SRA v Smith

[2000] NSWSC 334

CITATION:	State Rail Authority v Smith [2000] NSWSC 334
CURRENT JURISDICTION:	Common Law
FILE NUMBER(S):	SC 10797/99
HEARING DATE(S):	3 August 1999
JUDGMENT DATE:	19 April 2000
PARTIES :	State Rail Authority (Plaintiff) Mark SMITH (Defendant)
JUDGMENT OF:	Simpson J at 1

LOWER COURT JURISDICTION :	Local Court
LOWER COURT FILE NUMBER(S) :	6573/98
LOWER COURT JUDICIAL OFFICER :	Ms M Jerram

COUNSEL :	Mr H Packer (Plaintiff) Mr R Reitano (Defendant)
SOLICITORS:	Minter Ellison Geoffrey Edwards & Co (Defendant)
LEGISLATION CITED:	Public Sector Management Act 1988 Local Courts (Civil Claims) Act 1970 Justices Legislation Amendment (Appeal) Act 1998 Justices Act 1902
CASES CITED:	Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Computer Science of Australia Ltd v Lesley [1983] 6 IR 188 at 191 Eyles v Cook [(1967) 13 FLR 42] British Motor Corporation v Chance [[1964] AR(NSW) 364]
DECISION:	The summons is dismissed; The SRA is to pay Mr Smith's costs of the proceedings.

THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

SIMPSON J

Wednesday 19 April 2000

10797/99

STATE RAIL AUTHORITY OF NSW v Mark SMITH

JUDGMENT

HER HONOUR :

1    By summons filed 6 April 1999 the plaintiff, the State Rail Authority of NSW, to which I will refer as “the SRA”, seeks to appeal against the decision of Ms M Jerram, Local Court Magistrate, made on 9 March 1999. Before Ms Jerram was a statement of liquidated claim brought by the present defendant, Mr Mark Smith, for payment of a sum of money to which he asserted he was entitled under the provisions of the Public Sector Management Act 1988. The claim was brought under Local Courts (Civil Claims) Act 1970 (“the Civil Claims Act”). Ms Jerram found in favour of Mr Smith and ordered the SRA to pay the sum of $18,587.91 together with costs.

2    At the outset a question arises as to the provisions governing the entitlement of SRA to bring the appeal, and the extent of the appeal to which it is entitled. The issue between the parties in this respect is whether the SRA’s right of appeal is confined to questions of law or extends to questions of mixed fact and law. The question arises in the following way. Appeals to this Court from the Local Court were the subject of extensive legislative amendment which came into effect on 1 March 1999: Justices Legislation Amendment (Appeal) Act 1998. A new Part 5 was inserted into the Justices Act 1902. Pursuant to the new regime, s 69(2) of the Civil Claims Act confers a right of appeal to this Court upon a party to proceedings under the that Act who is dissatisfied with the judgment or order of the Local Court but the right so conferred is expressly restricted to questions of law.

3 But s 69 (3) makes the new provisions of Pt 5 of the Justices Act also applicable to appeals under sub s (2). S 104 of the Justices Act is the introductory section of Division 2 of Pt 5 of that Act. S 104(1)(b) confers a right of appeal, by the leave of this Court, on questions of mixed fact and law. By sub s (5) a party to proceedings under the Civil Claims Act has the benefit of the provisions of Pt 5. That includes s 104(1)(b).

4 The SRA’s original summons contained seven grounds. No application for leave to appeal on questions of mixed fact and law pursuant to s 104(1)(b) was then included. The summons assumed that the grounds raised were questions of law not requiring leave, and the SRA maintains that as its primary position. Recognising that an issue might arise as to whether the grounds were properly so characterised, and against the possibility that that issue might be decided against it, the SRA sought, by notice of motion filed on 19 May 1999, an extension of time in which to seek leave to appeal on questions of mixed fact and law. The grounds are the same grounds raised in the original summons, the only variation lying in the recognition of possible differences of view about the proper characterisation of the issues as questions of law, or questions of mixed fact and law.

5    The issue is not so arid as it might at first appear. If the grounds raised in the summons (or at least any of those grounds in which the SRA might have some prospect of success) are properly characterised as questions of mixed fact and law, then the SRA requires leave to argue them. Considerations relevant to the grant of leave are not spelled out in the legislation. Leave should not be granted merely because error may be demonstrated because that would be to render meaningless the requirement for leave. Prima facie, Mr Smith is entitled, error of law aside, to the benefit of his success in the Local Court. It is not possible to discern from the legislation any principles or to derive guidance as to the circumstances in which leave ought to be given to argue a question of mixed fact and law. Mr Smith’s principal position is that the grounds in the summons are essentially related to questions of fact; if that is so, then the question of leave would not arise. Similarly, if the SRA’s principal position, that the grounds raise questions of law, is correct, the questions of leave will not arise. It is only if they are properly characterised as questions of mixed fact and law, that the question of leave to appeal may become significant.

6    I do consider it appropriate (and I do not understand Mr Smith to have raised any real objection) to grant the extension of time necessary to permit the application for leave to be made. The outcome of that application will have to await the fate of the substantive grounds, and a determination whether any of those which might be successful fall into the category of questions of mixed fact and law. That alone is a matter of some complexity on which the authorities are not altogether clear.

7 I now turn to the substantive issues. On 2 March 1987 Mr Smith took up employment with the SRA as a management trainee. He prospered in his employment. He remained in the service of the SRA until some time in 1996. He progressed through the ranks, achieving regular promotions. In about 1996 he took up employment with another company. His reason for doing so is central to the issues between the parties. Had he remained in the employment of the SRA until 2 March 1997, that is had he served ten years, he would have become entitled to the benefits of the extended leave provisions contained in clause 1 of Schedule 5 to the Public Sector Management Act, or, on termination of his employment, to equivalent money payment. For any period in excess of ten years in which he remained in the service of the SRA his entitlement would have increased according to a statutory formula.

8    Sub clause 4 makes specific provision as to the entitlements to extended leave or its equivalent in money in relation to officers who have completed more than five but less than ten years’ service. Mr Smith falls into this category. Relevantly, the sub clause would entitle him to the leave or its money equivalent if his service was terminated:

“(b) by [him] on account of illness, incapacity or domestic or other pressing necessity.”

9    It was not contended that Mr Smith terminated his service on account of illness, incapacity or domestic necessity. He based his claim on his assertion that he terminated his service on account of “other pressing necessity”. The magistrate accepted his claim. The “other pressing necessity” on which he relied is spelled out in an affidavit sworn by him. Put shortly, he outlined regular structural changes in the SRA over the years of his employment. He was born in August 1962. In 1996, when he terminated his employment with the SRA, he was aged thirty-four. He was married with two children. He had been involved in a number of instances of restructuring when his own employment was in jeopardy. For example, in 1991, as a result of a restructure, the position he then held was abolished and he was obliged to apply for a newly created position. In this he was successful. In 1994 another restructuring took place. He was one of fourteen line managers. All positions were abolished and five new positions created. Of the fourteen former line managers he was the only one to be successful in his application but the new position required him to enter a five year contract which itself had some limitations of security by reason of the provisions of the Public Sector Management Act. He faced the possibility of a loss of about one third of his salary in the event of further restructuring causing abolition of the position he held. He did not at least in the first instance, face outright termination of his employment.

10    From 1995 a number of additional restructuring initiatives were being considered simultaneously by the SRA. Mr Smith’s experience told him that the restructurings were virtually always accompanied by a reduction in staff numbers.

11    Early in 1996 yet another restructure took place, amalgamating two sectors. Mr Smith became aware that one of two positions (one of which was his own) would be abolished. He found this very unsettling. When the restructure took place, he was appointed to the single remaining position. Between 1995 and 1997 the number of management positions was reduced from eight-six to thirty. Between 1995 and 1997 the number of management positions was reduced from eight-six to thirty.

12    Thereafter a process of dividing the SRA into four corporations was under way. The aim was to provoke the four separate corporations to compete with one another with a view to greater efficiency. Greater efficiency was likely to lead to cost and staff cuts. As the division plans were implemented Mr Smith became aware that the functions he carried out would be divided between two of the new corporations. In early 1996 at a high level meeting Mr Smith was told that a reduction in management positions and possibly a reduction in seniority of those occupying the positions could be expected. He realised that his employment was insecure. His terms of employment, even if his position was abolished, were such that he would retain certain rights, but may have been subjected to reduction of income and loss of status. He came to the view that the loss of status, if it occurred, would have an adverse impact on his future employment prospects. He began to seek employment elsewhere and eventually was appointed to the new position I have mentioned.

13    It was put to Mr Smith in cross-examination that, in effect, he had overstated the vulnerability of his position and that, as an ambitious and competent manager, he had seen the opportunity for career enhancement and that this was the real reason for his move. The magistrate accepted him as a truthful witness and that finding cannot here be assailed. It was argued before the magistrate that Mr Smith’s history with the SRA spoke for the unlikelihood that he would lose his position, and his quest for alternative employment did not come about because of any fears for his employment security that could qualify as “pressing necessity”. The agistrate found that, in the circumstances outlined, Mr Smith’s termination of his employment was, in the terms of the relevant clause, for “other pressing necessity”, entitling him to the benefits of the extended leave provisions. She expressly found that his fears for his position were reasonably held. She accepted that his family responsibilities and need for a secure future justified his decision to seek alternative employment. (That finding, of course, does not conclude the issue. What the magistrate had to decide, and did decide, was whether his reasons, as she found them, amounted, within the terms of the clause, to “other pressing necessity”).

14    It is necessary now to examine the grounds of appeal as they are framed.

15    Grounds 1 - 4 are framed with an identical structure. By each of these grounds it is asserted that her Worship erred in reaching a stated conclusion “in circumstances where” she had made a series of findings of fact. By way of example, ground 2 is framed as follows:

2. Her Worship erred in law in finding that the defendant genuinely felt uncertain about how long his position would continue due to restructuring within the plaintiff in circumstances where:

(a) Her Worship found that the plaintiff had a policy of no forced redundancies;
(b) Her Worship found that if the defendant’s current position had been abolished by the plaintiff the defendant would have been paid his existing salary for 12 months after any such abolition and thereafter be paid the salary he would be entitled to under his previous position grading for an indefinite period of time;
(c) Her Worship found that the defendant terminated his employment with the plaintiff to take up a position with less job security than the position he held with the plaintiff;
(d) Her Worship found that the defendant terminated his employment with the plaintiff knowing that he might lose his entitlement to extended leave under Schedule 5 to the Public Sector Management Act 1988;

(e) Her Worship found that the defendant:

(i) had done well during his 9 years and 15 weeks of employment with the plaintiff;
(ii) was well qualified;
(iii) successfully retained management positions during earlier restructurings of the plaintiff;
(iv) had been promoted during earlier restructurings of the plaintiff, and
(v) was highly regarded by his superiors, and
(f) Her Worship found that the defendant did not give the plaintiff any reasons for terminating his employment with the plaintiff.

16    By ground 3 it is asserted that, “in circumstances where” the magistrate had found the same series of facts, she erred in her conclusion:

“that the defendant’s uncertainty about how long his position would continue due to restructuring with the plaintiff was the real or motivating reason for the defendant terminating his employment with the plaintiff …”

17    By reference to the same findings of fact, ground 4 asserts that her Worship:

“erred in finding that the defendant’s termination of his employment with the plaintiff was reasonable …”

18    In my view, these grounds raise nothing but questions of fact. They attack the reasoning process, but it is purely a factual reasoning process that they attack; that is, the process of reasoning from a series of established facts to a conclusion, which is itself a conclusion of fact.

19    In saying what follows, I would not wish it to be thought that I accepted the proposition that the reasoning process was in any way flawed. It is simply unnecessary, and not open to this Court, to consider that question. In Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 the Court of Appeal observed that, where an appeal is limited to a question of law, it is pointless to submit that the reasoning by which the court of first instance arrived at a finding of fact was demonstrably unsound as this does not amount to error of law (p 156).

20    I reject grounds 2, 3 and 4 as not raising a question of law, or a question of mixed fact and law.

21    Ground 1, while framed in essentially the same terms as the succeeding three grounds, is not in quite the same category. By reference to the same findings of fact, plus one additional fact (which it is not necessary here to specify) it is asserted that her Worship erred:

“in finding that the defendant terminated his employment with the plaintiff on account of a ‘pressing necessity’ within the meaning of paragraph 4(b) of clause 1 of Schedule 5 to the Public Sector Management Act 1988 …”

22    The written argument put in support of this ground referred to precedent in relation to the construction of the clause. Reference was also made to dictionary definitions of the two words “pressing” and “necessity”. The opening words of the ground are capable of raising a question of law, if what is intended is a challenge to the construction placed upon the section by the magistrate. When regard is had to the citation of authority in the submissions advanced on behalf of the SRA, some colour of a question of law is suggested. However, the principal substantive argument that was put in support of the ground was that her Worship:

“could not have correctly applied the objective test … given her findings of fact.”

23    In my view this is merely another question of fact dressed up as a question of law. The argument is no more and no less than an argument that error of law is demonstrated by a conclusion of fact that is perverse.

24    I assume that the point the SRA seeks to make is that the ultimate finding of fact was untenable in the sense of being not open on the evidence, or within the terms stated in Azzopardi, where Glass JA wrote:

“Further an ultimate finding of fact, even in the absence of a misdirection, may reveal an error of law if the primary facts found are necessarily within or outside a statutory description and a contrary decision has been made …”

25    For this principle to be applicable it would be necessary for the SRA to establish that on the findings of fact made by magistrate, it was not open to her to conclude that Mr Smith had proved pressing necessity.

26    If this is what the SRA intended to argue, I reject it. The magistrate did acknowledge that the case may be on the borderline, but ultimately, having found the primary facts, she concluded that they brought Mr Smith within the statutory description. I am not satisfied that the SRA has made good an assertion that, on those primary facts, it was not open to the magistrate to find pressing necessity.

27    It was further argued that the magistrate failed to distinguish between “domestic necessity”, “illness or incapacity” and “pressing necessity”. This I do not accept. As I have observed above, neither illness, incapacity, nor domestic necessity was in issue and it was not necessary for the magistrate specifically to exclude those circumstances. What she had regard to, and properly had regard to, was the question of “other pressing necessity”, and she derived guidance from the relevant authorities in relation to the tests applicable to that question.

28    As part of the same argument it was put that her Worship failed to take into account “the urgency and degree of compulsion” required to establish “pressing necessity”.

29    I find nothing in the clause that requires either “urgency” or “compulsion”. “Pressing necessity” is, in my view, something less than “compelling necessity” and probably something less than (and certainly something different from) “urgent necessity”. In my view the legislature chose its terms carefully and the magistrate properly appreciated their import.

30    The SRA at least twice in its written argument relied upon the notion of “compulsion” or “compelling necessity”. The origin of this gloss on the word used by the legislature appears to be Computer Science of Australia Ltd v Lesley [1983] 6 IR 188 at 191. There the Full Bench of the Industrial Commission of NSW in Court Session used the same terminology. Their Honours wrote:

“We do not think, in any event, that properly considered, the judgments in Eyles v Cook [(1967) 13 FLR 42] and British Motor Corporation v Chance [[1964] AR(NSW) 364] are to be read as implying that the test is a ‘subjective’ one in the sense that the worker’s view is to prevail even though a reasonable person would not have felt compelled to seek a solution to the problem by terminating his employment in the same circumstances…
Applying that approach, the present case should be resolved, in our view, by asking the following question. (1) Was the reason claimed for termination one which fell within the section? (2) Was such reason genuinely held by the worker and not simply colourable or a rationalisation? (3) Although the reason claimed may not be the sole ground which actuated the worker in his decision to terminate, was it the real or motivating reason? (4) Was the reason such that a reasonable person in the circumstances in which the worker found himself placed might have felt compelled to terminate his employment? ” (emphasis added)

31    I do not think, in these passages, the Commission intended to substitute a test of “compelling necessity” for “pressing necessity”. If it did, then, not being bound by its decision, I would respectfully decline to follow it. I would accordingly find no error if her Worship also declined to apply to test so framed. What her Worship did was to consider the questions posed in Lesley and she then held:

“For Mr Smith it was not merely desirable to go but in those circumstances and with that uncertainty I accept that he felt compelled.”

32    It seems to me that, in applying the tests posed by Lesley, her Worship may have subjected Mr Smith to a more stringent test than the legislation required. If there was error, it was error that favoured the SRA. In my opinion “compelling necessity” encompasses “pressing necessity”.

33    I see no other error of law in the approach taken by the magistrate.

34    Ground 5 asserts error by the magistrate:

“in finding and taking into account in her decision that the defendant had ‘a need for a secure future’ when there was no evidence to support such a finding and no case advanced by the defendant to that effect.”

35    This ground is, in my view, founded on a fallacy. The entirety of Mr Smith’s case lay in the insecurity of employment created by the constant restructuring in the SRA and his need, both for his own professional reasons, and to support his family, for security of employment. There was no error of law in taking this circumstance into account. The foundational premise of the ground is not established.

36    Ground 6 is a reformulation of the argument to which I have earlier alluded, concerning the asserted failure to distinguish between tests for “domestic necessity”, “illness or incapacity”, and “other pressing necessity”. I have already expressed my views in relation to this assertion. No error of law is demonstrated.

37    The final ground, ground 7, asserts that the magistrate erred:

“In finding that the defendant’s desire for career advancement and job satisfaction, in circumstances where he had job security, compelled him to terminate his employment with the plaintiff.”

38    This, again, in my view, is a ground that raises a question of fact. I have extracted above the passage in the judgment in which the magistrate made the finding now criticised. It is not open to the SRA to argue the ground as framed.

39    Having regard to the conclusions I have reached, it is unnecessary to consider whether the SRA should be granted leave to appeal on questions of mixed fact and law. The grounds, generally speaking, raise only questions of fact, and where they may be distilled to yield a question of law, it is a question of law in which no error has been demonstrated. There are no questions of mixed fact and law. The summons is dismissed. The SRA is to pay Mr Smith’s costs of the proceedings.

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Last Modified: 09/25/2000