s.170CE application for relief in respect of termination of employment

Trollope Silverwood & Beck Pty Ltd (In liquidation)

Trollope Silverwood & Beck Pty Ltd (In liquidation)

Trollope Silverwood & Beck Pty Ltd (In liquidation)

Trollope Silverwood & Beck Pty Ltd (In liquidation)

Applications for a remedy in relation to termination of employment - respondent employer in liquidation - whether proceedings require the leave of the court - Workplace Relations Act 1996 s.170CE(1)(a) - Corporations Act 2001 ss.9, 58AA and 471B.

[1] These are appeals, for which leave is required, against a decision given by Commissioner Grainger in Melbourne on 20 March 2003.[1] The only issue of substance in the appeals is an important one concerning the Commission's jurisdiction to deal with an application for a remedy in relation to termination of employment in circumstances where the respondent employer is in liquidation and the applicant employee has not obtained the leave of the relevant court to commence or proceed with the application.

[2] The Commissioner's decision records the essential facts. There were four applications before him in which Messrs Smith, Ovcaric, Hose and Farragher, all former employees of a firm properly described as Trollope, Silverwood and Beck Pty Ltd (In liquidation) (the company), sought a remedy pursuant to s.170CE of the Workplace Relations Act 1995 (the WR ACT) in relation to the termination of their employment. Section 170CE reads where relevant as follows:

"(1) Subject to subsections (5) and (5A), an employee whose employment has been terminated by the employer may apply to the Commission for relief in respect of the termination of that employment:

(a) on the ground that the termination was harsh, unjust or unreasonable;"

[3] For present purposes it may be accepted that the employment of each of the applicants was terminated in late 2002 and the four applications were lodged between 2 and 23 January 2003. On 21 January 2003 the company's creditors resolved that the company be wound up pursuant to s.439C(c) of the Corporations Act 2001 (the Corporations Act). Subsequently, it is unclear precisely when, a liquidator was appointed.

[4] Section 471B of the Corporations Act provides as follows:

"Stay of proceedings and suspension of enforcement process

While a company is being wound up in insolvency or by the Court, or a

provisional liquidator of a company is acting, a person cannot begin or

(a) a proceeding in a court against the company or in relation to property of

(b) enforcement process in relation to such property;

except with the leave of the Court and in accordance with such terms (if any) as the Court imposes."

[5] The company moved for the dismissal of each of the applications for want of jurisdiction on the ground, among others, that the applicants were precluded from making a claim by this provision. Although the Commissioner did not uphold the objection to jurisdiction, he found that the applications could not proceed without the leave of the relevant court pursuant to s.471B.

[6] The issue is whether s.471B applies to the commencement or the continuation of proceedings in this Commission. This in turn involves the proper construction of the term "court" in paragraph (a) of the section. Commissioner Grainger held that, viewed in its context, "court" includes the Commission. The appellants submit that the Commissioner was wrong.

[7] Section 471B includes the terms "court" and "Court". Each of these terms is defined in s.9 of the Corporations Act. Section 9 provides that unless the contrary intention appears, "court" and "Court" have the meanings given by s.58AA. Section 58AA relevantly provides:

(d) a court to which section 41 of the Family Law Act 1975 applies because of a Proclamation made under subsection 41(2) of that Act.

(2) Except where there is a clear expression of a contrary intention (for example, by use of the expression "the Court"), proceedings in relation to a matter under this Act may, subject to Part 9_.7, be brought in any court."_

[8] As indicated, pursuant to s.9 of the Corporations Act "court" has the meaning it bears in s.58AA of the same Act unless the contrary intention appears. The first question is, therefore, what meaning does the term "court" bear in s.58AA?

[9] It seems clear that in s.58AA, the terms of which we have just set out, "court" means a body capable of being invested with the judicial power of the Commonwealth. In other words, the term is confined in meaning to Federal and State courts. This conclusion arises primarily from the terms of s.58AA(2). Proceedings in relation to a matter under the Act would require to be brought in a curial body exercising judicial power. It is beyond argument that the Commission is not a body capable of exercising the judicial power of the Commonwealth: R v Kirby; Ex parte Boilermakers' Society of Australia;[2] Miller v University of New South Wales.[3] If the term "court" is to be given its defined meaning it excludes the Commission. Therefore the Commission is not a court within the definition of that term in s.9. This was the conclusion reached by a justice of the Federal Court of Australia in Australian Liquor, Hospitality and Miscellaneous Workers Union v Home Care Transport Pty Ltd.[4] We respectfully agree.

[10] It follows from the terms of s.9 that the expression "any court" in s.471B includes only courts capable of exercising the judicial power of the Commonwealth, unless the contrary intention appears. Does an intention appear, either in s.471B itself or from the statutory context, that in s.471B "court" includes the Commission?

[11] In Home Care, Merkel J found that while the Commission, not being capable of being invested with the judicial power of the Commonwealth, is not a court as defined in s.9 of the Corporations Act nevertheless, as provided for in s.9, a contrary intention appears in s.471B. That intention is that in s.471B the term "court" should include non-judicial bodies such as the Commission.

[12] His Honour noted two decisions in which it was held that a state industrial tribunal was a court in a similar statutory context. The Full Court of the Supreme Court of Western Australia held that the Western Australian Industrial Relations Commission was a court for the purposes of the leave provision in s.471B of the Corporations Law: Helm v Hansley Holdings Pty Ltd (In liquidation)[5] and a member of the Supreme Court of New South Wales held that the Industrial Relations Commission of New South Wales was a court for the purposes of the leave provision in s.440D of the Corporations Law: Brian Rochford Ltd (Administrator appointed) v Textile Clothing and Footwear Union of New South Wales.[6] In each case the court adopted a purposive approach to the relevant provisions. Merkel J concluded that in enacting the Corporations Act with the relevant provisions unchanged the legislature intended not to disturb the decisions in Helm and Rochford. It follows that if the two state industrial tribunals were included in the term "court", so also was the Commission, which has broader powers and the capacity to make awards affecting the property and affairs of a corporation.

[13] His Honour also found that it was difficult to discern any reason for excluding the Commission from the ambit of the leave provision. The reverse was likely to be the case given the Commission's powers to make awards which might affect the rights of unsecured creditors.

[14] While a number of non-judicial bodies were held to be a court in Helm, Rochford and Home Care a different conclusion was reached by Master Evans of the Supreme Court of Victoria in Silvarich v Rathner.[7] There are two decisions of members of the Commission sitting alone which support the view that the Commission is not a court for the purpose of the same or similar provisions.[8] We were also referred to a case in which "court" was given a broad construction by reference to the purpose of the Suitors' Fund Act 1951 (NSW): Australian Postal Commission v Dao and others (No. 2).[9] In that case, however, there is no suggestion that the Court of Appeal of New South Wales was required to deal with the question of whether a contrary intention appeared in the legislation.

[15] In ascertaining whether the terms of a statute give rise to a contrary intention it is necessary to have regard to the relevant text. In our view there is nothing in the text of s.471B itself which evidences an intention that applications to bodies other than courts should be subject to the leave provision. Those decisions which have held that there is such an intention are based upon the purpose said to be implicit in the section. In Home Care and Helm that purpose was said to be to enable the court effectively to supervise all claims being brought against the company which is being wound up. To permit the Commission to deal with claims without leave might undermine the effectiveness of the court's supervision and permit an alteration or diminution of the rights of creditors which the court would be powerless to influence.

[16] Without the benefit of authority, it seems to us that there are some difficulties with the respondent's reliance on a purposive approach. This is because of the nature of the Commission, its jurisdiction and the powers available to it.

[17] The Commission's jurisdiction includes the prevention and settlement of industrial disputes (Part VI of the WR ACT), the fixation of minimum entitlements of employees (Part VIA) including applications for relief in respect of termination of employment (Part VIA, Division 3) and facilitating the making and certifying of agreements of various kinds (Part VIB). In exercising its powers the Commission is sometimes required to take into account the public interest, as well as the interests of the parties directly concerned.[10] When exercising its arbitral function the Commission is concerned with the creation and adjustment of rights, rather than with the declaration and enforcement of existing rights, the latter being functions of a court: Re Ranger Uranium Mines Pty Ltd: Ex parte Federated Miscellaneous Workers Union of Australia.[11] This is so even when the Commission exercises jurisdiction to determine applications for a remedy in relation to termination of employment on the basis that the termination was harsh, unjust or unreasonable.[12] While it is clear that by the exercise of its arbitral and other functions the Commission might affect the rights of creditors, by altering or extinguishing existing rights or creating new ones, it is not apparent that it is a purpose of s.471B that the Commission should be prevented from exercising those functions save with the leave of the relevant court. Because the Commission exercises predominantly arbitral power and may be required to take into account the public interest rather than just the interests of creditors, restraint of the Commission raises a number of issues that do not arise when restraint of a court is in contemplation.

[18] Since the Commission is primarily concerned with what rights there should be rather than with existing rights, the court could not supervise the exercise of the Commission's jurisdiction in the same way in which it might supervise the exercise of jurisdiction by a court. The Commission is required to take policy considerations into account in deciding what rights should exist whereas a court is not primarily concerned with such questions. If Commission proceedings were subject to the leave requirement, in exercising its discretion on the question of leave in a particular case, the relevant court may have to take into account considerations additional to those which might be relevant if leave were sought in relation to court proceedings. It is a truism that the relevant court could not itself exercise the Commission's jurisdiction and accordingly the nature of the supervision would be different on that account also. Because supervision of Commission proceedings would differ significantly from supervision of court proceedings, we think some specific indication would be required for an intention to appear that "court" should be given a meaning which differs from its defined meaning and which includes the Commission.

[19] We also think it is significant that the legislature has not included specific reference to the Commission and similar bodies. While one explanation is that the legislature has relied upon the decisions in Helm and Rochford and by implication endorsed those decisions by enacting the 2001 statute with the definition of court in relevantly the same form as it took in the preceeding legislation, that explanation is negatived to a significant extent by the fact that the Commission has dealt with many applications involving companies in liquidation without the leave of the relevant court being obtained either for the initiation or the continuation of the applications. Examples may be found of Commission decisions relating to liquidations of great notoriety and national significance: Re Trustees Executors and Agency Company Ltd (In liquidation);[13] Re Clerks' (Domestic Airlines) Award 1980 (Compass Airlines);[14] Re Insurance Industry Award 1998 (HIH Insurance).[15]

[20] If the legislature had intended to make proceedings in the Commission subject to the leave requirement it could have done so by express provision. An example of such a provision may be found in s.5 of the Suitors' Fund Act 1951 (NSW) which defines court in these words:"includes such tribunals or other bodies as are prescribed."

[21] Taking these considerations into account, we have concluded that the contrary intention does not appear and that "court" in s.471B should be given its defined meaning. With respect to those who have held otherwise, in our view the purposive approach does not take the respondent the distance it needs to go.

[22] We grant leave to appeal. For the reasons we have given the Commissioner's decision was wrong and constitutes a failure to exercise jurisdiction. The appeal must be upheld and the Commissioner's decision quashed. We shall make an order giving effect to our decision.

P. Burchardt for Trollope Silverwood and Beck Pty Ltd (In liquidation).

Printed by authority of the Commonwealth Government Printer

2 [1957] HCA 12; (1957) 95 CLR 529.

3 [2003] FCAFC 180 (14 August 2003).

4 [2002] FCA 497; (2002) 117 FCR 87 at 89-90.

5 [1999] WASCA 71.

6 (1998) 47 NSWLR 47 at 56-57.

7 [2000] VSC 314.

8 See Ryan v Justinprint Australia Pty Limited PR921657; Re Cosco Holdings Paper Manufacturing and Converting Award 1999 PR919999, (2002) 116 IR 321.

9 (1986) 6 NSWLR 497.

11 [1987] HCA 63; (1987) 163 CLR 656 at 667.

12 See ss.170CE(1)(a) and 170CFA(1) and Miller v University of New South Wales [2003] FCAFC 180, 14 August 2003.

14 (1992) 2 CAR 373 (Compas Airlines Pty Ltd provisional liquidator appointed).

15 AW784988, PR904332, 18 May 2001 (HIH Casualty and General Insurance Limited in provisional liquidation).