Kanes Hire Pty Ltd v Mitchell

Case [2010] FCA 756

FEDERAL COURT OF AUSTRALIA

Kanes Hire Pty Ltd v Mitchell [2010] FCA 756

Citation: Kanes Hire Pty Ltd v Mitchell [2010] FCA 756
Appeal from: Mitchell v Kanes Hire (unreported, Chief Industrial Magistrates Court of New South Wales, Newcastle, Chief Industrial Magistrate Hart, 125735 of 2008, 13 January 2010)
Parties: KANES HIRE PTY LTD, ROBERT MITCHELL, THE FAIR WORK OMBUDSMAN
File number: NSD 93 of 2010
Judge: MOORE J
Date of judgment: 21 July 2010
Catchwords: INDUSTRIAL LAW – appeal from Chief Industrial Magistrate of NSW – award interpretation – meaning of 'retail shop employee' – principles of award interpretation – major and substantial purpose – scope clause and plain words of the award – entitlement to severance pay where redundancy and employee given notice their employment is to be terminated
Legislation: Notional Agreement Preserving the Shop Employees (State) Award
Shops and Industries Act 1962 (NSW) s 78
Workplace Relations Act 1996 (Cth) ss 720, 725
Cases cited: Byrne v Australian Airlines Ltd (1995) 185 CLR 410
Comdox (No 272) Pty Ltd (t/as Ronald Stead Golf) v Dawson (1993) 49 IR 458
Concut Pty Ltd v Worrell (2000) 176 ALR 693
Kingmill Australia Pty Ltd t/a Thirfty Car Rental v Federated Clerks Union of Australia (NSW) [2001] 106 IR 217
Kucks v CSR Ltd (1996) 66 IR 182
Mitchell v Kanes Hire (unreported, Chief Industrial Magistrates Court of New South Wales, Newcastle, Chief Industrial Magistrate Hart, 125735 of 2008, 13 January 2010)
Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359
Softplay Pty Ltd v Department of Industrial Relations (Inspector McMahon) (1999) 94 IR 175
Ware v O'Donnell Griffin (Television Services) Pty Ltd [1971] AR(NSW) 18
Date of hearing: 28 May 2010
Date of last submissions: 31 May 2010
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 36
Counsel for the Appellant: A Britt
Solicitor for the Appellant: Diamond Conway Lawyers
Counsel for the Respondent: The respondent appeared in person
Counsel for the Intervener: L Doust
Solicitor for the Intervener: The Fair Work Ombudsman

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 93 of 2010
ON APPEAL FROM THE CHIEF INDUSTRIAL MAGISTRATES COURT OF NSW
BETWEEN:

KANES HIRE PTY LTD
Appellant
AND:

ROBERT MITCHELL
Respondent

THE FAIR WORK OMBUDSMAN
Intervener

JUDGE:

MOORE J

DATE OF ORDER:

21 JULY 2010

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The appeal be dismissed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 93 OF 2010
ON APPEAL FROM THE CHIEF INDUSTRIAL MAGISTRATES COURT OF NSW
BETWEEN:

KANES HIRE PTY LTD
Appellant
AND:

ROBERT MITCHELL
Respondent

THE FAIR WORK OMBUDSMAN
Intervener

JUDGE:

MOORE J

DATE:

21 JULY 2010

PLACE:

SYDNEY

REASONS FOR JUDGMENT

Introduction

  1. This is an appeal against a judgment of the Chief Industrial Magistrate…

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AGLC
Kanes Hire Pty Ltd v Mitchell [2010] FCA 756
Case
[2010] FCA 756
Decision Date

CaseChat Overview and Summary

In the case of Kanes Hire Pty Ltd v Mitchell, the dispute centered on the interpretation of an award clause regarding severance pay in the context of a redundancy. The case was heard in the Supreme Court of New South Wales. The primary legal issue was whether the employee, Mr. Mitchell, was entitled to severance pay under the terms of the Shop Award, given that his employment was terminated due to redundancy. The appellant, Kanes Hire Pty Ltd, argued that Mr. Mitchell's role did not qualify him for the award's benefits as he was not considered a "retail shop employee." This led to a broader examination of the principles of award interpretation, focusing on the scope clause and the plain words of the award.

The court considered the nature of the appellant's business and whether it qualified as a "shop" under the award. The Chief Industrial Magistrate had previously determined that the business involved significant sales of consumables incidental to the hiring of equipment, which the appellant contested. However, the court found that the evidence supported the Magistrate's conclusion that the business involved selling goods by retail, albeit as an incidental activity. This led to the conclusion that the Shop Award did apply to the appellant's business. Furthermore, the court rejected the argument that Mr. Mitchell's entitlement to severance pay could be nullified by post-termination discovery of misconduct. The court held that the redundancy benefit was not contingent on the respondent's conduct.

As a result, the appeal was dismissed, and the decision of the Chief Industrial Magistrate was upheld. This case underscores the importance of examining both the major and substantial activities of an employer and the specific terms of an award in determining coverage and entitlements.

Orders

Orders of the court

1. The appeal be dismissed.

Note:

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The specific clause dealing with redundancy pay provided:Clause 33 – Redundancy(1) Application(i) This clause shall apply in respect of full-time and part-time employees(ii) This clause shall apply in respect of employers who employ 15 employees or more immediately prior to the termination of employment of employees, in the terms of subclause 3, Termination of Employment.(iii) Notwithstanding anything contained elsewhere in this clause, this clause shall not apply to employees with less than one year's continuous service, and the general obligation on employers shall be no more than to give such employees an indication of the impending redundancy at the first reasonable opportunity, and to take such steps as may be reasonable to facilitate the obtaining by the employees of suitable alternative employment.(iv) Notwithstanding anything contained elsewhere in this clause, this clause shall not apply where employment is terminated as a consequence of conduct that justifies instant dismissal, including malingering, inefficiency or neglect of duty, or in the case of casual employees, apprentices or employees engaged for a specific period of time or for a specified task or tasks or where employment is terminated due to the ordinary and customary turnover of labour.…(4)Severance Pay(i) Where an employee is to be terminated pursuant to subclause 3, Termination of Employment, subject to further order of the Industrial Relations Commission of New South Wales, the employer shall pay the employee the following severance pay in respect of a continuous period service:(a)If an employee is under 45 years of age, the employer shall pay in accordance with the following scale:Years of service Under 45 years of age entitlementLess than 1 year Nil1 year and less than 2 years 4 weeks2 years and less than 3 years 7 weeks3 years and less than 4 years 10 weeks4 years and less than 5 years 12 weeks5 years and less than 6 years 14 weeks6 years and over 16 weeks(b) Where an employee is 45 years of age and over, the entitlement shall be in accordance with the following scale:Years of service Over 45 years of age entitlementLess than 1 year Nil1 year and less than 2 years 5 weeks2 years and less than 3 years 8.75 weeks3 years and less than 4 years 12.5 weeks4 years and less than 5 years 15 weeks5 years and less than 6 years 17.5 weeks6 years and over 20 weeksThe Chief Industrial Magistrate's decision The Chief Industrial Magistrate first considered whether the Shop Award applied to the appellant's business. Mr Mitchell submitted that he performed work in or in connection with a shop within the meaning of clause 37. The appellant contended that Mr Mitchell was not employed in connection with a shop. It contended that its business was not in the retail sector and that any sale of goods to members of the general public was so insignificant as to be irrelevant to any assessment of award coverage. The Chief Industrial Magistrate made a number of findings about the appellant's business at [22]:… the core business of the Respondent was the hiring out of a wide range of equipment and goods which would be used and then returned to the Respondent’s premises by the customer. Many of these transactions were accompanied by the sale of “consumables”, incidental to and associated with the hiring out of the equipment. The consumables which were sold included fuel such as diesel, two stroke, petrol and LPG gas. Sanding machines which were hired out frequently involved the sale of sandpaper, the hiring out of grinding machines of various types frequently involved the sale of discs for use in such grinders. In addition, goods were available for sale and were sold in circumstances where the sale was not associated with the hire of equipment.While the appellant challenged the findings in so far as the Chief Industrial Magistrate said "many" of the transactions were accompanied by a sale, these findings are broadly consistent with the evidence.

Ratio Decidendi

Legal Principle Established

The intervener contends that the proposition that an employee may be deprived of an award redundancy benefit by reason of discovered misconduct after the event is not established by the authorities upon which the appellant relies. The intervener submits that the redundancy benefit is not conditioned on the respondent's conduct in the manner asserted by the appellant. Additionally, the intervener does not accept the Chief Industrial Magistrate erred in not viewing all of the evidence. Rather, the intervener submits that having regard to the nature of the proceedings as a small claims procedure, the Chief Industrial Magistrate was not bound by the rules of evidence, could act without regard to legal forms and technicalities, and was otherwise entitled to act in an informal manner.Consideration The first issue to be resolved is whether the appellant's premises are a retail shop for the purpose of clause 37 of the Shop Award. During the course of the hearing, counsel for the appellant conceded that it was a shop for the purpose of s 78 of the Shops and Industries Act 1962 (NSW). This concession was almost certainly correct but it involves a concession that the premises in question were a place or building from which goods were offered for sale and sold by retail. That was the central element in the definition of shop under that state Act. Both the definition of shop in that legislation and, necessarily, the definition of shop in the award focus on two elements. The first is a location. The second is activity. If the location has one of the defining characteristics (place, building, stall etc) then the definition is satisfied if the defined activity is undertaken. That defined activity is selling, offering or exposing for sale goods by retail. Obviously in most instances all three activities would be undertaken. Comparatively rarely would items be sold without being offered or exposed for sale and one would expect infrequently would goods be offered or exposed for sale and not sold (perhaps other than in relation to businesses which were doomed in a commercial sense). For my part, I think this is one of these cases where it is a distraction to focus on the major and substantial activity of the employer which was one aspect of the approach of the Commission in Softplay Pty Ltd v Department of Industrial Relations (Inspector McMahon), a distraction adverted to by the Commission in Kingmill. The outcome in the first mentioned case (that the Shop Award (when simply a state award) did not apply to employees employed in the child-care centre at which some goods were sold) would have arisen simply by virtue of the fact that the employees engaged in selling goods did so only as a comparatively insignificant incident to their more general employment at the child-care centre. The employees were not comprehended by a classification to which the Shop Award applied. That was the route by which Maidment J concluded the Shop Award (as a state award) did not apply to the employment of the individual in question in the pro-golf shop in Comdox (No 272) Pty Limited (t/as Ronald Stead Golf) v Dawson.