Windrum and Anor v Matrix Healthcare Pty Ltd t-as Combined Pathology and Anor

CORAM: Boland J President; Haylen J; Backman J

CATCHWORDS: Appeal - Unfair contract - Disagreement over calculation of money orders under s 106(5) of the Industrial Relations Act 1996 - Consideration of what is just in the circumstances of the case and orders made on that basis - Further submissions invited on costs.

LEGISLATION CITED: Industrial Relations Act 1996

CASES CITED: Windrum and Anor v Matrix Healthcare Pty Ltd t-as Combined Pathology and Anor [2008] NSWIRComm 146

APPELLANTS Mr P M Kite SC with Mr P Coleman of counsel Solicitor: Mr S Chapman TressCox Lawyers LEGAL REPRESENTATIVES: RESPONDENTS Mr M J Kimber SC with Mr A Connelly of counsel Solicitor: Mr M Trisley Trisley Lawyers

GRAHAM WINDRUM AND ANOTHER v MATRIX HEALTHCARE PTY LTD T/AS COMBINED PATHOLOGY AND ANOTHER

Application by Graham Windrum and another for leave to appeal and appeal against a decision of Justice Staff given on 14 December 2007 in Matter No IRC 2739 of 2005

1 In Windrum and Anor v Matrix Healthcare Pty Ltd t-as Combined Pathology and Anor [2008] NSWIRComm 146, a decision given on 28 August 2008, the Full Bench granted leave to appeal and upheld the appeal from a decision and orders of Staff J in which his Honour dismissed the appellants' claim for relief under s 106 of the Industrial Relations Act 1996. 2 It is unnecessary to recount all of the matters that were the subject of the appeal because the only issue to be decided in this judgment is the quantification of the money orders made by the Full Bench. In that respect, at [104] of the judgment the Full Bench determined that: [104] In making an order under s 106(5) of the Act that is just in the circumstances of the case, we consider that the respondents, jointly and severally, shall pay the appellants for the period from 17 May 2005 to 31 July 2005 on the basis that was applicable immediately prior to the summary termination taking effect, less any monies earned in that period. Interest is payable on the amount derived from the foregoing calculation. 3 The Full Bench made the following orders: (1) Leave to appeal is granted. (2) The appeal is upheld. (3) The decision and orders of Staff J made on 14 December 2007 are set aside. (4) In consultation with the respondents the appellants shall prepare draft minutes of order reflecting the decision in this matter. (5) The draft minutes of order shall be filed within 14 days of the date of this decision together with any submissions by the appellants on costs. The respondents will have a further 14 days to file submissions on costs and unless either party applies to be heard on costs and/or the terms of the draft order, the Full Bench will determine any issues on the papers. 4 The parties were unable to agree on the terms of the orders. The appellants submitted draft orders according to their view of how the money orders were to be quantified and filed written submissions in support of their position. The respondents also filed written submissions supporting their position. The parties were provided with the opportunity of making additional oral submissions. 5 The draft short minutes of order filed by the appellants were in the following terms: 1. Leave to appeal is granted.

The decision and orders of Staff J made on 14 December 2007 are set aside.

The contract between the parties is declared to be an unfair contract.

The contract is varied to provide that in the event the contract is summarily terminated without fair and proper reason and in the absence of a positive regime of fair investigative procedures the appellants shall be entitled to three months payment in lieu of notice.

The respondents shall, jointly and severally, pay to the amount of $194,851.29 to the appellants representing payment for the period 17 May 2005 to 31 July 2005 on the basis applying immediately prior to 17 May 2005 less monies earned during that period plus interest.

The respondents shall, jointly and severally, pay the appellants costs of proceedings: (a) IRC 2739 of 2005 on a party/party basis and

(b) IRC 36 of 2008 on a party/party basis up to 1 March 2008 and on an indemnity basis after 1 March 2008. 6 The appellants explained that the approach taken to quantify the order under s 106(5) (order 6 in the short minutes) was: (a) The number of weeks between 17 May 2005 and 31 July 2005 is eleven (11).

(b) Reference is made to the invoices of the applicants for the 11 weeks leading up to the termination on 17 May 2005. Attached as a bundle and marked "B" are copies of tax invoices for the period 1 March 2005 to 17 May 2005.

(c) Those tax invoices total the sum of $164,502 (exclusive of GST). The sum of $17,455, being earnings from other sources during the relevant period, is deducted. Therefore, the amount payable is $147,047 (exclusive of GST).

(d) Interest for the period up to 31 December 2006 is 9% per annum and from 1 January 2007 the interest rate is 10% per annum. Interest up to (insert date submission is filed) is calculated at $47,804.29 and continues to accrue at $40.41 per day until orders are made.

(e) The total, including interest up to this date is $194,851.29. 7 For the respondents, it was noted that the basis of payment that was applicable immediately prior to the summary termination taking effect was a fee of $20 for each case dealt with by Dr Windrum ("the Personal Fee") plus a fee of $1 for each case dealt with by any of the pathologists working for the first respondent ("the Supervising Pathologist's Fee"). It was further noted that this basis for payment must be applied to the period from 17 May 2005 to 31 July 2005 ("the Relevant Period"): see [104] of the judgment. 8 It was submitted for the respondents that the basis for payment may be applied either: (a) retrospectively, estimating what the appellants would have earned by reference to what is known actually to have occurred in the Relevant Period; or (b) prospectively, estimating what the appellants would have earned by reference to what was known as at the termination date in mid-May 2005. 9 Dealing first with the respondents' retrospective approach, it was submitted that the required basis of payment could be applied to the number of cases that could actually have been dealt with by Dr Windrum in the circumstances that prevailed in the Relevant Period. Those circumstances included the following factors, according to the respondents: (a) Dr Clark was working for the first respondent and the first respondent was contractually bound to pay him for 130 cases a day (650 cases a week); (b) the appellants' contract was about to terminate upon notice. Dr Windrum had been offered a new contract for 250 cases per week, but had not accepted it; (c) Drs Cortis-Jones and Krausz were both continuing to work in part-time casual arrangements.

10 Mr Kimber SC, for the respondents, observed that the actual numbers of cases dealt with by the first respondent in the Relevant Period were recorded by the first respondent, but were not in evidence. Accordingly, senior counsel made application for the Full Bench to receive the further evidence pursuant to s 191(2) of the Industrial Relations Act. This evidence consisted of 11 one-page weekly records of case numbers (showing total reported cases and cases by doctor) and a summary extracting the figures from those records.

11 It was submitted that if the further evidence was received, it showed that a total of 10,746 cases were dealt with during the Relevant Period. If Dr Clark's 650 cases were deducted from the total and the remaining cases were distributed between Drs Windrum, Cortis-Jones and Krausz (using the actual figures for Dr Krausz and dividing the remainder of available work between Drs Windrum and Cortis-Jones) the cases available for Dr Windrum totalled 1,774. The relevant calculation of what would have been the earnings of the appellants resulted in a figure of $46,226. When this amount was reduced by $17,455 (the amount earned by Dr Windrum from 16 May 2005 to the end of July 2005), the amount that would have been earned by the appellants in the Relevant Period was $28,771. Interest calculated to 30 October 2008 would be $9,480.79, yielding a total amount of $38,251.79 as at that date.

12 On a prospective approach, the respondents submitted it was relevantly known as at the termination date: (a) how many cases had been dealt with by all doctors in the 11 weeks prior to the termination; (b) Dr Clark was due to commence on May 23 and the first respondent was contractually bound to pay him for 650 cases a week;

(c) Dr Windrum had been offered 250 cases per week, but had not accepted that offer; (d) Drs Cortis-Jones and Krausz were both working in part-time casual arrangements. Dr Cortis-Jones had been dealing with about 300 cases a week and Dr Krausz with about 150 cases a month. 13 The respondents accepted again that calculation of the monetary award would require the adducing of further evidence. This would show, it was submitted, that in the 11 weeks before the termination, a total of 11,320 cases were dealt with and that Dr Krausz dealt with 461 of those. When Dr Clark's 650 cases per week (totalling 7,150) and Dr Krausz's 461 cases are deducted, the remainder was 3,709. When this remainder was evenly distributed between Drs Windrum and Cortis-Jones, Dr Windrum would have dealt with 1,855 cases.

14 On the foregoing basis, the appellants would have received $37,100 in Personal Fees and $11,320 in Supervising Pathologist's Fees, making a total of $48,420. When $17,455 (the amount earned by Dr Windrum from 16 May 2005 to the end of July 2005) was deducted for amounts earned in the Relevant Period, the total was $30,965. Interest calculated to 30 October 2008 would be $10,203.77, yielding a total amount of $41,168.77 as at that date. 15 As to the appellants' approach to quantification, the respondents noted that it was to calculate the monetary award on the basis of what the appellants billed the first respondent in the 11 weeks prior to the termination. The respondents submitted that this approach did not give effect to the Full Bench's decision for two reasons: (a) the calculation includes fees billed in the 11 week period that relate to work done prior to that period. The appellants' tax invoice dated 6 March 2005 clearly includes a Supervising Pathologist's Fee of $4,658 for 4,658 cases dealt with in February 2005 (that is, prior to the 11 week period relied on by the appellants). The Supervising Pathologist's Fee for cases dealt with in the 11 week period prior to the termination are billed in the tax invoices dated 3 April 2005 (for cases dealt with in March 2005), 1 May 2005 (April 2005 cases) and 17 May 2005 (May 2005 cases). If the compensation were to be based on the appellants' earnings (rather than billings) for the 11 weeks prior to termination, the base figure (before calculation of interest) must be reduced by $4,658. (b) the amount proposed by the appellants (if corrected as set out in paragraph (a) above) is what the appellants earned in the 11 weeks prior to termination less amounts earned in the Relevant Period. It is not a payment for the period from 17 May 2005 to 31 July 2005 and does not reflect the reality of the situation during the Relevant Period. Consideration

16 In its judgment of 28 August 2008 the Full Bench decided that the respondents shall pay the appellants for the period from 17 May 2005 to 31 July 2005 on the basis that was applicable immediately prior to the summary termination taking effect, less any monies earned in that period. In so deciding, the Full Bench broadly envisaged that the appellants should be paid what they would have earned if Dr Windrum had remained in full time employment with the respondents up to 31 July 2005, less monies that were actually earned by the appellants between 17 May 2005 and 31 July 2005. Where the Full Bench referred to the "basis" applicable immediately prior to the summary termination, it was referring to the rate of payment ($20.00 per case plus $1.00 per case supervisory allowance) and not the number of cases processed by Dr Windrum. 17 Given this was the intention of the Full Bench, and noting the requirement in s 106(5) of the Act that any money order must be what the Court considers to be just in the circumstances of the case, we consider that the correct method for quantifying the money orders is the respondents' retrospective approach, namely, estimating what the appellants would have earned by reference to what is known actually to have occurred in the period between 17 May 2005 and 31 July 2005. 18 In order to enable this approach to be adopted it is necessary for the Full Bench to grant leave to the respondents to adduce the relevant evidence described earlier in this judgment. Because we consider the retrospective approach is the one that best leads to money orders that are just in the circumstances of the case, we are of the view that the necessary special grounds exist justifying the grant of leave under s 191(2) of the Act. Accordingly, we grant leave. 19 The respondents have calculated that the retrospective approach produces an outcome of $38,251.79. This amount includes interest to 30 October 2008. Interest will be payable to the date of this judgment thereby necessitating a revised calculation, but one based on the retrospective approach. Orders

20 The Full Bench makes the following orders: (1) The respondents, jointly and severally, shall pay to the appellants an amount of $28,771 (subject to this being a correct calculation) plus interest on that amount calculated to the date of this judgment. (2) Draft minutes of order reflecting this decision shall be filed within 14 days of the date of this decision together with any submissions by the respondents on costs. The appellants will have a further 14 days to file submissions on costs and unless either party applies to be heard on costs and/or the terms of the draft order, the Full Bench will determine any issues on the papers.

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