND: PAN LABORATORIES (AUSTRALIA) PTY LIMITED (in liquidation) ACN 003 763 308 RESPONDENT JUDGE: JACOBSON J DATE OF ORDER: 13 MAY 2004 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Each of the applications for leave to continue the proceedings in the Industrial Relations Commission is refused. 2. The applicants pay the costs of the proceedings in the Federal Court. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N47 of 2004 BETWEEN: COLIN BUCKINGHAM, SAMUEL ELIA, SOHRAB SIDHWA and KEN WARREN APPLICANTS AND: PAN LABORATORIES (AUSTRALIA) PTY LIMITED (IN LIQUIDATION) ACN 003 763 308 RESPONDENT JUDGE: JACOBSON J DATE: 13 MAY 2004 PLACE: SYDNEY REASONS FOR JUDGMENT Introduction 1 These are four applications for leave to commence or continue proceedings against the respondent, Pan Laboratories (Australia) Pty Limited (in liquidation) ("Pan Labs") in the Industrial Relations Commission of New South Wales. 2 The applications are said to be made under s 471B of the Corporations Act 2001 (Cth) ("the Act"). However, since Pan Labs is in liquidation under a creditors' voluntary winding up, it seems to me that the applications are brought under s 500(2) of the Act. The same principles apply whether the applications are made under s 471B or s 500 of the Act. 3 Pan Labs is a wholly owned subsidiary of Pan Pharmaceuticals Limited ("Pan"). On 23 May 2003, Mr A G McGrath and Mr C J Honey were appointed joint administrators of Pan Labs under s 436A of the Act. Mr McGrath and Mr Honey were appointed joint liquidators of Pan and Pan Labs on 23 September 2003 following a resolution of the creditors of both of those companies under s 439C of the Act. 4 The applicants are each former employees of Pan Labs. Each was employed in a senior capacity until his employment was terminated on the ground of redundancy on 2 October 2003. 5 Each of the applicants filed a summons for relief in the Industrial Relations Commission on 7 November 2003. Each summons claims an order under s 106 of the Industrial Relations Act, 1996 (NSW) ("the IR Act") declaring the applicant's contract of employment to be unfair. Each summons also claims an order that the contract of employment be varied to include a clause ordering Pan Labs to pay an amount for redundancy over and above the amount paid on termination of employment. 6 In Silbermann v One.Tel Ltd (2002) 20 ACLC 846 ("One.Tel") Gzell J held that a claim under s 106 of the IR Act by former officers of a company for a declaration that their contracts of employment were unfair insofar as they failed to provide indemnity against credit card liability was not a provable claim against the company under s 553 of the Act. 7 It seems to me that, with one exception, the claims in each of the present applications are indistinguishable from those which were considered by Gzell J. Accordingly, if I follow his Honour's decision in One.Tel, I would not grant leave to the applicants. 8 However, two of the summonses seek an order that the purported termination for redundancy was not bona fide. Counsel for the applicants contended that this was not a claim for relief under s 106 of the Industrial Relations Act and that the same claim was intended to be made in each of the other proceedings in the Industrial Relations Commission. 9 He submitted in argument that the claim was based on an implied term in each of the contracts of employment and that the purported termination in each case amounted to a wrongful repudiation of the contract which sounded in damages. 10 I gave the applicants leave to put in written submissions to expand counsel's oral submissions as to whether the termination for redundancy gave rise to a breach of an implied term. 11 Written submissions were filed by the parties, but apart from draft amendments to some of the summonses to allege lack of bona fides, the only substantive amendments in the drafts were to plead claims for compensation under s 89 of the IR Act. The Evidence 12 Each of the applicants was employed by Pan Labs for a number of years. 13 Mr Buckingham was employed for 9 ˝ years. At the time when he was made redundant, he held the position of Manufacturing Manager. His salary package as at 2 October 2003 was $91,633 p.a. with bonuses and a fuel allowance. 14 Mr Elia was employed for 9 years. He held the position of Quality Assurance Manager at the time when he was made redundant. His salary package as at 2 October 2003 was $104,710 including bonuses and allowances. 15 Mr Sidhwa was employed for 14 years. He held the position of Customer Service Manager and Packaging Manager when he was made redundant. His total salary package at that time was $79,369 including bonuses and allowances. 16 Mr Warren was employed for 9 ˝ years. He held the position of Engineering Manager. His total salary package as at 2 October 2003 was $75,800 including bonuses and allowances. 17 Each of the employees was paid an amount for redundancy on termination of his employment. Mr Buckingham, Mr Elia and Mr Warren were each paid $32,351 and Mr Sidhwa was paid $44,648. 18 None of the applicants had a written contract of employment. There was, accordingly, no written term entitling the applicants to any particular period of notice of termination or to a redundancy entitlement. Nor was it alleged that there were oral terms dealing with those questions. Indeed, the gravamen of each summons was that the contract was unfair because it contained no term dealing with redundancy. 19 In a letter from Mr McGrath to the solicitors for the applicants dated 28 October 2003, Mr McGrath set out an explanation for how the redundancy or severance payments were calculated. 20 The letter stated that since each of the employees was a non-award employee without a written contract, an assessment was made of the period which would constitute reasonable notice of termination. The letter stated that each received 13 weeks pay except for Mr Sidhwa who received slightly in excess of 17 weeks. 21 This appears then to have formed part of the calculation of redundancy. The letter explains the calculation of the total amount as follows:- "While the company had no formal written policy requiring severance payments to be made to non-award employees, there had been a past practice of making severance payments on the same basis as award employees. Accordingly, your clients were paid severance pay equivalent to that which applies to award employees, and calculated on the same basis. Each received the equivalent of 20 weeks pay." 22 Each of the employees asserts in his affidavit that he had an expectation that he would be paid an amount for redundancy greater than the sum he received. No evidentiary basis is laid for this with the possible exception of Mr Elia who referred to a document produced by Pan Labs called "Change in Control Policy" ("the Policy"). There is reference to the Policy in the summonses but the document was not in evidence. 23 There are also some suggestions in the applicants' evidence that the payments fall short of amounts paid elsewhere in the industry. However, the evidence did not establish that there was an industry practice. 24 Each applicant's evidence is to the effect that he received no prior warning that he would be made redundant. Each also asserts that the redundancy was not bona fide because he was immediately replaced by another named person. 25 However, this assertion was denied by Mr McGrath. He said in his affidavit of 16 March 2004 that none of the applicants, and indeed none of the other 96 employees who were made redundant on 2 October 2003 was replaced by another employee. 26 Mr McGrath's affidavit sets out the background to the redundancies and deals with the actions taken to determine the employment of the workforce. 27 Mr McGrath and Mr Honey were appointed as administrators in May 2003, approximately one month after a well publicised product recall and suspension of Pan's manufacturing licence by the Therapeutic Goods Authority ("the TGA"). 28 The business operated by the Pan Group was, apparently, large and complex. Approximately 150 staff were employed. 29 Mr McGrath's evidence refers to the attempts made to sell the Pan Group business, to the retention of existing employees during the period of administration for the benefit of any potential purchaser and to the eventual rejection by creditors on 23 September 2003 of a proposed Deed of Company Arrangement. On that date, the creditors resolved to place the company into liquidation. 30 Mr McGrath's evidence is that as a result of the decision to place Pan and Pan Labs into liquidation, a review was conducted of staffing levels aimed at minimising overheads. 31 The liquidators then determined that 100 of the staff of 142 should be made redundant. All of the redundancies were effected on 2 October 2003. The terminations and payment of entitlements to employees was supported by the Australian Workers' Union although the applicants are not members of the Union. 32 The liquidators reached agreement to sell the Pan Group business on 21 November 2003 and the sale was completed on 15 December 2003. 33 The liquidators' current estimate of the dividends to unsecured creditors of Pan Labs is in the range of 78 cents in the dollar. 34 There is one additional claim referred to in the evidence. It is a claim made only by Mr Elia and is reflected in his summons. He states in his evidence that following the suspension of Pan Lab's licence by the TGA in April 2003, the then CEO appointed Mr Elia to a new Executive Committee and promised him a retainer for his services in attempting to secure a licence. 35 No details of the terms of the alleged retainer are set out in the evidence. No evidence of any conversation deposing to the remuneration payable is set out. Nor are there any details in the summons. The Summonses for Relief filed in the Commission 36 Each summons is described as Form 12A "Summons for Relief under Section 106 (Unfair Contract)". Each summons is similarly entitled in the heading page which states that it is before the Industrial Relations Commission of New South Wales in Court Session. 37 Each summons claims an order declaring the contract of employment between the applicant and Pan Labs to be unfair under s 106 of the IR Act. 38 Each of the summonses also claims an order that the contract of employment be varied to include a clause ordering Pan Labs to pay redundancy based on the applicant's period of employment and seniority and based on his full salary package. 39 Each summons also claims an order that Pan Labs be ordered to pay the applicant an additional redundancy payment and an additional payment in lieu of notice less the redundancy payment made to him. 40 The amounts claimed for Mr Buckingham and Mr Sidhwa included one month's notice of termination due to seniority. Mr Warren claimed two months' additional notice. Mr Elia does not make a claim for an additional period of notice. 41 The total amount of the claims for additional redundancy payment and notice (where made) are $47,828 by Mr Buckingham, $124,714 by Mr Elia, $54,563 by Mr Sidhwa and $40,291 by Mr Warren. 42 Mr Elia also claims a fee in an unspecified amount for additional work said to have been performed by him from 28 April 2003 to 2 October 2003 towards regaining (albeit unsuccessfully) Pan Labs' manufacturing licence. The summons states that particulars of the fee will be provided prior to conciliation. 43 Mr Buckingham and Mr Elia claim an order declaring that the purported redundancy was not bona fide and compensation calculated in the same way as the claim for additional redundancy. Mr Sidhwa and Mr Warren do not make that claim in their summonses. The Proposed Amendments 44 Each of the applicants seeks to claim, in the alternative, an order that he be paid compensation under s 89 of the IR Act on the ground that his termination was unfair, such claim to be calculated in the same manner as the claim contained in the existing summons. 45 Mr Sidhwa's proposed amendment does not seek to make a claim for an order that his termination or redundancy was not bona fide. Mr Warren's proposed amendment does seek to make that claim. 46 The only other proposed amendment is common to each of the summonses. Each seeks to contend that the purported redundancy was not bona fide or was unfair (although Mr Sidhwa's document does not contend lack of bona fides) on five grounds as follows:- "(a) The applicant received by way of severance package an amount less favourable than was provided to other employees at the time of termination, (b) the contract did not include a redundancy provision, (c) the contract did not include any redundancy provision that was commensurate with the Applicant's length of employment, the Applicant's responsibilities with the Respondent Company or industry practice, (d) the contract did not afford natural justice to the Applicant in regards to the calculation of redundancy payment, and (e) the Applicant was made redundant and/or terminated without prior warning." 47 There is no allegation in the proposed amended summons that the applicants' contracts of employment contained an implied term in respect of an entitlement to redundancy payments. The Pan Pharmaceuticals Group Redundancy Award 2003 48 This award was made by the Industrial Relations Commission of New South Wales on 3 October 2003 by the President of the Commission. 49 It was made on the application of Pan, Pan Labs and three other companies in the Pan Group. The respondent to the application was the Australian Workers' Union (the "AWU") of New South Wales. 50 The award provides in [14] that the additional redundancy benefits which are to be provided are one week's pay for each completed year of service with a minimum of one week's pay for employees who have less than one year of service. The Legislation 51 Section 89 of the IR Act, on which the applicants now seek to rely, empowers the Commission to order an employer to reinstate an employee to his or her former position or, if it is impractical, to order compensation. 52 Section 89 is contained within Chapter 2, Part 6 of the IR Act. 53 Section 83 deals with the application of Part 6. Section 83(1) provides:- "(1) This Part applies to the dismissal of: (a) any public sector employee, or (b) any other employee, except an employee for whom conditions of employment are not set by an industrial instrument and whose annual remuneration is greater than $62,200 (or such greater amount as is prescribed by the regulations). …" 54 The amount now prescribed by the regulations is $85,400. 55 Section 84(1) provides that if an employer dismisses an employee and the employee claims that the dismissal is harsh, unreasonable or unjust, the employee may apply to the Commission for the claim to be dealt with under Part 6. 56 Section 85(1) provides that an application under Part 6 must be made not later than 21 days after the dismissal of the employee. The Commission is required to accept an application made out of time in the circumstances specified in s 85(2). The Commission may accept an application out of time under s 85(3) having regard in particular to the matters there set out. 57 Section 89(5) provides:- "If the Commission considers that it would be impracticable to make an order for reinstatement or re-employment, the Commission may order the employer to pay to the applicant an amount of compensation not exceeding the amount of remuneration of the applicant during the period of 6 months immediately before being dismissed. If the applicant was on leave without full pay during any part of that period, the maximum amount of compensation is to be determined as if the applicant had received full pay while on leave." 58 Section 90 provides as follows:- "The Commission must not determine an applicant's claim by making an order under section 89 if: (a) another Act or a statutory instrument provides for redress to the person in relation to the dismissal, and (b) the person has commenced proceedings under the other Act or instrument or has not lodged a written undertaking not to proceed under the other Act or instrument." 59 Section 106 of the IR Act is contained in Ch 2, part 9. It provides, relevantly:- "(1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract. (2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason. (3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time. … (5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case. (6) In making an order under this section, the Commission must take into account whether or not the applicant (or person on behalf of whom the application is made) took any action to mitigate loss." 60 The Commission is established by s 145 of the Act. Its functions are set out in s 146. Some of them are judicial functions. Many are not. 61 Provision is made in s 149 for the appointment of judicial members of the Commission. The judicial members constitute the Commission in Court Session; see s 151. 62 Section 153 provides that certain specified functions are to be exercised only by the Commission in Court session. 63 Proceedings under s 106 for relief from an unfair contract must be heard by the Commission in Court session; see s 153(1)(c). 64 A claim for an order under s 89 is not required to be heard by the Commission in Court session. Indeed it would seem inappropriate for it to do so because s 86 requires the Commission to endeavour by all proper and necessary means to settle the claim by conciliation. The principles which govern the exercise of the discretion to grant leave 65 In Re Sydney Formworks Pty Ltd [1965] NSWLR 646 at 649-650, McLelland, CJ in Eq, when dealing with a predecessor of the existing s 471B of the Act, said that the obvious intention of the section is:- "to ensure that the assets of the company in liquidation will be administered in accordance with the provisions of the Companies Act and that no person will get an advantage to which, under those provisions, he is not properly entitled, and to enable the Court effectively to supervise all claims brought against the company which is being wound up." 66 In Re A J Benjamin (In Liq.) and The Companies Act (1969) 90 WN (Pt 1) (NSW) 107 at 109-110, Street J said:- "Where a company is being wound up as an insolvent company it is recognized that the legislative policy contemplates the assets of the company being taken under the control of a liquidator and administered with due regard to the rights inter se of the creditors of the company. Independent actions by creditors are not encouraged in a winding up. Responsibility for satisfying the rights of creditors is placed upon the liquidator. … Leave is not to be withheld simply and solely as a punishment: the primary consideration is the enabling of an orderly winding up. If no prejudice, procedural or substantive, will flow to those having interests in the winding up, an applicant has a strong case for gaining the leave he seeks." 67 In an often cited passage from the judgment of McPherson J in Ogilvie-Grant v East (1983) 7 ACLR 669 at 672, his Honour said that the preferable explanation for the requirement of leave is that a company in liquidation should not be subject to a multiplicity of actions which would be expensive and time consuming. 68 In Vanguard Pty Ltd (in Liq) v Fielding (1992-93) 10 ACSR 373 a Full Court (Wilcox, Burchett and Beazley JJ) reviewed the authorities on the question of the evidence which is required to support the grant of leave. Their Honours held at 380 that it is unnecessary to demonstrate a prima facie case against the company in the technical sense of that term. Their Honours said at 380 that the test to be applied is akin to that which is used for the grant of interlocutory relief. That is to say, the evidence must demonstrate that there is a serious question to be tried. 69 In Nommack (No 100) Pty Ltd v FAI Insurances Ltd (in Liq) (2003) 45 ACSR 215, Burchett J said at 221 that the authorities establish that the factors which determine whether it is appropriate to grant leave include: the amount and seriousness of the claim, the degree of complexity of the legal and factual issues involved and the stage to which proceedings, if already commenced, have progressed. The Decision in One.Tel 70 The applicants for leave to proceed were former officers of the company who had incurred liabilities to credit card companies on their corporate credit cards. The applicants brought proceedings in the Commission in which they sought declarations under s 106 of the IR Act that the contract between the directors (and their service companies) and the company was unfair insofar as it failed to provide for an indemnity against liability to the credit card companies. They also claimed compensation against the company in an amount required for the indemnity. 71 Master Macready, at first instance, Silbermann v One.Tel Ltd [2001] NSWSC 895, held that an order for compensation unde s 106 of the IR Act was not a provable debt in the winding up. He therefore dismissed the application for leave. 72 An unsuccessful appeal was taken to Gzell J. His Honour considered the history of the nature of the debts and claims which may be proved in a liquidation under s 553 of the Act. The question which arose was whether a prospective order by the Commission was a future claim, the circumstances giving rise to which occurred before the date on which the winding up was taken to have begun. 73 His Honour was of the view that two decisions of the New South Wales Court of Appeal supported the proposition that a claim under s 106 of the IR Act is not a future claim for the purposes of s 553 of the Act. His Honour was of the view at [16] that those authorities established that s 106 of the IR Act does not create an obligation which comes into existence at the commencement of the winding up. It can only arise if and when the Commission makes an order. It is therefore not a future claim against the company. 74 Gzell J was fortified in his views by the observations of Sheller JA (with whom Beazley JA agreed) and Meagher JA in Fisher v Madden (2001-2002) 54 NSWLR 179 ("Fisher"). Although, as Gzell J observed, the decision in Fisher was not determinative of the issue in One.Tel, the reasoning was equally applicable. 75 Fisher is authority for the proposition that the right to invoke the jurisdiction of the Commission under s 106 of the IR Act is not a claim which was in existence at the commencement of the winding up so as to give rise to an existing obligation to make a retrenchment payment within the provisions of s 556(1)(h) of the Corporations Law (Cth); see at [12] per Meagher JA and at [41], [44] and [46] per Sheller JA. 76 Gzell J pointed out that Sheller JA had said that the accepted practice in a winding up is to compute the amount of the claim at the date of commencement of the winding up, Gzell J then said at [16]:- "In these circumstances it seemed unlikely to his Honour that the legislative intention was no longer to confine an obligation to one in existence at the relevant date but to extend the category of future claim to any obligation which comes into existence at any time in the future. In my view, such a construction of s 553(1) would place an intolerable burden on a liquidator whose responsibility is to determine which future claims are to be admitted to proof and in what amounts." 77 Master Macready followed One.Tel in the recent decision of Hansen v Namoi Enterprises [2004] NSWSC 65. Decision in the present application 78 Each of the proceedings filed in the Commission is a claim for relief under s 106 of the IR Act. That is how it is described and, with the possible exception of the claim by Mr Elia for the additional work under the retainer, that is the substance of the claim. 79 The suggestion in the claims made by Mr Buckingham and Mr Elia (and in the proposed claim by Mr Warren) that the purported redundancies were not bona fide were based upon breach of contract was not pursued in the proposed amended summonses. 80 The issue which arises in each of the present applications is precisely the same as the issue which was considered by Gzell J in One.Tel. 81 In my respectful opinion, the conclusion reached by his Honour is plainly correct. It is supported not only by two authorities of the New South Wales Court of Appeal, namely Fisher and Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1992) 28 NSWLR 443 but also by the authorities which explain the need for leave to proceed. 82 Whether or not the preferable explanation for the requirement of leave is the avoidance of multiple actions, it is also a fundamental principle that leave is necessary to ensure that no person will gain an advantage to which he or she is not properly entitled. 83 The principle which underlies the whole of the law of insolvency is that upon the making of a winding up order the rights of all parties, including creditors, crystallise. The assets of the company are to be realised and distributed rateably among the creditors then existing. In Hewlett Packard Australia Pty Ltd v GE Capital Finance Pty Ltd (2004) 203 ALR 51, Allsop J, in considering the question of the proper construction of s 266 of the Act, and in particular the power to extend time for lodgement of a charge, traced and analysed in considerable detail the development of the law on the effect of a winding up order on the rights of creditors. 84 Allsop J referred in the course of his analysis to the decision of the High Court in Commercial Banking Co of Sydney Ltd v George Hudson Pty Ltd (in Liq) (1973) 131 CLR 605. There, Menzies J said at 613:- "It is a deeply rooted principle of company law that, when liquidation has commenced, one creditor should not be assisted by the court to improve its position vis-ŕ-vis other creditors." 85 It would be inconsistent with these fundamental principles for a claim under s 106 of the IR Act to be characterised as a "future claim" which may be admitted to proof in a winding up. The section gives the Commission a wide discretion to alter, retrospectively, substantive rights and liabilities. In Fisher at [5] Meagher JA described the Commission's powers as malleable. The power which is conferred would, if exercised, permit the Commission to alter retrospectively the rights of existing creditors which have already crystallised on liquidation. The power to alter those rights would flow from a finding of unfairness in a claim made by a person to whom no obligation is owed at the relevant date. It cannot have been the intention of the legislature that a claim to the exercise of such a jurisdiction would be a future claim admissible to proof against the company under s 553(1) of the Act. 86 It is not to the point that the circumstances giving rise to the claim, that is to say, the employment of the applicants, occurred before the relevant date. The question is whether the claim is a future one in the sense referred to in s 553(1). For the reasons set out above, it is not. 87 I reject the submission that the decision of the Commission in Mullins v Peoplebank Australia Pty Ltd [2003] NSWIRComm 457 is authority for the proposition that leave may be granted under the Act to pursue a prospective claim under s 106 of the IR Act. If it is authority for that proposition, I would not follow it. 88 The only other claim made in the summonses as filed is the claim made by Mr Elia for a fee payable under the alleged retainer. Even if this is a claim for breach of contract rather than a claim of unfairness under s 106 of the IR Act, I would not give leave to pursue it because the evidence fails to establish that there is a serious question to be tried. 89 Not only is there no evidence of the terms of the retainer, in particular the fee payable and how it was to be determined, there is simply no evidence of any work done pursuant to the alleged retainer. 90 The applicants' failure to pursue in the proposed amended summons the suggestion made in argument that there was a claim for breach of contract arising from the alleged lack of bona fides in the redundancy means that it is unnecessary to deal further with that issue. It seems to me that the claims made in the existing summonses and in the proposed amended summonses about lack of bona fides are no more than claims of unfairness under s 106 of the IR Act. 91 Even if that is not so, I would not give leave to commence or continue a claim of lack of bona fides because the evidence does not demonstrate a serious question. 92 The evidence of lack of bona fides consists merely of bald assertions that the relevant applicant's job was undertaken by a named employee. It would have been open to the applicants to have obtained documents on subpoena which, if the allegation is correct, would have established the employment of the person and his or her job description. 93 It is true, as the authorities make clear, that it is unnecessary to prove every element of the claim but against the bald assertion by the applicants I have the sworn testimony of Mr McGrath that the applicants were not replaced by other employees. 94 Moreover, Mr McGrath's evidence demonstrates quite plainly the steps which were taken to make employees, including the applicants, redundant and the commercial considerations which underlay the decision to make the applicants redundant. Indeed, as Mr McGrath said in his letter of 28 October 2003, when a liquidator has been appointed, the insolvency of a company makes redundancies inevitable. 95 I turn then to the proposed claims under s 89 of the IR Act. I would not give leave to pursue those claims for the following reasons. 96 First, they are all out of time under s 85(1) of the IR Act and there is no evidence to suggest that they may fall within the exceptions in s 85(2) or (3). 97 Second, the claims are not future claims within s 553(1) of the Act for much the same reasons as claims under s 106(1) of the IR Act fall outside the Act. The power to award compensation and the obligation to pay it is not one which was in existence at the relevant date. It is not analogous to a claim for damages in tort which had its inception before the commencement of the winding up. It is not determined by the Commission in Court Session but as an aspect of the Commission's powers of conciliation. Moreover, the jurisdiction to make an award is dependent upon a finding that the dismissal is harsh, unreasonable or unjust. 98 In any event, the claim for compensation under s 89(6) is capped at six months' salary. All of the applicants have been paid nearly five months' salary so the claims would be limited to one month and must be of little utility. 99 There is a further reason why leave must be refused to pursue some of the claims under s 89. The jurisdiction is limited by s 83 and the Regulations to non-award employees whose total remuneration does not exceed $85,400. Mr Buckingham and Mr Elia are therefore precluded from making a claim. 100 Finally, there is nothing in the summonses, the proposed amended summonses or the evidence to support a claim of breach of contract. There was nothing, for example, to suggest that there was any contractual obligation to pay redundancy or give a particular period of notice under the Policy. Nor was there any suggestion of a contractual entitlement to payment in the same terms as the Pan Pharmaceutical Group Redundancy Award. 101 An entitlement to redundancy benefits may arise as a matter of implication from the employer's adoption of a redundancy policy. As Hely J said in Reynolds v Southcorp Wines Pty Ltd [2002] FCA 712 ("Reynolds") at [44] where a contract of employment is terminable by notice, any requirement to make a severance payment is in addition to the requirement to give notice of termination. Any entitlement to severance payment is enforceable as a contractual debt; see Reynolds at [45]; J J Macken et al, The Law of Employment, 5th edn, Lawbook Co, Sydney, 2002 at 190; see also In the matter of ACN 050 541 047 Ltd [2002] NSWSC 586 (Austin J). 102 If there was a contractual claim which satisfied the requirements for the exercise of my discretion, I would have given leave to bring it in the Supreme Court or the District Court or in this Court. However, as I have said, no such claim is made. Orders 103 The orders I will make are that each of the applications for leave to continue the proceedings in the Industrial Relations Commission of New South Wales is refused with costs. I certify that the preceding one hundred and three (103) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. Associate: Dated: 13 May 2004 Counsel for the Applicant: C S Ward Solicitor for the Applicant: Gordon Cavanagh Solicitors Counsel for the Respondent: J Scarcella Solicitor for the Respondent: Blake Dawson Waldron Date of Hearing: 20 April 2004 Date of Judgment: 13 May 2004