Stockwell International Pty Ltd v Solyali
[2014] NSWIC 7
•19 December 2014
Industrial Court
New South Wales
Medium Neutral Citation: Stockwell International Pty Ltd v Solyali [2014] NSWIC 7 Hearing dates: 15 December 2014 Decision date: 19 December 2014 Before: Boland AJ Decision: The Court makes the following orders:
(1) Leave to appeal is granted.
(2) The appeal is dismissed except to the extent that it is upheld on the question of costs at first instance.
(3) The decision and orders of Acting Chief Industrial Magistrate Wahlquist to award indemnity costs is quashed.
(4) The appellant shall pay the respondent's costs of the first instance proceedings on a party/party basis as agreed or assessed.
(5) The appellant shall pay the respondent's costs of the appeal as agreed or assessed.
Catchwords: APPEAL - Appeal from Local Court pursuant to s 197(1)(a) of Industrial Relations Act 1996 - Appeal from decision and orders at first instance by Acting Chief Industrial Magistrate granting application for recovery of money - Pro rata long service leave under Long Service Leave Act 1955 - Tests to be applied in considering claim for payment for long service leave on the ground that employee had terminated his employment on account of illness - Medical evidence not challenged at first instance - No error at first instance - COSTS - Indemnity costs awarded - Whether Acting CIM erred in failing to consider disadvantage of appellant in circumstances where appellant represented by agent who was not an Australian legal practitioner and respondent was represented by counsel and solicitor - Whether it is the practice of the CIM's court to award costs - Whether costs awarded are to be taken into account in determining whether jurisdictional limit on amount that may be awarded has been exceeded - Error in awarding indemnity costs Legislation Cited: Civil Procedure Act 2005
Industrial Relations Act 1996
Industrial Relations Amendment (Industrial Court) Act 2013
Industrial Relations (General) Regulation 2001
Industrial Relations Commission Rules 2009
Long Service Leave Act 1955
Uniform Civil Procedure Rules 2005Cases Cited: Anderson v Crown Melbourne Ltd [2008] FMCA 152; (2008) 216 FLR 164
AWU v Sunshine Coast Private Hospital [2003] QIRComm 241
Blue Mountains Disability Services Ltd v Stinson (1999) 92 IR 246
British Motor Corporation v Chance [1965] AR (NSW) 364
Bronwyn Aileen Loudon v Keith Matheson Proprietary Limited [2002] NSWCIMC 87
Calderbank v Calderbank [1976] Fam Law 93; [1975] All ER 333
Colin Mooney v Northern Group (Aust) Pty Ltd [2006] NSWCIMC 33
Computer Sciences of Australia Pty Ltd v Leslie [1983] AR (NSW) 828
Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1
Drake Personnel Ltd t/as Drake Industrial v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 432
Fiona Canham v 002y Wood Films Pty Ltd T/As Segers Realty [2004] NSWCIMC 47
Lisa Maree De Costa v Rhonda Wark T/a: Earth Works Real Estate [2006] NSWCIMC 7
Old v McInnes and Hodgkinson [2011] NSWCA 410
Pamela Rowles v Combined Packaging Co Pty Ltd [2005] NSWCIMC 82
Roma Marshall v Havenwax Pty Ltd Trading As Sos Visiting Nursing Service Home Help and Cleaning Agency [2005] NSWCIMC 116
South Eastern Sydney Area Health Service v King [2006] NSWCA 2
Westbus v Bartush [2000] NSWIRComm 26Category: Principal judgment Parties: Stockwell International Pty Limited (Appellant)
Mr Sezer Solyali (Respondent)Representation: B Obradovic of counsel (Respondent)
Rochfort Associates Pty Limited as Agent (Appellant)
Maclarens Lawyers (Respondent)
File Number(s): IRC 656 of 2014
Judgment
Introduction
This is an application by Stockwell International Pty Ltd ("appellant") for leave to appeal and, if leave is granted, to appeal from a decision of her Honour Acting Chief Industrial Magistrate Wahlquist given on 19 August 2014 in Matter CIM 2014/43461. The application is made under s 197(1)(a) of the Industrial Relations Act 1996 (the Act) as applied by s 14(c) of the Long Service Leave Act1955.
Her Honour was asked to determine a claim by an employee of the appellant, Mr Sezer Solyali ("respondent"), made under s 4(2)(a)(iii) of the Long Service Leave Act, for payment of pro rata long service leave. Mr Solyali had been employed by the appellant for eight years and eight months. He claimed payment for long service leave on the ground that he had terminated his employment on account of illness. Section 4(2)(a)(iii) provides:
(2)(a) Subject to paragraph (a2) and subsection (13) the amount of long service leave to which a worker shall be so entitled shall:
...
(iii) in the case of a worker who has completed with an employer at least five years service, and whose services are terminated by the employer for any reason other than the worker's serious and wilful misconduct, or by the worker on account of illness, incapacity or domestic or other pressing necessity, or by reason of the death of the worker, be a proportionate amount on the basis of 2 months for 10 years service.
The appellant had opposed the claim before the Acting CIM on the ground that the reason for the respondent's termination was not on account of illness, but rather because he had secured other employment. Her Honour, however, found in favour of Mr Solyali and ordered the appellant to pay $10,139.23 plus indemnity costs as agreed or assessed.
Background
The appellant is a transport and logistics company at Botany. Mr Solyali commenced employment with the appellant in 2004. He was promoted subsequently to more senior positions and in September 2012 was appointed to the position of Operations Manager. The respondent claimed that by May or June 2013 he found it increasingly difficult to cope with what he regarded as an excessive workload. He said he had made "over a dozen requests of various directors..." for additional staff including requests to Mr Terry Stockwell, Director of Transport and Warehousing, Mr David Stockwell, Director and to Ms Nicole McLean, Director and Human Resources Manager for the appellant. Mr Solyali's requests were not met.
It was Ms McLean's evidence that in or around May 2013 the respondent became disappointed at failing to achieve a further promotion and from that point onwards his "work performance declined". Mr Solyali agreed that his disappointment led him to seek other employment.
On 4 June 2013, the respondent left his place of employment claiming he had "personal issues". On 7 June 2013, Mr Solyali emailed Ms McLean asking how many sick days he had to his credit.
Ms McLean replied "what is going on? Are you ok?" A series of emails followed on 7 June 2013 between Ms McLean and Ms Solyali in which Mr Solyali indicated he needed time off for personal reasons. Ms McLean indicated Mr Solyali had sufficient sick leave to cover his absences and advised the respondent to speak with Mr Terry Stockwell because the firm was worried. Mr Solyali submitted a certificate from a medical practitioner indicating that for the period 7 June to 14 June 2013 the respondent was unfit to return to work due to "medical reasons". The respondent was paid sick leave.
On 17 June 2013 the respondent proceeded on a week's annual leave. He returned to work on 24 June 2013.
On 27 June 2013, the respondent consulted Mr Adam Fitzpatrick, Psychologist, who diagnosed "mixed anxiety and depression" as part of an "adjustment disorder due to personal and financial stressors". Mr Fitzpatrick said this condition was "significantly compounded by a chronic highly responsible, fast-paced work role which has reached a critical point and affected his emotional functioning." Mr Fitzpatrick recommended the respondent be provided with "two weeks off work in order for him to commence weekly psychological treatment..." Mr Solyali said in his evidence that by the time he consulted Mr Fitzpatrick his anxiety and depression had been:
[F]urther exacerbated due to a number of abusive telephone calls I received from both managing Director, Terry Stockwell and from Transport Manager, Shannon while I was absent from work on sick leave....
On 28 June 2013, the respondent requested that two weeks of his annual leave be "cashed out" due to financial pressures. The respondent also asked Ms McLean about the period of notice required to resign. On the same day the respondent met with Ms McLean to enquire how much sick leave he had to his credit and produced a medical certificate indicating that for "medical reasons" he was unfit for work from 1 July to 13 July 2013. Mr Solyali was paid sick leave.
On 4 July 2013, according to an ASIC search caused to be conducted by Ms McLean, the respondent was appointed one of two directors of S W Australian Transport Pty Ltd, another transport and logistics company.
On 10 July 2013, the respondent consulted Mr Fitzpatrick again who recorded pleasing progress, but recommended a further two weeks off work. A medical certificate provided to the respondent on 12 July 2013 indicated the respondent was unfit for work from Monday 15 July to Wednesday 31 July 2013 due to "medical reasons".
In a report to the respondent's general practitioner dated 16 July 2013 Mr Fitzpatrick stated:
After recent discussion with Sezer about his work role, I am concerned that his adjustment disorder will not resolve given the nature of the work stressors has has outlined with no resolution appearing to be offered by his employer... Sezer has informed me that he feels resigning from his work role is the only option for him to make progress. It is my opinion that given the level of emotional strain Sezer feels the work situation has placed on him, returning to this current work environment is not advised.
On 17 July 2013, Mr Solyali met with Ms McLean and Mr Terry Stockwell and tendered his resignation effective on 31 July 2013, citing medical reasons. He provided a copy of Mr Fitzpatrick's report of 16 July 2013.
The respondent sought payment of pro rata long service leave. On 23 July 2013, Ms McLean advised the respondent of his entitlements on termination. However, the respondent was also advised long service leave was not payable.
On 13 August 2013, the respondent commenced employment with S W Australian Transport and was paid salary on that date.
On 7 February 2014 the respondent filed his application for an order for recovery of remuneration. On 5 March 2014, the appellant made what was described as an "offer of compromise" to the respondent in the sum of $8,500.00. The offer was purportedly made in accordance with r 20.26 of the Uniform Civil Procedure Rules 2005 and remained open for a period of 28 days. The offer was rejected by the appellant in a letter dated 6 March 2014.
First instance proceedings
In the first instance proceedings, the respondent was represented by counsel and the appellant by an agent. The evidence for the respondent consisted of a statement and supporting documents, including medical certificates and the various reports of Mr Fitzpatrick including a report provided to the respondent's solicitors dated 15 November 2013. The statement and supporting documents were filed on 7 July 2014. Mr Solyali was required for cross-examination, but no objection was taken to any aspect of his statement or to any of the supporting documents being received as evidence in the proceedings including Mr Fitzpatrick's report of 10 November 2013. Mr Fitzpatrick was not called to give evidence nor was the respondent put on notice that Mr Fitzpatrick was required for cross-examination. The Acting CIM relied on the report of 10 November 2013 as well as the other medical evidence, none of it challenged by the appellant, to find that the respondent's illness was the genuine reason for the respondent terminating his employment.
The appellant's evidence consisted of a statement of Ms McLean together with supporting documents. The appellant sought to call Mr Daniel Sheen but her Honour decided the statement Mr Sheen had made was not relevant. Her Honour's refusal to allow the statement into evidence was not a ground of appeal.
I note that none of the appellant's evidence contradicted Mr Solyali's claim that he had made many requests for assistance with his workload whilst he was employed as Operations Manager for the appellant.
The Acting CIM's approach to the matters in issue was to adopt questions posed in Computer Sciences of Australia Pty Ltd v Leslie [1983] AR (NSW) 828 supplemented by two additional questions devised by the Queensland Industrial Relations Commission in AWU v Sunshine Coast Private Hospital [2003] QIRComm 241 and, on the basis of the evidence in the first instance proceedings, answer those questions accordingly.
In Leslie, the Full Bench was concerned with an appeal by Computer Sciences of Australia Pty Ltd against an order by the Chief Industrial Magistrate for payment of long service leave to Mr Leslie, the respondent in the appeal. The respondent had claimed that he had terminated his employment to take up a new position, because of financial reasons which amounted to a "domestic or other pressing necessity" within the meaning of s 4(2)(a)(iii) of the Long Service Leave Act. The Full Bench determined that the appeal should be resolved by asking the following questions (at 831):
(1) Was the reason claimed for termination one which fell within the section?
(2) Was the 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 and 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?
In Sunshine Coast, Asbury C was concerned with a claim for pro rata long service leave on behalf of a worker who had resigned his employment because of illness or incapacity. The respondent maintained that the worker resigned his employment to avoid dismissal for poor work performance, and was not entitled to proportionate payment for long service leave on termination. The Commissioner observed that the relevant provisions of the Queensland legislation were virtually identical to s 4(2)(a)(iii) of the Long Service Leave Act.
After referring to the approach in Leslie (and noting that approach had been approved in Westbus v Bartush [2000] NSWIRComm 26), Asbury C stated:
In my view, the following questions, which are substantially those posed in Leslie, with some reference to the questions posed in Chance, including some aspects of the dissenting judgment of McKeon J, are relevant to determining whether an employee has an entitlement to proportionate payment for long service leave under s. 43(4) of the Act:
1. Was the reason for the termination one which fell within the section?
2. Was the reason genuine and not simply a rationalisation of another reason which did not fall within the section; or a reason that while having the appearance of truth or right, is in reality a pretence or a deception; or a frivolous reason?
3. Although the reason claimed may not be the sole ground which caused the employee to make a decision to terminate his or her employment, was it the real or motivating reason?
4. Did the reason claimed cause the employee to terminate his or her employment?
5. Did the reason claimed affect the employee in relation to the particular service he or she terminated?
6. Was the situation which the employee was in at the point of the termination, one in which a reasonable person might have felt compelled to seek to resolve by terminating his or her employment?
The answers provided by the Acting CIM to the questions enunciated in Sunshine Coast were, in summary, as follows:
(1) The reason for termination fell within s 4(2)(a)(iii) because the reason was "on account of illness".
(2) Given the unchallenged medical evidence, the reason for termination was genuine and not merely a rationalisation.
(3) Although there was evidence of another reason for the respondent resigning his employment with the appellant, there was no dispute that he was suffering from the reported illness which the medical reports said could not be resolved while working for the appellant. On the balance of probabilities the motivating reason for the respondent's resignation was his illness.
(4) For the reasons already set out this question may be answered in the affirmative.
(5) For the reasons already set out this question may be answered in the affirmative.
(6) Given there were two medical reports both of which recommended termination this question should be answered in the affirmative.
The Acting CIM accordingly found that the respondent was entitled to long service leave and ordered payment in the sum of $10,139.23. In relation to costs, this issue was raised immediately following the delivery by the Acting CIM of her reasons for decision, with the respondent's solicitor submitting that an offer of compromise involving a settlement figure of $8,500.00 was put to the appellant on 5 March 2014 and rejected. The appellant opposed indemnity costs on the basis that the respondent had originally sought long service leave as well as payment in lieu of notice, with the latter claim being withdrawn in the course of proceedings. Her Honour did not accept that argument and ordered indemnity costs as agreed or assessed.
Appeal grounds
The grounds of appeal are as follows:
(1) The learned Acting Chief Industrial Magistrate erred in applying the principles set out in AWU v Sunshine Coast Private Hospital [2003] QIRComm 24 without regard to contrary issues raised. In particular, the learned Acting Chief Industrial Magistrate erred in her reasoning and findings as to whether the respondent's illness, diagnosed as an adjustment disorder, was the real and motivating factor for the respondent terminating his employment.
(2) The learned Acting Chief Industrial Magistrate erred in giving weight to evidence that the appellant did not question the medical certificates and psychologist reports:
(a) The position at law is that medical certificates from a qualified medical practitioner within the practitioner's area of expertise is prima facie to be accepted by the employer: Anderson v Crown Melbourne Ltd [2008] FMCA 152 (3 March 2008)
(b) An employer can only reject a medical certificate in exceptional circumstances: Anderson v Crown Melbourne Ltd [2008] FMCA 152 (3 March 2008). There was no such exceptional circumstance with the medical certificates in this case.
(3) The learned Acting Chief Industrial Magistrate erred in making findings of fact, in relation to the respondent's workload, which were not open on the evidence and which were not established by the respondent.
(4) The learned Acting Chief Industrial Magistrate erred in not giving proper or any weight to the evidence that, up until the date the respondent resigned, the appellant had no knowledge that the respondent was claiming to be under stress due to work or that the respondent was undergoing medical treatment due to work-related "stress".
(5) The learned Acting Chief Industrial Magistrate erred in not giving proper or any weight to the evidence that the respondent's claimed illness had not been diagnosed until just prior to the respondent terminating his employment.
(6) The learned Acting Chief Industrial Magistrate erred in not giving proper or any weight to the evidence that prior to the respondent's resignation, claimed to have been due to illness allegedly caused by excessive workload, the respondent had unsuccessfully sought a promotion within the company and the learned Acting Chief Industrial Magistrate failed to consider what effect this had on the respondent's decision to terminate his employment.
(7) The learned Acting Chief Industrial Magistrate erred in not giving proper or any weight to the evidence that the respondent was carrying additional responsibilities by undertaking work for another company, of which he was himself a director, whilst being employed by the appellant.
(8) The learned Acting Chief Industrial Magistrate erred in not giving proper or any weight to the evidence that the psychologist assessed the respondent's illness over the telephone and based his report on anecdotal statements made by the respondent.
(9) The learned Acting Chief Industrial Magistrate erred in making a costs order in matter whereby the respondent had elected to have the matter dealt with under the small claims procedure in accordance with section 379 of the Act.
(10) The learned Acting Chief Industrial Magistrate erred in making an order which would have the effect of requiring the appellant to pay an amount totalling $26,195.34,which is in excess of the amount which can be ordered against an employer pursuant to section 379 of the Act. Section 379(3) provides that the maximum amount that the industrial court may order an employer to pay on a small claims application is $20,000.00.
Ground 7 was not pressed.
Leave to appeal
It had been the case that an appeal brought under s 197(1)(a) of the Act required leave under s 188(1) of that Act: Drake Personnel Ltd t/as Drake Industrial v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 432; Blue Mountain Disability Services Ltd v Stinson (1999) 92 IR 246. Section 188(2) provides that leave will be granted if the Full Bench is of the opinion that the matter is of such importance that, in the public interest, leave should be granted. Section 188(3) provides that the Full Bench may deal with an application for leave to appeal separately and without conducting a hearing into the merits of the appeal.
The Industrial Relations Amendment (Industrial Court) Act 2013 amended the Act to provide, inter alia, that appeals from the Local Court under s 197 were to be heard be a single judicial member of the Industrial Court. Section 188 of the Act applies only to appeals to a Full Bench. It does not appear that any provision has been made in the Act requiring leave where the appeal is to a single judicial member of the Court.
Neither party addressed this question in their submissions. I have decided that this case is not the appropriate vehicle to determine that question. If leave is required, I propose to grant leave for the reasons that follow.
There are matters raised in the appeal that are important including whether costs, including indemnity costs, may be awarded in proceedings before the Chief Industrial Magistrate and whether costs are included for the purpose of determining whether the jurisdictional limit of $20,000 as prescribed by s 379(3) of the Act has been exceeded. It is in the public interest that these matters be clarified because they do not appear to have been the subject of any authoritative determination.
Consideration
I shall deal with each of the grounds of appeal. The first ground asserted that her Honour erred in finding the respondent's illness, diagnosed as an adjustment disorder, was the real and motivating factor for the respondent terminating his employment.
The Acting CIM observed in her judgment that the appellant did not challenge the content of the medical evidence including the evidence of Mr Fitzpatrick. Mr Fitzpatrick had said in a report that was in evidence that:
Given the nature of a diagnosis of Adjustment Disorder, once the stressor leading to the maladjustment is removed or resolved, a person is expected to improve in a timely manner. It became apparent given Mr Solyali's reporting of the deterioration of the relationship with his employer that resolution may not be realistic and removing the stressor by seeking alternative employment would be the most durable and appropriate path to recovery. I wrote to Mr Solyali's GP, Dr Ktenas on 16/07/2013 outlining these concerns and recommended he not return to his pre-injury employment.
Her Honour was alive to the arguments of the appellant that the real reason for the respondent's resignation was so that he could take up employment with another company of which he was a director. Her Honour referred to the appellant's contention that an inference was available that the respondent had been making plans to leave the appellant before he took sick leave and before he resigned.
The Acting CIM also took into account the respondent's evidence that he did not agree to employment with his new employer until after he had resigned, that he earns less with his new employer, that he agreed to employment with his new employer because he needed the income and that his new employer was a smaller operation involving less stress. Her Honour accepted there was evidence of another reason why the respondent resigned but that there was no dispute that he was suffering from an illness that the medical reports said could not be resolved while the respondent continued working for the appellant. Her Honour was satisfied on the balance of probabilities that the motivating reason for the resignation was the respondent's illness.
There is no doubt that an issue arises regarding the respondent's motivation for resigning. He was disappointed in not gaining a promotion with the appellant, which caused him to look for other employment. He became a director of S W Australian Transport on 4 July 2013, a little over a month after missing out on a promotion. A suspicion arises that the directorship was part of an agreement between the respondent and S W Australian Transport that once the respondent resigned his employment with the appellant he would take up employment with S W Australian Transport.
What fuels the need to consider the respondent's real motive for resigning is the lack of satisfactory explanation as to why the respondent suddenly left his place of employment on 4 June 2013, the vagueness of his initial medical certificates from his GP that simply stated he was unfit to work because of "medical reasons", the fact that the respondent did not make a claim for workers' compensation, his failure to advise his employer he was suffering stress from excessive workload, his urgent need for cash (was that connected with obtaining a directorship with S W Australian Transport?) and his taking up employment with S W Australian Transport on 13 August 2013 and being paid salary on his first day of employment with that firm.
There is also the fact that in his statement tendered in the first instance proceedings the respondent said he had indicated to the appellant's management at the time he handed in his resignation on 17 July 2013 that he was prepared to work out his two weeks' notice period. This was notwithstanding he had a medical certificate stating he was unfit for work until 31 July 2013. In cross-examination the respondent said, in effect, that what he said in his statement was incorrect and that he could not work because he had been certified unfit. The respondent's letter of resignation made no mention of being prepared to work out the period of notice. The respondent's evidence on this point was, therefore, conflicted
The foregoing issues, which raise the question of whether there was a motive other than illness for resigning, are somewhat troubling. Nevertheless, they are matters that were drawn to the Acting CIM's attention by the appellant and her Honour recognised that there was evidence of another reason for resigning. Her Honour was satisfied on the balance of probabilities that the respondent's motivating reason for resigning was illness
One must, however, weigh up the factors in the respondent's favour as the Acting CIM properly did. In that respect one cannot escape the fact that Mr Solyali was concerned about his workload prior to May 2013 and although he did not mention stress, nothing was done by the appellant about the respondent's concern with his excessive workload despite it being drawn to the appellant's attention. The appellant brought no evidence to say the concern was not raised with it or that steps had been taken to deal with the concern. The diagnosis of adjustment disorder was, according to Mr Fitzpatrick, caused in part by "a chronic highly responsible, fast-paced work role which has reached a critical point and affected his emotional functioning." Moreover, Mr Solyali complained that his anxiety and depression had been further exacerbated due to abusive phone calls from the Managing Director of the appellant and its Transport Manager. There was no contradictory evidence from the appellant. Mr Solyali's evidence was that he agreed to work for S W Australian Transport because it was a smaller firm and involved a less stressful workload.
The appellant submitted that Mr Fitzpatrick's report should only have been used as evidence that the respondent was suffering an illness and not whether the illness caused the termination. It was the psychologist's opinion, however, that it was necessary for the respondent to remove himself from a stressful workplace environment if his illness was to be resolved. The Acting CIM was entitled to rely on that evidence. It was not challenged in the proceedings by the appellant in any way.
For her Honour to have found otherwise than that the real reason for the respondent's resignation was illness, her Honour would need to reject the unchallenged evidence of the opinions of Mr Fitzpatrick and Dr Ktenas and the evidence of Mr Solyali and opt to draw an inference that the dominant reason was to take up other employment. Such a course would not have been reasonably open to her Honour.
It was open to the Acting CIM to find that the respondent's illness caused him to terminate his employment even though a factor other than his illness was taken into account by the respondent in making his decision: see British Motor Corporation v Chance [1965] AR (NSW) 364 at 382 per Beattie and Perrignon JJ.
The first ground of appeal fails.
The second ground of appeal was that her Honour erred in giving weight to evidence that the appellant did not question the medical certificates and psychologist reports. Her Honour was not referring to the occasions when the respondent presented medical certificates and Mr Fitzpatrick's report to the appellant and the appellant's failure to reject the validity of those certificates and the report. It may be accepted that when an employee presents to the employer a medical certificate from a qualified medical practitioner certifying illness or injury, prima facie the certificate is to be accepted: Anderson v Crown Melbourne Ltd [2008] FMCA 152; (2008) 216 FLR 164 at [80]-[81]. However, I note in that case the Court found there were exceptional circumstances justifying the employer's decision to refuse to accept the validity of the certificate.
In giving weight to the medical evidence the Acting CIM observed that it was unchallenged. By that her Honour meant that in the proceedings before her that evidence was not challenged. There was no attempt by the appellant to exclude the medical certificates and reports in the absence of the practitioners being called, no attempt to call contradictory medical evidence and no cross-examination challenging the validity of the certificates and reports other than to make the point that on at least two occasions the respondent's consultation with Mr Fitzpatrick was over the telephone.
The second ground of appeal fails.
The third and fourth grounds of appeal were that the Acting CIM erred in making findings of fact in relation to the respondent's workload and erred in not giving proper or any weight to the evidence that up until resignation the appellant had no knowledge that the respondent regarded his workload as causing stress or that the respondent was undergoing medical treatment for stress.
Firstly, her Honour made no findings of fact, and was not required to make any findings of fact, regarding excessive workload and could not, therefore, have erred in that respect. In her reasons for decision, in referring to excessive workload, her Honour was merely recording the respondent's evidence. Secondly, the weight of the evidence was that the respondent had made requests for additional staff to assist him in his role. That was the respondent's evidence and it was not contradicted by any evidence adduced by the appellant. Thirdly, although the employer was not aware that the respondent's excessive workload was causing him stress, it was not relevant to the question of whether or not the reason for resigning was genuinely on account of illness. That the employer was not aware and, therefore, unable to take remedial steps to address the cause of the stress does not, of itself, negative the fact, established on the evidence, that the respondent was ill and the illness constituted a genuine reason for resigning his employment.
The third and fourth grounds of appeal fail.
The fifth and eighth grounds of appeal were that the Acting CIM erred in not giving any or any proper weight to evidence that the respondent's claimed illness had not been diagnosed until just prior to his resignation and that Mr Fitzpatrick assessed the illness over the telephone.
The respondent's illness was diagnosed initially by Dr Ktenas in early June 2013, some six weeks before he tendered his resignation. Dr Ktenas had diagnosed "Adjustment Disorder with Mixed Depressed and Anxious mood consistent with DSM-V". Mr Fitzpatrick later agreed with that diagnosis. Thus, it is not correct to contend the diagnosis was made just prior to the respondent's resignation.
As for the contention that Mr Fitzpatrick's diagnoses were made over the telephone and, therefore, should have carried no weight in her Honour's consideration, Mr Fitzpatrick saw Mr Solyali in face to face consultations on two occasions, namely, 27 June 2013 and 3 July 2013. Furthermore, any challenge to the veracity of the medical evidence and validity of Mr Fitzpatrick's report was not undertaken. If the appellant wished to challenge, for example, Mr Fitzpatrick's opinions gathered through a telephone conversation with the respondent, or how Mr Fitzpatrick arrived at the opinion that the employer did not appear to be offering any resolution to the respondent's problems, the appropriate course was to either object to the reports being tendered into evidence in the absence of the author of the reports being available for cross-examination and/or call its own expert evidence. That was not done.
The task of the Court on appeal is to determine whether the Acting CIM erred, including in her Honour's treatment of the evidence. There was no evidence, for example, that Mr Fitzpatrick could not have formed valid opinions about the respondent's psychological health over the telephone or that it was "glaringly improbable" he could do so. There was no error.
Grounds 5 and 8 of the appeal fail.
Ground 6 of the appeal asserted that the Acting CIM erred in not giving any or any proper weight to evidence that just prior to his resignation the respondent had unsuccessfully sought a promotion; that he was disappointed in not being promoted and began applying for any job. It was submitted that her Honour failed to take into account that there was a strong inference that prior to commencing sick leave the respondent had already set himself on a path to seeking alternative employment.
Perhaps the reason why the Acting CIM did not give any weight to evidence that just prior to his resignation the respondent had unsuccessfully sought a promotion, was because the appellant did not rely on this fact in its submissions. The appellant submitted the "sole reason" why the respondent resigned was in order for him to take up employment with S W Australian Transport in respect of which he was a director. Not having run the argument at first instance, the appellant cannot put a different case on appeal: Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 at 8.
In any event, it may have been that a reason for taking up employment with S W Australian Transport was the respondent's disappointment with failing to win a promotion. However, the Acting CIM found on the balance of probabilities that illness was a genuine reason for resigning. That finding was open to her Honour.
Ground 6 of the appeal fails.
Grounds 9 and 10 of the appeal relate to the question of costs. The appellant submitted there was a significant body of case law that provides costs orders will not be granted in matters dealt with in the small claims jurisdiction of the Chief Industrial Magistrate's Court: Fiona Canham v 002y Wood Films Pty Ltd T/As Segers Realty [2004] NSWCIMC 47; Pamela Rowles v Combined Packaging Co Pty Ltd [2005] NSWCIMC 82; Roma Marshall v Havenwax Pty Ltd Trading As Sos Visiting Nursing Service Home Help and Cleaning Agency [2005] NSWCIMC 116; Lisa Maree De Costa v Rhonda Wark T/a: Earth Works Real Estate [2006] NSWCIMC 7; Colin Mooney v Northern Group (Aust) Pty Ltd [2006] NSWCIMC 33.
The appellant submitted that a departure from the position to not award legal costs in the small claims jurisdiction would have adverse consequences for the quick, cheap, informal and effective resolution of small claims disputes. Further, that had the respondent wished to recover his legal costs he could have, from the outset, elected to proceed with the matter under s 365 of the Act and not under s 379. This was somewhat inconsistent with the appellant's indication in its letter rejecting an offer of compromise (which I will come to shortly) that the appellant would be seeking costs before the Acting CIM.
The appellant also submitted cl 43B of the Industrial Relations (General) Regulation 2001 (the Regulation) provides that for the purposes of s 379(3)(b) of the Act, the maximum amount payable on a small claims application is $20,000.00. In her decision, the Acting CIM ordered the appellant to pay the respondent the amount of $10,139.23. Subsequently, the respondent's counsel made an application seeking indemnity costs in the amount of $10,400.00 which, it was submitted, was beyond the jurisdiction of the Court. It was submitted that:
The Magistrate ultimately made an order that indemnity costs are to be paid by the appellant to the respondent as agreed or assessed. It should be noted that the decision on costs was an ex tempore decision made without the benefit of proper and considered submissions.
The respondent's solicitor subsequently furnished a bill of costs in the amount of $16,195.34 for professional costs and disbursements. The claim for costs is unreasonable as it is disproportionate to the small quantum of the respondent's claim and the fact that the issues in dispute were fairly straightforward.
Importantly, the order had the effect of requiring the appellant to pay a total amount of $26,334.57, which is prima facie in excess of the maximum amount that an employer can be ordered to pay under section 379 of the Act.
By electing to proceed in accordance with the small claims procedure, the respondent had waived any entitlement to be awarded an amount in excess of $20,000.00 and there was no jurisdictional basis for any order which exceeded that amount.
The respondent submitted the Act permitted the Chief Industrial Magistrates Court to make an order for costs: s 373; cl 15.7(1) of the Industrial Relations Commission Rules 2009 (the Commission Rules). It was further submitted:
The costs were sought by the legal representatives for the respondent on the day Her Honour delivered the reasons for judgment and made the orders, such an application being made orally. The appellant addressed the court on costs, and did not seek that the costs application be adjourned (on the basis that it was not ready to meet the application or on any other basis) nor that it be permitted to make further submissions on the issue.
The issue of the Court's jurisdiction was not raised below.
The order made by Her Honour was for "Indemnity costs to be paid by the respondent to the applicant as agreed or assessed". Such an order must be understood within the jurisdiction of the court, and cannot be said to be an order exceeding the jurisdiction.
The order sought by the respondent was for payment of $10,400, an order which was not made. It can only be implied that the amount of costs which the court ordered would therefore be assessed or agreed as being below $10,400, and indeed within the Court's jurisdiction.
...
An order for payment of an amount exceeding the jurisdiction of the Court cannot be made. However, the order made by the learned Magistrate did not exceed such jurisdiction.
It would appear that the Acting CIM decided to deal with the respondent's long service leave claim as a small claims application under s 379 of the Act. Section 379, which is in Pt 2 of Ch 7 of the Act, provides:
379 Small claims procedure
(1) A person who makes an application to an industrial court for an order under this Part may request that the application be dealt with under this section.
(2) An application that the industrial court decides to deal with under this section is called a small claims application.
(3) The maximum amount that the industrial court may order an employer to pay on a small claims application in respect of any one employee is:
(a) except as provided by paragraph (b)-$10,000, or
(b) if some other amount is prescribed by the regulations for the purposes of this section-that other amount.
(4) The industrial court is not bound by the rules of evidence when dealing with a small claims application, but may inform itself of any matter in such manner as the court thinks fit.
(5) A party to proceedings on a small claims application may be represented by an agent, but is not entitled to be represented by an agent who is an Australian legal practitioner unless the industrial court so approves. That approval is not to be given unless:
(a) all parties to the proceedings agree, and
(b) the industrial court is satisfied that the parties (other than the party who applies for approval) or any of them will not be disadvantaged.
(6) The approval of the industrial court to be represented by an Australian legal practitioner is not required if the practitioner:
(a) represents a corporation and is an officer of the corporation within the meaning of the Corporations Act 2001 of the Commonwealth, or
(b) represents an owners corporation constituted under the Strata Schemes Management Act 1996 and is one of the proprietors or lessees constituting the owners corporation, or
(c) represents a member of an industrial organisation and is an officer or employee of the organisation, or
(d) represents a member of a State peak council and is an officer or employee of that council.
(7) The approval of the industrial court to be represented by an Australian legal practitioner may be given subject to such conditions as the court considers reasonable to ensure that any other party to the proceedings is not disadvantaged by the practitioner appearing in the proceedings.
(8) A contravention of subsections (5)-(7) does not invalidate the proceedings or any order made in those proceedings.
An "industrial court" is defined in s 364 (in Pt 2 of Ch 7) of the Act to include "the Local Court constituted specially for the purposes of this Part by an Industrial Magistrate sitting alone."
For the purposes of s 379(3)(b) the maximum amount that the Industrial Court may order an employer to pay on a small claims application in respect of any one employee is $20,000.00 according to cl 43B of the Regulation.
Section 383 of the Act, which is to be found in Pt 3 of Ch 7, provides:
383 Procedure
(1) The Criminal Procedure Act 1986 and other Acts regulating the procedure before the Local Court (but not the Civil Procedure Act 2005) apply to the exercise of any jurisdiction by the Chief Industrial Magistrate or other Industrial Magistrate, except as provided by the regulations under this section.
(2) The regulations may make provision for or with respect to procedure and other matters relating to the exercise of any such jurisdiction of the Chief Industrial Magistrate or other Industrial Magistrate that does not concern proceedings for an offence.
Clause 43 of the Regulation provides:
43 Industrial Magistrate-civil procedure
(1) For the purposes of section 383 of the Act, the provisions of the Act, the regulations and rules of the Commission as to the practice and procedure of the Industrial Court (except in criminal proceedings) apply, with all necessary modifications, to proceedings before the Chief Industrial Magistrate or other Industrial Magistrate.
(2) Without limiting subclause (1), the Chief Industrial Magistrate or other Industrial Magistrate may hear evidence orally or by affidavit and may hear evidence whether or not notice to call the evidence has been given. However, if the interests of justice so require, a witness is to be called to give oral evidence instead of evidence by affidavit.
(3) This clause does not apply to proceedings for an offence or to proceedings under section 357 of the Act for a civil penalty for a contravention of an industrial instrument.
It follows from cl 43 of the Regulation that, in relation to costs, it is the Act, Regulation and the Commission Rules that apply. The Civil Procedure Act 2005 and the Uniform Civil Procedure Rules 2005 do not apply.
Section 181 of the Act deals with the Commission's powers relating to costs:
181 Costs
(1) Subject to the rules of the Commission and any other Act or law:
(a) the Commission may award costs, and
(b) costs are in the discretion of the Commission, and
(c) the Commission may determine by whom and to what extent costs are to be paid, and
(d) the Commission may order costs to be assessed on the basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis.
(2) However, the Commission when it is not in Court Session may award costs only in the following cases:
(a) the Commission may award costs against an applicant if it considers that the application to it was frivolous or vexatious, or
(b) the Commission may award costs against a party to proceedings who, in the opinion of the Commission, instituted proceedings without reasonable cause, or
(c) the Commission may award costs against a party to proceedings under Part 6 of Chapter 2 (Unfair dismissals) who, in the opinion of the Commission, unreasonably failed to agree to a settlement of the claim or whose application was frivolous or vexatious, or
(c1) the Commission may award costs against an industrial agent representing an applicant or employer in proceedings under Part 6 of Chapter 2 if:
(i) the industrial agent fails to file a certificate as required by section 90A, or
(ii) the Commission finds that the industrial agent has filed a certificate under that section certifying that the agent has reasonable grounds for believing, on the basis of provable facts, that the applicant's claim or employer's response to the claim had reasonable prospects of success when the agent did not have reasonable grounds for believing, on the basis of provable facts, that it had reasonable prospects of success, or
(d) the Commission may award costs in proceedings for a breach of an industrial instrument or the recovery of money under Chapter 7, as provided by sections 357 and 373.
(3) The Commission in Court Session may not award costs in proceedings for a contravention of a dispute order or in proceedings under Division 2 of Part 4 of Chapter 5 (Rules of industrial organisations).
(3A) Despite subsection (1), the Commission may not award costs in proceedings under Part 7 of Chapter 2.
Note. This subsection does not prevent the award of costs in appeals relating to questions of law in relation to public sector promotional and disciplinary matters under section 197B.
(4) In this section, costs includes:
(a) costs of or incidental to proceedings in the Commission, and
(b) in the case of an appeal to the Commission, the costs of or incidental to the proceedings giving rise to the appeal, as well as the costs of or incidental to the appeal.
Part 15 - Small Claims Applications, of the Commission Rules applies to proceedings on an application for the recovery of money under Pt 2 of Ch 7 of the Act in respect of which a request has been made for the application to be dealt with under s 379 of the Act as a small claims application. Rule 15.7 provides:
15.7 Costs
(1) The Industrial Court may make orders for the payment of costs in any proceedings, including proceedings that are adjourned, discontinued or dismissed.
(2) The amounts that the Industrial Court may award for such costs include not only the fixed costs prescribed under the Legal Profession Act 2004 but also any disbursements properly incurred in relation to the matters for which those costs are prescribed.
(3) Despite subrules (1) and (2), the maximum costs that may be awarded to a party:
(a) if proceedings are discontinued or dismissed, whether at a conciliation or at a hearing, or
(b) if proceedings are adjourned as a consequence of a party's default or neglect, including a party's failure to comply with a direction of the Industrial Court, or
(c) if proceedings on a motion are heard by the Industrial Court, or
(d) if judgment is given after a hearing of proceedings,
are the costs allowable in accordance with the regulations under the Legal Profession Act 2004.
It is clear that the Acting CIM had power to award costs and there is nothing in the legislation precluding her Honour from awarding costs on an indemnity basis. Indeed, costs are entirely within the discretion of the Commission: see 181(1) of the Act. As I noted earlier, the respondent's offer of compromise was purportedly made pursuant to the Uniform Civil Procedure Rules. Those Rules have no application. In the alternative, counsel for the respondent submitted on appeal the offer should be regarded as a Calderbank offer (Calderbank v Calderbank [1976] Fam Law 93; [1975] All ER 333). Whether it was a Calderbank offer or not nothing in the Act, Regulation or Commission Rules requires an offer of compromise to be in any particular form. When the Court is asked to exercise its discretion as to costs it is entitled to look at the conduct of the parties throughout the proceedings including conduct relating to settlement offers. In Old v McInnes and Hodgkinson [2011] NSWCA 410, Beazley JA stated at [28]-[34]:
[28] The court encourages the settlement of matters for reasons both of public policy and private interest.
[29] In Computer Machinery Co Ltd v Drescher [1983] 1 WLR 1379; [1983] 3 All ER 153, Megarry VC stated at 1383:
"Whether an offer is made 'without prejudice' or 'without prejudice save as to costs,' the courts ought to enforce the terms on which the offer is made so as to encourage compromises and shorten litigation. The latter form of offer has the added advantage of preventing the offer from being inadmissible on costs, thereby assisting the court towards justice in making the order as to costs."
[30] This approach has been judicially endorsed by this Court on innumerable occasions. In Leichhardt Municipal Council v Green [2004] NSWCA 341 in referring to Calderbank offers, Santow JA stated, at [17]:
"... the practice of Calderbank letters is allowed because it is thought to facilitate the public policy objective of providing an incentive for the disputants to end their litigation as soon as possible. Furthermore, however, it can be seen as also influenced by the related public policy of discouraging wasteful and unreasonable behaviour by litigants."
[31] See also South Eastern Sydney Area Health Service v King [2006] NSWCA 2 where Hunt AJA (Mason P and McColl JA agreeing) stated, at [83], that the purpose of offers of compromise was:
"... to encourage the proper compromise of litigation, in the private interests of the litigants and in the public interest of the prompt and economical disposal of litigation."
See also Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 373; Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15.
[32] The significance of a Calderbank offer is that it provides a readily recognisable basis for the court to exercise its costs discretion in a form which may result in a more favourable costs outcome than would have been the case had UCPR, r 42.1 applied: see SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37]; Jones v Bradley (No 2); Commonwealth of Australia v Gretton [2008] NSWCA 117 at [40]; [114]. However, the Court's discretion is not confined to cases which are 'strictly' characterised or expressly stated to be Calderbank offers.
[33] In Commonwealth of Australia v Gretton Hodgson JA stated, at [121]:
"In my opinion, underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs. Costs follow the event generally because, if a plaintiff wins, the incurring of costs was the defendant's responsibility because the plaintiff was caused to incur costs by the defendant's failure otherwise to accord to the plaintiff that to which the plaintiff was entitled; while if a defendant wins, the defendant was caused to incur costs in resisting a claim for something to which the plaintiff was not entitled: cf Ohn v Walton (1995) 36 NSWLR 77 at 79 per Gleeson CJ. Departures from the general rule that costs follow the event are broadly based on a similar approach." (emphasis added)
[34] Given the court's discretionary power as to costs and the important public policy considerations and the private interests of parties in settling litigation, the fact that a failed Rules offer of compromise is not strictly conformable with the usual Calderbank offer, does not preclude the court from considering whether it should exercise its discretion as to costs so as to make some other order than costs follow the event, in accordance with UCPR, r 42.1. Rather, when the court is asked to exercise its discretion as to costs, it is entitled to look at the conduct of the parties throughout the proceedings, including attempts made at settlement and the terms of the failed UCPR offer.
Apparently the offer of compromise was made on 5 March 2014 in the sum of $8,500.00, which was less than the amount ordered to be paid by the Acting CIM ($10,139.23). The Appellant's agent rejected the offer of compromise.
The only basis upon which the indemnity costs order was opposed at first instance was that the respondent had withdrawn its claim for payment in lieu of notice. Her Honour found that was not a basis upon which to refuse indemnity costs.
On appeal the appellant relied on what it contended was a "significant body of case law" that it submitted showed costs orders will not be granted in matters dealt with in the small claims jurisdiction of the Chief Industrial Magistrate's Court. The appellant also relied on the proposition that there was prohibition on legal representation of parties in small claims applications. Reference was made to s 379(5) of the Act, which precludes a party to a small claims application being represented by an agent who is an Australian legal practitioner without leave of the court. Section 379(5) provides:
(5) A party to proceedings on a small claims application may be represented by an agent, but is not entitled to be represented by an agent who is an Australian legal practitioner unless the industrial court so approves. That approval is not to be given unless:
(a) all parties to the proceedings agree, and
(b) the industrial court is satisfied that the parties (other than the party who applies for approval) or any of them will not be disadvantaged.
I presume the appellant's point regarding legal representation was that "the small claims jurisdiction was established in the industrial jurisdiction to provide an expeditious way of allowing persons to bring small industrial claims before this court without the need for legal representation": Bronwyn Aileen Loudon v Keith Matheson Proprietary Limited [2002] NSWCIMC 87. Further, that in limiting representation by counsel the legislature's intention in having a small claims jurisdiction was to keep costs to a minimum. Therefore, as I understand the appellant's submission, the Acting CIM should not have allowed the respondent to have legal representation, but having done so should not have awarded legal costs against the appellant.
I cannot see, in the record of proceedings before the Acting CIM, any objection taken by the appellant to the appearance of counsel for the respondent. It could be argued that in acquiescing to counsel's appearance, the appellant constructively consented to such appearance. I also notice the issue of legal representation was not taken up, as it should have been, by the Acting CIM, perhaps because the issue was not drawn to her Honour's attention. In any event, s 379(8) of the Act provides that a contravention of s 379(5) does not invalidate the proceedings or any order made in those proceedings.
I am satisfied that the appellant has established on the appeal that the practice of the Chief Industrial Magistrate's Court has been to refrain from awarding professional legal costs except in exceptional cases. Her Honour was acting in the position of CIM and it would not be surprising that her Honour may not have been aware of the practice. The Acting CIM certainly did not receive any assistance from the parties in that respect.
However, whilst comity is important it cannot prevail where the legislation provides a wide discretion to the Court to deal with costs and the Court has a reasonable and proper basis to make a costs order, even an order for indemnity costs.
That raises the question of the basis for making the costs order. The purpose of offers of compromise is "to encourage the proper compromise of litigation, in the private interests of the litigants and in the public interest of the prompt and economical disposal of litigation": South Eastern Sydney Area Health Service v King [2006] NSWCA 2 at [83]. The respondent made what could only be regarded as a genuine attempt to compromise by seeking agreement to an amount of $8,500.00 when what was owed to the respondent for pro rata long service leave was calculated to be $10,139.23. The appellant declined to accept the offer in circumstances where its case for resisting an order was not strong, particularly given that the appellant chose not to challenge the medical and psychological evidence.
On the other hand, the respondent was represented by counsel and the appellant was not. Notwithstanding the fact that the issue of legal representation was not raised before her Honour, s 379 required her Honour to consider whether the respondent should be allowed legal representation and in doing so to consider whether any disadvantage would arise if approval was given for counsel to appear. I note that the agent representing the appellant has many years' experience in industrial relations generally. However, he is not an Australian legal practitioner and the appellant's handling of the question of costs revealed to me a lack of knowledge or understanding of the relevant issues. To that extent it might be concluded the appellant was at a disadvantage.
Additionally, in my view the reason why legal representation is discouraged under the legislation is that it adds significantly to costs in a jurisdiction that is designed to deal with small claims in a quick and cheap way.
Thus, my concern in this appeal is that if I do not disturb the Acting CIM's orders regarding costs, it may be seen as an endorsement of the award of costs becoming the norm when for many years successive CIM's have resisted awarding legal professional costs other than in exceptional circumstances. On the other hand, if I did disturb her Honour's orders, it might be seen as undermining the purpose of offers of compromise.
I propose to implement my own compromise and that is to order costs on a party/party basis in relation to the proceedings at first instance. I only do that because I think it would be unfair to order indemnity costs where the appellant was at some disadvantage given the respondent was represented by counsel and in light of the Acting CIM's error in failing to address the question of legal representation. However, the respondent should be entitled to some indemnification of costs, especially given there was a genuine attempt by the respondent to compromise and an unreasonable rejection by the appellant of the compromise offer.
The appellant made another submission regarding costs noting that the maximum amount payable on a small claims application is $20,000. The appellant submitted (footnotes omitted):
In her decision, Magistrate Wahlquist ordered the appellant to pay the respondent the amount of $10,139.23. Magistrate Wahlquist did not initially make an order as to costs.
Subsequently, the respondent's barrister made an application seeking indemnity costs in the amount of $10,400.00, which was outside the jurisdiction of the Court.
The Magistrate ultimately made an order that indemnity costs are to be paid by the appellant to the respondent as agreed or assessed. It should be noted that the decision on costs was an ex tempore decision made without the benefit of proper and considered submissions.
The respondent's solicitor subsequently furnished a bill of costs in the amount of $16,195.34 for professional costs and disbursements. The claim for costs is unreasonable as it is disproportionate to the small quantum of the respondent's claim and the fact that the issues in dispute were fairly straightforward.
Importantly, the order had the effect of requiring the appellant to pay a total amount of $26,334.57, which is prima facie in excess of the maximum amount that an employer can be ordered to pay under section 379 of the Act.
By electing to proceed in accordance with the small claims procedure, the respondent had waived any entitlement to be awarded an amount in excess of $20,000.00 and there was no jurisdictional basis for any order which exceeded that amount.
If costs were to be assessed at an amount of $16,195.34, as the respondent claimed, the question arises whether costs are to be added to the amount of $10,139.23 in determining whether the jurisdictional limit of $20,000 has been exceeded. If costs are to be included, the effect of an order that costs are to be as agreed or assessed would be to exceed the maximum amount payable under cl 43B of the Regulation and it is arguable the orders would be ultra vires.
The respondent submitted that costs are not subject to the jurisdictional limit. No authority was cited and the respondent relied on the construction of s 179(1)(2) and (3) of the Act:
(1) A person who makes an application to an industrial court for an order under this Part may request that the application be dealt with under this section.
(2) An application that the industrial court decides to deal with under this section is called a small claims application.
(3) The maximum amount that the industrial court may order an employer to pay on a small claims application in respect of any one employee is:
(a) except as provided by paragraph (b)-$10,000, or
(b) if some other amount is prescribed by the regulations for the purposes of this section-that other amount.
It was submitted that an order to pay "on a small claims application" was not an order in relation to costs, which was a separate matter to the application.
My opinion is that costs are not subject to the jurisdictional limit. The reference in s 379(1) to an "application to an industrial court for an order under this Part" requires consideration of ss 364, 365 and 369 of the Act, which are in the following terms:
364 Definitions
(1) In this Part:
amount payable under an industrial instrument, includes:
(a) remuneration payable to an employee for work done where the industrial instrument fixes the rate or amount of the remuneration, or
(b) commission or other amount payable to a person in the circumstances specified in the industrial instrument (other than remuneration for work done), or
(c) an amount for which an employee is required under the industrial instrument to be re-imbursed or compensated for an expense incurred or loss sustained by the employee.
...
(2) In this Part, a reference to an industrial instrument and to an amount payable under the industrial instrument includes a reference to:
(a) a permit under section 125 and the amount that may be paid to the employee in accordance with the permit, and
(b) section 13 of the Annual Holidays Act 1944, section 12 of the Long Service Leave Act 1955 and section 12 of the Long Service Leave (Metalliferous Mining Industry) Act 1963 and an amount payable to the employee under any such provision.
365 Order for recovery of remuneration and other amounts payable under industrial instrument
An industrial court may, on application, order an employer to pay any amount payable under an industrial instrument that remains unpaid to the person to whom it is payable.
...
369 Application for order
(1) An application for an order under this Part for the payment of money may be made:
(a) by the person to whom the money is payable, or
(b) with the written consent and on behalf of that person-by an inspector, by an officer of a Government Department or by an officer of an industrial organisation concerned in the industry to which the proceedings relate.
(2) A single application may be made by a person for 2 or more orders against the employer. A single application may also be made by an officer of an industrial organisation for orders against an employer on behalf of 2 or more persons.
(3) An application for an order may only be made if the money became due within the period of 6 years immediately before the application was made.
Section 364(2), it will be noted, defines a reference to an industrial instrument and to an amount payable under the industrial instrument as including a reference to s 12 of the Long Service Leave Act. Section 12(1) of that Act provides:
12 Recovery of long service leave pay
(1) Any worker may apply to the Local Court, or to the Industrial Relations Commission in Court Session, for an order directing the employer to pay to the worker the full amount of any payment which has become due to the worker under this Act at any time during the period of 6 years immediately preceding the date of the application but not earlier than 2 years before the date of assent to the Long Service Leave (Amendment) Act 1980.
The Local Court or Industrial Relations Commission in Court Session may make any order it thinks just in the matter and may award costs to either party, and assess the amount of such costs.
(I do not understand the application for recovery of the pro rata long service leave to have been made under s 12 of the Long Service Leave Act, but rather under Pt 2 of Ch 7 of the Act and, in particular, s 379.)
Thus, an application for an order under Pt 2 of Ch 7 of the Act is, relevantly, an application for an "amount payable" which includes "remuneration payable to an employee for work done where the industrial instrument fixes the rate or amount of the remuneration", which in turn includes "the full amount of any payment which has become due to the worker under..." the Long Service Leave Act: s 364(2). The Court may order "an employer to pay any amount payable": s365. An application for an order for an "amount payable" may be made as a small claims application: s 379(1) and (2). The maximum amount that the industrial court may order an employer to pay on a small claims application, which is for an "amount payable", is $20,000: s379(3) and cl 43B of the Regulation.
The "amount payable" that may be ordered in this case was the amount of payment that had become due to the respondent under s 4(2)(a)(iii) of the Long Service Leave Act. The "amount payable" is not defined in the Act as including costs: it is, in this case, limited to the amount of pro rata long service leave. Accordingly, the maximum amount that may be ordered to be paid on the respondent's application does not require costs to be taken into account in determining the maximum amount. Costs are a separate consideration. This construction is reinforced by the second paragraph in s 12 of the Long Service Leave Act, which provides:
The Local Court or Industrial Relations Commission in Court Session may make any order it thinks just in the matter and may award costs to either party, and assess the amount of such costs.
Costs of the appeal
Both parties sought costs of the appeal if they were to be successful. The normal rule is that costs follow the event. The practice of the Industrial Court in dealing with appeals from the Chief Industrial Magistrate's Court is to apply the usual cost rules. Accordingly, the appellant will pay the respondent's costs of the appeal.
Orders
The Court makes the following orders:
(1) Leave to appeal is granted.
(2) The appeal is dismissed except to the extent that it is upheld on the question of costs at first instance.
(3) The decision and orders of Acting Chief Industrial Magistrate Wahlquist to award indemnity costs is quashed.
(4) The appellant shall pay the respondent's costs of the first instance proceedings on a party/party basis as agreed or assessed.
(5) The appellant shall pay the respondent's costs of the appeal as agreed or assessed.
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Decision last updated: 19 December 2014
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