King v State Bank of New South Wales

APPELLANT/CROSS-RESPONDENT: Mr J J Fernon of counsel Toomey Pegg Drevikovsky, Lawyers (Mr Edward Heggarty) LEGAL REPRESENTATIVES: RESPONDENT/CROSS-APPELLANT: Mr J V Murphy of counsel Mallesons Stephen Jaques (Mr Brett Feltham)

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

CORAM: WRIGHT J, President WALTON J, Vice-President KAVANAGH J Tuesday 30 September 2003 Matter No IRC 38 of 2001 ROBERT GORDON KING v STATE BANK OF NEW SOUTH WALES Application for leave to appeal and appeal against a decision of Marks J given on 6 December 2000 in Matter No IRC 1153 of 1996 Matter No IRC 584 of 2001 STATE BANK OF NEW SOUTH WALES v ROBERT GORDON KING Application for leave to cross-appeal and cross-appeal against a decision of Marks J given on 6 December 2000 in Matter No IRC 1153 of 1996 JUDGMENT OF THE COURT [2003] NSWIRComm 308 1 These appeal proceedings concerned applications for leave to appeal and to cross-appeal against the judgment of Marks J delivered on 6 December 2000 in which his Honour found the contract of employment between Robert Gordon King and the State Bank of New South Wales was an unfair contract within the meaning of s 105 of the Industrial Relations Act 1996 and afforded Mr King relief under s 106 of the statute by varying the contract and making consequential monetary orders: see King v State Bank of New South Wales [2000] NSWIRComm 229. 2 The judgment in these appeals was delivered on 23 December 2002: see King v State Bank of New South Wales (No 2) [2002] NSWIRComm 353, with the orders of the Court to be made being referred to in the following terms (at [117]): We order that the appeal and cross-appeal be upheld and that the respondent pay the costs of the appeal proceedings. The appellant shall, within 28 days, file short minutes as to the orders he proposes to give effect to these reasons. The respondent shall, within seven days thereafter, advise the Industrial Registrar in writing whether it consents to those draft orders or file short minutes setting out the alternative orders it proposes. The Court will make formal orders disposing of both appeals in due course. 3 Draft short minutes of order were filed on 17 April 2003. They were not in agreed terms. At the request of the parties, they were afforded further time to consider the nature of the orders. However, while there were apparently a number of matters which were agreed between them, the parties were unable to come to a final agreement on the form of the appropriate orders. The matter was relisted before the Full Bench on 3 July 2003 and directions were made for the filing of submissions. The Bench indicated that it was likely to deal with the matter on the papers, except if there was any need to clarify the issues raised on the papers. The submissions of the parties have been received and we consider it is appropriate to deal with the matters for decision on the written submissions filed. 4 In his written submissions the appellant, Mr King, referred to the draft orders filed by him on 17 April 2003, noting that they included a provision for interest from the date of termination of his employment to the date of judgment. That order was included as a part of the orders to be made in place of those made by the trial judge. 5 On the appellant's submission, whilst the Full Bench granted leave to appeal and leave to cross-appeal in the judgment in these proceedings, the leave granted was limited and did not include that aspect of the orders made at first instance relating to interest. The appellant submitted that it was hardly surprising, on the appellant's submission, as his Honour's orders were "conventional and consistent with authority": Garuda Indonesian Airways v Backer Spielvogel Bates Ltd (unreported, Court of Appeal, 4 December 1997). 6 In addition to orders proposed in the short minutes attached to his submissions, the appellant sought an order for the costs associated with the present application as to interest. 7 The respondent (the State Bank), on the other hand, contended that the substantive judgment in these proceedings, insofar as it granted leave to appeal and to cross-appeal, did not limit the grant of leave, and indeed the submissions of the appellant to that effect, ignore the fact that the ultimate judgment went beyond the matters referred to in paragraph [57] of the judgment where leave was granted. 8 Further, while the judgment of Garuda Indonesian Airways confirms that an order for interest is discretionary, such a discretion must be exercised judicially. This, on the respondent's submission, includes the requirement to follow established law and principle. The relevant principles in this jurisdiction are to be found in Thomas National Transport v Thomas (1990) 34 IR 378, 383 (Bauer J) and 393 - 394 (Hungerford J), Westfield Limited v Helprin (1997) 82 IR 411, 443 - 444 and Abboud v State of New South Wales (Department of School Education) (No 2) (2000) 99 IR 299, 303, 306 - 308. The respondent submitted that neither the judgment of Marks J at first instance nor the judgment of the Full Bench provide any basis whereby these proceedings fell outside these principles. 9 The respondent submitted that the orders of Marks J insofar as they related to the payment of interest should be set aside, or, alternatively, that an order be made requiring that interest be paid only from the date of filing the further amended summons, namely 4 July 2000. 10 The appellant's reply emphasised that an order requiring the payment of interest was, as recognised by the respondent, discretionary: Abboud (No 2) at 307. Marks J had regard to the fact that there had been a delay in the initiation and conduct of the proceedings in making his orders. There was nothing that had been put to demonstrate that his Honour had erred in the exercise of that discretion. Having regard to the observations in Abboud (No 2) the appellant contended that this was a case where orders were sought to give effect to promises made and to rectify misrepresentations. The trial judge's conclusions on interest were not only open to him but were consistent with conventional authority. There was no merit in the contention that his Honour's judgment was inconsistent with authorities in this Court. 11 The issue of leave to appeal was addressed in paragraphs [52] - [57] of the substantive decision in this matter. The Full Bench, having emphasised at paragraph [52] that "appeals to a Full Bench of the Commission are subject to the grant of leave" and that "leave will not lightly be granted", made the following observations (at [54]): [54] Having regard to the submissions of the appellant on the question of leave in his appeal, it is plain that in large measure, the appeal seeks to challenge the findings of fact made by his Honour. As was made clear by the Full Bench in Knowles [see Knowles v Anglican Property Church Trust (No 2) (2000) 95 IR 380 and in particular at 381 - 382] an appeal which seeks, by and large, to challenge findings of fact or the exercise of discretion of a member of the Commission, will face a significant hurdle obtaining leave to appeal. ... 12 Having referred to decisions that emphasise the "primacy" that "must be given to first instance judgments" in respect of findings of fact under the present statutory regime, the Full Bench observed (at [55]) that such "observations [were] equally applicable to significant aspects of the current proceedings". The substantive bases of the appeal were referred to at para [56] and the substantive bases of the cross-appeal were considered in this way: [57] We consider that this is an appropriate case in which to grant both leave to appeal and leave to cross appeal. Whilst the mere raising of factual or legal error, a jurisdictional issue or an argument which suggests there was some novelty in the approach adopted, or in the remedy granted at first instance, will not automatically result in the grant of leave, the questions going to the appropriateness of taking into consideration the "distress" associated with the appellant's termination of employment when making monetary orders, is a matter which ought be considered by the Full Bench. We are also satisfied that there has been error demonstrated in the way his Honour aggregated redundancy and notice payment upon termination when exercising the powers under s 106(5) to make monetary orders. 13 It is plain from the terms of paras [42] and [51] of the judgment on appeal that the Court was alive to the fact that the cross-appeal was, at least in part, reliant upon the contention that it was inappropriate that the respondent be required to pay interest on the monies ordered at first instance from the date of the termination of the appellant's employment. In that context the Full Bench said (at [57]) that leave to cross-appeal was granted as it had formed the view that "the questions relating to the appropriateness of taking into consideration the 'distress' associated with the appellant's termination of employment when making monetary orders, [was] a matter which ought be considered by the Full Bench". 14 Whilst it may not have been expressly stated in the judgment of December last, the fact that the issue of interest was not otherwise referred to in the decision, when taken with the emphasis on the limited basis of an appeal under the statutory scheme, was an adequate indication of the Court's intention that leave had not been granted to deal with that aspect. The respondent is, however, correct in its submission that reasons were not provided specifically in relation to that matter. It was nevertheless the intention of the Court, in granting leave as to the cross-appeal, not to do so in respect of the issue of interest. 15 However, since the present issue has now arisen, it seems appropriate to return shortly to that issue. The issue of interest was dealt with by Marks J as follows; [113] The applicant sought interest on the amount awarded. The respondent resisted the awarding of any interest. In doing so the respondent set out a timetable which, in part, indicated that the applicant's employment was terminated on 14 September 1990, but the summons for relief was not filed until 12 June 1996. The respondent moved for dismissal of the proceedings for lack of prosecution on 19 March 1997. Subsequently the applicant filed affidavits in support between 23 May 1997 and 7 April 2000. The hearing of the proceedings was set down for 10, 11 and 12 April 2000. An amended summons for relief was filed on 10 April 2000 which resulted in the proceedings being adjourned. A further amended summons for relief was filed on 3 July 2000 creating a further adjournment and the proceedings resumed on 9 November 2000. In these circumstances, it was submitted that the applicant should not be entitled to interest on moneys awarded to him. Mr Fernon replied that the respondent had had the use of the moneys to which the applicant was justly entitled over a long period of time and, in fairness, the applicant should be entitled to the usual order for payment of interest.

[114] No authority was cited by counsel with respect to this issue, nor was any submission made on behalf of the respondent that the awarding of interest should be deferred.

[115] Although there has been a significant delay in the commencement and prosecution of these proceedings this will not of itself disentitle the applicant to receive interest. However, I have assessed the amount of compensation of $15,000 as at this date, applying such value judgment as is applicable as at this date. Accordingly, to award interest on this amount would involve some element of double counting given some inflationary trends between September 1990 and the date of this judgment. Accordingly I do not propose to allow interest on the sum of $15,000 but I do propose to order the payment of interest on the remainder of the moneys awarded in favour of the applicant. 16 As was identified in Abboud (No 2), Thomas Nationwide Transport has formed the foundation of much of the Commission's jurisprudence on the issue of interest in a claim under s 106 of the Industrial Relations Act. Bauer J in Thomas Nationwide Transport observed (at 383): In my view, allowances in the nature of sums in the nature of "interest" should only be assessed in exceptional cases for periods before there has been a refusal or constructive refusal to meet the claim. 17 However, we do not apprehend that his Honour was intending to lay down any inflexible rule on the issue. Such an approach would not, in any event, be appropriate having regard to the requirement that any orders made under s 106(5) (or its statutory predecessors) be directed towards what is, in all the circumstances, "just in the circumstances of the case": see, generally, Westfield Holdings Pty Ltd v Adams (2001) 114 IR 241. Hungerford J, in his judgment in Thomas Nationwide Transport, having referred to the restitutionary nature of orders under the then s 88F as considered by Barwick CJ in Brown v Rezitis (1971) 127 CLR 157, held (at 392), aptly in our opinion: Whether or not interest is to be awarded and at what rate, it seems to me, is determined by a proper exercise of discretion in all the circumstances of a case in discharge of the statutory requirement of s 88F(2) to "make such order as to the payment of money … as may appear to the Commission to be just in the circumstances of the case". 18 Relying on previous decisions of the Commission, including Schwarz v Gronow Enterprises Pty Ltd [1968] AR (NSW) 171, Watt v Boles Transport Co Pty Ltd [1974] AR (NSW) 242, and also by reference to the history of orders for the payment of interest at common law: London, Chatham & Dover Railway Co v South Eastern Railway Co [1893] AC 429, Hungerfords v Walker (1989) 63 ALJR 210 and s 94 of the Supreme Court Act 1970, Hungerford J observed (at 393): In concept, then, it seems to me s 94 is not dissimilar from s 88F of the Industrial Arbitration Act in that the award of interest is subject to the discretion of the Court and what is thought to be "fit". The circumstances of any particular case, it must follow, are therefore very relevant as to whether and to what extent interest payments will be ordered. 19 Similarly, in Abboud (No 2), Schmidt J, having referred to Thomas Nationwide Transport and Westfield Limited v Helprin, and also to the restitutionary nature of the monetary orders as considered by Barwick CJ in Brown v Rezitis (1971) 127 CLR 157, 165 in relation to s 88F of the Industrial Arbitration Act 1940, held: [47] It follows that the awarding of an interest component is a matter of discretion to be exercised in the particular circumstances of the case in order to discharge the statutory duty, now arising under s106(5), to make a monetary order in connection with the contract varied, 'just in the circumstances of the case'. This will not necessarily require that interest at commercial rates and for commercial reasons be awarded in every case, even those with a commercial flavour.

[48] Following that approach, in my view, this is not a case where interest should run from the date of termination of the contract, having in mind the nature of the jurisdiction under s106 of the Act and the particular case brought here. The claim advanced was not, for instance, that the contract be declared void, so that restitution of the parties to a pre-existing position be effected, or where the contract was sought to be varied to give effect to promises made or to rectify misrepresentations, in which cases a proper basis could well be advanced for an order for interest from a date earlier than the date of judgment, as an appropriate exercise of the discretion given to the Court under s106(5).

[49] Here, the question which now arises is whether the express provision for a minimum of two weeks' notice was unfair, where misconduct warranting summary dismissal has not been established, in the circumstances outlined. I take the view that the proper approach in the circumstances of this case is to make an order as to the payment of money 'just in the circumstances of the case', which requires that interest should flow from the date of application and no earlier. While there undoubtedly have and will be cases brought under s106 where the issue is notice and where a proper basis for making an order in relation to interest calculated from a date earlier than the date of application will be established, there was nothing advanced in evidence or submissions in this case, which would provide a proper basis for going beyond that date. 20 The relevant aspects of the judgments in Thomas Nationwide Transport and Abboud (No 2) emphasise the discretionary nature of the power to award interest. The parties to the appeal did not contend otherwise. It is plain from the opening sentence of para [115] of his Honour's judgment that Marks J had regard to "a significant delay in the commencement and prosecution of these proceedings", in reaching his decision to make orders for interest in the appellant's favour. His Honour was also alive to the potential for double counting or double compensation. Having regard to the principles applicable to an appeal against a discretionary decision we find the respondent has not demonstrated any error in his Honour's judgment in this regard such as to warrant intervention on appeal. 21 Moreover, in resolving the issue of interest between the parties in the circumstances of the case at first instance, his Honour was doing no more than approaching the matter in the exercise of the relevant discretion. He was not seeking to establish, nor was he establishing, any new principle that would have significance beyond the circumstances of the particular proceedings. Nothing has been shown in this respect to have such importance as to warrant the grant of leave. 22 We confirm the earlier intention and conclusion that leave to appeal should not be granted on the matter of interest. The appellant is granted his costs of this phase of the appeal proceedings. 23 It is then appropriate to make final orders in these proceedings essentially in terms of the draft orders annexed to the appellant's filed submissions which, it is understood, were agreed except for the issue now determined The Court orders accordingly: 1. Leave to appeal and leave to cross-appeal granted to the extent set out in these reasons and those of 23 December 2002. 2. The appeal is allowed. 3. The cross-appeal as it relates to paragraph E(b) of the application for leave to cross-appeal and cross-appeal is allowed. 4. The respondent/cross-appellant, the State Bank of New South Wales, shall pay: (a) to the appellant/cross-respondent within seven days the sum of $115,505.46; (b) interest on the amount of $115,505.46 from 23 December 2002 to 30 June 2003 of $5,411.35 and continuing daily at $28.48 per day after 30 June 2003, until paid; (c) the appellant/cross-respondent's costs of the appeal as agreed or assessed; (d) the appellant/cross-respondent's costs of and relating to the directions hearing on 3 July 2003 and the costs of the preparation of submissions etc thereafter.

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