State Rail Authority v Smith [2000] NSWSC 334

New South Wales Supreme Court

CITATION : State Rail Authority v Smith [2000] NSWSC 334 CURRENT JURISDICTION: Common Law FILE NUMBER(S) : SC 10797/99 HEARING DATE(S) : 3 August 1999 JUDGMENT DATE : 19 April 2000

PARTIES : State Rail Authority (Plaintiff) Mark SMITH (Defendant) JUDGMENT OF : Simpson J at 1

LOWER COURT Local Court JURISDICTION : LOWER COURT 6573/98 FILE NUMBER(S) : LOWER COURT Ms M Jerram JUDICIAL OFFICER :

COUNSEL : Mr H Packer (Plaintiff) Mr R Reitano (Defendant) SOLICITORS : Minter Ellison Geoffrey Edwards & Co (Defendant) Public Sector Management Act 1988 LEGISLATION CITED : Local Courts (Civil Claims) Act 1970 Justices Legislation Amendment (Appeal) Act 1998 Justices Act 1902 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 CASES CITED : Computer Science of Australia Ltd v Lesley [1983] 6 IR 188 at 191 Eyles v Cook [(1967) 13 FLR 42] British Motor Corporation v Chance [[1964] AR(NSW) 364] DECISION : The summons is dismissed; The SRA is to pay Mr Smith's costs of the proceedings.

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

SIMPSON J

Wednesday 19 April 2000

10797/99 STATE RAIL AUTHORITY OF NSW v Mark SMITH JUDGMENT

HER HONOUR : 1 By summons filed 6 April 1999 the plaintiff, the State Rail Authority of NSW, to which I will refer as "the SRA", seeks to appeal against the decision of Ms M Jerram, Local Court Magistrate, made on 9 March 1999. Before Ms Jerram was a statement of liquidated claim brought by the present defendant, Mr Mark Smith, for payment of a sum of money to which he asserted he was entitled under the provisions of the Public Sector Management Act 1988. The claim was brought under Local Courts (Civil Claims) Act 1970 ("the Civil Claims Act"). Ms Jerram found in favour of Mr Smith and ordered the SRA to pay the sum of $18,587.91 together with costs. 2 At the outset a question arises as to the provisions governing the entitlement of SRA to bring the appeal, and the extent of the appeal to which it is entitled. The issue between the parties in this respect is whether the SRA's right of appeal is confined to questions of law or extends to questions of mixed fact and law. The question arises in the following way. Appeals to this Court from the Local Court were the subject of extensive legislative amendment which came into effect on 1 March 1999: Justices Legislation Amendment (Appeal) Act 1998. A new Part 5 was inserted into the Justices Act 1902. Pursuant to the new regime, s 69(2) of the Civil Claims Act confers a right of appeal to this Court upon a party to proceedings under the that Act who is dissatisfied with the judgment or order of the Local Court but the right so conferred is expressly restricted to questions of law. 3 But s 69 (3) makes the new provisions of Pt 5 of the Justices Act also applicable to appeals under sub s (2). S 104 of the Justices Act is the introductory section of Division 2 of Pt 5 of that Act. S 104(1)(b) confers a right of appeal, by the leave of this Court, on questions of mixed fact and law. By sub s (5) a party to proceedings under the Civil Claims Act has the benefit of the provisions of Pt 5. That includes s 104(1)(b). 4 The SRA's original summons contained seven grounds. No application for leave to appeal on questions of mixed fact and law pursuant to s 104(1)(b) was then included. The summons assumed that the grounds raised were questions of law not requiring leave, and the SRA maintains that as its primary position. Recognising that an issue might arise as to whether the grounds were properly so characterised, and against the possibility that that issue might be decided against it, the SRA sought, by notice of motion filed on 19 May 1999, an extension of time in which to seek leave to appeal on questions of mixed fact and law. The grounds are the same grounds raised in the original summons, the only variation lying in the recognition of possible differences of view about the proper characterisation of the issues as questions of law, or questions of mixed fact and law. 5 The issue is not so arid as it might at first appear. If the grounds raised in the summons (or at least any of those grounds in which the SRA might have some prospect of success) are properly characterised as questions of mixed fact and law, then the SRA requires leave to argue them. Considerations relevant to the grant of leave are not spelled out in the legislation. Leave should not be granted merely because error may be demonstrated because that would be to render meaningless the requirement for leave. Prima facie, Mr Smith is entitled, error of law aside, to the benefit of his success in the Local Court. It is not possible to discern from the legislation any principles or to derive guidance as to the circumstances in which leave ought to be given to argue a question of mixed fact and law. Mr Smith's principal position is that the grounds in the summons are essentially related to questions of fact; if that is so, then the question of leave would not arise. Similarly, if the SRA's principal position, that the grounds raise questions of law, is correct, the questions of leave will not arise. It is only if they are properly characterised as questions of mixed fact and law, that the question of leave to appeal may become significant. 6 I do consider it appropriate (and I do not understand Mr Smith to have raised any real objection) to grant the extension of time necessary to permit the application for leave to be made. The outcome of that application will have to await the fate of the substantive grounds, and a determination whether any of those which might be successful fall into the category of questions of mixed fact and law. That alone is a matter of some complexity on which the authorities are not altogether clear. 7 I now turn to the substantive issues. On 2 March 1987 Mr Smith took up employment with the SRA as a management trainee. He prospered in his employment. He remained in the service of the SRA until some time in 1996. He progressed through the ranks, achieving regular promotions. In about 1996 he took up employment with another company. His reason for doing so is central to the issues between the parties. Had he remained in the employment of the SRA until 2 March 1997, that is had he served ten years, he would have become entitled to the benefits of the extended leave provisions contained in clause 1 of Schedule 5 to the Public Sector Management Act, or, on termination of his employment, to equivalent money payment. For any period in excess of ten years in which he remained in the service of the SRA his entitlement would have increased according to a statutory formula. 8 Sub clause 4 makes specific provision as to the entitlements to extended leave or its equivalent in money in relation to officers who have completed more than five but less than ten years' service. Mr Smith falls into this category. Relevantly, the sub clause would entitle him to the leave or its money equivalent if his service was terminated: "(b) by [him] on account of illness, incapacity or domestic or other pressing necessity." 9 It was not contended that Mr Smith terminated his service on account of illness, incapacity or domestic necessity. He based his claim on his assertion that he terminated his service on account of "other pressing necessity". The magistrate accepted his claim. The "other pressing necessity" on which he relied is spelled out in an affidavit sworn by him. Put shortly, he outlined regular structural changes in the SRA over the years of his employment. He was born in August 1962. In 1996, when he terminated his employment with the SRA, he was aged thirty-four. He was married with two children. He had been involved in a number of instances of restructuring when his own employment was in jeopardy. For example, in 1991, as a result of a restructure, the position he then held was abolished and he was obliged to apply for a newly created position. In this he was successful. In 1994 another restructuring took place. He was one of fourteen line managers. All positions were abolished and five new positions created. Of the fourteen former line managers he was the only one to be successful in his application but the new position required him to enter a five year contract which itself had some limitations of security by reason of the provisions of the Public Sector Management Act. He faced the possibility of a loss of about one third of his salary in the event of further restructuring causing abolition of the position he held. He did not at least in the first instance, face outright termination of his employment. 10 From 1995 a number of additional restructuring initiatives were being considered simultaneously by the SRA. Mr Smith's experience told him that the restructurings were virtually always accompanied by a reduction in staff numbers. 11 Early in 1996 yet another restructure took place, amalgamating two sectors. Mr Smith became aware that one of two positions (one of which was his own) would be abolished. He found this very unsettling. When the restructure took place, he was appointed to the single remaining position. Between 1995 and 1997 the number of management positions was reduced from eight-six to thirty. Between 1995 and 1997 the number of management positions was reduced from eight-six to thirty. 12 Thereafter a process of dividing the SRA into four corporations was under way. The aim was to provoke the four separate corporations to compete with one another with a view to greater efficiency. Greater efficiency was likely to lead to cost and staff cuts. As the division plans were implemented Mr Smith became aware that the functions he carried out would be divided between two of the new corporations. In early 1996 at a high level meeting Mr Smith was told that a reduction in management positions and possibly a reduction in seniority of those occupying the positions could be expected. He realised that his employment was insecure. His terms of employment, even if his position was abolished, were such that he would retain certain rights, but may have been subjected to reduction of income and loss of status. He came to the view that the loss of status, if it occurred, would have an adverse impact on his future employment prospects. He began to seek employment elsewhere and eventually was appointed to the new position I have mentioned. 13 It was put to Mr Smith in cross-examination that, in effect, he had overstated the vulnerability of his position and that, as an ambitious and competent manager, he had seen the opportunity for career enhancement and that this was the real reason for his move. The magistrate accepted him as a truthful witness and that finding cannot here be assailed. It was argued before the magistrate that Mr Smith's history with the SRA spoke for the unlikelihood that he would lose his position, and his quest for alternative employment did not come about because of any fears for his employment security that could qualify as "pressing necessity". The agistrate found that, in the circumstances outlined, Mr Smith's termination of his employment was, in the terms of the relevant clause, for "other pressing necessity", entitling him to the benefits of the extended leave provisions. She expressly found that his fears for his position were reasonably held. She accepted that his family responsibilities and need for a secure future justified his decision to seek alternative employment. (That finding, of course, does not conclude the issue. What the magistrate had to decide, and did decide, was whether his reasons, as she found them, amounted, within the terms of the clause, to "other pressing necessity"). 14 It is necessary now to examine the grounds of appeal as they are framed. 15 Grounds 1 - 4 are framed with an identical structure. By each of these grounds it is asserted that her Worship erred in reaching a stated conclusion "in circumstances where" she had made a series of findings of fact. By way of example, ground 2 is framed as follows: