Steinhardt v Sapphire Bioscience Pty Ltd

Steinhardt v Sapphire Bioscience Pty Ltd - [2004] NSWIRComm 42 - NSWIRComm 2004 case summary — Zoe

[25]

10 As a general rule, it is desirable that a challenge to the jurisdiction of a court to determine a particular application should be heard at the earliest opportunity. Should such an objection succeed, the expense and delay occasioned by a full trial of the matter would thereby be avoided. However, numerous decisions of this and other courts, notably Nagle (t/as W D & J L Nagle & Sons) v Tilburg (1993) 51 IR 8 and the authorities relied upon therein, have indicated that it will only be appropriate to determine an objection to jurisdiction at the appropriate stage in the proceedings. As was said by Kirby P (as he then was) in Majik Markets Pty. Limited v Brake & Service Centre Drummoyne Pty. Limited (1991) 28 NSWLR 443 at 446, the approach of determining jurisdiction at a preliminary stage is a sensible course only "where a party has a substantial threshold argument which, if it succeeds will knock out the claim"; see also Virtue v NSW Department of Education and Training (1999) 92 IR 428 at 447-448. 11 Whether it is appropriate for a question of jurisdiction to be resolved at a preliminary or threshold stage will necessarily depend upon the nature of the challenge to jurisdiction, as well as the amount of evidence which must be examined and the scope of the determinations which must be made in the course of deciding the jurisdictional point. If an objection to jurisdiction of the Court requires the examination of the bulk of the evidence and demands that the Court make extensive factual findings, it is unlikely that it will be profitable from the perspective of the parties or the Court for the matter to be determined on a preliminary basis. To do so would effectively require an applicant to run the case twice should the challenge to jurisdiction prove unsuccessful. 12 It is also relevant to observe that this Court and other Courts have demanded that a particular threshold be satisfied before a preliminary challenge to jurisdiction can be upheld. For the respondent to succeed it must be demonstrated that there is no power for the Court to grant any relief to the applicant : see Virtue at 448 and Federated Municipal and Shire Council Employees Union v Energy Australia (1999) 90 IR 311 at 319. This is a matter which must be considered when assessing whether the respondent has raised a substantial threshold argument which will 'knock out' the claim if it succeeds.

[30]

19 Earlier in Beahan, in what, with respect to their Honours, I find an erudite judgment dealing with s 109A and its interaction with s 106, the Full Bench said (at 32): The ability of the unfair contracts provision to operate at the time of termination of an employment contract on the dismissal of an employee but by reference to the contract itself was the subject of two decisions by the Court of Appeal in April 1994 in Walker v Industrial Court (NSW) (1994) 53 IR 121 and Rothmans Distribution Services Limited v Full Court of the Industrial Court of New South Wales (1994) 53 IR 157. In affirming the earlier approach stated in Incitec v Industrial Court , as referred to above, Kirby P said as to the meaning of s 88F (53 IR at 133): "Whatever doubts may have existed earlier, it is now beyond argument that the 'unfairness' referred to in s 88F(1)(b)IAA can arise, not only from positive provisions of the contract or arrangement which offend fairness in the relevant sense, but also from the failure, on the part of the contract or arrangement, to provide in a way that such fairness requires". In determining whether 'unfairness' has been established, His Honour commented that "regard may be had not merely to the terms of the contract or arrangement, as originally negotiated, but also to the manner in which the contract or arrangement has ultimately worked out and operates as between the parties to it." As to the operation of s 88F where alternative remedies may be available, Kirby P said (at 134-135): "The existence of other remedies (such as statutory claims for redundancy payments, statutory claims for reinstatement for wrongful dismissal, or a common law claim for unjust dismissal) do not control or limit the very large language of s 88F(1)." … As it was argued here by Mr Hodgkinson, s 109A excludes from s 106 a contract of employment where a claim could be made for an unfair dismissal; Kirby P expressly acknowledged such an exclusion by statute but, importantly, His Honour noted that "the ingredients of the various entitlements may be different". Therefore, it seems to us, in considering in a particular case whether s 109A will effectively exclude the contract of employment concerned it is necessary to examine those ingredients respectively as to the unfair dismissals and unfair contracts regimes. We will return to this later. In Walker v Industrial Court , Meagher JA agreed with Sheller JA who commented (at 149) "that the contract of employment permitted termination which, in the circumstances, was unfair and discriminatory. By so permitting the contract was or became unfair". It will be seen that Sheller JA, like Kirby P, focused on what the contract itself permitted by its terms. In Rothman's Distribution Services v Industrial Court , the Court of Appeal was concerned with relief which had been allowed under s 275 of the 1991 Act in relation to an employment contract found to be unfair on its termination as to redundancy payments. Priestley JA, with whom Kirby P and Meagher JA agreed, said (at 160): "As to the point that the Full Court, in considering fairness, looked at conduct rather than the terms of the contract, I think that what the Full Court did was to consider how the terms of the contract operated in practice at the time of termination (which necessarily means looking at the conduct of Rothmans) and to conclude that a contract which could so operate was unfair. I see no jurisdictional error in this." Again, it is to be emphasised, the reasoning was directed to the terms of the contract itself and how it operated in practice as distinct from whether the dismissal itself was unfair (harsh, unreasonable or unjust).

[35]

23 The respondents, in order to succeed, must demonstrate that there is no power to grant any relief to the applicant. Where a claim challenges the terms, or, operation of a contract of employment by genuine reasons related to the contract itself, s 109A has no operation in relation to it. Mr Latham relied upon the decision of Boland J, in Balsdon v Murray Irrigation Limited. His Honour said at paragraph 30: The question, therefore, is whether Mr Balsdon's claim challenges the terms or operation of his employment contract by genuine reasons related to the contract itself. Unlike the Summons considered by the Full Bench in Beahan the Summons in the present proceedings did not specify why it was that the contract of employment was unfair. It seems to me, however, that Mr Balsdon was not attacking the terms or operation of his employment contract as being unfair but rather his focus was the unfairness of his employer's conduct in dismissing him from his employment prior to the dismissal of criminal charges against him and prior to any "thorough and proper investigation being undertaken by the respondent into the allegations." In other words, the core of Mr Balsdon's complaint was that he was not accorded procedural fairness by the employer in coming to its decision to terminate his employment. That is, the decision to dismiss was unfair because of a lack of procedural fairness. His Honour went on to determine that although Mr Balsdon sought a variation of his contract of employment, his Honour did not consider this fact reflected a genuine challenge to the terms of the contract. In that matter, the Summons sought an order that Mr Balsdon be "restored to duty and treated as though he had never been dismissed." His Honour observed "this was an order akin to an order for reinstatement and not authorised by s 106 of the Act." Mr Balsdon also sought an order that he "be paid an amount representing lost wages by him on and from the date of his dismissal". His Honour observed that such an order is an order of the type available under s 89(3) of the Act. The final order sought by Mr Balsdon was that he "be paid an amount representing the amount he would have earned if he had remained in employment for a further two years". His Honour found that this was essentially an order seeking to compensate Mr Balsdon for loss of his employment and that s 106 was not concerned with compensating an employee for loss of his or her employment contract; Beahan at 35 quoted with approval in Reich v Client Server Professionals of Australia Pty. Limited (Administrator Appointed) 99 IR 69 at 86.

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