Fisher v Madden

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.