16037/07 SALVATORE BARONE v BRIAN ANTHONY KERR
JUDGMENT
1 HIS HONOUR: The parties to these proceedings are dentists. The defendant, Dr Kerr, worked for the plaintiff, Dr Barone, for about seventeen years between 1985 and 2002. Dr Kerr has commenced proceedings in the Chief Industrial Magistrate's Court claiming payment of some $50,000 (in round figures) as long service leave. Dr Barone asserts that Dr Kerr was never a "worker" within the meaning of s3 of the Long Service Leave Act 1955.
2 The issue with which I am concerned is whether Dr Kerr's proceedings in the Chief Industrial Magistrate's Court should be transferred to this Court. That issue arises because of a defence filed by Dr Barone in the Chief Industrial Magistrate's Court and a foreshadowed cross-claim based on the matters asserted in that defence.
3 As I have indicated, the issue between Dr Kerr and Dr Barone in the Chief Industrial Magistrate's Court is whether Dr Kerr was a "worker". Dr Barone asserts that Dr Kerr was an independent contractor and not a worker. Dr Barone asserts further that in about 1985 he offered two alternatives to Dr Kerr. One was that Dr Kerr would be paid 36% of the gross fees earned or charged by him, plus applicable employee entitlements. The other was that he would be paid 50% of those gross fees, but without any entitlements.
4 Dr Barone says that, on the first alternative, Dr Kerr would have been, and continued to be, a worker; but, on the second, he would not. Dr Barone says that Dr Kerr accepted the second alternative and that for the balance of the time that Dr Kerr worked in Dr Barone's practice Dr Kerr was paid 50%, without applicable entitlements, and was not a worker.
5 Dr Barone asserts that, if Dr Kerr were found to be a worker for the purposes of the Long Service Leave Act, then the amounts paid to him from the making of the agreement in 1985 were amounts paid under a mistake and should be repaid, on the basis that Dr Kerr were unjustly enriched by their receipt.
6 It is clear that this cross-claim (if I may so call it) is capable of operating as a defence by way of set-off to the extent of Dr Barone's claim. So much is not in dispute, although neither the express term "set-off", nor the general concept, is referred to in Dr Barone's defence in the Chief Industrial Magistrate's Court.
7 The real difficulty arises, so it is submitted for Dr Barone, if the cross-claim succeeds. The difficulty is that the amounts to which Dr Barone would be entitled, and that Dr Kerr might be liable to repay, would be well in excess of the amount claimed by Dr Kerr for long service leave. The only evidence of the amount of Dr Barone's cross-claim is that it exceeds $20,000. This somewhat unsatisfactory evidence was directed to showing that the District Court of New South Wales has no jurisdiction because of the provisions of s134(1)(d) of the District Court Act 1973.
8 A quick, and probably inaccurate, calculation, based on Dr Kerr's assertion (in his application to the Chief Industrial Magistrate's Court) as to his weekly income in the final fourteen weeks of his employment, indicates, by extrapolation, that the total cross-claim might be of the order of $300,000. I say this because, in round figures, 14% of the total fees rendered by Dr Kerr for those fourteen weeks (as deduced from his application) would appear to be an amount that, taken back over the preceding seventeen years, leads to a claim in excess of $640,000.
9 If one assumes that Dr Kerr's remuneration increased incrementally over the period, and applies a rough rule of thumb, the claim may be one of the order of $300,000 (50% of the arithmetic calculation but making some allowance for entitlements apart from long service leave). All this does not matter to a great extent, because it is reasonably clear that the cross-claim is likely to exceed the jurisdictional limit of the Local Court. The relevance of the Local Court's jurisdictional limit is a matter that requires some explanation.
10 Under s12 of the Long Service Leave Act, jurisdiction is given to "a Local Court constituted by a Magistrate sitting alone, or to the Industrial Relations Commission in Court Session" to order an employer to pay the worker any payment that has become due under the Act within six years preceding the making of the application.
11 Jurisdiction is also given to "an industrial court" by ss364 and 365 of the Industrial Relations Act 1996. By those sections an industrial court, as defined, may order an employer to pay to an employee any amount payable under an industrial instrument, as defined.
12 An "industrial court" is defined to include the Industrial Relations Commission in Court Session and "a Local Court constituted specially for the purposes of this Part by an Industrial Magistrate sitting alone".
13 A reference to an "industrial instrument" includes a reference to s12 of the Long Service Leave Act.
14 Section 381 of the Industrial Relations Act provides for the appointment of Local Court magistrates to be a chief or other industrial magistrate. Section 382(1) provides that the chief and other industrial magistrates may exercise jurisdiction conferred on a Local Court under a number of Acts, including the Industrial Relations Act. Subsection (2) provides that "the Chief Industrial Magistrate or other Industrial Magistrate constitutes a Local Court" when exercising the jurisdiction conferred by subs(1).
15 Thus, it seems, the Chief Industrial Magistrate hears the matter either because he is "a Local Court constituted by a Magistrate sitting alone" (s12 of the Long Service Leave Act), or because it is jurisdiction conferred on him, as Chief Industrial Magistrate and therefore an industrial court, by s365 of the Industrial Relations Act, in which case also he constitutes a Local Court (s382(1) of the Industrial Relations Act). On either basis, it seems to me, if the Chief Industrial Magistrate is to hear the claim, then he will be sitting as a Local Court when he does so, notwithstanding that certain procedures applicable to Local Courts do not apply, and certain procedures inapplicable to Local Courts do apply.
16 One of the procedures that would apply to proceedings before the Chief Industrial Magistrate pursuant to s365 of the Industrial Relations Act but would not apply to "ordinary" proceedings in a Local Court, is that set out in s371 of the Industrial Relations Act. In essence, s371 says that an industrial court should not make an order unless it has tried its hardest to bring the parties to settlement through conciliation.
17 Section 140 of the Civil Procedure Act 2005 empowers this Court to remove into it from a Local Court proceedings pending in that Local Court. For the reasons that I have given, I think that s140 is enlivened, because I think that, however one views the source of the Chief Industrial Magistrate's jurisdiction, it is jurisdiction conferred upon, and to be exercised by, him as a magistrate constituting a Local Court.
18 However, the finding that proceedings may be removed does not mean that they should be removed. This Court must be satisfied "that there is sufficient reason for hearing the proceedings" in this Court (s140(4)). That leads to the discretionary issues.
19 For Dr Kerr, Mr Reitano of counsel submitted that it was plain, from the structure of Chapter 7 of the Industrial Relations Act, that the legislature had set up "industrial courts" to deal with what might be called industrial disputes of the kind referred to in Chapter 7. I accept that submission. This Court should think carefully before removing proceedings from a specialist tribunal, in circumstances where the proceedings are of a kind that the legislature intended should be dealt with by that specialist tribunal.
20 Of course, the general jurisdiction of Local Courts is not excluded. That is apparent both from the wording of s12(1) of the Long Service Leave Act, to which I have referred, and from s376 of the Industrial Relations Act. Under the latter section, a person entitled to an order for the payment of money under Part 2 of Chapter 7 (which is the relevant part) may go to any court of competent jurisdiction, instead of to an industrial court. Nonetheless, where a person who claims to be a worker has gone to an industrial court, I think that this Court should take into account, as a factor telling against transfer, that choice and the statutory purpose to which I have referred.
21 There are other factors that operate against the making of an order for transfer. Mr Reitano submitted that the costs that might be incurred in the Chief Industrial Magistrate's Court would be less than the costs that would be incurred in this Court. Mr Sneddon of counsel, who appeared for Dr Barone, did not accept that proposition. However, I would have to say that I would be astonished if the costs in the Local Court (which is what the Chief Industrial Magistrate is for the purpose of jurisdiction) would be the same as the costs in this Court. I would be even more astonished if the recoverable costs were of the same order in the two Courts. The question of recoverable costs is a matter of some significance to the losing party, who may be faced with an order for costs.
22 Another factor operating against the making of an order for transfer is s371 of the Industrial Relations Act. To some extent, that is covered by what I have said already as to the respect to be given to the legislative intention and Dr Kerr's choice of an industrial court as the forum for the litigation of his dispute. One would think that those advising Dr Kerr had in mind the panoply of procedures and remedies available in the Chief Industrial Magistrate's Court, and the procedures that apply: including the requirement for compulsory conciliation.
23 Thus, if matters went no further, I would not make the order for transfer. However, matters do go further. As I have said, it is likely that the full amount of Dr Barone's cross-claim, should it succeed in principle, could not be determined in the Chief Industrial Magistrate's Court. That would mean that Dr Barone would be left to run his cross-claim as an action in this Court (on the assumption following from s134(1)(b) of the District Court Act that the District Court could not hear it). Thus, Mr Sneddon says, Dr Barone is exposed to the risk of multiplicity of proceedings and inconsistent findings, as well as the prospect of delay. There is something to be said for that, but I think that the problem may have been somewhat exaggerated.
24 The hypothetical situation which one must consider is this:
(1) Dr Kerr has succeeded in chief in his claim in the Chief Industrial Magistrate's Court.