State of New South Wales v The Broken Hill Town Employees' Union on behalf of employees

[2022] NSWSC 961

Supreme Court

New South Wales

Medium Neutral Citation:

State of New South Wales & Anor v The Broken Hill Town Employees’ Union on behalf of employees [2022] NSWSC 961

Hearing dates:

6 July 2022

Date of orders:

19 July 2022

Decision date:

19 July 2022

Jurisdiction:

Common Law

Before:

Cavanagh J

Decision:

(1) Local Court proceedings number 2021/00262357 be transferred to the Supreme Court of New South Wales pursuant to s 140(1) of the Civil Procedure Act 2005 (NSW).

(2) The matter be allocated to the Administrative and Industrial Law List in the Common Law Division.

(3) The Union file a statement of claim within 28 days.

(4) The nominated defendants to the statement of claim file a defence within 28 days.

(5) At the same time as filing its defence, the nominated defendants inform the Union of the separate questions which they propose and their proposal for the quick and efficient determination of the issues.

(6) The matter be listed before the Administrative and Industrial Law List Judge on 20 September 2022.

Catchwords:

CIVIL PROCEDURE — Jurisdiction — Transfers to and from other courts — Local Court to Supreme Court — Complex legal issues to be determined — Monetary claim exceeds jurisdictional limit

Legislation Cited:

Fair Work Act 1994 (SA)

Industrial Relations Act 1996 (NSW)

Health Services Act 1997(NSW)

Local Court Act 2007 (NSW)

Cases Cited:

Barone v Kerr (2008) 170 IR 94; [2008] NSWSC 100

Category:

Procedural rulings

Parties:

State of New South Wales (First Plaintiff)
Far West Local Health District (Second Plaintiff)
The Broken Hill Town Employees’ Union on behalf of employees (Defendant)

Representation:

Counsel:
M Foran (First and Second Plaintiffs)

Solicitors:
Maddocks (First and Second Plaintiffs)
A M Knox (Industrial Officer The Broken Hill Town Employees’ Union) (Defendant)

File Number(s):

2022/45861

Publication restriction:

None

Judgment

1. Pursuant to a summons filed on 14 February 2022, the plaintiffs seek to transfer proceedings commenced by the defendant in the Local Court at Broken Hill to this Court. The plaintiffs also seek that the matter be allocated to the Administrative and Industrial Law List in the Common Law Division and the matter proceed by way of pleadings.

2. The second plaintiff is the respondent in proceedings commenced by the defendant, The Broken Hill Town Employees’ Union (the Union) filed on 21 December 2021 and identified as “Application for Recovery of Money – before the Chief Industrial Magistrate”.

3. The Union opposes the transfer of the proceedings from the Local Court at Broken Hill to this Court.

4. On the hearing of the summons before me on 6 July 2022, Miles Foran of Counsel appeared for the plaintiffs. Andrew Knox sought and was granted leave to appear on behalf of the Union. Mr Knox is a part-time industrial officer and registered industrial agent pursuant to s 26 of the Fair Work Act 1994 (SA). Mr Knox appeared by audio-visual link, in company with Rosslyn Ferry, the Secretary of the Union. Mr Foran and his instructing solicitors appeared in person.

5. I should say at the outset that the plaintiffs do not accept that the Union has correctly named the respondent to the proceedings in the Local Court. The plaintiffs have prepared an amended summons in which the names of the parties are corrected. The parties agreed that it was not necessary for me to deal with that issue at this time. It is a matter which should be capable of agreement. Plainly, the Union seeks recovery of moneys from the relevant employer of the persons whom the Union is representing in the proceedings.

The nature of the dispute

6. The Union brings a claim as an industrial organisation as defined in the Industrial Relations Act 1996 (NSW) as representative of the members who are set out in schedule 1 to the application in the Local Court. The Union says that the 40 persons named in the schedule are owed sums of money by the Local Health District amounting to a total of $1,198,812.35. In schedule A to the application in the Local Court, the Union identifies each of the 40 persons who are owed money and specifies the amounts owed to each employee. The amounts vary between amounts of around $2,000 to $3,000 to a sum of $123,000 said to be owed to one particular employee. There are three employees who are said to be owed in excess of $100,000.

7. The Union’s claim is set out in some detail in the particulars of claim accompanying the application in the Local Court. The essential question arising in the dispute is whether the 40 employees, who I understand were all permanent part-time workers, were underpaid for the work that they performed during various periods. The Union says that under the terms of the industrial agreement, permanent part-time workers who worked more than their contracted hours should have been paid at overtime rates rather than their normal hours. That is, a permanent part-time worker who normally works 20 hours a week was entitled to be paid at an overtime rate for any hours worked over 20 hours a week.

8. The Local Health District says that that is not so and that on a proper construction of the industrial agreement, overtime was only payable once the employees worked more than the hours worked by full-time employees, for example, more than 38 hours per week.

9. In its particulars of claim annexed to the application in the Local Court on behalf of the 40 employees, the Union pleads that:

1. The dispute came before Commissioner Murphy in a compulsory conference in May and June 2019.

2. The parties reached a binding agreement entitled “Agreed Way Forward” which was consistent with s 116A(3) of the Health Services Act 1997 (NSW) and which is binding both upon the Local Health District and the Union as both a common law contract and a binding agreement under s 116A(3) of the Health Services Act.

3. The Agreed Way Forward agreement was reduced to writing by virtue of Commissioner Murphy reciting the terms of the agreement to the parties. The relevant terms of the binding agreement included a notation that the claim on behalf of the part-time employees remained outstanding and that “the unions will determine how they wish to settle that matter – either in the civil courts or in the commission. The Commission suggests an employee be selected and a test case run …”.

4. Consistent with the Agreed Way Forward agreement, the Union then pursued a test case with the result that the dispute was resolved in favour of Ms Jacka (the Jacka decision).

5. The Local Health District did not exercise its right of appeal under s 197 of the Industrial Relations Act and is now estopped from relitigating the same issue.

6. The Board of the Local Health District at its meeting of 28 June 2021 resolved that it would not appeal the Jacka decision but, if further claims are pursued, they would argue the wrong interpretation of the agreement.

7. In entering that resolution, the Local Health District has repudiated the Agreed Way Forward agreement.

8. In the circumstances, the Union seeks damages in the amount of the unpaid overtime for each of the members named in the schedule.

9. In the alternative, the Union asserts that if the Agreed Way Forward was not an enforceable industrial agreement within the meaning of the Industrial Relations Act, it was enforceable at common law and the Union seeks damages for breach of the common law agreement.

10. Further, in the alternative, if the Agreed Way Forward agreement was not an enforceable contract either at common law or under the Industrial Relations Act, the Local Health District breached the terms of an enforceable industrial instrument, being the Far West Area Health Service Industrial Agreement 1997. The Union says that, as it is a signatory and party to the industrial agreement, it is entitled to bring those proceedings as a representative of the employees within the meaning of s 378 of the Industrial Relations Act.

10. The Union also seeks a civil penalty pursuant to s 357 of the Industrial Relations Act.

11. The Local Health District has filed a defence in the Local Court. It asserts that:

1. It was not the employer of the persons pursuing the claim and the proper respondent should be the State of New South Wales.

2. As the total quantum of the claim is $1,198,812.35, the amount of the claim exceeds the jurisdiction of the Chief Industrial Magistrate’s Court constituted by the Local Court under s 382(2) of the Industrial Relations Act asserting that the jurisdictional limit under s 29 of the Local Court Act 2007 (NSW) is $100,000.

3. Alternatively, the Local Health District asserts that the resolution of the claim involves:

1. Complex issues of law;

2. Allegations of significant notoriety or public importance; and

3. Representative proceedings in respect of a class said to contain 40 members and is appropriate to be dealt with in the Supreme Court.

12. As is evidenced from its defence in the Local Court, the Local Health District does not really particularise any of its legal arguments and simply asserts that the matter is more appropriately determined in the Supreme Court. As part of its application is that the matter proceed by way of pleadings, I assume that the Local Health District (or the State of New South Wales) will file a substantive defence to any statement of claim which would be filed by the Union should the matter be transferred to this Court. Alternatively, it would be necessary to file a substantive defence in the Local Court.

13. Having said that, Mr Foran identified that the issues arising in the proceedings are in his submission complex and of importance. The plaintiffs assert that contrary to the allegations contained in the Local Court application:

1. There is no Agreed Way Forward agreement.

2. There was no agreement that the Local Health District would be bound by the Jacka decision or that there was no agreement to run a test case.

3. The Jacka decision is plainly wrong for a number of reasons, including the Magistrate considered the wrong award in coming to the decision.

4. There being no agreement to run a test case and the Local Health District not agreeing to be bound by the Jacka decision, there could be no estoppel.

5. The relevant industrial agreement does not require payment of overtime to permanent part-time employees as asserted by the Union.

14. On any view, there remains significant factual and legal issues in dispute between the parties. Despite Mr Knox’s view that the central issue has been resolved and determined, the plaintiffs take a completely different view of what has happened in the past and intend to contest the entitlement of the 40 workers to the allegedly outstanding payments.

15. Of course, I am not required to determine all of these issues at this time, albeit both parties tended to emphasise the correctness of their position on the central dispute during submissions on the hearing of the summons before me.

16. Having said that, as will be evident from my summary, there are really two principal bases on which the plaintiffs submit that the Local Court proceedings should be transferred to this Court, being:

1. The complexity of the legal issues involved; and

2. The Local Court does not have jurisdiction to award more than $100,000.

Principles to be applied

17. As set out in s 140 of the Civil Procedure Act 2005 (NSW) (CPA), this Court may, of its own motion or on application made by a party to proceedings before the District Court of the Local Court, order that the proceedings be transferred to this Court.

18. Section 140(4) is in the following terms:

140 Transfer of proceedings to higher court

…

(4)  Proceedings in the Local Court are not to be transferred to a higher court under this section unless the higher court is satisfied that there is sufficient reason for hearing the proceedings in the higher court.

…

19. I have a discretion as to whether the proceedings should be transferred from the Local Court to this Court. However, s 140(4) precludes the transfer unless I am satisfied that there is a sufficient reason for hearing the proceedings in this Court. What may be a sufficient reason depends on the facts and circumstances of the particular case. Satisfaction of or even the potential for the full judgment sum to exceed the jurisdictional limit of the Local Court may be a sufficient reason to transfer the matter. Further, the complexity and importance of the issues in dispute may also provide sufficient reason.

20. Having said that, the existence of those matters does not compel the transfer. For example, in circumstances in which a plaintiff elects to commence proceedings in the Local Court despite the risk of any judgment exceeding the jurisdictional limit and resists transfer despite that risk (as on one view, in this case), the Court may be disinclined to transfer without other reasons for doing so.

21. Further, in circumstances in which the plaintiff has commenced in a specialist jurisdiction (as the Union submits in this case), the complexity of the legal issues may not provide a sufficient reason for transfer. Indeed, both parties relied on the observations of MacDougall J in Barone v Kerr (“Barone”)^[1] to the effect that caution needs to be exercised before transferring proceedings from a specialist tribunal in circumstances in which the legislature intended that the issue should be dealt with by that specialist tribunal. As his Honour said (at [20]):

“I think this Court should take into account, as a factor telling against transfer, that choice in the statutory purpose to which I have referred.”

1. (2008) 170 IR 94; [2008] NSWSC 100.

22. As this Court now falls within the definition of an Industrial Court, it may be that the significance of his Honour’s caution in Barone is somewhat lessened.

23. As set out in s 355B of the Industrial Relations Act, the Supreme Court has jurisdiction over the proceedings, being:

“(g) proceedings under Part 1 of Chapter 7 (Breach of Industrial Instruments)”

or

(h) proceedings for recovery of money under Part 2 of Chapter 7 (other than small claims under s 380)”.

The Union’s resistance to transfer

24. The onus remains on the plaintiffs to satisfy the Court that the discretion to transfer should be exercised and that there is sufficient reason for the transfer within the meaning of s 140(4) CPA.

25. As set out in both the Union’s written and oral submissions, the Union identifies the following reasons why the matter should not be transferred:

1. The transfer of the proceedings to this Court would be contrary to s 56 CPA and would not facilitate the just, quick and cheap resolution of the real issues in the proceedings.

2. The transfer of the proceedings would significantly disadvantage the Union and its members in that it would be unlikely that the Union could afford proper representation in this Court having regard to the way in which this Court would conduct the proceedings. Mr Knox submitted that the Union would be unable to afford Counsel and that it may be that it would be forced to discontinue the action should the matter be transferred because the Union could not afford proper representation. Indeed, Mr Knox went so far as to suggest that the plaintiffs were seeking to transfer the matter as a means of bringing an end to the proceedings. I did suggest that care needed to be exercised before making such a submission lest it be without a proper foundation.

3. The transfer of the matter to this Court and an order that the matter proceed by pleadings would be contrary to the objects of the Industrial Relations Act, specifically s 3(g) which is “to provide for the resolution of the industrial disputes by conciliation and, if necessary, arbitration in a prompt and fair manner and with a minimum of legal technicality.”

4. In circumstances in which the resources of the Union are limited as their membership is confined to employees within the County of Yancowinna and the individual collective resources of the Union and its members are minuscule compared to the resources of the New South Wales government, it must be that the transfer would result in significant prejudice to the Union. Indeed, Mr Knox submits that the audited income of the Union in the financial year 2020/2021 was $141,304 with a net profit of $5,013.

5. The significant disadvantage to the Union and its members must be contrasted with the position of the Local Health District should the matter remain in the Local Court. The Union submits that there could be no disadvantage, both financially and practically. This may be so albeit the primary submission advanced by the Union on this basis is really that the Local Health District chose not to appeal the Jacka decision and it is now too late to complain about the Union seeking to enforce the entitlements of other of its members who have been similarly underpaid.

6. The plaintiffs should comply with their own requirements of being a model litigant. This necessarily involves dealing with claims properly and not causing unnecessary delay in the handling of claims and litigation, acting consistently, endeavouring to avoid litigation and not relying on technical defences. Again, the Union submits that the entering into the Agreed Way Forward agreement and running a test case was consistent with the requirements of a model litigant. The transfer of the proceedings to this Court is not.

7. There is no public interest in this particular case as the industrial instrument in question is no longer in operation.

8. The transfer to this Court would cause unreasonable delay and costs and unnecessary use of the Court’s resources. The Chief Industrial Magistrate’s Court is a specialist Court able to deal with these matters quickly, efficiently and is possessed of the sufficient expertise to do so. The Industrial Relations Act provides exclusively for the enforcement amounts payable under the industrial instrument and the Local Court has been given jurisdiction to determine these disputes. The Union elected to and was entitled to commence proceedings before the Industrial Court as an Industrial Magistrate sitting alone by way of a Local Court. In other words, commencement of the proceedings in the Local Court was what the legislature intended for the recovery of such amounts.

9. In the final paragraph of the Union’s submissions, the following submission was made:

“It is against the public interest that litigants can be allowed, if not encouraged, to flaunt agreements they make to avoid costly, time consuming litigation. Test cases resolve the issues in dispute but avoid the need to scrutinise every snap of like evidence thus minimise the use of court resources. If a Ministry of the Crown is allowed to abuse the use of accords and/or test cases, the precedent presented will come at the cost of incalculable strain upon the resources of the justice system. Respectfully, the Summons should be dismissed and CIM Case number 2021/00262357 be allowed to proceed without delay.”

26. Finally, the Union submits that contrary to the plaintiffs’ position, the Local Court has jurisdiction to award the amount claimed, despite it being an amount in excess of $1 million.

27. Specifically, the Union submits that the action is for recovery of the moneys brought pursuant to Part 2 of the Industrial Relations Act and, in particular, s 369(2). As set out in s 369(2), a single application may be made by a person for two or more orders against the employer. A similar application may also be made by an officer of an industrial organisation for an award against the employer on behalf of two or more persons. The officer of the Union brings the application in the Local Court against the employer on behalf of the 40 persons named in the schedule. The plaintiffs do not suggest that he is not entitled to do so.

28. Further, as set out in s 375 of the Industrial Relations Act, any amount ordered to be paid by the Local Court constituted by the Industrial Magistrate may be recovered as is with the judgment of the Local Court for the payment of a debt of the same amount. Section 375 is in the following terms:

Section 375 Recovery of amounts ordered to be paid

Any amount ordered to be paid by the Local Court constituted by an Industrial Magistrate under this Part may be recovered as if it were a judgment of the Local Court for the payment of a debt of the same amount (whether or not the Local Court has jurisdiction to give judgment for the payment of a debt of that amount).

29. Section 375 was amended in 2000 by the Industrial Relations Amendment Act 2000 (NSW). In the Explanatory Note to the provision, the amendment is explained:

“Section 375 of the Principal Act currently provides for the enforcement of monetary judgments of an Industrial Magistrate in different courts. The criterion for determining the proper court of enforcement is that it must be one whose jurisdiction enables it to give judgments in an equivalent amount. The section is amended so as to provide that all such judgments of an Industrial Magistrate may be enforced in the Local Court, irrespective of amount.” (emphasis added)

30. The Union thus submits that the plaintiffs are wrong in their suggestion that the Local Court does not have jurisdiction to award the sum sought.

Determination

31. Despite Mr Knox’s submissions that none of the matters raised by the plaintiffs should be in dispute, the fact is that they are.

32. Further, Mr Knox’s submissions, well put as they were, proceed on the basis that the legal issues are quite clear and have already been determined. However, I am not satisfied at this point and for the purposes of this application that the legal issues are so clear. Indeed, they appear to be somewhat complex.

33. If it is merely a matter of looking at the documents, accepting there was an agreement and accepting that the plaintiffs are bound by the result of the test case, the issues may not be difficult to determine.

34. However, the Union pursues alternative cases. In order to determine the outcome of this matter. it will be necessary to determine:

1. Whether the parties did enter into a binding agreement;

2. Whether that is an industrial agreement;

3. Whether one party is estopped from challenging an earlier Court decision, having regard to that agreement;

4. Whether there has been repudiation of the agreement;

5. What damages might flow from that asserted repudiation;

6. Whether a civil penalty should be payable and, in the alternative;

7. Whether on a proper construction of an industrial agreement the employees are entitled to be paid at a certain rate, depending on the number of hours they work.

35. It is true that the Industrial Magistrate who determined the Jacka case determined the matter quickly and efficiently. His Honour construed the industrial agreement in such a way that rendered the Local Health District liable to pay Ms Jacka additional sums. However, the issues raised by the current application on behalf of 40 members are much more complex. That is because on one cause of action pursued by the Union, the 40 persons are not asking the Court to construe the original industrial agreement but rather are asking the Court to award damages for repudiation of an agreement the existence of which remains in dispute.

36. Further, the Union particularises an alternative case should it fail in its primary argument.

37. As I understand the primary claim constituted by the Agreed Way Forward document, it is based on the following statement from the director of the NSW Ministry of Health:

“… in relation to part-time employees who worked up to 76 hours per fortnight, that claim remains outstanding, and the Unions will determine how they wish to settle that matter – either in the civil Courts or in the Commission. The Commission suggests that an employee be selected and a test case run - …”

38. Again, it is not my function to determine whether an agreement was entered into and the basis of that agreement but, if the Union’s contention is that the documents comprising the agreement include that part of the email which I have just read out, a number of arguments would surely arise.

39. It is only necessary to say at this time that I am satisfied that the issues between the parties may involve complex issues, including issues relating to the formation of a contract, its terms, estoppel, interpretation of the Industrial Relations Act and an industrial agreement. That is not to say that a Local Court Magistrate sitting alone as Chief Industrial Magistrate would not be capable of determining these issues but I accept the plaintiffs’ submission that the issues may be complex.

40. The second broad category of arguments made by both parties relates to the way in which the case might be conducted in the Supreme Court and the costs and difficulties of doing so, having regard to the Union’s position.

41. Firstly, I accept that the Union is not a well-resourced litigant and that it is pursuing these proceedings on behalf of even more under-resourced members. Secondly, I accept that the very purpose of the amendment to the Industrial Relations Act was to allow such persons to recover amounts owing to them through the processes of the Local Court, even though the amounts involved might exceed the ordinary jurisdiction of the Local Court. I will comment on whether there is any argument about that jurisdiction shortly.

42. The ability of the Union to fund a long and expensive case must be in doubt. However, it is not clear to me that this case will be as long and expensive as the Union maintains. I say this because the plaintiffs propose that if the matter is transferred to the Supreme Court, the essential issues can be determined by way of separate questions. These are really matters of construction and consideration of documents as to the formation and terms of an agreement. Mr Knox submitted that he would not be intending to call any witnesses as such but rely on the documents. This seems to be the approach of the plaintiffs. The plaintiffs submit that once the separate questions are determined, the matter could be referred back for conciliation, presumably to deal with the assessment of the individual claims in accordance with the usual mechanisms under the Industrial Relations Act.

43. It is not clear to me why the hearing of this matter would not be short, perhaps two days with the parties providing written and oral submissions.

44. Further, it is not clear why it would be necessarily so that the Union must have a different form of representation in this Court from the Local Court. Again, it is not up to me to determine what form that representation might take, but to the extent to which Mr Knox has thus far been running the argument, he is plainly a competent advocate.

45. Further, he raised the prospect that he and other persons would not be able to attend in Sydney, particularly due to his health. That is no longer a problem in this Court, having regard to the Court’s experience with hearings by AVL over the past two years.

46. In the circumstances, whilst the cost and time involved would undoubtedly be greater in this Court than in the Local Court at Broken Hill, I am not satisfied that the time and expense is such that it should necessarily militate against transfer.

47. This Court is able to use its own procedures to deal with matters quickly and efficiently, subject to the willingness of the parties to similarly do so.

48. All of the difficulties identified by the Union in terms of resources, time and cost are valid, except that I am not satisfied that the difficulties would be as great as the Union maintains. I am not prepared to accept that without direct evidence that the transfer to this Court would result in withdrawal of the application by the Union. The Union has already prepared a document which might form the basis of any statement of claim.

49. The third central point made by the plaintiffs is that the Local Court does not have jurisdiction to award the amount sought. As I have already identified, the Union says that this must be wrong having regard to Chapter 7 of the Industrial Relations Act and, in particular, s 375.

50. In response, the plaintiffs rely on the pleaded case in the Local Court. The plaintiff states that s 375 of the Industrial Relations Act does not assist the Union as it applies to “any amount ordered to be paid by the Local Court constituted by an Industrial Magistrate under this Part”. The plaintiffs say that this only applies to an amount ordered to be paid under the industrial agreement and not for damages or a debt.

51. The plaintiffs point out that part of the case pursued by the Union is that the Agreed Way Forward agreement was an agreement arising at common law, rather than under an industrial instrument and that damages for repudiation are sought. The plaintiffs contend that in those circumstances the Local Court does not have jurisdiction to award either the total amount or any individual amounts over $100,000 (there are three).

52. Again, it is not my function to determine the outcome of that argument. I am uncertain of its strength. It is only necessary to say that unlike most matters when there is a transfer of this type, the parties are in dispute as to whether the Local Court has jurisdiction to award the amounts sought. Mr Knox’s response to the argument was to reject it but also to say that even if it be correct, those three persons who sought more than $100,000 may have to forego those additional amounts. Whilst I understand why he made that submission, I am not sure that it is a satisfactory answer.

53. Plainly, Mr Knox sees considerable benefit in keeping the matter in the Local Court at Broken Hill. Again, I understand that position but the plaintiffs at the very least raise an argument as to whether all of the persons who are seeking recovery of sums through the Union will be able to recover the full amount they seek.

54. In all the circumstances, I am satisfied that there is sufficient reason for this matter to be transferred to the Supreme Court of New South Wales.

55. I make the following orders:

1. That the Local Court proceedings number 2021/00262357 be transferred to the Supreme Court pursuant to s 140(1) of the Civil Procedure Act 2005 (NSW).

2. That the matter be allocated to the Administrative and Industrial Law List in the Common Law Division.

3. That the Union file a statement of claim within 28 days.

4. That the nominated defendants to the statement of claim file a defence within 28 days.

5. At the same time as filing its defence the nominated defendants inform the Union of the separate questions which they propose and their proposal for the quick and efficient determination of the issues.

6. That the matter be listed before the Administrative and Industrial Law List Judge on 20 September 2022.

56. The plaintiffs seek costs on the basis that they have been successful in the summons. The plaintiffs say that the Union could have consented to the transfer. That may be so, but the plaintiffs are applying to the Court to exercise a discretion in their favour in circumstances which the Union was quite entitled to commence proceedings in the Local Court. On the Union’s case, the Local Court has jurisdiction to determine the case and is the appropriate forum to determine the case having regard to the purposes of the Industrial Relations Act.

57. It does not seem to me that in those circumstances the Union should bear the cost of an application which the plaintiffs brought in their own interests. The plaintiffs should bear their own costs and I make no order as to costs.

**********

Endnote

Decision last updated: 19 July 2022