Kaizen Hospitals (Malvern) Pty Ltd T/A Malvern Private Hospital; Kaizen Hospitals (Mountain District) Pty Ltd T/A Melbourne Eastern Private Hospital; Kaizen Hospitals (Essendon) Pty Ltd T/A Essendon Private Hospital
[2013] FWCFB 3493
•5 JUNE 2013
[2013] FWCFB 3493 |
FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
(C2013/2652)
SENIOR DEPUTY PRESIDENT WATSON | MELBOURNE, 5 JUNE 2013 |
Appeal against decision [PR531618 [PR532223, PR532331 and PR532337]] of Deputy President Hamilton at Melbourne on 20 December 2012 in matter numbers AG2012/8449 and AG2012/8450 and AG2012/8453 - rate of interest determined.
[1] This decision arises out of three appeals against decisions of 20 December 2012 1 by Deputy President Hamilton to approve the Essendon Private Hospital and the Australian Nursing Federation and Health Services Union Nurses Enterprise Agreement 2012, the Malvern Private Hospital and the Australian Nursing Federation and Health Services Union Nurses Enterprise Agreement 2012 and the Melbourne Eastern Private Hospital and the Australian Nursing Federation and Health Services Union Nurses Enterprise Agreement 2012 (the agreements). The appeals were dismissed in our decision of 26 March 2013.2
[2] The appeals were brought by the employer party to each agreement - Kaizen Hospitals (Essendon) Pty Ltd, Kaizen Hospitals (Malvern) Pty Ltd and Kaizen Hospitals (Mount District) Pty Ltd (collectively the appellants).
[3] Prior to the hearing and determination of the appeals the appellants sought and obtained an order, staying the approval decisions of Deputy President Hamilton. The stay order, 3 made by Senior Deputy President Hamberger, was subject to the following condition (authorised by s.606(1) of the Fair Work Act 2009):
“2. If the appeals against the decisions are dismissed, Kaizen Hospitals (Essendon) Pty Ltd, Kaizen Hospitals (Malvern) Pty Ltd and Kaizen Hospitals (Mount District) Pty Ltd shall, in addition to making payments owing under the relevant enterprise agreements, pay interest on the outstanding amounts (at a rate to be determined by the appeal bench) from the operative dates of those agreements.”
[4] In correspondence of 6 May 2013, solicitors for the Australian Nursing Federation (ANF), the respondent in the appeals, requested that the rate of interest be determined by the Fair Work Commission (the Commission) in accordance with the stay order.
[5] On 7 May 2013, we issued directions requiring the filing of written submissions in relation to the rate of interest to be applied in accordance with the stay order.
Submissions
[6] The ANF submitted:
● In determining the rate of interest to apply, the Appeal Bench is exercising powers “analogous to the discretion of the Federal Court of Australia under section 51A(1)(a) of the Federal Court of Australia Act 1976 (Cth) to order pre-judgement interest ‘at such rate as the Court . . . thinks fit . . .’”;
● “The purpose of pre-judgement interest is to compensate a party ‘for the loss or detriment which he or she has suffered by being kept out of his or her money during the relevant period’”; 4
● In this case, the appellants sought a stay order which “deprive others of the benefit of the relevant enterprise agreements” which would have otherwise operated, “pending the determination of the appeal”. The exercise of the discretion to stay the decisions of Deputy President Hamilton was subject to the payment of interest;
● The Commission should apply the decision of the Full Court of the Federal Court of Australia in Management 3 Group Pty Ltd (In Liq) v Lenny’s Commercial Kitchens Pty Ltd (No 2) (Management 3 Group):
“The proper rate of interest to be applied should be the rate prevailing from time to time in the market place which would represent the cost of the money to a successful applicant. The Court has suggested in Practice Note CM16 that that rate is 4% above the cash rate fixed by the Reserve Bank. In our opinion that rate is a rough and ready guide of the prevailing interest rate at any given time and should be applied in relation to pre-judgment interest on any award which has been calculated as at the date that the cause of action arose.” 5
● The Commission, as a national Tribunal, should apply interest rates for the same or substantially the same purpose consistently with the approach of the Federal Court of Australia; and
● The operative date of the enterprise agreements is 27 December 2012. The cash rate last published by the Reserve Bank of Australia before 1 July 2012 was 3.5 per cent and the cash rate last published before 1 January 2013 was 3 per cent.
[7] The Federal Court of Australia’s Practice Note CM 16 (Practice Note) at paragraph 2, provides:
“Practitioners and litigants should expect that where, pursuant to section 51A(1)(a), interest in respect of a pre-judgment period is to be included in a judgment, the Court will have regard to the following rates, being rates agreed upon by the Discount and Interest Rate Harmonisation Committee established following a referral by the Council of Chief Justices of Australia and New Zealand:
(a) in respect of the period from 1 January to 30 June in any year – the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced, and
(b) in respect of the period from 1 July to 31 December in any year – the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced.”
[emphasis added]
[8] The ANF submitted that the Commission should determine the rate of interest of:
● 7.5 per cent for the period 27 December 2012 to 31 December 2012; and
● 7 per cent for the period from 1 January 2013.
[9] The appellants submitted that they intended to apply to the Federal Court of Australia pursuant to s.39B of the Judiciary Act 1903 (Cth) for judicial review of the decision dismissing their appeal and apply for a stay of the decisions of Deputy President Hamilton. They submitted that it would be premature to determine a rate of interest prior to the Federal Court of Australia’s determination of the stay application and submitted that the Appeal Bench should adjourn the proceedings.
[10] In the alternative, the appellants submitted that the rate of interest should be determined as 3 per cent, on the basis that it is the median rate of published interest rates for savings/deposits of major financial institutions. 6 The appellants also submitted that we should have regard to the evidence of Dr T Wenkart, Chief Executive of the appellants, as to the cost pressures brought about by the cost increases arising from the agreements in determining the rate of interest.
[11] In response, the ANF submitted that in circumstances where it has been two months since the appeal decision, no stay order is in force and the agreements are operative, the Commission should proceed to determine the rate of interest. Any subsequent application to the Federal Court of Australia for a stay order is a matter for that Court.
[12] The ANF also submitted that the median rate of a selection of interest rates published by The Sydney Morning Herald is not a sound basis for determining the rate of interest to be applied. It submitted that the approach set out in its primary submissions should be applied.
Determination
[13] The appeal was determined on 26 March 2013. The stay order of Senior Deputy President Hamberger was conditioned by the payment of interest on the outstanding amounts and the determination of the rate of interest by the Appeal Bench. We are not persuaded that we should adjourn the proceedings on the basis of the possibility of an appeal against the appeal decision and a possible stay of our decision. Any application to the Federal Court of Australia for a stay order, if made, will be a matter for that Court.
[14] The condition attached to the stay order was directed to addressing the detriment 7 which would be suffered by employees entitled to additional payments under one of the agreements but for the stay in the event that the appeal was unsuccessful. The requirement to pay interest is analogous to the purpose of pre-judgement in interest to compensate a party for the loss or detriment suffered by being “kept out of [their] money”.8 For that purpose, we are guided by the approach of the Full Court inManagement 3 Group:
“The proper rate of interest to be applied should be the rate prevailing from time to time in the market place which would represent the cost of the money to a successful applicant.” 9
[15] The rate of interest to be applied in this case should be addressed to the detriment to employees, to whom the agreements apply arising from the delay in the payment of increases in wages and other payments as a result of the operation of the stay order, focusing on the cost of the money to them. In our view, this focus is addressed to the cost to the employees of otherwise accessing the money they would have received but for the operation of the stay order, rather than the return on those monies, if invested, had they received the money –borrowing rates rather than deposit rates.
[16] The median rate of interest rates for savings/deposits of major financial institutions published in the press, as proposed by the appellants, does not appropriately represent the cost of the money to employees.
[17] Consistent with the approach of the Full Court inManagement 3 Group we have decided to have regard to and apply the interest rate as calculated by reference to the Practice Note. It reasonably represents the cost of the money to the employees. Further, it is consistent with the approach agreed upon by the Discount and Interest Rate Harmonisation Committee established following a referral by the Council of Chief Justices of Australia and New Zealand. That approach now informs the fixing of interest rates for the purpose of compensating a party for the loss or detriment suffered from a delay in accessing monies due to the party by Federal and State Courts across Australia, with the possible exception of the Victorian Courts. 10 We think it is appropriate to have regard to that approach for fixing the interest rate for the analogous purpose in the circumstances of this matter.
[18] Using that approach, the ANF submitted that the Commission should determine the rate of interest of:
● 7.5 per cent for the period 27 December 2012 to 31 December 2012; and
● 7 per cent for the period from 1 January 2013.
[19] We determine that the rate of interest for the purpose of the stay order will be 7 per cent for the period from 27 December 2012. We depart from the approach in the Practice Note, and the outcome suggested by the ANF, to the extent we will not apply a different rate for the final five days of 2012. Utilising the discretion generally available to us, and the discretion reflected in the Practice Note, we have decided, in the circumstances of this matter, that the simplicity of a single rate of interest is preferable in light of the limited time over which the first rate proposed by the ANF would apply.
[20] We determine that the rate of interest for the purpose of the stay order will be 7 per cent for the period from 27 December 2012.
SENIOR DEPUTY PRESIDENT
Final written submissions:
2013.
Melbourne:
Respondent - May 16.
Appellants - May 16.
Respondent in Reply - May 23.
1 [2012] FWA 9905, [2012] FWAA 10420, [2012 FWAA 10505 and [2012] FWAA 10511.
2 [2013] FWCFB 1846.
3 PR533396.
4 Grincelis v House (2000) 201 CLR 321, at para 16.
5 [2012] FCAFC 92 (25 June 2012) at para 25.
6 The Sydney Morning Herald: “Money” section - Compare savings accounts, 14 May 2103 and para 6 of appellants submissions.
7 Transcript of stay proceedings, para 110.
8 Grincelis v House (2000) 201 CLR 321, at para 16.
9 [2012] FCAFC 92 (25 June 2012) at para 25.
10 ibid., at paras 26 and 27.
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