Everitt v Cuscal Shared Services Pty Ltd and anor

Australian Constitution LEGISLATION CITED: Industrial Relations Act 1996 Workplace Relations Act 1996 s 152(1)

Barry v Australian Broadcasting Corporation (2002) 112 IR 33 Burgess v Mount Thorley Operations Pty Ltd (2002) 115 IR 13 Hansen Yuncken Pty Ltd v Costopoulos (2004) 136 IR 61 CASES CITED: Majik Markets Pty Ltd v Brakes & Service Centre Drummoyne Pty Ltd [1991] 28 NSWLR 443 Nagle v Tilberg (1993) 51 IR 8 Stonham v Speaker of the Legislative Assembly of NSW (2000) 97 IR 325

APPLICANT Dr Berwick of counsel Solicitor: Mr G Healey GH Healey & Co, Sutherland LEGAL REPRESENTATIVES:

RESPONDENTS Mr S Meehan of counsel Solicitor: Mr B Rauf Blake Dawson Waldron

LESLEY EVERITT v CUSCAL SHARED SERVICES PTY LTD AND ANOR

Application under s.106 of the Industrial Relations Act 1996

JUDGMENT ON STRIKE OUT APPLICATION [2005] NSWIRComm 319

1 By summons, the applicant, Lesley Everitt, has sought certain relief against the first respondent, Cuscal Shared Services Pty Ltd ("Cuscal"), and the second respondent, Credit Union Services Corporation Australia Limited ("CUS"), under s 106 of the Industrial Relations Act 1996 ("the Act"). 2 The second respondent has sought by motion to have the proceedings against it dismissed. It is alleged that any order made would be inconsistent with the provisions of an award of the Australian Industrial Relations Commission and therefore invalid under s 109 of the Australian Constitution. Appropriate notices were given under s 78B of the Judiciary Act. 3 The summary of matters of fact and law contained within the summons states that the applicant became employed by the "respondent" in about January 2002. The summons does not nominate which of the two named respondents was the employer at that stage. The summons, after relating certain matters concerning her employment, states that the applicant was informed on about 6 May 2003 in a meeting that her employment would be terminated on the basis that her position would be "a redundant position". 4 The summons does not contain any hint as to the respective circumstances of the first and second respondents. The summons refers variously to a contract, contracts or arrangements between the applicant and, in some parts, "the respondents" and, in some parts, "the respondent". 5 In a Reply document, the respondents submitted firstly that the summons did not comply with Rule 18A of the rules of this Court. That Reply document gives some hint as to what occurred. It asserts that the applicant commenced employment with the first respondent on 29 January 2002 and that, on 1 April 2002, the applicant became an employee of the second respondent. The Reply document states that the applicant's employment with the second respondent was terminated on the ground of redundancy. 6 In a Response document filed by the applicant, the applicant conceded that she became employed by the first respondent, but stated that she did "not know and cannot admit or deny that the second respondent" became her employer on 1 April 2002 or at any other time. 7 The applicant has filed an affidavit in the substantive proceedings which became evidence for the purpose of this interlocutory application. That affidavit annexed a letter to the applicant under the hand of the General Manager, Corporate Services/CFO, of CUS dated 6 May 2003. That letter stated that, due to a restructure, the applicant's position was to be made redundant. The letter stated that efforts would be made to redeploy the applicant; if unsuccessful the applicant would be "released" on 13 May 2003 or on such other date as was to be agreed. 8 An affidavit filed on behalf of the respondent, sworn by Bilal Rauf, the solicitor for the respondents on 2 December 2004, annexed a copy of a letter addressed to the applicant dated 21 January 2001, offering her employment with the first respondent. There is also annexed a document between the same parties entitled "Contract of Employment - Executive". 9 A further annexure to that affidavit is dated 27 February 2002. It is a letter addressed to the applicant indicating an intention to "transfer" the applicant's employment to the second respondent effective 1 April 2002. Finally, there is annexed a document entitled "Employee's consent to transfer employment contract from Cuscal Shared Services Pty Ltd to Credit Union Services Corporation (Australia) Limited". The copy document is purported to have been signed by the applicant on 19 April 2002, by which she consents to the transfer of her employment contract from one company to the other effective 1 April 2002. There is an acknowledgement that all the terms and conditions of her previous employment contract remain unchanged, including all entitlements. 10 The second respondent, but not the first respondent, was a party to the Credit Union Award made by the Australian Industrial Relations Commission. That Award names the second respondent as a respondent to the Award and purports to be binding on all employers named in the respondency schedule "in respect to all their employees …". 11 The respondents sought to rely on the provisions of that Award as a basis for asserting that this Court lacked jurisdiction to deal with so much of the applicant's claim as was brought against the second respondent by reference to the provisions of s 109 of the Australian Constitution. 12 The respondents relied on the following provisions of the Award, in particular, clause 17. This is entitled "Termination, Change and Redundancy". It is in familiar form and contains detailed provisions entitling an employer to terminate the employment of an employee upon the giving of relevant periods of notice therein set out or the making of payment in lieu of that notice. In particular, clause 17.1.4 states that "The required amount of payment in lieu of notice must equal or exceed the total of all amounts that, if the employee's employment had continued until the end of the required period of notice, the employer would have become liable to pay it to the employee because of the employment continuing during that period". There is then specific reference to the requirement to take into account ordinary hours of work, allowances, loadings and penalties and "any other amounts payable under the employee's contract of employment". The periods of notice referred to are stated not to apply in the case of dismissal for serious misconduct and other matters which are, for present purposes, irrelevant. There then follows provisions concerning notice of termination, job search entitlements and transmission of business. Finally, there are detailed provisions in familiar form contained within clause 17.5 dealing with redundancy. Those redundancy provisions are of a detailed nature. 13 It is now necessary to analyse in some greater detail the claims made by the applicant in the summons. I should state in this regard that, after the commencement of the hearing of this interlocutory application on 1 September 2005, the applicant sought and was granted leave to draft a proposed amendment to the summons in order to clarify part of the claim. I shall refer to the proposed amendment later in this judgment. 14 The claims made in the summons in its current form seek orders declaring void any contract, contracts or arrangements between the applicant and "the respondent" whereby the applicant performed work in the finance industry for the respondent. The basis for the declaration of avoidance was that the said contract etc be characterised as an unfair contract pursuant to s 106 of the Act. An order was also sought for a declaration of unfairness with respect to any collateral arrangement or related conditions. Furthermore, consequential orders were sought varying the contracts or arrangements to impact upon the circumstances in which termination could occur and the amount of notice that should be given. There is a mention of bonuses. Consequential relief sought in terms of a variation is that, for the purpose of calculating payments in respect of notice and redundancy, payment is to be calculated by reference to the monetary value of all employment benefits receivable by the applicant during the notice period including, specifically, bonuses. 15 By paragraph 18 of the summons the contract was said to be unfair in that the applicant was in a position of inferior or unequal bargaining power, that representations had been made to her on behalf of the respondent which had not been fulfilled, that the applicant had been misled and deceived by representations, that the conduct in respect of the representations was unfair, that the contract permitted termination of employment without any sufficiently valid reason, that the contract was also unfair etc "in so far as it related to termination and payments of commission and/or bonuses upon termination" in a number of respects which, in essence, were repetitive or by way of elaboration of the matters to which I have earlier referred.

The Applicable Principles 16 The circumstances impacting upon any order made by this Court under s 106 of the Act in circumstances where there is inconsistency or potential inconsistency with the provisions of an industrial instrument made by the Australian Industrial Relations Commission have been considered on many occasions, including Full Bench decisions of this Court. Many of the authorities are discussed in Barry v Australian Broadcasting Corporation (2002) 112 IR 33, albeit in the context of relevant inconsistency for the purpose of s 109 of the Constitution being raised by reference to Commonwealth legislation rather than an industrial instrument. Nevertheless, the principles are the same. 17 In essence, s 109 of the Australian Constitution provides that "when a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail and the former shall, to the extent of the inconsistency, be invalid". I refer also to s 152(1) of the Workplace Relations Act 1996, which provides relevantly that "…if a State law or a State award is inconsistent with, or deals with a matter dealt with in an award the latter prevails and the former, to the extent of the inconsistency or in relation to the matter dealt with, is invalid". 18 It may be assumed, as has been assumed in all relevant authorities, that an order made by this Court under s 106 of the Act would constitute a law of the State for the purpose of s 109 of the Constitution. 19 It has sometimes been argued, as it was in these proceedings, that the s 106 application is concerned with the contract of employment which applies concurrently with any industrial instrument to an employment situation. That, however, is not to the point. In applying s 109 of the Constitution, one looks to any inconsistency between an order made under s 106 and any instrument which may be characterised as a law of the Commonwealth. The matter was encapsulated succinctly by Schmidt J in Burgess v Mount Thorley Operations Pty Ltd (2002) 115 IR 13. I would respectfully adopt and apply what was said by her Honour at paragraph 171. "While the Court is given power by s106 to deal with unfair contracts, as defined, that power is a statutory interference with the parties' right to contract as they wish. The award making powers of the AIRC and the power to certify agreements, thus giving them the force of award, are also statutory powers which interferes with contractual agreements parties have otherwise made or might be free to make. While the parties to a contract of employment which attracts the terms of such an award or agreement, may still have the right to agree to more generous arrangements than those provided in such Federal instruments, this Court does not have the jurisdiction to require such parties to adhere to more favourable terms which it, not they, determine, if the end result be `an interference with the adjustment of industrial relations established by the award with respect to the matters formerly in dispute'. (See Metal Trades Industry Association of Australia & Ors v The Amalgamated Metal Workers Shipwrights' Union & Ors (1983)152 CLR 632 at pp642 -3.)".

20 For completeness, I refer to the recent judgment of a Full Bench of this Court in Hansen Yuncken Pty Ltd v Costopoulos (2004) 136 IR 61. At paragraph 32 the Court said: "An order under s 106(5) of the Act requiring payment in relation to notice in excess of or above that provided for in the Agreement would be in direct collision with the terms of the Agreement and, therefore, invalid". Relevant authorities are then cited. I should add that the agreement therein referred to was an enterprise agreement certified by the Australian Industrial Relations Commission. 21 In applying these principles it is necessary to examine the subject matter of the summons and the declarations and orders which are sought by reference to the provisions of the relevant award. It is in the context of this examination that any inconsistency will be determined. 22 Dr Berwick, counsel for the applicant, in resisting the motion submitted that an integral part of the applicant's claim was based on the failure of the respondent to pay a bonus or any monies referrable to bonus on termination of employment. He asserted that such a matter was outside the award. He also said that the applicant wished to amend the summons to clarify the precise manner in which the bonus issue was raised in the proceedings. The applicant was given 7 days in which to formulate a proposed amendment to the summons and the proceedings would then be dealt with on that basis, subject to further written submissions. In any event, the award makes provision for the payment of all monies owing under the contract of employment on termination, so that prima facie any amendment would nevertheless not assist the applicant in resisting the notice of motion. 23 In written submissions, the applicant asserted that it was inappropriate to consider this matter at this stage of the proceedings before all of the evidence had been dealt with. Reliance was placed on a number of well-known authorities including Nagle v Tilberg (1993) 51 IR 8, Majik Markets Pty Ltd v Brakes & Service Centre Drummoyne Pty Ltd [1991] 28 NSWLR 443 and Stonham v Speaker of the Legislative Assembly of NSW (2000) 97 IR 325. Although this is not a strict court of pleading, applicants are required by reason of the rules, and particularly rule 18A, to specify the claim and the basis for the claim in sufficient detail to allow both the respondents and the court to comprehend the nature and extent of the claim made. Accordingly, one may assume that the ultimate evidentiary material, when admitted, will, at its highest, support the applicant's case put at its highest in the summons. On this basis it is permissible to have regard to the summons in this light when determining whether the respondents' submission should be accepted. 24 The applicant submitted that there were a number of instances which demonstrated unfairness. These included a misrepresentation by the respondents as to the applicant's long-term employment, the failure of the second respondent to advise the applicant that her employment situation was covered by an industrial instrument, the fact that she may have been employed to carry out a specific task with little employment prospect beyond this, the fact that she worked significant hours in order to accomplish that task and the like. However, the nature and extent of any unfairness, and in particular, unfair conduct, is not determinative of the issue in these interlocutory proceedings. What is determinative is, as I have previously indicated, an examination of inconsistency by reference to the declarations and orders which are sought in the summons in the context of the contents of the industrial instrument. 25 I have previously summarised the orders sought in the summons. There can be no doubt that the relief sought is ultimately directed to conditions applying to, and monies payable upon, the termination of the applicant's contract of employment with the respective respondents. In the case of the second respondent, this is a matter which in my opinion is comprehensively provided for in clause 17 of the relevant Federal award, the provisions of which I have earlier summarised. Even though the applicant, through her counsel, sought to emphasise that the monies payable included a reference to bonuses, clause 17, when dealing the monetary amount payable on termination for redundancy, specifically requires that all amounts payable under the employee's contract of employment are to be taken into account. This would prima facie include any monies payable under, or by reference to, any bonus provision contained within, or incorporated within, the contract of employment. On that basis, no matter what the allegations of unfairness are that are contained within the summons, the ultimate relief sought must and does create inconsistency between any order for the payment of monies and the method of calculation made by this Court in terms of the obligations of the second respondent under the provisions of the award. This is sufficient to constitute inconsistency for the purpose of s 109 of the Australian Constitution which is, in turn, sufficient to justify acceding to the strike-out orders sought by the respondents with respect to so much of the applicant's claim as is made against the second respondent under the summons in its current form. 26 I now turn to deal with the proposed amended summons. Both parties made submissions with respect to it. Even though there has been no formal application to amend, the proceedings have been conducted on the basis that such an application would be made and that it was appropriate that I consider its terms in the context of the motion brought by the respondents. 27 The proposed amended summons deletes a number of claims for relief and inserts additional claims. The respondents did not argue that all of the additional claims sought to be brought by the applicant should be struck out. It is only necessary, therefore, that I deal with those that are the subject of the respondent's submissions. The proposed amendments in contention seek orders of variation of the contracts or arrangements between the applicant and the respondents or any collateral arrangement or related condition so as to include the following terms: "(e) that on termination of the contract of employment for reasons of redundancy, the second respondent would not disadvantage the applicant by invoking any clause of the Credit Union Award 1998 which defeated her reasonable expectation that all reasonable efforts would be made to find her an alternative position; … (i) that the applicant would be entitled to work out any period of notice." 28 The respondents submitted that the orders sought would operate in a manner as to create inconsistency with, and conflict with, the operation of the redundancy clause provisions in the award or would otherwise impair or detract from its operation. I agree with those submissions. An order of this Court which would have the effect of precluding the second respondent from relying on any entitlement arising under the relevant redundancy clause in the award would create inconsistency for the purpose of s 109 of the Australian Constitution. There is no requirement on an employer by reason of clause 17 of the award to make reasonable efforts to find an employee an alternative position in the event of redundancy. 29 The same situation applies to any order that this Court might make that the applicant would be entitled to work out any period of notice. Clause 17.1.3 of the award allows payment in lieu of notice to be made if the appropriate notice period is not given, and allows for part-payment in lieu of notice with respect to any part of the period of notice. 30 For these reasons I uphold the respondents' submissions with respect to those parts of the proposed amended summons referred to above. 31 As I understand the position advanced by the respondents, there is no objection to leave being granted to the applicant to further amend the summons in the form of the proposed amended summons, save for the right to move the Court to strike-out any part of the proposed amended summons by reason of the provisions of s 108B of the Act. As the provisions of s 108B go to jurisdiction, there would appear to be no basis for precluding the respondents from seeking to move the Court at any appropriate stage of the proceedings. 32 The respondents, having been successful in the application, are prima facie entitled to a costs order in their favour. However, I note that at one stage the proceedings were adjourned in order to allow the respondents to serve a notice under s78B of the Judiciary Act. The applicant should thus be entitled to a costs order in her favour with respect to any costs thrown away by reason of the adjournment.

33 ORDERS I make the following orders: 1. The applicant is granted leave to amend the summons in terms of the proposed amended summons, a copy of which was filed in the registry on 22 November 2005, save that the claims numbered 3(e) and (i) in Part A are struck out. The applicant is directed to file and serve the amended summons within 28 days of this date; 2. So much of the applicant's claim as is brought against the second respondent by reason of the summons filed on 6 May 2004 is dismissed; 3. The applicant is to pay the respondents' costs of the motion in an amount assessed in default of agreement, save for any costs associated with the adjournment of the proceedings to allow for service of a notice under s 78B of the Judiciary Act . 4. The respondents are to pay the applicant's costs incurred by reason of the adjournment of the proceedings to enable the respondents to serve a notice under s 78B of the Judiciary Act in an amount assessed in default of agreement. 5. The solicitors for the applicant and the respondents are directed to confer and file with the Court within 28 days an amended timetable for the advancement of the proceedings pursuant to Practice Direction 14. If agreement cannot be reached, the applicant's solicitor is directed to exercise the liberty to apply which continues to have the matter listed before the Deputy Industrial Registrar for further directions.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.