Peter James McKay Watson v Royal Selangor (Aust) Pty Ltd [1995] IRCA 296

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 2054 of 1995 B E T W E E N PETER JAMES MCKAY WATSON Applicant A N D ROYAL SELANGOR (AUST) PTY LTD Respondent Reasons for Judgment 4 July 1995 PARKINSON JR This decision is in relation to notices of motion filed in an application made pursuant to S170EA of the Industrial Relations Act 1988. The applicant filed a notice of motion on 22 May 1995 and a notice of motion was filed by the respondent on 26 May 1995. It is appropriate to set out the history of this matter and these notices of motion. The S170EA application was referred to the Industrial Relations Commission for conciliation pursuant to S170EC. That conciliation took place on 2 May 1995. At that proceeding the applicant says the matter was settled, with agreement being reached between the applicant and the respondent as to terms of settlement. The applicant was represented at the conciliation conference by solicitors, and the respondent was represented by senior employees of the respondent and the Victorian Employers Chamber of Commerce and Industry. The agreement alleged by the applicant was not complied with by the respondent, and at paragraph 6 of the applicant's affidavit he says that on 12 May 1995 he was informed that the respondent "would not proceed with the agreement". The respondent's general manager says in his affidavit that the respondent's representatives had limited authority to settle the matter and any further terms were subject to his approval and the execution of terms of settlement. Mr Schoknecht then refers to the fact that no formal terms had, at the date of the hearing of the notices of motion, been executed. It is not said in that affidavit that the terms were beyond the representatives' authority, nor is it said that the terms were not as the applicant has described them, other than in the aforementioned aspects. However, it is apparent from the submissions of counsel for the applicant that the terms alleged by the applicant are disputed. The applicant filed a notice of motion filed on 22 May 1995 and a notice of motion was filed by the respondent on 26 May 1995. The applicant's motion is that the court ought, in its accrued jurisdiction, make orders to enforce a contractual claim raised by the applicant as a result of the terms of settlement entered between the parties. The applicant seeks the following orders: 1. An order that the respondent has breached the agreement made on its behalf by its representatives on 2 May 1995. 2. An order that the respondent pay to the applicant the sum of $30,000.00 forthwith. 3. An order for interest from 16 May 1994 to the date of the decision in accordance with the Rules of Court. (I take the reference to the Federal Court Rules to be a reference to the Rules of the Industrial Relations Court of Australia.) 4. An order for costs. 5. Any other order which the court may deem to be appropriate. The respondent's notice of motion raises a jurisdictional issue and further denies any terms of settlement were agreed between the parties so as to constitute a binding agreement between them. Further, the respondent says that the court ought not proceed to hear and determine the claim arising in the inherent or accrued jurisdiction. The respondent seeks the following orders: 1. That the court has no jurisdiction to hear and determine the application under S170EA of the Act because, pursuant to S170CD, the applicant's relevant wage exceeded the prescribed amount. 2. An order that the referral of the application to the Australian Industrial Relations Commission was beyond the jurisdiction of the court . 3. Various orders in relation to the dealings by the Australian Industrial Relations Commission with the application referred to it by the court. 4. In the alternative, if the court finds it has jurisdiction to deal with the application, that it refer the application to the Commission for further conciliation; or determine that it is satisfied that it is not appropriate to so refer and give directions for the hearing of the merits of the application by the court. S170CD(1)(a) It is appropriate to deal first with the respondent's argument pursuant to S170CD that the applicant was in receipt of more than $60,000.00 in relevant wages in the 12 months to the termination of his employment. The applicant was employed upon a base salary, together with a commission of 1.5% of all sales made by him. The applicant was paid $12,946.37 in commission during the relevant period. This took his earnings during the relevant period to $64,244.91. No issue was taken by the applicant as to the amount in question or as to the time periods in respect to which it was attributed. The affidavit of Mr Schoknecht says at paragraph 3 that it was an objective of the parties at the point of engagement that the applicant would receive an annual salary of $65,000.00. Nevertheless there is clear authority in this court for the proposition that what is relevant in this context is not the genesis of the obligation but its nature: see in this regard Ardino v Count Financial Services Group Ltd (1994) 126 ALR 49 at 55. I am concerned with what the arrangements between the parties were in actual fact, and what actual monetary entitlement to wages the applicant had. The respondent submits that the commission to which the applicant was entitled is to be accounted for as wages for the purposes of S170CD. The meaning of the term "relevant wages" was considered by the Chief Justice in Ardino in the context of payments made into a superannuation account at the initiative of the employee. The respondent in its subsequent written submissions submitted at paragraph 2 on page 4 that Ardino is authority for the following proposition: "Wilcox CJ found that superannuation payments which an employee was entitled to receive would be payments by the Respondent and would be wages." This was then extrapolated to the proposition that superannuation payments of all types would be included as "relevant wages" and, consequently, because commissions are used to calculate the appropriate superannuation contribution, therefore commission should also be included. I do not agree that this is either the correct interpretation of that decision, or the approach to be followed in this matter. That decision was fundamentally concerned with a situation where a clear and express entitlement to a monetary amount as "wages" above $60,000.00 in the relevant period had been established between the parties. There was a deliberate decision by the applicant in that matter, some time after the employment commenced, to divert his wages, tax paid, to a superannuation fund and to have the wages described as a contribution made by the employer. The Chief Justice decided that they were not superannuation contributions made by the employer pursuant to any obligation to so do on the part of the employer, but rather were contributions made by and channelled by the employee of his relevant wages, which he had an entitlement to receive in the applicable 12 month period. The applicant's counsel pressed for the dealing with the claim in the court's accrued jurisdiction, and made only limited submissions at the hearing in relation to the application of S170CD(1)(a). After the hearing additional material was filed on behalf of the applicant wherein reliance was placed upon Brown v Listaglen Pty. Ltd. ( VI 1072/94, Murphy JR, unreported, 21 December 1994). The respondent was invited by the court to file further submissions in relation to this aspect, and it did so. It was submitted by the respondent that the circumstances of Brown v Listaglen could be distinguished, or that it ought not be followed. I find the Judicial Registrar's comprehensive analysis of the Act of assistance in this matter, and adopt his reasoning in this regard. In particular, I respectfully agree with the Judicial Registrar's analysis of the meaning of the term "wages" as being referrable to the base wage to which the applicant was entitled. In this regard the explanatory memorandum is of assistance. So too are the terms of the statute itself, wherein it precludes consideration of payments made for overtime. I am of the view that it is clear by the definition of matters excluded from "relevant wages" that it was intended that there be a certain and definable basis upon which it could be determined whether an employee was excluded from the operation of the Act by virtue of S170CD, and that that was to be determined by the employee's base rate of pay. The term "wages" has been considered in Ardino and is to be given its ordinary meaning. In this respect the decisions of the High Court and the Western Australian Industrial Court to which I was referred by the respondent are of little assistance. As counsel for the respondent rightly pointed out, the term "wages" is defined in each of the statutes under consideration therein. Further, in each of the High Court cases, the court was dealing with that term in the context of the interpretation of various taxation statutes, and in the circumstances of legislation which has an entirely different purpose to that of Division 3 Part VIA of the Industrial Relations Act 1988. This approach is appropriate when one has regard to the following extract from the decision of Brooking J in Commissioner of Payroll Tax v Reserve Bank of Australia (1986) 66 ALR 677. His Honour said at 686: "The Commonwealth Pay-roll Tax Assessment Act always reached out far beyond wages in the ordinary sense. The reference to "salary" made it clear that the tax extended to the remuneration of "white collar workers" or other persons who might have been thought to receive salary rather than wages...A bonus, also included in the definition, would not ordinarily be regarded as wages; neither would commission. Allowances are mentioned." Having regard to the above matters, I am not satisfied that the term "relevant wages" or the word "wages" in S170CD includes amounts paid to employees by way of commission calculated by reference to a percentage of sales made. It follows that I have decided that the applicant is not precluded by the operation of S170CD from bringing his application and the court has jurisdiction in the matter. I turn now to consider the application made by the applicant that, pursuant to S430 of the Act, the court proceed to make orders in respect of the alleged agreement arising out of conciliation. The Accrued Jurisdiction Claim It was submitted by counsel for the applicant that the claim which ought be dealt with is the agreement sought to be enforced by the applicant. This was so whether or not the court found that jurisdiction existed to deal with the application pursuant to S170EA of the Act. The respondent submitted that in the event that the principal claim was beyond jurisdiction, the court ought not proceed to deal with the accrued claim. In this regard I was referred to Ardino v Count Financial Group Pty Ltd (cited above). I have already decided that the application is within the jurisdiction of the court so it is unnecessary to deal with this aspect of the respondent's submissions. I turn therefore to deal with the question of whether, having regard to the principles established in Fencott v Muller (1983) 152 CLR 570 and Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212, it is convenient or appropriate for the court to hear the claim in the accrued or inherent jurisdiction pursuant to S430 of the Act. The respondent submitted that if the court found that the application was within jurisdiction it ought proceed to deal with the S170EA application and decline in its discretion to hear the accrued claim. I agree with the respondent and am of the view that it is not convenient or appropriate for the claim to be heard in the accrued or associated jurisdiction. This is because I am not satisfied that the claim arises out of the same substratum of facts which found the original jurisdiction of the court pursuant to S170EA of the Act. The claim sought to be litigated is a contractual claim arising out of alleged terms of settlement. That agreement and its terms, whilst entered into during the course of a conciliation proceeding pursuant to the Act, is justiciable according to the usual principles of contract law governing agreements, without necessarily having regard to the factual circumstances of the employment, or the termination of the employment in particular, the latter being the principal issue with which this court is concerned. It is of particular note that the terms of settlement alleged by the applicant are disputed by the respondent; so the orders sought by the applicant could not be made without a full hearing to establish the actual terms of any agreement. I note that the applicant has not filed any notice discontinuing the proceedings, which appears to have been one of the terms of the agreement alleged, and to that extent his application is still alive and before the court. In view of the above matters I have decided that it is not convenient or appropriate that the court deal with the applicant's claim in its accrued jurisdiction, and I therefore decline to make the orders sought. The notice of motion filed by the applicant on 22 May 1995 is dismissed. In view of the history of this matter and the outcome of the conciliation proceedings, I am of the opinion that this is not a matter which is appropriate to be referred to the Australian Industrial Relations Commission. The application pursuant to S170EA will be placed in the list for directions and the parties will be advised of the date for a directions hearing. The orders of the court shall be: 1. That the applicant's notice of motion filed 22 May 1995 is dismissed. 2. That the respondent's notice of motion filed 26 May 1995 is dimissed in all respects except for application number 5(b) therein. 3. That the application pursuant to S170EA be placed in the list of cases awaiting directions. 4. That this is not a matter which it is appropriate to refer to the Australian Industrial Relations Commission. I certify that this and the preceding ten (10) pages are a true copy of the reasons for judgment of Judicial Registrar Parkinson. Associate: Dated: 4 July 1995 Solicitor for the applicant: Ms R Murley Counsel appearing for the applicant: Mr C D Johnson Solicitors for the respondent: Rigby Cooke Counsel appearing for the respondent: Mr F Parry Date of hearing: 6 June 1995 Date of judgment: 4 July 1995