Silvarich v Rathner

[2000] VSC 314

IN THE SUPREME COURT OF VICTORIA AT MELBOURNE

1. No:  4984

CHARLES SILVARICH & ORS

Plaintiffs

-AND-

GIDEON RATHNER

Defendant

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Master:  Evans

Where Held:  Melbourne

Date of Hearing:  2 August 2000

Date of Judgment:  3 August 2000

Medium Neutral Citation: [2000] VSC 314

Appearances:  Counsel
For the Plaintiff/  Mr M Gronow  

Respondent:

For the Defendant/  Mr T North
Applicant:

MASTERS REASONS FOR DECISION:

1. This proceeding is brought pursuant to s.1321 of the Corporations Law. In it the plaintiffs, former employees of Major Engineering Pty Ltd (“the company”) challenge the rejection by the defendant, the administrator of a deed of arrangement entered into between the company and its creditors, of their proofs of debt in the administration.

1. The rejection of the proofs submitted by some of the plaintiffs was based on the defendant’s contention that  the entitlements of all the plaintiffs upon termination of their employment by the defendant by notice given on or about 3 December 1999 was governed by the Metal Engineering and Associated Industries Award 1998 made by the Australian Industrial Relations Commission (“the Commission”) .

1. The plaintiffs all contend that they are entitled to enhanced redundancy payments on termination pursuant to the provisions of the Major Engineering (Interim Consent) Award 1999 (“the award”).

1. The award was made by the Commission.  The date of the making of the award was an issue before me but for the reasons I will set out below it is not necessary for me to decide when it was made.  The parties have accepted for the purposes of  this proceeding that on any view all formalities necessary to be complied with in order for the award to come into force were complied with at the latest by 22 November 1999.

1. The defendant’s contention depends on the premise that the award did not come into force prior to his appointment as administrator of the company. That appointment took effect at 4.00pm on 19 November 1999 when the directors of the company resolved that he be appointed as administrator of the company (s.435C (1) and s.436A(1) Corporations Law).

1. Section 440D(1) of the Corporations Law provides, relevantly,

“During the administration of a Company, a proceeding in a court against the company ……. cannot be ….. proceeded with except;

(a)        with the administrator’s written consent or

(b)        with the leave of the Court …….”

1. It is common ground that neither exception applied to the proceeding in which the award was made.

1. Section 58AA(1) defines the meaning of the word court as used in the Corporations Law as follows:

‘court  means any court exercising the jurisdiction of this jurisdiction’.

1. The central issue in this proceeding is whether the Commission is a court within the meaning of Section 440D(1). It is a body created by the Industrial Relations Act 1988, (now known as the Workplace Relations Act 1996) (“the act”). It is a Commonwealth Act made by the Federal parliament in the exercise, inter alia, of the power conferred by the Constitution to make laws in respect of conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State (Commonwealth of Australia Constitution Act s.51(xxxv)) and to make laws in respect to matters referred to the Parliament of the Commonwealth by the Parliament of any State (ibid s.51(xxxvii).

1. In argument before me there was no detailed examination of the powers and functions of the Commission or of the constitutionality of the act in conferring those powers and functions.  For the purpose of these reasons I will assume that it is constitutionally valid in that respect.

1. I note that in Part VI of the act there are powers and functions conferred on the Commission which relate to the prevention and settlement of industrial disputes (s.89(a)) by arbitration, making an award or varying an award. (s.89A).

1. To confer the judicial power of the Commonwealth under Chapter III of the Constitution on a body exercising such non judicial functions would be unconstitutional (R –v- Kirby, exparte Boilermakers’ Society of Australia (1957) 95 CLR 529)

1. I also note that by the Commonwealth Powers (Industrial Relations) Act 1996 the Parliament of Victoria referred to the Parliament of the Commonwealth the matter of the conciliation and arbitration for prevention and settlement of industrial disputes within the State (s.4(2)).

1. In the exercise of the referred power Part XV of the act was enacted.  There was no consideration in argument before given to the question whether the Commission was acting in the exercise of the  powers conferred by that Part in making the Award.

1. Whether or not the Commission was acting in the exercise of its general powers or functions or of those conferred by Part XV, I am satisfied that in doing so it was acting in the exercise of jurisdiction conferred by Commonwealth legislation made in the exercise of powers conferred by the Constitution and not in the exercise of the jurisdiction of the State of Victoria.

1. The Commission exercises its jurisdiction for and in relation to the entire Commonwealth (cf: Merribee Pastoral Industries Pty Ltd –v- Australian and New Zealand Banking Group Ltd (1998) 193 CLR 502 at 512, 513) even if that jurisdiction is conferred in the exercise of referred powers as those powers once referred are the powers of the Commonwealth, though exercised only in respect of a component part of the Commonwealth.

1. Even if this conclusion is incorrect I am satisfied that the Commission is not a court within the meaning of s.58AA of the Corporations Law. To conclude otherwise would involve a conclusion that the Commission has vested in it the judicial power of the Commonwealth contrary to the Constitution. Counsel for the liquidator did not advance any argument in support of such a conclusion.

1. There exists a further reason for allowing the plaintiffs appeal.  The award has been made and once made it comes into force on the day specified in it (s.146 of the act) and is final and conclusive (subject to the act) (s. 150 of the act).

1. Even if the parties were bound by the injunction contained in s.440D the award operates in law until set aside.

1. By reason of the conclusions I have expressed it is not necessary for me to express any final conclusion on the question of when the award was made within the meaning of the act.

1. In another context the many issues raised would have merited a far more detailed consideration but I considered that the justice of the case and the interests of the parties dictated a speedy resolution of the proceeding.  Accordingly I have dealt with the proceeding as quickly as possible and my reasons are necessarily more briefly expressed than might otherwise have been appropriate.

1. Warren J. has referred to me the interlocutory application instituted by the defendant seeking answers to certain questions. The answers to each of those questions is – The Major Engineering (Interim Consent) Award 1999.  The  context in which I am asked to answer those questions necessarily confines the answer to  employees of the company at the time the administration commenced.  If it was intended to seek broader guidance from the Court it would be necessary to reformulate question (b).

1. I have assumed from what was said in the course of argument that at this stage the parties do not wish me to proceed to a determination of what the entitlements of each of the plaintiffs is under the relevant award.  If that is correct I propose to adjourn the further hearing of the proceeding to a date to be fixed and reserve liberty to apply.

1. When the parties have had an opportunity to digest these reasons I will hear from them on the question of  costs.

…………………………………………

Ewan K Evans

Master of the Supreme Court