Karen Fisher v Martin Madden as Receiver and Manager of Dataflow Computer Services Pty Limited
JUDGMENT OF:
Meagher JA at 1; Sheller JA at 17; Beazley JA at 48
LOWER COURT JURISDICTION :
Supreme Court
LOWER COURT FILE NUMBER(S) :
SC 1828 of 2001
LOWER COURT JUDICIAL OFFICER :
Windeyer J
COUNSEL:
A: I Neil R: R Weber SC with G Rich
SOLICITORS:
A: Haywards R: Coudert Brothers
CATCHWORDS:
Order of priorities set by s 433(3)(c) of Corporations Law - s 106 of Industrial Relations Act 1996 - whether the Industrial Relations commission could retrospectively vary a contract of employment between a company and its employee - whether company was required to make a retrenchment payment to employee - characterisation of "retrenchment payment" within the meaning of s 556(1)(h) of Corporations Law - appeal dismissed with costs.
1. Appeal dismissed; 2. the appellant to pay the respondent's costs of the appeal; 3. to the extent that the respondent has incurred costs in this appeal not recoverable under order 2, such costs to be paid out of the assets in his hands as receiver.
IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL
CA 40521/01
MEAGHER JA SHELLER JA BEAZLEY JA
Thursday, 21 March 2002
KAREN FISHER v MARTIN MADDEN AS RECEIVER AND MANAGER OF DATAFLOW COMPUTER SERVICES
Facts
The respondent, Martin Madden, was appointed Receiver and Manager of Dataflow Computer Services Pty Ltd on 29 May 2000. The appellant, Fisher, had been an employee of Dataflow since 1983. As at the date of the Receiver’s appointment, the appellant had entitlements for the value of unpaid annual leave of $54,842, and long service leave of $2,614.62. Fisher would also have been entitled to $10,000 in lieu of one month’s notice had her employment ceased at the date of the Receiver’s appointment. However on the facts, no such entitlement arose. On her dismissal, the appellant was paid her unpaid holiday pay and long service leave, and in priority to the claims of other creditors. If at the date she had been owed any retrenchment payment, she would have been paid that amount.
At the time of the Receiver’s appointment, the appellant brought proceedings in the Industrial Relations Commission seeking orders under s 106 of the Industrial Relations Act 1996. She alleged that her contract of employment with Dataflow was unfair, harsh or unconscionable and against the public interest, and sought orders varying it by including (a) 12 months’ notice of termination or payment in lieu, and (b) a severance payment if payment was based on redundancy. The Commission had not yet heard the appellant’s case at the time of this appeal.
It was contended, that…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Fisher v Madden [2002] NSWCA 28
Case
[2002] NSWCA 28
Decision Date
CaseChat Overview and Summary
Fisher was the receiver of a company, and Madden was an employee of that company. The dispute concerned Madden's entitlement to a retrenchment payment following the company's insolvency. Fisher, as receiver, sought to avoid making this payment, arguing it was subordinate to other claims under the Corporations Law. The matter came before the Court of Appeal of New South Wales.
The primary legal issues before the court were whether the Industrial Relations Commission had the power to retrospectively vary Madden's contract of employment to create an entitlement to a retrenchment payment, and if such a payment, once characterised, fell within the priority provisions of the Corporations Law, specifically s 433(3)(c) and s 556(1)(h). The court also considered the interplay between the Industrial Relations Act 1996 and the Corporations Law in the context of employee entitlements during receivership.
The court reasoned that the Industrial Relations Commission did possess the power to make retrospective orders varying employment contracts. However, the critical question was how a retrenchment payment, arising from such a variation, was to be characterised for the purposes of the Corporations Law. The court held that a retrenchment payment, even if arising from a retrospective order, was not a debt incurred by the company in the ordinary course of its business prior to the appointment of the receiver. Consequently, it did not attract the priority afforded by s 433(3)(c) of the Corporations Law, which applies to certain employee entitlements. The court found that the payment was not a "retrenchment payment" within the meaning of s 556(1)(h) of the Corporations Law, which deals with preferential payments.
The appeal was dismissed, with the appellant, Fisher, ordered to pay the respondent's, Madden's, costs of the appeal. Any costs incurred by the respondent not recoverable from the appellant personally were to be paid out of the assets held by Fisher as receiver.
Orders
Orders of the court
1. Appeal dismissed; 2. the appellant to pay the respondent's costs of the appeal; 3. to the extent that the respondent has incurred costs in this appeal not recoverable under order 2, such costs to be paid out of the assets in his hands as receiver.