Anthony Smith & Associates Pty Limited v Sinclair [1996] IRCA 160

DECISION NO: 160/96 CATCHWORDS INDUSTRIAL LAW - appeal - principles on appeal - whether an appeal to a Full Court in the circumstances is a rehearing. INDUSTRIAL LAW - termination of employment - unlawful termination - remedy - whether reinstatement practicable and appropriate in all the circumstances. Industrial Relations Act 1988 ss 170DE(2), 170EA, 170EE(1), 170EE(2) and 377 Industrial Relations and Other Legislation Amendment Act 1995 - "final judgment" Re Coldham & Ors; Ex parte Brideson (No 2) (1990) 170 CLR 267 Simpson Ltd v Arcipreste (1989) 53 SASR 9 Mitchell-Collins v The Latrobe Council (1995) 60 IR 480 The Queen Victoria Memorial Hospital v Thornton (1953) 87 CLR 144 Liddell v Lembke (t/as Cheryl's Unisex Salon) (1994) 1 IRCR 466 No. RR 1260 of 1995 ANTHONY SMITH & ASSOCIATES PTY LIMITED v. GARY SINCLAIR WILCOX CJ, MOORE & MARSHALL JJ ADELAIDE 22 April 1996

IN THE INDUSTRIAL RELATIONS ) ) COURT OF AUSTRALIA ) No. RR 1260 of 1995 ) SOUTH AUSTRALIAN DISTRICT REGISTRY ) BETWEEN: ANTHONY SMITH & ASSOCIATES PTY LIMITED Appellant AND: GARY SINCLAIR Respondent CORAM: Wilcox CJ, Moore & Marshall JJ PLACE: Adelaide DATE: 22 April 1996 ORDER OF THE COURT THE COURT ORDERS THAT: 1. The appeal is dismissed. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.

IN THE INDUSTRIAL RELATIONS ) ) COURT OF AUSTRALIA ) No. RR 1260 of 1995 ) SOUTH AUSTRALIAN DISTRICT REGISTRY ) BETWEEN: ANTHONY SMITH & ASSOCIATES PTY LIMITED Appellant AND: GARY SINCLAIR Respondent CORAM: Wilcox CJ, Moore & Marshall JJ PLACE: Adelaide

DATE: 22 April 1996 REASONS FOR JUDGMENT On 12 March 1996 we dismissed an appeal against a judgment of von Doussa J and indicated we would publish our reasons for doing so in due course. These are our reasons. On 3 July 1995 Gary Sinclair ("the respondent") made application under s170EA of the Industrial Relations Act 1988 ("the Act") alleging that the termination of his employment by Anthony Smith & Associates Pty Limited ("the employer") had been in contravention of provisions of Division 3 of Part VIA of the Act. The application was heard by a Judicial Registrar who, on 2 November 1995, determined that the termination had been in contravention of s170DE(2) of the Act as the termination had been harsh, unjust and unreasonable. The Judicial Registrar ordered that the employer reinstate the respondent by appointing him to another position on terms and conditions no less favourable than those on which he was employed immediately before the termination. The employer applied for a review under s377 of the Act of the determination by the Judicial Registrar. The review was heard by von Doussa J on 1 December 1995. His Honour gave judgment that day and found that the termination had been in contravention of s170DE(2) of the Act though his Honour's reasons differed slightly from those of the Judicial Registrar. His Honour made orders in the following terms: "1. The respondent reinstate the applicant by appointing the applicant to another position on terms and conditions no less favourable than those on which he was employed immediately before the termination of his employment. 2. The respondent pay to the applicant lost remuneration resulting from the termination of his employment, being the wages that he would have received had he not had his employment terminated, less a sum of $4,044, being earnings received from other sources in the meantime." The employer appealed against the whole of the judgment of von Doussa J. The grounds in the original notice of appeal raised three issues. First, the employer challenged the finding of the trial judge that the termination had been in contravention of s170DE(2) of the Act. The second and third grounds were related and concerned the issue of whether the employer bore an onus of establishing that reinstatement was impracticable: see s170EE(2) of the Act, and if so whether the employer had discharged that onus. At the commencement of the hearing of the appeal, senior counsel for the employer sought leave to amend the notice of appeal by raising additional grounds and abandoning the ground challenging the trial judge's finding that the termination had been harsh, unjust and unreasonable. This was opposed by counsel for the respondent for reasons including the extremely short notice of the amendment. Notice had only been given on the previous Friday, 8 March 1996. The new grounds, in substance, raised two issues which were related. The first was whether amendments made to the Act by the Industrial Relations and Other Legislation Amendment Act 1995 ("the amending Act") were relevant when determining the appeal. The second was whether an appeal to a Full Court in a matter such as this was a rehearing in which the Court would be obliged to determine the facts as they existed at the time of the hearing of the appeal and the law as it existed at that time. Leave was given to raise these additional issues. The amending Act amended s170EE (1) and (2) which in their amended form provide: "In respect of a contravention of a provision of this Division (other than section 170DB or 170DD) constituted by the termination of employment of an employee, the Court may, if the Court considers it appropriate in all the circumstances of the case, make the following orders: (a) an order requiring the employer to reinstate the employee by: (i) reappointing the employee to the position in which the employee was employed immediately before the termination; (ii) appointing the employee to another position on terms and conditions no less favourable than those on which the employee was employed immediately before the termination; and (b) if the Court makes an order under paragraph (a): (i) any order that it thinks necessary to maintain the continuity of the employee's employment; and (ii) an order requiring the employer to pay to the employee the remuneration lost by the employee because of the termination. 170EE(2) If the Court thinks, in respect of a contravention of a provision of this Division (other than section 170DB or 170DD) constituted by the termination of employment of an employee, that the reinstatement of the employee is impracticable, the Court may, if the Court considers it appropriate in all the circumstances of the case, make an order requiring the employer to pay to the employee compensation of such amount as the Court thinks appropriate." The underlined words were added to the sub-sections by the amending Act and the remainder of the sub-sections reflect their terms prior to the amendment. It can be seen that the Court, when considering whether an order for reinstatement should be made, must consider whether it is appropriate in all the circumstances of the case to make such an order. The amending Act contained transitional provisions which relevantly provided: "The amendments of the Industrial Relations Act 1988 made by items 9 and 10 of this Schedule apply: (a) in relation to a termination of the employment of an employee that occurs on or after the day fixed by Proclamation for the commencement of those items; and (b) in relation to a termination of the employment of an employee that occurs before that day if: (i) neither the employee nor a trade union on behalf of the employee has made an application to the Industrial Relations Court of Australia for a remedy under section 170EA of that Act as in force before that day; or (ii) if such an application has been made to that Court before that day but the Court has not pronounced final judgment in respect of the application before that day." Section 170EE(1) was amended by item 9 of the Schedule and s170EE(2) by item 10. Senior counsel for the employer referred to Re Coldham & Ors Ex parte Brideson (No. 2) (1990) 170 CLR 267 in support of the submission that the appeal was a rehearing. He also referred to Simpson Ltd v Arcipreste (1989) 53 SASR 9 at 16 in which Duggan J helpfully discusses three categories of appeals namely, an appeal stricto sensu, an appeal by way of rehearing and an appeal by way of a hearing de novo. While we accept that this submission is one of some substance, we do not view it as necessary to decide for reasons which will shortly become apparent. We are prepared to assume that the appeal is a rehearing and that we are required to apply the law in force at the time of the appeal by reference to the facts as they exist at that time. In this appeal no application was made to call further evidence. The amendments made to s170EE(2) of the Act are, by operation of the transitional provisions, to apply to the determination of an application under s170EA of the Act unless "the Court has not pronounced final judgment in respect of the application" before 15 January 1996, which is the relevant date fixed by proclamation. The question that then arises is whether the making of orders by a trial judge constituted "final judgment" for the purposes of the transitional provisions or whether there will have been final judgment only after a Full Court has disposed of any appeal from a judgment dealing with an application under s170EA of the Act. Again we are prepared to assume that final judgment has not been pronounced by the Court in this matter. Thus we are prepared to assume that this Full Court is obliged to consider the question of what remedy should be awarded, for what is now a conceded contravention of the Act, having regard to the Act in its amended form. We have followed this course because these issues were raised by the employer at a very late stage and only with the most limited of notice to counsel for the respondent. The issues are important, particularly the question of whether the appeal is a rehearing. While counsel for the respondent indicated he was prepared to proceed, he made clear he was doing so in circumstances where he had not had an opportunity to fully consider the issues recently raised. We should not decide them in the absence of full argument. As the appeal can be determined without deciding the issues and by assuming their resolution in the employer's favour, we make the two assumptions to which we have just referred. The facts as found by the trial judge were not put in issue. The respondent's employment was terminated on 15 June 1995. He had been employed by the employer 24 January 1990 as a machine setter. The employer is a manufacturer and supplier in South Australia of wine corks and other consumables used in the bottling of wine. The respondent's employment as a machine setter was in the forming section which was set up to make PVC capsules for bottles, foil to go over the top of a champagne bottle and muselets which are the wire structures retaining the cork in a champagne bottle. After about eighteen months employment in that position the respondent became a shift supervisor though he continued to operate machinery. As a shift supervisor he was obliged to do some administrative and supervisory work in relation to other employees in the forming section, on his shift. In March 1995 the employer received a consultant's report relating to the restructuring of the business. There had been a downturn in the employer's business in the preceding twelve to eighteen months. The consultant recommended the elimination of certain "management" positions which included the position occupied by the respondent. His was one of three staff supervisor positions that were abolished. It was as the result of the abolition of this position that the respondent's employment was terminated. At the time of his termination the respondent's base salary was approximately $24,000 per annum and the base salary of other employees operating machinery was approximately $20,000 per annum. This difference in the rates of pay assumes some importance in this appeal. The business of the employer picked up between the time of the respondent's termination and October 1995 when the Judicial Registrar heard the evidence in the application. As a result of the upturn in the business the employer employed additional labour. Two extra people had been employed though as contract labourers through a labour hire firm. They were employed as operators in the forming section which was the area in which the respondent originally commenced working. As can be seen from the terms of s170EE of the Act which we earlier set out, an order requiring an employer to reinstate an employee can take one of two forms. The first is an order requiring reappointment to the position held by the employee immediately before the termination. That has no relevance in this case as it was common ground that the supervisory position held by the respondent was abolished as a result of the restructuring of the employer's business. The second involves the appointment of the employee to another position on terms and conditions no less favourable than those on which the employee was employed immediately before the termination. It is to be remembered that s170EE(2) of the Act requires the Court to consider whether reinstatement is impracticable. Von Doussa J adopted the approach that if the Court was considering an order for reinstatement of the second type then the evidentiary burden of proving impracticability rested on the employer. It was plain from the evidence that there was no position in the business of the employer which involved the operation of machinery and for which an employee would, in the ordinary course, be paid a base salary of approximately $24,000. The trial judge adverted to the onus of proof in the context of considering whether a job existed or might be created in the business of the employer which would attract a base salary of approximately $24,000. This approach was one that had been earlier adopted by Spender J in Mitchell-Collins v The Latrobe Council (1995) 60 IR 480. We have already set out the terms of s170EE(1)(a)(ii) of the Act. The sub-paragraph empowers the Court to require the employer to reinstate the employee by appointing him or her "to another position on terms and conditions no less favourable than those on which the employee was employed immediately before the termination". This might be a specific position, the availability and suitability of which is revealed by the evidence. On other occasions, the Court will not specify a particular position. Provided that the Court is satisfied that reinstatement is practicable and appropriate, it is open to the Court to make an order in terms of para.(a)(ii), leaving it to the employer to choose the position and to comply with the Court's order to provide terms and conditions that are no less favourable than those on which the employee was employed immediately before the termination. If this course is taken, the employer may select an existing position, or he or she may create a new position for the purpose. If the latter, contrary to the submission of counsel for the employer, it will not be to the point that, in the absence of the order, the employer might not have created the position. We appreciate that creation of a new position may occasion a cost, or other disadvantage, to the employer. Where there is evidence that this will be so, that evidence may be relevant on the issues of practicability and appropriateness. But it would be contrary to principle to treat such evidence as necessarily determinative. The occasion for the order arises because the employer has acted unlawfully in terminating the employee's employment. A reinstatement order is akin to an injunction compelling a wrong-doer to restore the position of the innocent party. In considering whether to grant an injunction, a court will always take into account the consequences of an order to the wrong-doer but the existence of adverse consequences has never been regarded as excluding the possibility of an order being made. The employer submitted that an order that might require an employer to create a position involved something other than the exercise of judicial power. Reference was made to The Queen Victoria Memorial Hospital v Thornton (1953) 87 CLR 144 (especially at 150) in which the High Court declared invalid a provision in a Commonwealth Act conferring on a magistrate the power to require an employer to engage an employee. However that case is far removed from the present. An order made under s170EE(1) of the Act is a remedy ordered after the determination of whether there had been a termination in contravention of the Act. The power to mould a remedy, if authorised by statute, is not inconsistent with the exercise of judicial power even if it imposes on the person bound by the order an obligation to take steps to effectuate it. In the present case there was clear evidence of positions to which the respondent might be appointed by operation of an order for reinstatement. They were the positions occupied by the casual contract labour. No question of who bears the onus of proving impracticability thus arises proceeding, as we are, on the basis that this is a rehearing. This is so because the evidence clearly demonstrates the existence of other positions. Thus an order for reinstatement can be made requiring the employer to appoint the applicant to another position. The Court can then impose the condition that the terms and conditions of employment will be no less favourable than those enjoyed by the respondent immediately prior to his termination. It does not matter whether the position is one that would otherwise attract those terms and conditions. Accordingly we are not satisfied that the reinstatement of the appellant is impracticable. This leads to a consideration of whether it is appropriate in all the circumstances of the case to make the order. We accept, as the employer submitted, that the observations of the Full Court in Liddell v Lembke (t/as Cheryl's Unisex Salon) (1994) 1 IRCR 466 about the scope of the Court's discretion in making orders under s170EE(1) of the Act have to be reconsidered in the light of the recent amendments to that sub-section. However it is not necessary for the purposes of this case to discuss what is comprehended by the expression "appropriate in all the circumstances of the case" or the modifications that may be necessary to the observations made in Liddell. It is sufficient to say that we are satisfied that the order made by von Doussa J is both practicable and appropriate in all the circumstances. Senior counsel for the employer spoke of the possible industrial repercussions of the respondent being reinstated into a position of machine operator attracting a salary in excess of that generally paid to machine operators in the employer's business. There was no evidence to support this submission. However even if it is a problem that might, without proof, reasonably be apprehended as arising, it is not a matter that is likely to be an insuperable problem. Any problems of that type that might arise have their origins in the unlawful termination of the respondent in the manner described by the trial judge. It was a termination that was in breach of the applicable industrial award's provisions regarding notice of termination. We are satisfied that it is appropriate in all the circumstances of the case that an order for reinstatement should be made. For the preceding reasons we dismissed the appeal. I certify that this and the preceding eleven (11) pages are a true copy of the Reasons for Judgment of Chief Justice Wilcox, Justices Moore and Marshall. Associate: ...................... Dated: 22 April 1996