Eddey v Alphaprint Pty Ltd
[1996] IRCA 384
•7 Aug 1996
DECISION NO: 384/96
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 1260 of 1996
B E T W E E N :
MICHAEL THOMAS EDDEY
Applicant
AND
ALPHAPRINT PTY LTD
Respondent
Before: Judicial Registrar Murphy
Place: Melbourne
Date: 7 August 1996
EX-TEMPORE REASONS FOR JUDGMENT
Relevant Wages.
At the commencement of the hearing of these proceedings, the parties argued a Notice of Motion filed by the respondent. The Notice of Motion sought to move that the Court was without jurisdiction because the “relevant wages” of the applicant were in excess of the limit set by s170CD of the Industrial Relations Act (“the Act”). The motion was determined only on evidence led by the respondent, the applicant electing not to lead any evidence controverting the affidavit material of the respondent.
The evidence was that the applicant was employed pursuant to a letter of offer dated 17 March 1995 and signed by him on 21 March 1995 (Exhibit “DNL3”) to Lockwood’s affidavit sworn 20 June 1996). The letter is expressed to be subject to a formal contract of employment and for an initial period of 12 months. The letter provides:
“On behalf of Alphaprint Pty Limited, we hereby confirm your offer of employment on the following terms and conditions:
(a) A base salary package of $70,000 (inclusive of superannuation), plus car;
(b) The base salary package may be taken in wages, superannuation, or other benefits as deemed acceptable by the company.”
There are other provisions including the payment of a bonus.
In the affidavit, Mr Lockwood deposes that the applicant was told at the interview that he could take the salary package in any way that he wished. The formal employment contract (Exhibit “DNL5” to Mr Lockwood’s affidavit) was not executed by the applicant. It provided (paragraph 4.1) that the applicant would be paid an annual salary of $70,000 (inclusive of superannuation) “which shall accrue on a day-to-day basis and be payable by equal monthly payments in arrears on the last business day of the Company in each calendar month”.
Mr Lockwood deposes (paragraph 14) that the applicant had declined to sign the employment contract as he believed that the terms of his contract were set out in the letter of 17 March 1995. The evidence was that the applicant, after he commenced employment, was paid a gross weekly payment of $1,015.39, being on an annual basis, $52,800.28 per annum. In addition, a company, Deluna Pty Ltd was paid $280.00 net per week, amounting to a gross payment per annum of $14,616.00. Mr Lockwood deposes (paragraph 15) that the applicant “elected to have the respondent pay to Deluna Pty Ltd” that sum per week. He further deposes (paragraph 16) that the applicant and Judith Lorraine Eddey are the sole directors and shareholders of the company.
It was argued that the two payments per week of $1,015.39, and $280.00 to Deluna Pty Ltd exceeded the limit set under s170CD and therefore the Court did not have jurisdiction. Reliance was placed on Ardino v Count Financial Services Group Pty Ltd (1994) 1 IRCR 221. Counsel for the applicant argued that the relevant wages here were $52,800.00 per annum as the payments to Deluna Pty Ltd were referable to an antecedent legal obligation of the respondent. The material before the Court does not support this characterisation. The evidence is that the applicant was told he could take the $70,000.00 base salary package in any way he liked. The letter of offer confirms this; the draft of employment agreement also confirms this.
The factual situation here is on all fours with Ardino. There the applicant was on a remuneration package comprising a base salary of $75,000.00 For 2 months during the period of his employment, Mr Ardino directed that payments of his salary be made to a superannuation fund. It was held that they remained part of his “relevant wages”. Here the evidence before the Court supports the proposition that the payments to Deluna Pty Ltd were made at the applicant's direction. He was entitled to receive them. He chose not to receive them, but his entitlement remained. The payments then are similar to those in Ardino which were held to be part of his “relevant wages”. They are different from other payments in Ardino, which, pursuant to the agreement, were made at the rate of 5% as superannuation. In Ardino at 228, Wilcox CJ distinguishes non-pecuniary benefits from pecuniary benefits. Here the only non-pecuniary benefits in the employment contract were the use of a car. The pecuniary benefits were the base salary package of $70,000.00. That was diverted by the applicant, but he always remained entitled to receive it.
There is some similarity in this case to Fleming v National Mutual Funds Management Ltd (Murphy JR, 17 July 1995, unreported). There the employee was entitled to a remuneration package of $80,000.00 per annum. Except for a portion that was to be paid for compulsory superannuation, the employee was entitled to convert the balance of the package to cash, although only 70% of it was described as salary. It was held that the relevant wages in that case consisted of the entire remuneration package except for the amount that had to be accounted for superannuation. Here, on the evidence, I am satisfied that the applicant was entitled to the $70,000,00 per annum salary package and that he chose to divert part of that package to another company. He remained, however, entitled to receive that amount in cash, and I am satisfied therefore that, following the decisions in Ardino and Fleming, his “relevant wages” exceeded the jurisdictional limit set by s170CD. It follows from this that I must uphold paragraph 1 of the respondent's Notice of Motion. The Court has no jurisdiction to hear this matter.
Accrued jurisdiction.
By way of Notice of Motion filed 26 July 1996, the applicant sought the leave of the Court, in its associated jurisdiction pursuant to s430 of the Act, to amend his application in the manner indicated in the amended application. Annexed thereto was a claim seeking a declaration that the respondent had breached its contract of employment, and a claim for payment of remuneration in lieu of reasonable notice. The amended application also sought the payment of $4,000.00 wrongly deducted in breach of the contract from his salary, and a claim of $2,007.98 wrongfully debited to a credit card in breach of the contract of employment.
It was argued that these claims arose out of the same substratum of facts as the claim pursuant to s170EA of the Act. It was further argued that the claim was not colourable and that the original claim was arguable. In response, counsel for the respondent submitted that s430 of the Act is premised on the Court having jurisdiction and that as a result of the upholding of the respondent's Notice of Motion, the Court found that it did not ever have jurisdiction because the “relevant wages” exceeded the limit set under s170CD of the Act. It was further argued that in any event the exercise of the associated jurisdiction is discretionary and that, as this application was made late in the day with very little supporting factual material, it was not bona fide and should not be entertained by the Court.
In my ruling on the respondent's Notice of Motion I followed the decision in Ardino. I found that the decision in Ardino was on all fours with the position of the applicant here. In Ardino at 230, the Wilcox CJ found that the claim was "unarguable". He declined to allow a claim in the associated jurisdiction. I propose to follow the Chief Justice's reasoning and decline to allow any claim in the associated jurisdiction as there are no factual differences between the position in this case and the position in Ardino. The decision Coulson v Thomas Cook Ltd (Madgwick J, 5 March 1996, unreported) is not directly on point. The decision in Coulson only relates to the jurisdiction of judicial registrars and whether they are entitled to deal with matters at common law. It is not a decision on s430 of the Act.
It follows that I accept counsel for the respondent's submission that the Court does not have jurisdiction under s430 of the Act, and therefore the Court is not in a position to allow the applicant to pursue a claim at common law that he asserted arises out of the same substratum of facts. I therefore refuse paragraph 1 of the applicant's Notice of Motion.
Costs - s347 of the Act.
The respondent, following the upholding of its Notice of Motion to strike the proceedings out, and the dismissal of the applicant's motion to file a claim in the accrued jurisdiction, has sought costs of the proceeding under s347 of the Act. That provision provides that costs are not to be awarded unless a party has instituted the proceeding “vexatiously or without reasonable cause”. Counsel for the respondent argued that the proceedings were instituted without reasonable cause on the basis that the proceedings were bound to fail as the result of the decision in Ardino. Counsel for the applicant submitted that the proceedings were not instituted without reasonable cause, but were arguable because the case was distinguishable from Ardino and the issue of salary sacrifice had not been the subject of a direct determination in the court.
There is considerable authority for the proposition that it is only in exceptional circumstances that costs are awarded against an unsuccessful applicant in this court: Thompson v Hodder (1989) 29 IR 339. In Kanan v Australian Postal and Communications Union (1992) 43 IR 257 at 264, Wilcox J set out a test as follows:
“It seems to me that one way of testing whether a proceeding is instituted "without reasonable cause" is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being "without reasonable cause." But where, on the applicant's own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause.”
Here the question of whether or not the Court should exercise its discretion to order costs under s347 revolves around resolution of whether or not it can be said that these proceedings were instituted without reasonable cause. Here I am satisfied that it is proper to characterise these proceedings as having been instituted without reasonable cause. The decision of the Chief Justice in Ardino is, I am satisfied, on all fours with the facts in this case because Wilcox CJ held that the question to be determined in relation to whether or not a salary comes within s170CD is to look at the nature of the payment and whether or not it is a non-pecuniary payment or a pecuniary payment. He refers, at 229, to this question as follows:
“So far as money payments are concerned (superannuation, school fees, etc.), the critical question is whether the employee ever had an entitlement to receive the money himself or herself. If the contractual arrangement between the employer and the employee was that the money would be paid to someone else as soon as the occasion arose to the exclusion of any right of the employee to obtain payment, the money was not something that the employee received or was entitled to receive.”
And then he refers to the 5% superannuation payment. Here, on the material before the Court, it was clear that at all times the applicant was entitled to receive a gross salary of $70,000.00. No material before the Court shows that that arrangement did not exist at the time of the institution of the proceedings. On the contrary, the affidavit material indicates that payments were made to the applicant and he directed payments to another corporate body. It follows, as I said, that the matter was on all fours with Ardino. If there was any doubt about whether the application was bound to fail, it should have been resolved by the decision in Fleming (above) which referred to whether or not the applicant in that case was entitled to receive the money in cash.
Here there was no doubt that the applicant was entitled to receive an amount in excess of the statutory limit in cash, and thus as Ardino has held his “relevant wages” were in excess of the jurisdictional limit. I am satisfied that the case was “unarguable” and thus is properly to be characterised as “without reasonable cause”, I therefore accede to the respondent's application for costs, and order that they be taxed in default of agreement.
MINUTES OF ORDERS
THE COURT ORDERS THAT:
Paragraph 1 of the Respondent’s Notice of Motion is allowed;
The application under s170EA is dismissed;
Paragraph 1 of the Applicant’s Notice of Motion is refused;
The Applicant is ordered to pay the Respondent’s costs of the proceedings, to be taxed by the District Registrar in default of agreement;
Stay of 21 days on the Order in paragraph 4 hereof.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
I certify that this and the preceding seven (7) pages are a true copy of the reasons for judgment of Judicial Registrar Murphy.
Associate:
Dated: 7 August 1996
Solicitors for the Applicant: Maurice Blackburn & Co
Counsel for the Applicant: Mr N Kenyon
Solicitors for the Respondent: Phillips Fox
Counsel for the Respondent: Mr G A Devries
Date of hearing: 7 August 1996
Date of judgment: 7 August 1996
C A T C H W O R D S
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - JURISDICTION - REMUNERATION - whether relevant WAGES exceeded limit - applicant on $70,000 salary but diverted part to a body corporate - PRACTICE AND PROCEDURE - claim in associated jurisdiction - COSTS - whether proceeding instituted without reasonable cause.
Industrial Relations Act 1988 ss.170CD, 170EA, 347, 430.
CASES:Ardino v Count Financial Services Group Pty Ltd (1994) 1 IRCR 221.
Fleming v National Mutual Funds Management Ltd (Murphy JR, 17 July 1995, unreported).
Coulson v Thomas Cook Ltd (Madgwick J, 5 March 1996, unreported)
Thompson v Hodder (1989) 29 IR 339.
Kanan v Australian Postal and Communications Union (1992) 43 IR 257.
MICHAEL THOMAS EDDEY -v- ALPHAPRINT PTY LTD
No. VI 1260 of 1996
Before: Judicial Registrar Murphy
Place: Melbourne
Date: 7 August 1996
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 1260 of 1996
B E T W E E N :
MICHAEL THOMAS EDDEY
Applicant
AND
ALPHAPRINT PTY LTD
Respondent
MINUTES OF ORDERS
Judicial Registrar Murphy 7 August 1996
THE COURT ORDERS THAT:
Paragraph 1 of the Respondent’s Notice of Motion is allowed;
The application under s170EA is dismissed;
Paragraph 1 of the Applicant’s Notice of Motion is refused;
The Applicant is ordered to pay the Respondent’s costs of the proceedings, to be taxed by the District Registrar in default of agreement;
Stay of 21 days on the Order in paragraph 4 hereof.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
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