WILKINSON v CLEO'S UNITISATION & WILKINSON v CLEO'S UNITISATION [1997] IRCA 82

DECISION NO:82/97 CATCHWORDS INDUSTRIAL LAW - UNLAWFUL TERMINATION - Review of Judicial Registrar's power to order costs - Whether application was without reasonable cause Workplace Relations Act 1996 s 170 EA National Union of Workers v Downtown Duty Free Stores (unreported, IRCA decision no 356/95, 8 August 1995, Moore J) Kanan v Australia Postal and Telecommunications Union (1992) 43 IR 257 Mohazab v Dick Smith Electronics Pty Ltd (No.2) (1995) 62 IR 200 Rheinberger v Huxley Marketing Pty Ltd (1996) 67 IR 154 No. NI 5002R of 1995 HERBERT HENRY WILKINSON v CLEO'S UNITISATION No NI 4924R of 1995 CHERYL ANN WILKINSON v CLEO'S UNITISATION MOORE J SYDNEY 27 FEBRUARY 1997

IN THE INDUSTRIAL RELATIONS ) ) COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY) No. NI 5002R of 1995 BETWEEN: HERBERT HENRY WILKINSON Applicant AND: CLEO'S UNITISATION PTY LTD Respondent No. NI 4924R of 1995 BETWEEN: CHERYL ANN WILKINSON Applicant AND: CLEO'S UNITISATION PTY LTD Respondent JUDGE: Moore J PLACE: Sydney DATE: 27 February 1997 ORDER OF THE COURT THE COURT ORDERS THAT: 1. The orders of the Judicial Registrar of 5 July 1996 are set aside. 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 ) ) NEW SOUTH WALES DISTRICT REGISTRY) No. NI 5002R of 1995 BETWEEN: HERBERT HENRY WILKINSON Applicant AND: CLEO'S UNITISATION PTY LTD Respondent No. NI 4924R of 1995 BETWEEN: CHERYL ANN WILKINSON Applicant AND: CLEO'S UNITISATION PTY LTD Respondent JUDGE: Moore J PLACE: Sydney DATE: 27 February 1997 REASONS FOR JUDGMENT On 5 July 1996 a Judicial Registrar ordered that Mr Henry Wilkinson and Mrs Cheryl Wilkinson each pay Cleo's Unitisation Pty Ltd ("the Company") $1,600 costs in proceedings brought by the Wilkinsons under s 170EA of what is now called the Workplace Relations Act 1996 ("the Act"). An application has been made by the Wilkinsons for a review of the exercise by the Judicial Registrar of the power to award costs. The orders were made in proceedings arising from applications by each of the Wilkinsons under s 170EA of the Act. I will, for convenience and economy, generally treat the two applications, and the proceedings that resulted from them, as if there was only one application made. The fact that one application was filed on 22 December 1995 and the other several days earlier, on 19 December 1995, is not material. The power of the Court to award costs is conditioned by the terms of s 347(1) which provides: "(1) A party to a proceeding (including an appeal) in a matter arising under this Act shall not be ordered to pay costs incurred by any other party to the proceeding unless the first-mentioned party instituted the proceedings vexatiously or without reasonable cause." In deciding to whether to order the Wilkinson's to pay the Company's costs, the Judicial Registrar determined that the proceedings were instituted without reasonable cause. This review is a hearing de novo. It is thus necessary for me to determine whether costs should be ordered because the application was brought, that is, the proceedings were instituted, without reasonable cause. That is to be determined by reference to circumstances and events existing at 19 and 22 December 1995 which, as noted earlier, are the dates the applications were filed. In the review, the Wilkinsons have filed affidavits setting out the facts as they recall them. The Judicial Registrar refused the Wilkinsons an adjournment to put on evidence. The costs order was made by the Judicial Registrar without the benefit of that evidence. Evidence has also been filed in the review on behalf of the Company putting in issue at least some of the evidence of the Wilkinsons. Mr Wilkinson was cross-examined. However the proper approach, in my opinion, in dealing with the issue raised by s 347, namely whether proceedings were instituted without reasonable cause, is to review the evidence of the applicants on the basis that it would be accepted at a final hearing unless the evidence is demonstrably false or, as I described it in National Union of Workers v Downtown Duty Free Stores (unreported, Industrial Relations Court of Australia decision no 356/95, 8 August 1995, Moore J), inherently implausible. This accords with the approach of Wilcox J in Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264-5 in which his Honour said: "It seems to me that one way of testing whether a proceeding is instituted "without reasonable cause" is to ask whether, upon the fact apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being "without reasonable cause". But where, on the applicant's own version of facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause." The following material facts emerge from the evidence of the Wilkinsons. They first commenced employment with the Company in April 1993 to manage a property in Queensland, "Oakvale", owned by the Company. The property was 1460 acres and used, it would appear, principally for raising cattle. Their duties as managers were comprehensive and wide ranging concerning the maintenance and management of the property. They commenced work in May 1993 and continued to manage the property until October 1995. Shortly after they commenced, the Wilkinsons had a conversation with Mr Powell, who was a director of the Company and the person representing the company with whom the Wilkinsons dealt. During that conversation Powell said that he wished to employ the Wilkinsons until Mr Wilkinson turned sixty-five, which was in nine years time. While this conversation is denied by Powell, as are other conversations about which the Wilkinsons gave evidence, I proceed on the basis that the Wilkinsons account might be accepted. I do so because the evidence of the Wilkinsons is not demonstrably false or inherently implausible. In October 1994, Mr Powell advised Mr Wilkinson that Oakvale was being put on the market for sale. He indicated that he was endeavouring to buy another property and would ask the Wilkinsons to manager it when it had been purchased. Some months later, Mr Powell contacted Mr Wilkinson and informed him that the Company was looking to purchase a property called "Yamba" near Narrandera in New South Wales. An inspection took place involving Mr Wilkinson. In early 1995 Mr Powell spoke to the Wilkinsons and informed them that Yamba had been purchased. The import of the conversation they had was that the Wilkinsons would remain at Oakvale until it was sold but that Mr Powell was anxious to move the Wilkinsons to the new property as the workers there had no expertise in raising cattle. Two months late there was another conversation in which Mr Powell informed Mr Wilkinson that a Mr Fred Puntoriero had been engaged as a casual to assist Mr Wilkinson on Yamba. His expertise was centre pivot irrigation. It was accepted by Mr Wilkinson that he had no expertise in irrigation of this type. In October 1995, the Wilkinsons left Oakvale, which had been sold, and journeyed to Yamba. There they were disappointed. Their evidence was that the house they were to live in was in a state of disrepair and extremely dirty. It also emerged that Mr Puntoriero took the view that he had been employed as manager of the property. In a subsequent conversation with Mr Powell, Mr Wilkinson was asked to teach Mr Puntoriero all he knew. Mr Wilkinson took this to be an invitation to pass on his knowledge of farming to Mr Puntoriero so as to, in due course, make himself dispensable. Mr Wilkinson gave evidence that there was a material diminution in the duties he performed as an employee at Yamba, and many of the duties he formerly performed as a result of direct contact with Mr Powell were being performed indirectly through Mr Puntoriero. Mr Powell no longer contacted Mr Wilkinson but rather contacted Mr Puntoriero who then passed instructions on to Mr Wilkinson. The relationship between the Wilkinsons and Mr Powell deteriorated. A point was reached on 19 November 1995 when Mr Wilkinson indicated that he and his wife were giving four weeks notice and proposed to finish up. There were other events addressed in the evidence of the Wilkinsons but I do not view them as material. The critical issue is whether, at the time the Wilkinsons instituted these proceedings, namely 22 December 1995, they did so without reasonable cause because it was not open to them to argue that there had been a termination of their employment. The submissions made in the review are firstly, there was an arguable case that there had been a termination having regard to the judgment of the Full Court in Mohazab v Dick Smith Electronics Pty Ltd (No.2)(1995) 62 IR 200, or that the change in duties resulting from the transfer to the property in New South Wales constituted a demotion which in turn involved a termination. This latter point is one I find difficult to accept as even arguably correct. If the change of duties constituted a demotion, which in turn constituted a termination, that occurred in October 1995. The application alleged that the last day that the Wilkinsons worked was 14 December 1995. There is nothing in the application that suggests that a termination was alleged in October 1995 or even November 1995. It is difficult to accept that the case propounded in the application concerned a termination prior to 14 December 1995. The first contention is one I find more persuasive. In Mohazab v Dick Smith (supra) the Full Court said (at 205): "Consistent with the ordinary meaning of the expression in the Convention, a termination of employment at the initiative of the employer may be treated as a termination in which the action of the employer is the principal contributing factor which leads to the termination of the employment relationship." And (at 207): "[I]ndustrial tribunals and courts have long accepted that an employee who resigns from his or her employment can and should be treated as having been dismissed by the employer if the dismissal is one where the employee did not resign willingly and, in effect, was forces to do so by the conduct of the employer." This judgment was given on 28 November 1995. The Wilkinsons and anyone who had been advising them might, on the Wilkinsons' account of events, reasonably have approached the matter in December 1995 on the basis that the whole process of transfer at the request of the Mr Powell, ultimately necessitated by the sale of Oakvale, coupled with the change in the duties and responsibilities of the Wilkinsons became so oppressive that the Wilkinsons had no option but to resign. In so doing, the Wilkinsons and anyone who had been advising them may have taken the view that, at least arguably, the circumstances of the Wilkinsons were comprehended by the observations of the Full Court. As earlier noted, the Full Court's judgment was delivered on 28 November 1995. While I have not researched the matter exhaustively, as far as I am aware, there were no judgments before 22 December 1995 which involved further consideration of the issue. I am aware of my own decision in Rheinberger v Huxley Marketing Pty Ltd (1996) 67 IR 154 at 160 given on 16 April 1996 in which I said in relation to the Full Court's judgment in Mohazab v Dick Smith (supra): "However it is plain from these passages that it is not sufficient to demonstrate that the employee did not voluntarily leave his or her employment to establish that there had been a termination of the employment at the initiative of the employer. Such a termination must result from some action on the part of the employer intended to bring the employment to an end and perhaps action which would, on any reasonable view, probably have that effect. I leave open the question of whether a termination of employment at the initiative of the employer requires the employer to intend by its action that the employment will conclude. I am prepared to assume, for present purposes, that there can be a termination at the initiative of the employer if the cessation of the employment relationship is the probable result of the employer's conduct." It may be doubted that the conduct of Mr Powell, even on the Wilkinson's account, was intended to bring about their resignation. I accept that the Wilkinsons contend that an inference to that effect might be drawn from evidence of Mr Wilkinson that, when told of the resignation, Mr Powell smiled and said "I love you", as if, on one view, the Wilkinsons had delivered the result which, by his conduct, he had intended to achieve. However the evidentiary base for such an inference is weak. Nonetheless, as I earlier discussed, the Wilkinsons' account of the facts might reasonably be viewed as falling within the scope of what the Full Court intimated might be a termination at the initiative of an employer. Accordingly, I am not satisfied the application was brought without reasonable cause. Thus s 347 precludes the making of a costs order against the Wilkinsons. I set aside the orders of the Judicial Registrar of 5 July 1996 in NI 4924 of 1995 and NI 5002 of 1995 ordering the Wilkinsons to pay the Company's costs in the sum of $1,600. I certify that the preceding eight (8) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore. Associate: Alexandra George Dated: 27 February 1996 APPEARANCES Counsel for the Applicant: Ms E.A. Collins Solicitor for the Applicant: Walters Solicitors Solicitor for the Respondent: Mr G. Newton of Webeck Farland Pender Dates of Hearing: 12 February 1997 Date of Judgment: 27 February 1997