Chief Executive of the Public Service Commission v The President of the Industrial Court of Queensland & Anor [2014] QSC 122

EMPLOYMENT LAW - EFFECT OF INDUSTRIAL AWARDS, AGREEMENTS OR LEGISLATION ON EMPLOYMENT CONTRACT - PARTICULAR CASES - where the applicant and second respondent were parties to an arbitration conducted by the Queensland Industrial Relations Commission - where the second respondent sought a determination that the wages of 50,000 employees be increased over a three year period - where the second respondent applied for an interim wage increase before a final determination of the matter - whether an interim wage increase is an interlocutory order - whether the Commission has the power to make an interlocutory order.

Industrial Relations Act 1999 (Qld), s 149, s 150, s 230, s 273, s 274, s 326

Industrial Relations (Fair Work Act Harmonisation No. 2) and Other Legislation Amendment Act 2013 (Qld)

Australian Telecommunications Corporation v Barnes [1996] QCA 1; (1995) 125 FLR 335

Bienstein v Bienstein (2003) 195 ALR 225

Carr v Finance Corporation of Australia (No 1) [1981] HCA 20; (1981) 147 CLR 246

Gilbert v Endean (1878) 9 Ch D 259

Hall v Nominal Defendant [1966] HCA 36; (1966) 117 CLR 423

Licul v Corney [1976] HCA 6; (1976) 180 CLR 213

N K Collins Industries Pty Ltd v The President of the Industrial Court of Queensland & Anor [2013] QCA 179

Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30; (1998) 195 CLR 1

Rouse v IOOF Australia (No 2) [1999] SASC 205

Stanberg Pty Ltd v Tabibi [2012] SASC 187

S Keim SC, with J Merrell, for the second respondent

[1] In January 2013, the applicant and the second respondent became parties to an arbitration to be conducted by the Queensland Industrial Relations Commission ("the Commission") under the then terms of s 149 of the Industrial Relations Act 1999 (Qld) ("the Act").

[2] In that proceeding, the second respondent (which I will call the respondent) sought a determination by the Commission that the wages of approximately 50,000 employees in the State public sector be increased for a period of three years which commenced on 1 September 2012. It claimed an increase of 4.5 per cent in the first year followed by increases of four per cent in each of the second and third years.

[3] Prior to this claim being referred to arbitration, the applicant had put to the relevant employees an offer by which there would be increases of 2.35 per cent for each of those years. That offer was rejected by a majority of employees.

[4] As soon as the arbitration commenced, the respondent applied within that proceeding for an interim order that the wages of relevant employees be increased immediately by that amount of 2.35 per cent. This was opposed by the applicant, who argued that the Commission did not have power to make such an interim order. Under the then s 149 of the Act, under which the arbitration was to be conducted, the Commission could make "orders of an interlocutory nature". The respondent's case was that an order for an interim wage increase, as it sought, was such an order. The applicant's case was that it was not such an order and that the Commission had no power to make it.

[5] That question of power was determined by the Commission as a preliminary question. A full bench of the Commission upheld the applicant's argument and dismissed the application for the interim wage increase. The decision was appealed to the Industrial Court, then constituted by President Hall, who allowed the appeal and remitted the matter to the Commission. The President held that the order sought for an interim wage increase was an order of an interlocutory nature which the Commission was empowered to make under s 149(2).

[6] The applicant applies to this court for a review of the decision of the President. He argues that the President's decision was affected by a jurisdictional error and that there should be an order in the nature of certiorari to quash the President's decision and remit the matter to the Industrial Court for further consideration and determination according to law. He seeks also a declaration that upon the proper construction of what was s 149 of the Act, it did not authorise an interim wage increase. Alternatively, the applicant seeks a declaration that if s 149 did empower the Commission to make such an order, it could only be made after consideration of the matters referred to in s 149(5)(a), (b), (c) and (d) of the Act. They are matters which, according to s 149(5), had to be considered by the Commission "in considering the matters at issue" when the Commission is "exercising its arbitration powers".[1] The President did not reach a concluded view about s 149(5) but expressed the tentative view that it would not apply to a decision about an interim wage increase.

[7] The Act was substantially amended last December by the Industrial Relations (Fair Work Act Harmonisation No. 2) and Other Legislation Amendment Act 2013 (Qld) which replaced what had been s 149 of the Act with new ss 149-149E. Section 149C now provides that in this context a wage increase cannot be ordered before the full bench of the Commission makes its final arbitration determination. However, as the parties agree, the present case must be determined according to the Act as it was prior to those amendments. Section 831 of the Act provides that if before the "introduction day", which was 17 October 2013,[2] the Commission's jurisdiction to determine a matter by arbitration had been engaged under s 149 and a determination had not been made, then the Commission is to determine the matter by arbitration under s 149 of the pre-amended Act. The discussion which follows refers to that Act.

[8] Section 149 was within Chapter 6 which provided for a process of negotiation, conciliation and arbitration. Sections 141 through 147 provided for the conduct of negotiations towards the making of an agreement between an employer and a group of employees. Section 148 empowered the Commission to intervene by conciliation to the end of assisting the parties to reach a concluded agreement.

[9] Section 149 provided for an arbitration between the negotiating parties in circumstances where, broadly speaking, the process of conciliation had been and was likely to remain unsuccessful. In this case, there was no question that circumstances had arisen which engaged s 149.

(a) the commission has the arbitration powers that it would have under section 230 if that section applied to certified agreement negotiations instead of industrial disputes; and

(b) the commission may give directions or make orders of an interlocutory nature.

(3) Industrial action organised, or engaged in, while the commission determines the matter by arbitration is not protected industrial action for section 174.

(4) In exercising the arbitration powers, the commission must limit its consideration to the matters at issue during negotiations for the proposed agreement.

(5) In considering the matters at issue the commission must consider at least the following:

(b) the likely effects of the commission's proposed determination, and any matters agreed before arbitration, on employees and employers who will be bound by the proposed determination;

(c) the public interest, and to that end the commission must consider -

(A) for a matter involving a public sector entity - the State's financial position and fiscal strategy, and the financial position of the public sector entity; or

(B) for any other matter - the employer's financial position;

and the likely effects of the commission's determination on those things; and

(iii) the likely effects of the commission's determination on the economy and the community;

(d) the extent to which the negotiating parties have negotiated in good faith.

(6) The commission must publish its reasons when determining a matter under this section.

(7) The reasons must address each of the things the commission considered under subsection (5) and, for each thing, must -

(a) set out the commission's findings on material questions of fact; and

(b) refer to the evidence or other material on which those findings were based."

(1) A determination under section 149 must specify a date, of no later than 3 years after the date on which the determination is made, as its nominal expiry date.

(2) The determination has effect subject to any conditions specified in it.

(3) The determination (including a determination made before the commencement of this subsection) operates until -

(a) before its nominal expiry date has passed - the commission, acting on an application under subsection (4), revokes it under subsection (5); or

(ii) the commission, acting on an application under subsection (4), revokes it under subsection (6).

(4) The following persons may apply to the commission to revoke a determination -

(b) a valid majority of the employees to whom the determination applies;

(ii) has at least 1 member who is an employee bound by the determination.

(5) Before the determination's nominal expiry date has passed, the commission must not revoke the determination unless satisfied -

(a) the employer and the 1 or more employee organisations, or a valid majority of the employees, who are bound by the determination have agreed to the revocation (for example, because they propose to make an agreement under division 1); and

(b) the revocation would not be against the public interest.

(6) After the determination's nominal expiry date has passed, the commission must revoke the determination if, and only if, satisfied -

(a) for a determination that provides that it may be revoked if particular conditions are met - the conditions have been met; or

(b) for a determination that does not provide for the way it may be revoked - it is in the public interest to revoke the determination.

(7) The revocation takes effect when the commission's approval takes effect. ..."

[12] As already noted, the power to order an interim wage increase was thought by the President to come from s 149(2)(b), such an order being one of an interlocutory nature according to his reasoning.

[13] It is relevant also to consider s 230 of the Act, which is referred to in s 149(2)(a). Section 230 conferred arbitration powers upon the Commission in the context of an industrial dispute. Section 230(4) provided that the Commission might do one or more of the following:

(4) Without limiting subsection (3), the commission may do 1 or more of the following -

(b) make orders, or give directions, of an interlocutory nature;

(c) exercise the commission's powers under section 277 (whether or not application under that section has been made) to grant an interim injunction;

(d) make another order or exercise another power the commission considers appropriate for the prevention or prompt settlement of the dispute."

[14] Section 273 defined the Commission's functions as relevantly including the "resolving [of] disputes in the negotiation of agreements ... by arbitration, including by the making of determinations ...".[3]

[15] Section 274 provided the Commission with power to do all things necessary or convenient to be done for, or in connection with, the performance of its functions including a power to make any order which it considered appropriate.[4]

[16] Of some relevance also is s 326 which was as follows:

In an industrial cause, the president, commission or registrar may make orders, or give directions, the president, commission or registrar considers just and necessary in relation to interlocutory proceedings to be taken before the hearing of the cause, including proceedings about -

(b) persons to be served with notice of proceedings; or

(c) calling of persons to attend in proceedings; or

(e) the issues to be referred to the court or commission; or

(f) admissions, discovery, interrogatories or inspection of documents or property; or

[17] The Commission noted that in some of its earlier decisions, orders had been made for interim wage increases but observed that these orders were made by agreement between the parties.

[18] The Commission accepted a submission for the present applicant which was to the effect that apart from a procedural order, an interlocutory order must be for the maintenance or "restoration" of the status quo. The Commission apparently accepted the submissions for the present applicant that this limitation resulted from what was said by Cotton LJ in Gilbert v Endean as follows:[5]

"[T]hose applications only are considered interlocutory which do not decide the rights of the parties, but are made for the purpose of keeping things in statu quo till the rights can be decided, or for the purpose of obtaining some direction of the Court as to how the cause is to be conducted, as to what is to be done in the progress of the cause for the purpose of enabling the Court ultimately to decide upon the rights of the parties."

This proposed order, it held, "would lead to the creation of additional rights for employees to be covered by the proposed determination in circumstances where no such rights or entitlements existed previously" so that "any order made in relation to interim wage increases could never be considered 'interlocutory' in nature".

[19] The Commission added that any decision by the Commission upon whether there should be an interim wage increase would engage s 149(4) requiring the Commission "to consider the matters at issue during the negotiations" and s 149(5), requiring the Commission to consider the matters set out in that subsection.

[20] The President disagreed with the Commission's definition of the ambit of an order of an interlocutory nature. In particular, he disagreed with the Commission's view that such an order must be one which maintained the status quo.

[21] In the President's view, the law had "moved on" such that the nature of an interlocutory order was not so limited. In his view, the essential question was whether the order finally determined, "not a particular matter, but the principal cause pending between the parties". The President adopted the reasoning of Peek J in Stanberg Pty Ltd v Tabibi,[6] where there was a relatively recent survey of the authorities.[7] Peek J there quoted passages from Hall v Nominal Defendant,[8] Licul v Corney,[9] Carr v Finance Corporation of Australia (No 1)[10] and Bienstein v Bienstein.[11] The President also cited the observations of Gaudron J in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia as follows:[12]

"As a general rule, interlocutory orders and injunctions are confined to orders maintaining the status quo at the time of the making of an application for those orders. However, that is not invariably so."

[22] The President was persuaded that an order for an interim wage increase was an interlocutory order which the Commission was empowered to make under s 149(2)(b). He added that he was "attracted by [the present respondent's] submission that s 149(5)(a)(ii) and (iii) of the Act are about the final determination of the controversy between the parties, rather than interlocutory orders along the way", but did not express a concluded view.

[23] The applicant submitted that an interim wage increase could not be an interlocutory order for the purposes of s 149(2)(b) at least for several reasons. The first was that it would create new rights in favour of relevant employees. The second was that the order would involve a final determination, in that it would finally determine "the rights of the parties in respect of the interim wage increase". In that respect, it was submitted that the right created by an interim wage increase would be "complete and immediate" and "not contingent on or 'pending' some future event to crystallise". The argument acknowledged the possibility that the ultimate decision of the Commission could order something in the nature of a set-off in circumstance that the extent of the wage increase in that final determination is lower than the extent of the interim wage increase. But the applicant pointed out that this "set-off" would not be inevitably imposed and nor was it certain that it would permit the applicant to recover all which had been effectively overpaid. In particular, there would be an inability to recover monies from persons who had received the interim wage increase but who had ceased to be relevant employees by the time of the final determination.

[24] The applicant also referred to the introductory words of s 149(2), emphasising that the power to make an order of an interlocutory nature is limited in that it must be something done "to determine the matter by arbitration". The submission here was that an interim wage increase would not be to the end of determining "the matter", being the controversy requiring the ultimate decision within the arbitration.

[25] The applicant's submissions otherwise corresponded with the reasoning of the Commission as to whether an interim wage order would be an order of an interlocutory nature. Further, it was submitted that the Commission was right to conclude that any wage order would require a consideration of the matters set out in s 149(5).

[26] The respondent argued that the test to be applied here is that which is generally applied to distinguish between final and interlocutory orders, namely whether the order finally determines the rights of the parties. Applying that test, it was said that the effect of an interim wages order would not be final because it would operate only pending the making of a final determination. The respondent submitted that it was not to the point that an interlocutory injunction is granted to maintain the status quo because what was sought here was not an injunction but another order of an interlocutory nature. The respondent conceded that if the President had erred in his construction of s 149, this involved a jurisdictional error.[13]

[27] The respondent submitted that the Commission would not be obliged to consider the matters set out at s 149(5) prior to ordering an interim wage increase. That is because the reference to the Commission's "considering the matters at issue" (at the commencement of s 149(5)), was to the matters in issue in the ultimate determination.

[28] The starting point is that "the usual test for determining whether an order is final or interlocutory is whether the order, as made, finally determines the rights of the parties".[14] An interlocutory order might determine conclusively one or more issues, but it will be regarded as interlocutory in nature if it does not determine all of the rights of the parties.[15] According to the usual test, an order for an interim wage increase in this context would be interlocutory in nature, because it would not determine the entirety of the questions between the parties. It is not to the point to say that it would finally determine the question of whether there should be an interim wage increase. If that were the test for distinguishing between interlocutory and final orders, no order would be interlocutory because, as has been observed, in that sense all orders would be final.[16]

[29] The next question is whether the term "orders of an interlocutory nature" was used in a different sense within s 149. The applicant suggests that its meaning was affected by other provisions of the Act, of which one is s 326. The argument emphasises that the type of orders for which s 326 provides is, in each case, procedural. However, the language of s 326 suggests that that is not a comprehensive list of the orders or directions which might be made "in relation to interlocutory proceedings to be taken before the hearing of the cause".

[30] The applicant's argument also pointed to s 230(4), suggesting a distinction between orders of an interlocutory nature and an order for an interim injunction. It is said that this suggested a more limited meaning to be given to orders of an interlocutory nature. But this is not a clear indication that an interim injunction is different from an "order of an interlocutory nature" and more generally, that such an order, for the purposes of s 149(2)(b), is limited to a procedural order or direction. In my view, other provisions of the Act do not provide a sufficient indication that the well established distinction between interlocutory and final orders is not to be employed within s 149.

[31] I conclude that the usual test is to be applied to distinguish between interlocutory and final orders in this context. An order for an interim wage increase would be an order of an interlocutory nature. But it is another thing to say that it is an order which the Commission was empowered to make at all or alternatively without consideration of the matters set out in s 149(5).

[32] The range of possible interlocutory orders is limited by the introductory words of s 149(2). The interlocutory order must be one which is to the end of "determin[ing] the matter by arbitration". The "matter" is that which had been the subject of the negotiations and conciliation under preceding provisions of the Act. A decision upon one or more issues within that matter, in advance of the remaining issues, could be characterised as an order of an interlocutory nature to the end of the determination of the matter.

[33] It was suggested that an order for an interim wage increase could have consequences which could not have been intended in the enactment of s 149. There was the possibility that the interim increase would be greater than the ultimate increase, with the result that employees would be overpaid without certainty that the overpayment could be recovered by some set off. There was also the position of a particular group of employees from whom any such repayment could never be recovered by a set off, namely those who had ceased to be relevant employees by the time of the ultimate determination in the arbitration.

[34] These potential consequences, I accept, would be relevant in the Commission's consideration of whether and if so what orders should be made for an interim wage increase. But they do not demonstrate that any interim wage increase could not be ordered under s 149. Suppose the Commission were able to quickly and comfortably conclude that the ultimate outcome would be a wage increase of at least a certain extent: in such a case there would be no prospect of an overpayment by an interim wage increase to that extent. But where that conclusion could not be comfortably made, the risks of irrecoverable overpayments would surely affect the Commission's decision about an interim wage increase. In my view, the commission would be empowered, under s 149(2)(b), to order an interim wage increase.

[35] Section 149(5) requires the Commission, when considering the matters at issue, to consider the particular things which are there prescribed. The expression "matters at issue" is used also in s 149(4), which precludes the Commission from imposing a result, in the exercise of its arbitration powers, which is inconsistent with the parties' consensus about an issue. I do not read s 149(4) or s 149(5) as effectively providing that all of the matters at issue, or put another way, all of the issues within the matter for determination, must be decided contemporaneously. Rather, s 149(5) could be engaged upon a consideration of some of the matters at issue.

[36] Any consideration of an application for an interim wages increase would have to include a consideration of the likely ultimate outcome of the arbitration. It could not be thought that the Commission could award an interim wages increase with no regard to the merits of the respective cases. In turn, that assessment of the likely outcome of the arbitration would require the Commission to consider everything which might bear upon that outcome. In particular, it would require the Commission to consider the matters specified within s 149(5). That is consistent with the words of s 149(5) because the Commission, when assessing the likely outcome of the arbitration, would be "considering the matters at issue". Thus it would be open to the Commission to order an interim wage increase if the Commission was satisfied that the increase would not exceed what might ultimately be ordered. But to reach that point, the Commission would have to consider the matters in s 149(5).

[37] For these reasons, I am persuaded that an interim wage increase could be ordered pursuant to the Commission's power, under the then s 149(2)(b), to make an order of an interlocutory nature. But I am also persuaded that such an order could not be made without a consideration of the things set out in s 149(5). I therefore respectfully disagree with the conclusion of the Commission on that first question and with the tentative view expressed by the Industrial Court on that second question.

[38] It follows that the application to quash the decision of the Industrial Court in determining that an interim wage order could be made as an interlocutory order, should be refused. However, the applicant has established his case for a declaration as to the applicability of s 149(5).

[39] It will be declared that in considering the application by the second respondent dated 31 January 2013 for an order for an interim wage increase, the Queensland Industrial Relations Commission must consider the matters referred to in s 149(5)(a), (b), (c) and (d) of the Industrial Relations Act 1999 (Qld), as those provisions were prior to the enactment of the Industrial Relations (Fair Work Act Harmonisation No. 2) and Other Legislation Amendment Act 2013 (Qld).

[2] See the definition in s 807 of the Act which refers to the day on which the 2013 Act was introduced into the Parliament.

[5] (1878) 9 Ch D 259 at 268-269.

[6] [2012] SASC 187.

[8] [1966] HCA 36; (1966) 117 CLR 423 at 443-444 per Windeyer J.

[9] [1976] HCA 6; (1976) 180 CLR 213 at 219-220 per Barwick CJ, 225 per Gibbs J and 230-231 per Stephen and Jacobs JJ.

[10] [1981] HCA 20; (1981) 147 CLR 246 at 248 per Gibbs CJ and 254 per Mason J.

[11] (2003) 195 ALR 225 at 230 per McHugh, Kirby and Callinan JJ.

[12] [1998] HCA 30; (1998) 195 CLR 1 at 59 [119].

[13] Citing N K Collins Industries Pty Ltd v The President of the Industrial Court of Queensland & Anor [2013] QCA 179.

[15] See eg Australian Telecommunications Corporation v Barnes [1996] QCA 1; (1995) 125 FLR 335, where the Queensland Court of Appeal held that a declaratory judgment, on an issue, finally determined that issue although it was an interlocutory order for the purposes of an appeal.

[16] Carr v Finance Corporation of Australia (No 1) [1981] HCA 20; (1981) 147 CLR 246 at 254 per Mason J; Rouse v IOOF Australia (No 2) [1999] SASC 205 at [46]- [47] per Lander J.