ROTHMANS DISTRIBUTION SERVICES LTD v FULL COURT OF THE INDUSTRIAL COURT OF NEW SOUTH WALES SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, PRIESTLEY and MEAGHER JJA 12 April 1994, 29 April 1994 [1994] NSWCA 272 INDUSTRIAL LAW — industrial arbitration — avoidance or variation of contracts or arrangements to perform work — contract or arrangement with senior employee-redundancy payment less than that paid to weekly employees following closure of employer's factory — primary judge (Cahill J) dismisses claim for relief — on appeal, Full Industrial Court (Fisher and Hungerford JJ; Hill J dissenting) reverses Cahill J and provides relief under s275 Industrial Relations Act 1991 (equivalent to former s88F Industrial Arbitration Act 1940) — on summons for relief in the nature of prohibition or certiorari CONTRACTS — unfair contracts — employment contract — claim for statutory relief where contract or arrangement unfair, harsh or unconscionable — finding that contract unfair by reason of subsequent events, including payment of higher redundancy payments to weekly employees — contention that Court could not have regard to events occurring after the contract was made or to payments made to third parties Held: (Priestley JA, Kirby P and Meagher JA concurring): (1) As no jurisdictional error had been shown, the summons for relief for excess of jurisdiction should be dismissed. Walker v Industrial Court of New South Wales and Anor, Court of Appeal (NSW) unreported, 12 April 1994 applied; (2) Leave to reargue the correctness of Incitec Ltd and Anor v Industrial Court of New South Wales and Ors (1992) 45 IR 155 (NSWCA) refused. Held: Contentions incorrect and in any case no jurisdictional error. Incitec Ltd and Anor v Industrial Court of New South Wales and Ors (1992) 45 IR 155 (NSWCA); Brown v Rezitis (1970) 127 CLR 157 applied. Industrial Arbitration Act 1940, s88F. Industrial Relations Act 1991, s275, s297, s301. Kirby P For the reasons given by Priestley JA, I am of the view that Rothmans Distribution Services Ltd (the claimant) has failed to demonstrate a relevant jurisdictional error which would authorise this Court to exercise its supervisory powers in relation to the Full Industrial Court. So much follows which ever view of this Court's powers is taken from Walker v Industrial Court of New South Wales and Anor, Court of Appeal, unreported, 12 April 1994 which was handed down on the morning that this summons was listed for hearing. Valiant attempts were made for the claimant to bring it within the holding in Walker. But, especially if the majority view in Walker is adopted, this is not a case where this Court may provide relief. I agree that the summons should be dismissed with costs. 2 UNREPORTED JUDGMENTS Priestley JA The proceedings before this court are the third stage in litigation commenced by Mr KM Baker (the employee) against Rothmans Distribution Services Ltd (Rothmans) formerly his employer, in which he sought an increase in the redundancy payment made to him consequent upon determination of his employment. The first stage was before Cahill DCJ of the Industrial Court of New South Wales, where the employee lost. The second stage was the employee's appeal to the Full Industrial Court, where the employee succeeded. The employee relied, for the relief he sought in the Industrial Court upon s275 of the Industrial Relations Act 1991 (the Act). S275 is the section which corresponds with s88F of the repealed Industrial Arbitration Act. In the proceedings the employee claimed, under the section, that "the contract or arrangement... whereby the [employee] performed work for [Rothmans]... or any condition or collateral arrangement relating thereto... be varied ab initio or from some other time on the grounds that the contract is unfair, or is harsh and unconscionable or is against the public interest". The employee further claimed that he should receive a redundancy payment on terms no less favourable than the provisions made by Rothmans for its weekly employees. The employee's claim had its origin in the fact that when Rothmans in 1990 closed down its branch at Coffs Harbour, which was concerned with the distribution of confectionery products, it made redundancy payments to its weekly employees on a much higher scale than it did to its monthly employees. The former were members of various unions which were able to use their industrial strength to negotiate favourable redundancy arrangements. The latter were not union members and did not have the bargaining power that the weekly employees were able to wield via their unions. The employee's appeal from Cahill DCJ's decision to the Full Industrial Court was pursuant to s297(2)(d) of the Act. By s297(3) such an appeal was a full appeal on fact and law in which the Full Court could exercise all the functions of the court whose decision was the subject of the appeal. The Full Court (Fisher CJ and Hungerford J, Hill J dissenting) reversed the decision of Cahill DCJ. The majority considered the evidence in detail and then reviewed the process by which Cahill DCJ had reached his decision. Their conclusion was that his Honour had erred in accepting as not leading to any unfairness the process adopted by Rothmans for reasons of commercial expediency in negotiating a separate and more favourable redundancy package for the weekly employees regardless of the way Rothmans treated Mr Baker as a monthly employee. They then summarised their view of the evidence which they said showed: "the negotiations of the redundancy agreement with the unions; the importance of settling that agreement to enable the timely closure of the confectionery part of the business, including necessarily the closure of the Coffs Harbour Branch; the willingness to concede very favourable redundancy payments to the weekly employees for reasons of commercial expediency due to fears of their apparent industrial strength; the secrecy surrounding the likelihood of retrenchments; the deliberate device in the memorandum of 21 June 1990 to all managers, including the appellant, implying that retrenchments were neither intended nor pending; the failure to provide the appellant as a monthly employee with an opportunity to reasonably discuss a redundancy payment; the unilateral imposition of a pre-existing company policy on redundancy for monthly employees; the UROTHMANS DISTRIBUTION SERVICES LTD v FULL COURT OF THE INDUSTRIAB& COURT OF NEW SOUTH WALES (Priestley JA) deliberate refusal to advise the appellant of his redundancy arrangement until the day before he was summarily retrenched; the requirement for the appellant to continue employment for a period of about three weeks to ensure the orderly closure of the Coffs Harbour Branch, but in the absence of advice of a proposed redundancy payment; the more favourable consideration extended to the weekly employees compared to the monthly employees; and the failure to review the monthly employees' redundancy arrangements in terms of fairness or at all." (at 35-6) This sequence of happenings in their opinion showed "the quality of unfairness... as to the way in which the [employee's] employment contract and arrangements worked out in practice". They concluded: "Tt is no exaggeration to say that the respondent paid scant regard to the position of the appellant as a monthly employee by comparison with what clearly appears to be the extraordinarily generous treatment allowed to the weekly employees generally. We conclude, from the evidence, that the respondent disregarded the position of the appellant to his disadvantage because it was not minded, forced or required to do otherwise. Those circumstances, on any view of the test under s275, represented patent unfairness requiring remedy." (at 36) They then dealt with a number of factual arguments and concluded by ordering that the employee's contract of employment be varied by inserting a redundancy entitlement equivalent to that which the weekly employees had been successful in negotiating for themselves. There is no right of appeal from the decision of the Full Industrial Court similar to the right of appeal to that court from the decision of Cahill DCJ. S301 of the Act makes the Industrial Court's decision final and prohibits its being appealed against, reviewed, quashed or called in question by any court or tribunal. Further, no judgment or order in the nature of prohibition or certiorari may be given or made in relation to a decision of the court. S301 however does not affect the operation of s48 of the Supreme Court Act 1970. The effect of s301 was said, in Walker v Industrial Court of New South Wales (Court of Appeal, 12 April 1994, Kirby P and Meagher and Sheller JJA), to be that although a decision of the Industrial Court is not immune from supervision by this court if the Industrial Court has acted without authority or beyond its authority, it is immune from challenge or review in this court for non jurisdictional error: see per Sheller JA, with whom Meagher JA agreed, at 13, and Kirby P, to similar effect, at 28-29. This position was accepted as correct by Rothmans' counsel. This meant that the third stage of the proceedings, in this court took the form of a summons seeking the quashing of the Full Court's orders, on the ground they were made in consequence of jurisdictional error. As Walker vividly demonstrates, such a proceeding goes on a much more limited basis than an ordinary appeal to this court. Three grounds were relied on by Rothmans in an effort to show that the Full Court was not only in error in its conclusions but that the error involved error going to jurisdiction. The first was that in determining that the contract was unfair the court had had regard to extraneous conduct or events after the inclusion of the term providing for payments for redundancy in the employee's employment contract, and that this was an error going to jurisdiction. It was said that it was the contract that had to be looked at, not conduct, and that the time at which the fairness of the contract had to be considered was the time when the contract was made, or last amended. 4 UNREPORTED JUDGMENTS Dealing with the latter point first, it is not clear to me when the employee's employment contract was said to have begun, or when any term providing for redundancy payments was included in it. Assuming in Rothmans' favour however that it is factually correct that the Full Court did have regard to events after the making of the relevant employment contract between the employee and Rothmans in reaching its conclusions, I think it is quite clear that no jurisdictional error was involved. Numerous authorities contradict this aspect of Rothmans' submission. I think it sufficient to refer to two of the recent ones: Incitec Ltd v Industrial Court of New South Wales (1992) 45 IR 155 at 157 and Walker per Sheller JA at 7-11. Counsel for Rothmans sought leave to challenge the correctness of these decisions but the position seems to me to be too clear and too well established to warrant any re-examination. I think the court should refuse to grant such leave. As to the point that the Full Court, in considering fairness, looked at conduct rather than the terms of the contract, I think that what the Full Court did was to consider how the terms of the contract operated in practice at the time of termination (which necessarily meant looking at the conduct of Rothmans) and to conclude that a contract which could so operate was unfair. I see no jurisdictional error in this. The first submission in my opinion fails. Rothmans' second submission was that even if the Full Court was within jurisdiction in examining the contract to determine whether it was unfair at the date of the decision to give different redundancy benefits to the employee from those given to the weekly employees, the court went beyond jurisdiction when, in considering fairness, it took into account (and indeed attached decisive importance) to Rothmans' dealings with the weekly employees, who were characterised by counsel for Rothmans as "third parties". As part of this submission it was said that the Industrial Court has solely judicial functions under the Act and what it did by its orders was in the nature of an arbitral function. I do not accept these arguments. I do not think, when the employment of a number of employees is being terminated at about the same time, that the question of what is unfair in regard to one employee must necessarily be decided without reference to what happens in the cases of the other employees. On the contrary, it seems to me that what happens to the others must be relevant. It may be that in some cases there will be special circumstances applying to other employees which will affect the weight to be given to evidence about them. Clearly, the circumstances concerning some employees are likely to be more similar to those of a party seeking to use them in a particular case than to those of other employees. The more closely similar the circumstances are the greater the relevance, and the less similar, then, the less useful the evidence will be. I do not see however, that it can ever be said to be necessarily irrelevant. It follows from this that the Full Court can not have been travelling outside its jurisdiction in considering the evidence. I think there are various answers to the submission seeking to confine the powers of the Industrial Court to judicial powers in the sense in which judicial power is used in the Australian Constitution, but will confine myself to saying simply that s275(3) empowers the Industrial Court in making an order under s275 to make such order as to the payment of money in connection with any varied UROTHMANS DISTRIBUTION SERVICES LTD v FULL COURT OF THE INDUSTRIAB COURT OF NEW SOUTH WALES (Meagher JA) contract as the Industrial Court considers just in the circumstances of the case. The subsection thus gives power, in direct and plain terms to the Full Court to do what it did in the present case. In my opinion the second submission also fails. The third submission seeking to show that the Full Industrial Court had exceeded its jurisdiction in making the orders that it did, was that the court, having given no weight to the circumstances that the "third parties" received extraordinarily generous redundancy benefits as a result of industrial pressure, then ordered, in effect, redundancy benefits to the employee on the same basis as that on which they had been calculated for the weekly employees (the "third parties"). The consequence of this approach was, it was submitted, that there was no requisite connection between the proper facts of the case and the court's orders. Counsel for Rothmans, when pressed to state the criterion by which a court should judge whether there was a sufficient connection between the facts of the case and the orders made for the orders to be within jurisdiction, responded in terms of what Barwick CJ said in Brown v Rezitis (1970) 127 CLR 157. In that case, which dealt with a predecessor section to s275, Barwick CJ said: "\.. an order which is of a kind which at best could not conceivably be thought to be in connection with the contractual arrangement varied or avoided is not merely erroneous: it would, in my opinion, be invalid." (at 166) He added that an order going "beyond what could conceivably be thought to be within the range of permissible orders" would be in excess of power (at 166). I do not think the orders in the present case can be said to fall into this category. The Full Court made the order that it did on the basis that Rothmans' redundancy arrangements with the weekly employees had set the standard by which fairness must be judged in regard to the amount to go to the employee. I am not at all persuaded that I would agree that this was the necessary result in the circumstances, but equally, I have no doubt that it was within the jurisdiction of the Full Court to adopt this basis. I think this submission also fails. In my opinion Rothmans has not shown any jurisdictional error by the Full Court and the proceedings should be dismissed with costs. Meagher JA In this matter, I have had the benefit of reading in draft the judgment of Priestley JA. I agree both with the orders he proposes and his reasons. I do so with considerable regret, because it seems to me that the judgment of the majority of the Full Court is clearly wrong. Yet, they had jurisdiction to err. Summons dismissed with costs. COUNSEL: Claimant: JL Trew QC with DR Robinson 1st Opponent (Industrial Court): Submitting appearance 2nd Opponent (KN Baker): JN West QC with RM Goot SOLICITORS: Claimant: Freehill Hollingdale and Page 6 UNREPORTED JUDGMENTS 1st Opponent (Industrial Court): HK Roberts, Crown Solicitor (submitting) 2nd Opponent (KN Baker): Koops Martin