Poulos, Peter Anthony v Waltons Stores (Interstate) Ltd [1986] FCA 430

Conciliation & Arbitration Act 1904 - application of s.197A -

whether an action is a proceeding "in a matter arising under

Conciliation & Arbitration Act 1904, ss.4, 5, 41, 49, 118A,

Retail & Wholesale Shop Employees (Australian Capital

PETER ANTHONY FOULOS v. WALTONS STORES (INTERSTATE) LIMITED

IN THE FEDERAL COURT OF AUSTRALIA } AUSTRALIAN CAPITAL TERRITORY

(Appellant) And: WALTONS STORES CINTERSTATE) LIMITED

NOTE: Settlement and entry of orders is dealt with by

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

Between: PETER ANTHONY POGULOS (Appellant) And: WALTONS STORES CINTERSTATE ) LIMITED

CORAM: Smithers, Keely and Gray Jd DATE: 26 September 1986

SMITHERS J: It would be more than surprising that Parliament would enact that a workman who had to sue for wages due to him under an award and wrongfully withheld by his employer may recover judgment for the wage but not be awarded the costs of the--proceedings to obtain -1t. Surprise would be intensified 1f the costs not recoverable were those of a four day hearing at first instance, and two hearings before the Full Court in which the employer failed on every issue he raised. Yet that

would be the consequence in this case on one possible

interpretation of s.197A nf the Conciliation & Arbitration Act

1904 (the Act). In such a situation the remedy of an employee

to recover wages wrongfully withheld would be less than illusory. It is my view that that section should not be so

interpreted. If it were so interpreted there would be the

When a member of a union is suing to protect himself under s.5 of the Act, or to enforce a union rule (ss.140 and 141), or to punish an employer for non-observance of an award, he is using the law as an instrument of the industrial relations system. a semi-public purpose. When he sues for his wages that is a purely personal piece of litigation. If in this latter case he cannot recover his costs, s.123 is likely ta be frustrated. By resisting the claim the employer puts his emplovee in the position that he can never recover his wages without using what he recovers to pay the costs of the proceedings. If he is threatened with an appeal, then, in most cases. he would have done better to put up with the position of having worked for the emplover for nothing. If

the employee sues for wages to which he is not entitled, then

there is no reason for protecting him against the ordinary penalty of costs of a Litigant who sues for something to which he is not entitled. There is no reason why an employer so

In this matter judgment was delivered on 22 April 1986

by the Full Court of this Court for the appellant for the sum

of $6,208.30 in respect of remuneration payable to the

appellant by the respondent pursuant to the terms ot the

Retail & Wholesale Shop Employees «Australian Capital

The claim came on for hearing at first instance, before a single judge ot this Court. At the hearing the respondent contended that the work performed by the appellant tor the respondent did not tall within the work classification in the award under which the appellant claimed. ft also contended that the award did not apply in the Australian Capital Territory 'ACT: notwithstanding a series of common rule declarations made with respect to it under s.49 of the Act and that even 1f the award did operate in the A.C.T. the appellant was excluded from any entitlement thereunder because 1t was not shown that he was at the relevant time a member or the

At tarst instance it was held that all these defences were valid. On appeal in March 1985 1t was decided by the Full Court that the work performed by the appellant for the respondent was work within the work classification under which the appellant claimed. At the hearing at which this was

decided the respondent was not ready to argue the question

Un 22 April 1986 the Full Vourt delivered judgment for the appellant. A majority of the Court held that the appellant was entitled under the award to the rates of pay

awarded therein notwithstanding that 1t was not shown that he

was a member of the relevant trade union. It was also decided that by reason of the common rule declarations under s.49 of the Act the award operated in the ACT and that notwithstanding the absence ot proot that the appellant was a member of the relevant union he was entitled to the benefit of the provisions therein as to the rates af pay for the work he performed. Judgment was entered accordingly but because of the terms of s.197A ot the Act the Court reserved the question whether 1¢ should award the costs to the appellant which it

would otherwise have awarded. Section 197A is in the

(a) a proceeding before the Commission or the Registrar; (bo a proceeding, including an appeal, before

(1) being an appeal from a judgment, decree, order or sentence of the Court or any other court under this Act; or

(11l) being a proceeding in respect of an award proposed to be made, made or

purporting to have been made, a decision proposed to be given, given or purporting to have been given, or any other act proposed to be done, done or purporting to have been done, under this Act or in respect of a failure to make " soe > 'cs: an award, give a decision or do any other act that is required or permitted by this Act to be made, given or done,

shall not be ordered to pay any costs incurred by any other party to that proceeding except where the party against whom the order is made

instituted the proceeding vexatiously or without reasonable cause."

The appellant s claim for his wages was brought to this Court at first instance on the basis that jurisdiction to hear and determine that claim was conferred on the Federal Court by

jurisdiction." Section 123 18 contained in Part VI ot the Act which 1s headed "The Enforcement of Orders and Awards". That part contains provisions relating to the entorcement of orders and awards. It conters jurisdiction on various courts of limited jurisdiction to impose penalties for breaches of awards (ss.119-and 1L21), it provides maximum penalties ('s.119(1D)), 1t specifies the person who may sue for the recovery of penalties (s.119(2)), it provides a period of limitation ot

action (s.,119(4)). It creates the offence ot wilfully making

The power of the Conciliation & Arbitration Commission to make an award 1S contained in s.41(1) of the Act. Section

~ ""Yhe: Commission may, in relation to an industrial dispute - ...

(b) make an award (including a provisional or interim award relating to any or all of the matters in dispute) or ...".

And it 1s clear that persons who have performed, for an

employer, work of a classification of work specified in an

award are persons "entitled to the benerit" of a provision ofr

the award specitying the wage rate payable by an employer in

Accordingly, the appellant was a person entitled under s.123, to sue for the wages specified in the award as those

payable by the employer. Section 123 gives access to such a

person to any court of competent jurisdiction. But the

benefit of the award to which the appellant was entitled thereunder arose from the award itself and not trom s.123, Had there been no 3.123 it might have been recovered by way of the entorcement or the award in, for instance, the Supreme Court of Victoria. Section 123 renders sucha relatively

unwieldy course unnecessary. But whichever course might be

It aS necessary therefore to enquire whether the proceeding brought by the appellant in this Court to recover the wages due to him under the relevant award was, within the meaning of s.1l97A(b), a proceeding "in a matter arising under this Act". lt ais clear from the distinction between the expression "proceeding being an appeal from a judgment of 'the Court' ... under this Act" in s.197A(c)(i) and the expression "proceeding ... in aA matter arising under this Act" in S.1¥7A(b), that the proceeding referred to in this latter sub-section is a proceeding which 1s brought with respect toa

matter arising under the Act and not merely a proceeding which

Accordingly, the enquiry 1s whether, for the purposes of s.L97A(b), the claim for wages due under the award was brought "an a matter arising under this Act". It was quite clearly brought 1n a matter arising from the award. Equally clearly the award was made pursuant to powers conterred on the Commission by this Act. There is a sense therefore 1n which the proceeding was brought 1n a matter arising under the Act. But the award once made under the Act operated to create new rights and tl1iabilities in employers and employees in accordance with its terms. Those rights and liabilities were, for purposes of normal reference, rights and liabilities under the award, not under some Act. The award was an operating anstrument, i1tselt creating rights and tliabilities and conferring benefits on persons. Entitlements under a judgment of, say the Supreme Court of a State, are ordinarily referred to as entitlements under the judgment of the Court, rather than as entitlements arising under the Supreme Court Act, the source or authority to give the judgment. The judgment like an award has a life of its own and the entitlements under 1t are reterable to it alone, notwithstanding that that lite could not have come into being but for the authority of the statute under which the payment was made. The "arising" of the entitlements under the judgment or the award are one step away from the authorising statute and it is a step of such a kind that those - entitlements are not happily referred to as arising under the statute. They arise under an award which

section 1¥Y7A 18 a provision which takes away rights usually incidental to a successtul action at law. There is of course reason to protect litigants against liability for costs un those proceedings which 1n the narrower sense arise out of the Act. Provisions in the Act for the protection of andividuals from unsuccessful attempts to secure justice in court trom fellow unionists, in the observance of union rules and the like might well speak in vain if the attempt might leave the individual at risk to an obligation in costs which might ruin him. The legislature has recognized that in certain cases individuals should actually be financed to

The raison d etre of the Act 1s to ensure that the worker receives award rates for award work. I[f he cannot sue a non-paying employer for what 1s due to him without incurring the costs of suing the employer, the award may well speak in vain. Indeed a determined employer in the position of the respondent in this case would only have had to remind the employee that the case before the primary judge will take several days and the appeal will take several days to cause the employee to give up in despair. Fortunately, I think s.197A, interpreted according to accepted principles, does not

apply to a proceeding for wages due under an award.

Ut course the appellant's case depended not on the award alone, but on the award as operating 1n accordance with declarations that 1t be a common rule, such declarations being

made under s.49 of the Act. [ft 15 no doubt arguable that this

factor gives to the appellant''s claim the quality of being a matter arising under the Act. I do not accept this view. The declaration that the award shall be a common rule in the ACT 1s made "1f 1t appears to the Commission to be necessary or expedient for the purpose of preventing or settling an industrial dispute with which 1t 1s dealing or of preventing further industrial disputes". The making of the declaration 1s thus an act in nature comparable to the act of the Commission in making the award which 1s declared a common rule. When the appellant sued as he did, on an award Qperating in accordance with the relevant common rule declarations he was, 1n substance, suing for wages due under an award and thus not, within the meaning of s.197A(b) "in a

As a matter of policy there may be justification for protecting the various parties in relation to costs where the

cause of action arises within the Act and relates to the entorcement of a union rule or a claim under s.5 or 5.119 which may be described as essentially industrial matters. But a claim by a workman for money due to him tor work and labour done in accordance with an award is the purest ground of common law action by one man against another for a debt and

has nothing to do with the enforcement of industrial relations

Accordingly, pursuant to the reservation of the matter

by the Full Court there should be an order that the respondent

pay to the appellant his costs of the proceedings at first

nine (9) preceding pages are a true and accurate copy of the

keasons for Judgment herein of The Hon Mr Justice Smithers

ON APPEAL FROM A SINGLE JUDGE OF THE FEDEPAL COUPT OF AUSTPALTA

CORAM: SMITHERS, KEELY AND GRAY JJ DATE. 26 SEPTEMBER, 1980 PLACE: MELBOURNE

In my opinion both the proceeding before the learned trial judge and the proceeding before this court on appeal were oroceedings "... in a mattar arising under this Act"

within the meaning of 3. 137A of fhe Cenciliiation and

Arbitration Act 1904; at follows that, in accordance with

action, the resporndert "saall nan be ordered to pay any

osts incurred by" the prezent appellant. = have had the

benefit cf readirg the reasons for judgment of Gray J and

agree with his reasons for reatning thah cctnclusion.

greater than the amount of wayes in question. It wili he noted that Smithers J, in his reasons for judgment, has also drawn attention to this aspect, questioning whether Parliament could have intended such a result. His Honour said that, if s. 197A were to be interpreted in such a way as to deprive the court of the power to order costs in such a case, there would be the cléaresr case for Parliament to change the law. In my opinion 26 25 desirable that the attention of the Attorney-General be drawn to this matter

I certify this and the preceding page to be a true copy of the Reasons for Judgment of his Honour Me Justice Keely.

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

Appellant AND WALTONS STORES (INTERSTATE) LIMITED Respondent CORAM: Smithers, Keely and Gray JJ. DATE: 26th September 1986

By his application, which was filed on 21st January 1983, the applicant claimed, on the grounds appearing in the accompanying statement of claim, ""wages" and "costs". The statement of claim pleaded that the proceeding was "an action alleging, inter alia, an entitlement to a benefit under the Retail and Wholesale Shop Employees (Australian Capital Territory) Award 1968 pursuant to sec. 123 of the Conciliation

The statement of claim went onto allege that the appellant was employed by the respondent during a particular period, ina particular capacity, and that he had been underpaid

At first instance, the appellant's claim failed. He appealed, and was successful. On 29th March 1985, the Full Court expressed the view that the appellant was employed in the relevant capacity specified in the award. It was hoped that this would dispose of the appeal, but the respondent desired to argue a number of other points. On 22nd April 1986, the Full Court allowed the appeal and ordered that judgment be entered for the

appellant in the sum of $6,208.30. Costs were reserved.

The parties were subsequently given an opportunity to be heard on the question of costs, but both declined to put submissions to the Full Court. The question of costs, therefore,

falls to be determined in the absence of detailed argument.

Section 197A of the Conciliation and Arbitration Act

(a) a proceeding before the Commission or the Registrar;

(b) a proceeding, including an appeal, before the Court, or before a court of a State or Territory, in a matter arising under this Act; or

(1) being an appeal from a judgment, decree, order or sentence of the Court or any other court under this Act; or

(ii) being a proceeding in respect of an award proposed to be made, made or purporting to have been made, a decision proposed to be given, given or purporting to have been given, or any other act proposed to

be done, done or purporting to have been done, under this Act or in respect of a

failure to make an award, give a decision or do any other act that 15 required or

shall not be ordered to pay any costs incurred by any other party to that proceeding except where the party against whom the order is made instituted the proceeding vexatiously or without reasonable cause." The phrase "the Court" is defined in s. 4(1) of the Act as meaning the Australian Industrial Court. By subsequent

legislation, however, there was inserted in the Act s. 118A. In

Brophy v. Mapstone (1984) 3 F.C.R. 227, a Full Court held that

the erfect of 5. 118A is to require that the phrase "the Court" in s. 197A(b) is to be read as including the Federal Court of Australia. In the absence of argument to the contrary, this

The question, therefore, 1s whether this appeal, and indeed the proceeding at first instance from which the appeal is brought, is "a proceeding...in a matter arising under this Act". If it is, then s. 197A precludes this Court from awarding any costs to the appellant.

The use of both the words "proceeding" and "matter" in the same legislative provision tends to suggest that the word "Matter" was intended to bear the meaning of "a justiciable

controversy, identifiable independently of the proceedings which

• 4 - are brought for its determination and encompassing all claims

made within the scope of the controversy". See Fencott v. Muller

(1983) 152 C.L.R. 570, at p. 603, per Mason, Murphy, Brennan and Deane JJ. In the present case, the "matter" was a dispute between the parties which involved a number of aspects. In the first place, there was a question whether the appellant's duties brought him within the classification under which he claimed to be entitled to payment. In the second place, the parties were at odds as to whether the award itself gave to the appellant any enforceable right. The appellant called in aid various

legislative provisions, including s. 49 of the Conciliation and

Arbitration Act 1904, and the respondent denied the efficacy of these provisions to make it liable to pay the appellant under the award. There were also, of course, various questions of fact, ancluding the precise nature of the duties performed by the appellant, the amounts of any differences between payments made to him and payments required by the award, the membership or non-membership by the appellant and respondent of various registered organizations, and the making and form of common rule declarations. All of the questions which divided the parties could properly be said to constitute the "matter" which was the

subject of the proceeding, both at first instance and on appeal.

The more difficult question is whether the matter was

one "arising under" the Conciliation and Arbitration Act 1904.

The High Court of Australia has been called upon frequently to construe the phrase "arising under" in the context of s. 76(ii) of the Constitution. See, for example, R. v. Commonwealth Court

of Conciliation and Arbitration; ex parte Barrett (1945) 70

C.L.R. 141, Felton v. Mulligan (1971) 124 C.L.R. 367 and L.N.C

Industries Ltd. v. B.M.W. (Australia) Ltd. (1983) 151 C.L.R. 575. In those cases, the question was whether a particular matter was a Matter "arising under any laws made by the Parliament", i.e. the Commonwealth Parliament. An examination of those cases suggests that the question whether a matter is one "arising under" a law of the Commonwealth depends upon whether the matter involves the assertion of some right or defence provided by the jaw of the Commonwealth. In the first mentioned case, at page 154, Latham C.J. said:

"Thus one is compelled to the conclusion that a matter May properly be said to arise under a Federal law if the right or duty in question in the matter owes its existence to Federal law or depends upon Federal law for its enforcement, whether or not the determination of the controversy involves the interpretation (or validity) of the law."

This passage was quoted by six members of the Court in L.N.C

Industries Ltd. v. B.M.W. (Australia) Ltd., at page 581, where it

was described as having "often been cited with approval".

In the absence of any argument to the contrary, it is appropriate that a similar sort of test be applied to the question whether a matter 1s one "arising under" the Conciliation

and Arbitration Act 1904, for the purposes of s. 197A(b) of that

Act. Applying that test, it is plain that the raght to payment "asserted by the appellant owed its existence to the Act. The only power which existed to make the award was to be found in 5s. 41(1)(b) of the Act. Without that power, the award would have been a nullity, even assuming the existence of machinery to make

it, which itself depended upon the provisions of the Act.

-6- Further, 1t is equally plain that the enforcement of the right

asserted by the appellant depended upon the Act. It was s. 61 which gave binding effect to the award, and s. 49 which gave it force as a common rule. Without those provisions the appellant would not have been able to enforce the award in his favour. It may be that, in some cases, an employer and an employee can be said to have contracted on the basis that the terms of an award have become terms of the contract of employment, whether or not the award would otherwise be applicable to each of them. This was not the appellant's case. Finally, 1n the process of enforcement of the award, it was 5. 123 of the Act, in conjunction with 5. 118A, which gave to this Court jurisdiction to award to the appellant the sum of money to which he was entitled under the award. Without s. 123, this Court would not

For all these reasons, the proceeding, both at first instance and on appeal, was and ius a proceeding ina matter arising under the Conciliation and Arbitration Act 1904. As a consequence, 5. 197A of the Act deprives the Court of power to

order the respondent to pay any costs to the appellant.

It may be thought that such a provision is unjust. Certainly, in a case in which an employer were to decline to pay proper award wages, in the knowledge that the enforcement of an employee's award entitlements would involve him or her in expense greater than the amount of the wages themselves, there would be injustice. It should not be assumed, however, that employers

will deliberately act in defiance of the law, upon the footing

• 7- that its enforcement will be too expensive. Nor should it he assumed that all employees will be without means to secure the appropriate enforcement of their entitlements; those who helong to registered organizations of employees, or even to other associations of employees, will no doubt be able to expect financial backing in the assertion of their rights. In any event, where the Parliament has enacted a clear provision, it is not for the courts to attempt to set 1t aside by reason of their

perceptions of injustice caused by the provision in a particular

There can be no order made as to costs, either at first