TD Preece & Co Pty Ltd v Industrial Court of New South Wales

[2008] NSWCA 285

New South Wales

Court of Appeal

CITATION:	T D Preece & Co Pty Ltd v Industrial Court of New South Wales [2008] NSWCA 285
HEARING DATE(S):	10 July 2008
JUDGMENT DATE:	4 November 2008
JUDGMENT OF:	Spigelman CJ at 1; Hodgson JA at 67; Basten JA at 70
DECISION:	The summons should be dismissed with costs.
CATCHWORDS:	INDUSTRIAL LAW – Unfair Contract – Finding of unfairness – Failure to identify terms of contract – Jurisdictional error – Proper approach to determining unfairness - PROCEDURE – Appeal to Full Bench – Finding of unfairness on basis different to trial judge – Jurisdiction of Full Bench – Procedural fairness - PROCEDURE – Powers of Full Bench on appeal – Industrial Relations Act 1996, s 106, s 191, s 192
LEGISLATION CITED:	Industrial Relations Act 1991 Industrial Relations Act 1996 Supreme Court Act 1970 Workplace Relations Act 1996 (Cth)
CASES CITED:	Alliance Motor Auctions Pty Ltd v Industrial Relations Commission (NSW) [2005] NSWCA 355; (2005) 146 IR 99 Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 Ex parte Hebburn Ltd; Re Kearsley Shire Council (1947) 47 SR (NSW) 416 Fish v Solution 6 Holdings Ltd [2006] HCA 22; (2006) 225 CLR 180 Grygiel v Baine [2005] NSWCA 218 House v The King (1936) 55 CLR 499 Murton v T D Preece & Co Pty Ltd [2006] NSWIRComm 367 Russell v Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2007] NSWSC 104; (2007) 69 NSWLR 198 Russell v Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2008] NSWCA 217 Sydney Water Corporation Ltd v Industrial Relations Commission (NSW) [2004] NSWCA 436; (2004) 61 NSWLR 661 T D Preece & Co Pty Ltd v Murton [2007] NSWIRComm 130; (2007) 164 IR 396 The King v Connell; Ex parte The Hetton Bellbird Collieries Ltd (1944) 69 CLR 407 Walker v Industrial Court (NSW) (1994) 53 IR 121
PARTIES:	T D Preece & Co Pty Ltd (Applicant) Industrial Court of New South Wales (First Respondent) Rick Murton (Second Respondent)
FILE NUMBER(S):	CA 40467/2007
COUNSEL:	T Dixon (Applicant) I Latham (Second Respondent)
SOLICITORS:	Jones King Lawyers (Applicant) I V Knight, Crown Solicitor (First Respondent) Turner Freeman Lawyers (Second Respondent)
LOWER COURT JURISDICTION:	Industrial Court of New South Wales
LOWER COURT FILE NUMBER(S):	IRC 6239/2002 IRC 3638/2006
LOWER COURT JUDICIAL OFFICER:	IRC 6239/2002 Backman J; IRC 3638/2006 Wright J (P), Walton J (VP) and Boland J
LOWER COURT DATE OF DECISION:	IRC 6239/2002 23 November 2006 IRC 3638/2006 28 June 2007
LOWER COURT MEDIUM NEUTRAL CITATION:	IRC 6239/2002 [2006] NSWIRComm 367; IRC 3638/2006 [2007] NSWIRComm 130

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40467/2007

SPIGELMAN CJ
HODGSON JA
BASTEN JA

Tuesday 4 November 2008

T D PREECE & CO PTY LTD v INDUSTRIAL COURT OF NEW SOUTH WALES

Judgment

1 SPIGELMAN CJ: The second respondent (“Mr Murton”) brought an application under s 106 of the Industrial Relations Act 1996 (“the IR Act”) filed on 6 November 2002. He alleged that he was employed under an unfair contract with the applicant (“T D Preece”) in the period 4 February 2002 to 19 April 2002, being 11 working weeks.

2 The matter came to trial on 11 April 2006. Backman J handed down judgment on 23 November 2006 finding for Mr Murton and making certain orders in his favour (Murton v T D Preece & Co Pty Ltd [2006] NSWIRComm 367). T D Preece appealed to the Full Bench of the Industrial Court of New South Wales, which varied the orders made by her Honour at first instance, but otherwise dismissed the appeal on 28 June 2007 (T D Preece & Co Pty Ltd v Murton [2007] NSWIRComm 130).

3 Mr Murton was employed as a financial accountant/controller by T D Preece. He had a turbulent relationship with the principal of the company. On some twenty occasions, statements were made to him threatening dismissal. Eventually his employment was summarily terminated.

4 I note that s 109A of the IR Act excludes from the unfair contracts provision any contract alleged to be unfair for any reason which could have been the subject of an application under the unfair dismissals provisions in Pt 6 of the Act. The applicability of this section was not raised before the Industrial Relations Commission. Nor was it raised as a jurisdictional issue in this Court.

The Proceedings at First Instance

5 The summons for relief under s 106 sought an order declaring the contract to be an unfair contract and consequential orders, including orders varying the contract by inserting the following provisions:

“(a) The contract shall not be terminated without the consent of the applicant except for serious misconduct unless the respondent gives the applicant 12 months’ notice in writing or pays the applicant an amount in lieu thereof equal to 12 months’ remuneration payable under the contract;
(b) The terms and conditions of engagement of the applicant and the duties and responsibilities of the applicant shall not be altered without the consent of the applicant unless the respondent gives the applicant 12 months’ notice in writing. If the respondent varies the terms and conditions of engagement of the applicant and the duties and responsibilities of the applicant without giving the applicant 12 months’ notice in writing, the applicant shall be entitled to treat the respondent as having terminated the contract of engagement and shall be entitled to payment of an amount equal to 12 months’ remuneration payable under the contract;
(c) The respondent shall not conduct itself in such a manner as will be likely to damage without cause the confidence and trust in the engagement relationship that it has with the applicant and shall not make any decision adverse to the applicant unless:
(i) the respondent shall give the applicant reasonable notice of any such intention and provide to the applicant reasons for the proposed adverse decision and adequate factual material in relation to the reasons;
(ii) if the reasons for the proposed adverse decision relate to the applicant’s conduct or performance of his duties, the applicant has been given an opportunity to defend himself against any allegations made in relation to his conduct or performance;
(iii) if the reasons for the proposed adverse decision relate to the applicant’s conduct or performance of his duties, the respondent has undertaken a thorough investigation of any allegations made in relation to the applicant’s conduct or performance and any matter presented by the applicant in his defence;
(iv) the respondent shall make any such decision reasonably having regard to:
(A) the applicant’s personal circumstances;
(B) the satisfactory (or otherwise) performance by the applicant of his obligations under the contract.
[(d)] In the event that the applicant’s position with the respondent is made redundant, the respondent will, in addition to the notice required to terminate the applicant’s engagement, pay the applicant an additional 12 months’ pay as a severance payment for redundancy.”

6 In the course of the submissions before Backman J, Mr Murton changed his claim from 12 months’ pay to a claim for 3 months’ pay. Mr Murton also submitted:

“The contract is alleged to be unfair because it did not contain sufficient protective mechanisms against the termination of the contract without notice, procedural fairness and with regard to the circumstances of the applicant.”

7 In her reasons Backman J summarised the import of the submissions of the applicant before her in the following way:

“[45] … the applicant’s case that the contract was unfair appears directed more to the issues of the failure to make provision for adequate notice in the circumstances of the applicant’s termination.”

8 This was a reference to the particular in the summons:

“33. The contract was unfair in that it:
…
(c) failed to protect the applicant from summary termination of employment;
(d) failed to provide for adequate notice provisions upon termination of the contract without cause;

…”

9 Her Honour then noted that T D Preece submitted that the jurisdiction of the Commission had not been properly invoked, on the authority of Sydney Water Corporation Ltd v Industrial Relations Commission (NSW) [2004] NSWCA 436; (2004) 61 NSWLR 661. In that case, this Court overruled earlier authority in the Commission which held that a contract could be unfair by reason of conduct that was in breach of the contract.

10 Her Honour made no reference to the written submissions of T D Preece in this regard, to the effect that this was an essential first step for the Court to decide what the terms of the contract were (see Alliance Motor Auctions Pty Ltd v Industrial Relations Commission (NSW) [2005] NSWCA 355; (2005) 146 IR 99 especially at [20] and the observations to the same effect in the five judge joint judgment in Fish v Solution 6 Holdings Ltd [2006] HCA 22; (2006) 225 CLR 180 at [19]).

11 With respect to the submission based on the Sydney Water case, her Honour said:

“[48] … Upon closer analysis, however, the submission as I understand it really relates to the allegation of a failure to provide for adequate notice; the respondents’ primary contention in this regard being that a reasonable notice period was implied (in the absence of an express term in the contract). In my opinion, however[,] an implied term of reasonable notice, although not of itself unfair[,] may nevertheless operate unfairly on the contract in circumstances where the termination of an applicant’s engagement or employment under the contract constitutes unfairness under the contract by reason of, for example, the failure to make a monetary payment in lieu of notice, or make provision for any notice where there is no finding of misconduct. … ”

12 Her Honour added:

“[49] Whether the circumstances of the applicant’s summary termination rendered the contract unfair will be considered shortly, but plainly a relevant consideration will be the fact, which is not in dispute, that at the time of termination the applicant received no payment in lieu of notice.”

13 Her Honour’s conclusions in this respect commence with the following statement:

“[55] It remains to decide whether the circumstances of the applicant’s termination and the failure to provide for adequate notice provisions in the contract were unfair. …”

14 It appears clear that Backman J failed to have regard to the actual contract and what was the period of reasonable notice pursuant to the term to that effect implied in the contract. Because of this, she did not address the critical issue: was the actual contract unfair. This, in my opinion, was a jurisdictional error.

15 Her Honour made the following findings relevant to the issues on this appeal:

“[56] The respondent asserts that the applicant’s services were terminated because of poor performance. There is little substance to this allegation in my view … ”

16 Her Honour went on to outline the facts in support of this conclusion. Of particular relevance for the purposes of the appeal is her Honour’s ultimate finding at [57]:

“[57] I find for the reasons outlined above that the applicant’s summary termination was not influenced by any considerations pertaining to work performance. I therefore find that the contract operated unfairly against the applicant because it failed to protect him from the circumstances of summary termination. The following reasons have influenced my decision:
(i) the applicant’s services were summarily terminated in the absence of any substantiated allegations of misconduct such as poor work performance and without notice;
(ii) the applicant was not paid any monies in lieu of notice consequent upon his termination;
(iii) the applicant had a reasonable expectation that his engagement or employment would be for a lengthy period of time;
(iv) at the time of his summary termination the applicant had been engaged in a relatively senior position which entailed a significant degree of responsibility and trust.”

17 Her Honour made the following orders:

“(1) The contract entered into between the applicant and the respondent under which the applicant commenced work for the respondent on 4 February 2002 is declared unfair.
(2) The contract referred to in Order 1 above is varied from its inception to include a term that the contract shall not be terminated without the consent of the applicant except for serious misconduct unless the respondent pays the applicant $13,330, representing 2 months’ remuneration payable under the contract.
(3) The respondent is to pay the applicant $13,330 representing 2 months remuneration payable under the contract.”

The Appeal to the Full Bench

18 In its application for leave to appeal to the Full Bench, the applicant identified the questions raised by the appeal as:

“(i) Whether the court had jurisdiction to hear and determine the matter in view of the decision of the Court of Appeal in Sydney Water Corporation Ltd & Anor -v- Industrial Relations Commission of NSW & Anor [2004] NSWCA 436;
(ii) Whether there exists a requirement to identify the terms of the contract or arrangement before deciding the question of fairness or unfairness;
…
(iv) Whether, in circumstances where a period of notice is implied by law or fact into a contract, a contract can be said to have operated unfairly against a Respondent because it failed to protect him from the circumstances of summary termination.”

19 The grounds of appeal included:

“(i) Her Honour erred in fact and in law in failing to find that:
…
if the contract was one in which a notice period applied as a matter of fact or law, the contract did not operate unfairly against the Respondent because it failed to protect him from the circumstances of summary termination.
(ii) Her Honour erred in fact and in law in failing to find the applicable terms of the contract or arrangement prior to finding unfairness;
(iii) Her Honour erred in fact and in law in failing to uphold the Appellant’s jurisdictional objections relating to … the decision of the Court of Appeal in Sydney Water Corporation Ltd & Anor -v- Industrial Relations Commission of NSW & Anor [2004] NSWCA 436;

…”

20 In the course of the submissions on the appeal to the Full Bench, T D Preece submitted that, on the authority of the Sydney Water case, the Court did not have jurisdiction on the following grounds:

“(a) The contract in question contained a period of notice implied as a matter of law (and/or fact): Quinn v Jack Chia (1992) 43 IR 91; New South Wales Cancer Council v Sarfaty (1992) 28 NSWLR 68;
(b) It follows that the contract could not have been unfair as a notice provision existed in any event;
(c) The fact that the notice period was not paid out in the circumstances of summary termination makes this a pure breach case amenable to damages at general law
…”

21 The applicant also referred to the extract from [48] of her Honour’s judgment set out at [11] above and submitted that this extract “inverts the proper reasoning process” because the jurisdiction of the Full Bench “is only enlivened upon a finding of unfairness in the terms of the contract”.

22 The submissions went on to state that the relevant issue before the Full Bench was the necessity to identify the terms of the contract arrangement, before deciding the question of fairness or unfairness. Reliance was placed in this respect on Fish v Solution 6 Holdings at [19] and [43] and Alliance Motor Auctions v Industrial Relations Commission at [20]. On these authorities, T D Preece contended, the issue before the Full Bench was simply that “the question of the true contractual terms was never determined”.

23 Counsel for Mr Murton before the Full Bench identified the contractual provisions which her Honour had found to exist. In reply counsel for T D Preece submitted:

“In this case, the critical term was the period of notice which was operative as a matter of law upon the finding that there were no grounds for summary termination.
It is submitted that the failure to make a finding as to the term of implied notice led her Honour into error in relation to Sydney Water CorporationLtd ...”

24 The Full Bench of the Industrial Court, granted leave to appeal in order to correct errors that their Honours identified in the judgment of Backman J.

25 Their Honours said:

“[16] The main issue on appeal is a relatively narrow but important one. The appellant contended that in the absence of an express term in the contract between it and the respondent dealing with notice of termination, the common law implied a term of reasonable notice: Quinn v Jack Chia (Australian) Ltd (1992) 43 IR 91; New South Wales Cancer Council v Sarfaty (1992) 28 NSWLR 68. It followed, therefore, that the contract itself could not have been unfair, as a notice provision was provided for in the contract. The appellant submitted that the fact that the notice period was not paid out in the circumstances of summary termination made this not ‘a pure breach case amenable to damages at general law’ and, therefore, on the authority of Sydney Water and Alliance Motor Auctions Pty Ltd v Industrial Relations Commission of New South Wales (2005) 146 IR 99, the Court had no jurisdiction to entertain the respondent’s summons for relief. It was also submitted her Honour erred in failing to identify the terms of the contract or arrangement before deciding the question of fairness of unfairness: Fish and Another v Solution 6 Holdings Limited (2006) 225 CLR 180 at [19] and [43]; Alliance Motor Auctions at [20].”

26 Their Honours went on at [18] of their judgment to say:

“[18] … we agree with the appellant that Backman J erred in failing to identify the terms of the contract between the appellant and the respondent. …”

They referred to [19] of the joint judgment in Fish v Solution 6 Holdings . This is a clear finding of legal error.

27 It is convenient at this point to dispose of one of the contentions of the applicant to the effect that the Full Bench failed to exercise its jurisdiction by not dealing with the sole issue raised in the appeal, ie the Sydney Water point. It is quite clear that the Full Bench not only dealt with it, but upheld the applicant’s contention.

28 The joint judgment of the Full Bench of the Industrial Court then said:

“[19] Such an error is not necessarily fatal. Provided that it is apparent from the material in the appeal that the trial judge understood what were the terms of the contract or arrangement whereby a person performed work in any industry, which terms caused the contract or arrangement to be unfair and that the contract or arrangement was declared wholly or partly void, or varied, in order to remedy the terms found to be unfair, then there will be no error requiring appellate intervention.”

29 The Full Bench went on to say:

“[22] In his submissions at first instance, the respondent submitted that he was not seeking damages for breach of contract but rather he was seeking to vary the contract ‘to insert protective provisions to make it fair’ and referred in particular to the pleading that the contract failed to protect the respondent from summary termination. The respondent at first instance referred to protective provisions as including provisions relating to ‘procedural fairness’ as well as a period of notice.
[23] Her Honour found at [57] that the contract operated unfairly against the respondent because it failed to protect him from the circumstances of summary termination. Mr Dixon of counsel for the appellant, however, submitted that her Honour’s reference to the failure to provide for protective provisions was limited to the appellant’s failure to provide payment in lieu of notice. In this regard, Mr Dixon referred to the reasons relied upon in [57] by her Honour qualifying the finding that [the] contract operated unfairly against the respondent because it failed to protect him from the circumstances of summary termination. …”

30 The Full Bench also said:

“[26] It is not apparent from the decision at first instance that in finding the contract between the appellant and respondent was unfair the trial judge did so on the basis that the contract failed to provide for fair procedures on termination, notwithstanding that this was clearly pleaded and argued as part of the respondent’s case at first instance. Whilst her Honour at [57] stated that the contract operated unfairly against the respondent because it failed to protect him from the circumstances of summary termination, the reasons her Honour gave as to how she was influenced to come to that conclusion do not include a failure to provide for fair procedures on termination, but they did include that the respondent was not paid any monies in lieu of notice consequent upon his termination.
[27] Furthermore, in varying the contract to remedy the unfairness found, her Honour confined it to a variation providing for what was a payment in lieu of notice. Such a variation suggests that the basis upon which her Honour found the contract to be unfair was due to the fact that the respondent was not paid any monies in lieu of notice consequent upon his termination and not because of the absence in the contract of fair termination procedures.
[28] It may have been the case that in finding unfairness the trial judge had in contemplation the absence in the contract of fair termination provisions; her Honour was most certainly aware of the absence of such provisions. However, the omission in the orders of a variation remedying the absence of those provisions leads us to the conclusion that her Honour erred as to the basis upon which the contract was unfair and as to the form of variation ordered.”

31 Their Honours concluded:

“[30] The trial judge found that the respondent's summary termination was not influenced by any considerations pertaining to work performance. This finding was not challenged on appeal. No other basis was contended at first instance as justifying summary dismissal. The evidence in the proceeding makes clear that the contract between the appellant and the respondent did not provide for fair termination procedures. The absence of such procedures as counselling or warnings relating to the respondent's performance or conduct, or provisions giving the respondent the opportunity to defend allegations of poor performance before dismissal was effected, thereby permitted an unfair, harsh or unconscionable dealing by the appellant with the respondent. What a contract permits, or does not proscribe, may make the contract relevantly unfair under s 106 (see Sydney Water at [32]-[33] per Mason P referring to the observations of Sheller JA in Walker v Industrial Court of New South Wales & Anor (1994) 53 IR 121 at 149; see also Oracle Systems Australia Pty Limited v Michael John Pym [2005] NSWIRComm 15 at [50]).
[31] It follows that the contract was or became unfair because it permitted the appellant to act unfairly, harshly or unconscionably in summarily terminating the employment of the respondent on grounds that were not made out and in failing to apply fair termination procedures …
[32] An alternative way of considering the matter is that the contract was or became unfair in that it permitted summary termination of the respondent's employment on grounds that did not support such a peremptory step being taken by the employer, poor performance (if such a ground had been made out) not being conduct that is a sufficiently serious breach of the contract, or not being conduct that evinces an intention by the respondent that he no longer wished to be bound by the contract, and because the contract permitted the appellant to adopt unfair procedures in terminating the services of the respondent.”

32 Their Honours further concluded:

“[40] It is open to us to find that the warnings/counselling given or adopted by the appellant did not constitute fair procedures and would offend the contract if varied to include the procedural clauses concerning termination sought in the summons. The evidence revealed that the 20 so-called warnings/counselling delivered to the respondent by Mr Preece were merely episodes of verbal abuse, about which the respondent had complained in his evidence, in the course of which he was threatened with dismissal. The very fact that the respondent was threatened with dismissal on 20 occasions in such a relatively short space of time suggests the threats were empty gestures containing no genuine warning that the respondent's employment was in jeopardy for any good reason. The threats were certainly not accompanied by counselling of the respondent with the objective of improving his work performance. Mr Murton inferred in his evidence that there were so many threats, directed at so many people, he did not take the threats seriously. We find there were no warnings given or counselling undertaken by the appellant in relation to any alleged poor work performance of the respondent that might be regarded as constituting elements of a fair termination procedure.
[41] Having found the contract was unfair, we have assessed compensation as two months' pay. We note that Backman J arrived at the same conclusion regarding compensation, although on a different basis to that determined on appeal. There was no contention by any party on appeal that two months was inappropriate.”

33 On the basis of this reasoning, the Full Bench varied the orders made by Backman J only by substituting the following order:

“[42] We propose to vary order (2) of the trial judge's Orders consistent with our findings on appeal. Varied order (2) will be in the following terms:
(2) The contract between the applicant and the respondent under which the applicant commenced work for the respondent on 4 February 2002 is varied ab initio to provide that the contract shall not be terminated without the consent of the applicant except for serious misconduct justifying summary dismissal and after investigation, consultation and warnings in accordance with the requirements set out below. The contract is further varied to provide that the respondent shall not make any decision adverse to the applicant unless the following requirements are met:

(a) that the respondent gives the applicant reasonable notice of any such intention and provides to the applicant reasons for the proposed adverse decision and adequate factual material in relation to the reasons;
(b) that if the reasons for the proposed adverse decision relate to the applicant's conduct or performance of his duties, the applicant has been given an opportunity to defend himself against any allegations made in relation to his conduct or performance;
(c) that if the reasons for the proposed adverse decision relate to the applicant's conduct or performance of his duties, the respondent has undertaken a thorough investigation of any allegations made in relation to the applicant's conduct or performance and any matter presented to the applicant in his defence;
(d) that the respondent shall make any such decision reasonably having regard to the satisfactory (or otherwise) performance by the applicant of his obligations under the contract.”

34 An appeal to the Full Bench is not, of course, restricted to judicial review for jurisdictional error. It is clear from the above that the Full Bench identified an error of law in the approach of Backman J. Her Honour’s failure to first identify the terms of the contract before determining whether that contract was unfair, would have constituted jurisdictional error. However, it has been corrected by the Full Bench, which has substituted its own decision. This Court need only concern itself with the submissions that the Full Bench itself committed jurisdictional error.

The Jurisdiction of the Full Bench

35 The first issue before this Court turns on the jurisdiction that the Full Bench exercised. The appeal provisions are found in s 191 and s 192 of the IR Act 1996, which provide:

“191(1) An appeal to a Full Bench of the Commission under this Part is not by way of a new hearing and is to be determined on the evidence and material adduced in relation to the decision appealed against.
(2) However, the Full Bench may, by leave, receive further evidence if it considers that special grounds exist or if the evidence concerns matters occurring after the decision appealed against.
(3) To avoid doubt, the Full Bench cannot merely substitute its decision on the matter, but must follow the principles applying to appeals from discretionary decisions, whether or not further evidence is received.
192(1) On an appeal under this Part to a Full Bench of the Commission, the Full Bench may (in accordance with this Act):
(a) confirm, quash or vary the decision of the Commission concerned, or
(b) direct a member of the Commission to take further action under this Act to carry its decision on the appeal into effect, or
(c) refer the matter back to the member of the Commission, with such directions or recommendations as the Full Bench considers appropriate.
The Full Bench may determine a part of the matter and refer the remainder back to the member of the Commission.
(2) The Full Bench may direct that its decision on an appeal under this Part take effect as from any specified date after the lodging of the original application relating to the decision.”

36 The Full Bench in the present proceedings referred to its jurisdiction as follows:

“[29] Section 192(1)(a) of the Act provides that on an appeal the Full Bench may confirm, quash or vary the decision of the Commission concerned. We consider it is open to us, on the material before the Full Bench on appeal, to form our own view about the contract (see Walker v Industrial Court of New South Wales & Anor (1994) 53 IR 121 at 149 per Sheller JA) and having done so, to vary the decision at first instance consistent with that view. No party on appeal demurred from that proposition. Of course, if an issue of credit had been involved it may not have been open to the Full Bench to form its own view, but that is not the case here.”

37 Mr T Dixon, who appeared for T D Preece in this Court, noted that the authority referred to by the Industrial Court (Walker v Industrial Court (NSW) (1994) 53 IR 121), was concerned with a distinctively different appeal provision under the Industrial Relations Act 1991, s 297, which gave the Full Industrial Court a broader appellate jurisdiction including:

“297(3) The Full Industrial Court may exercise the functions of the court or person whose decision is the subject of an appeal, including:
(a) amendment; and
(b) the drawing of inferences and the making of findings of fact; and
(c) the assessment of damages and other money sums.
(4) The Full Industrial Court may make any finding or assessment, give any direction for entry of judgment, or make any order, which ought to have been made or which the nature of the case requires.”

38 Although the reference to this Court’s decision in Walker may not have been apt, the reference at [29] quoted above to the position being different “if an issue of credit had been involved”, indicates that the Full Bench was well aware of the fact that its jurisdiction was not as broad as it had been under the 1991 Act.

39 T D Preece submitted that the Full Bench exceeded its jurisdiction by making findings of fact, namely the determination that the contract was unfair in a different respect to that found by the trial judge. In view of the conclusion she had reached, Backman J did not need to deal with Mr Murton’s alternative case.

40 The power to vary an order is expressly conferred by s 192(1)(a). Although the nature of the hearing is not a hearing de novo, that does not mean that the Full Bench cannot, after identifying error, proceed to find unfairness on an alternative basis that has been properly raised.

41 The applicant contended that the Full Bench was not entitled to substitute its own decision for that of the trial judge. The applicant’s submissions do not give any weight to the word “merely” in s 191(3). The Full Bench is entitled to “substitute its decision” for that of a trial judge. That is what an appeal, capable of leading to a variation of the order, is for. Section 191(3) affirms a traditional form of restraint upon the exercise of an appellate function with respect to discretionary decisions. It does not prevent the Full Bench from determining the appeal on a basis different from that of the trial judge.

42 This basis for jurisdictional error should be rejected.

The Natural Justice Issue

43 As indicated in the extracts from the judgment of the Full Bench set out above, their Honours proceeded to uphold the substantive order made by Backman J on a different basis. Consequential upon the legal error their Honours had identified, the Full Bench found that the contract was unfair in a different respect, namely that it failed to contain what their Honours identified as “fair termination procedures” (see, eg, [26]-[28], [31]-[32] and [40] of the Full Bench’s judgment set out at [30]-[32] above).

44 In this Court, T D Preece made no submission that this alternative route to reaching a modest result, in terms of an amount awarded, ie equivalent to two months’ notice was, in itself, beyond jurisdiction. The gravamen of its complaint was that this was not an issue agitated by T D Preece on the appeal. T D Preece acknowledged that this alternative basis for unfairness was raised in the proceedings at first instance.

45 In one respect, this complaint on the part of T D Preece rises no higher than a submission to the effect that the Full Bench acted on that basis without insisting on a formal notice of contention or cross appeal. It was perfectly open to the Full Bench to act in this way, not least when only $13,000 was in issue. This aspect of the complaint is incapable of constituting a jurisdictional error.

46 However, insofar as T D Preece asserts that the possibility of this alternative route being taken was not raised in such a manner as to enable it to make submissions on the issue, then a denial of procedural fairness may have occurred. This would constitute jurisdictional error (see, eg, Re Refugee Review Tribunal; Ex parte Aala [2007] HCA 57; (2000) 204 CLR 82 at [41], [142] and [170]-[171]).

47 T D Preece submitted that it did not receive any notice that the proceedings in the Full Bench could be decided on the basis that it was decided, ie by an order varying the contract in a completely different respect to what was the subject of its own appeal. Accordingly, it submitted it did not have a reasonable opportunity of being heard with respect to this issue, upon which the ultimate outcome turns.

48 In the light of the finding of fact that the termination of employment was not actually based on any performance related issues, it does not appear what role any of the elaborate termination procedure provisions inserted into this oral contract by the Full Bench could have played. However, no jurisdictional point is made in this regard. The only relevant jurisdictional error identifiable in the submissions is the denial of procedural fairness.

49 Counsel for Mr Murton directed attention to a number of passages in the transcript of the hearing before the Full Bench in which, he submitted, the option of acting in the manner in which the Full Bench eventually acted was raised sufficiently to put the applicant on notice that it had to address these issues.

50 In the course of submissions by counsel for Mr Murton before the Full Bench, an issue was raised as to the existence of a contract of employment, not being a matter which has been agitated in this Court. The President of the Industrial Relations Commission, in the context of asking questions about that matter, asked whether or not there was “sufficient” material in the judgment of first instance and/or the record, ie the evidence at first instance:

“… for the Full Bench to make a finding as to, one, whether there was a contract and, two, what were the relevant terms of it – relevant in deciding whether relief under s 106 should be granted.”

51 In this reference, his Honour went beyond the issue then being discussed, ie as to the existence of a contract, to encompass reference to the “relevant terms” of any such contract in the context of deciding “whether relief under s 106 should be granted”.

52 The President then referred to a point made by counsel for the applicant before the Full Bench about her Honour’s failure to make relevant findings as to, “at least, the terms of the contract”.

53 His Honour went on to say:

“If he is right with that, the question is what do we do? Do we quash the decision and send it back?”

54 His Honour added:

“The third one is for the Full Bench to decide whether the material on the record or in the record, which includes the decision at first instance, is sufficient to allow it to make the requisite findings.”

55 Shortly thereafter, the learned President interrupted counsel for the second respondent in order to address a question to counsel for the applicant. His Honour said:

“… a lot of what I was raising with Mr Latham was equally relevant to your case so perhaps you can deal with it in reply, that is, the issue we are dealing with now, whether you have acceded there is sufficient material in the record - material enough for the Full Bench to make findings which, if we accept your submission, were crucial findings omitted at first instance. I am not asking you to address that now but I am putting you on notice that you should address it in reply.”

56 In this respect, his Honour clearly raised the question about the terms of any such contract for the purposes of granting relief under s 106 of the Act.

57 In the course of the applicant’s submissions in reply, the President returned to the desirability of the Full Bench deciding the matter, rather than quashing the decision and remitting it, particularly in the absence of any issue relating to credit of a witness. In the course of doing so his Honour pointed out that:

“… in the public interest it is not seen to be appropriate to send the matter back for a retrial unless there is no alternative.”

58 His Honour then referred to the fact that no issue arose as to credit and the Full Bench:

“… would make the necessary findings and exercise the necessary discretion to avoid sending it back.
That is why I asked that question, to see where this goes if you succeed”.

59 Perhaps more significantly, and quite directly his Honour said:

“I am focussed on the failure to make a finding as to the relevant terms.”

60 These references occurred against a background in which there had been earlier references to the pleadings which sought an order along the general lines of the term ultimately included in the contract by the Full Bench which, during the course of submissions, were referred to as “protective provisions” (see [5] above).

61 Counsel for the applicant had earlier referred to the fact that “the lack of protective mechanisms” had been a matter agitated at trial and that her Honour had not made any finding in that respect by reason of the conclusion she had reached.

62 Furthermore, counsel for the second respondent had drawn attention to the pleading of the relevant protective provisions that he had sought to be inserted into the contract and had asserted: “we say that the fact that the contract permitted conduct contrary to those protective provisions in itself is unfair”. Counsel accepted a suggestion from the Bench that the fact that the contract did not make provision for arrangements in the nature of the “protective provisions” was itself sufficient to make the contract unfair. The second respondent indicated that he was relying upon the absence of such a protective provision in the summons.

63 These were matters raised in the course of the submissions on behalf of the second respondent, but the subsequent intervention of the President indicated clearly that submissions on matters of this character were sought.

64 In my opinion, the way in which the Full Bench ultimately resolved the appeal was sufficiently raised for consideration in the course of oral submissions in such a manner as to put the applicant on notice that the Full Bench was considering making a finding of an alternative term for inclusion in the contract, being a term of the kind described as “a protective provision”, should it uphold the applicant’s challenge to the manner in which the trial judge had approached the matter.

65 In my opinion there was no denial of procedural fairness.

Conclusion

66 For these reasons the summons should be dismissed with costs.

67 HODGSON JA: I agree with the order proposed by Spigelman CJ and with his reasons. I would make the following additional comments.

68 I believe it would have been arguable before the Industrial Relations Court that s 109A of the Industrial Relations Act excluded this contract from s 106, so far as concerned the application brought by Mr Murton; and it would have been arguable before this Court that this exclusion went to jurisdiction. However, as noted by Spigelman CJ, this point was not raised either in the Industrial Relations Court or in this Court.

69 I note also that the varied order (2) made by the Full Bench appears to have created a contract that excluded the possibility of the employment being terminated without consent of the applicant, in the absence of serious misconduct, even by the twelve months’ notice or pay in lieu suggested by Mr Murton’s summons under s 106. Even if this was an error, it could not have amounted to a jurisdictional error. In any event, it did not matter, when the Full Bench assessed compensation at two months’ pay.

70 BASTEN JA: The proceedings in this Court rely upon the Court’s supervisory jurisdiction to grant relief (relevantly) in the nature of certiorari pursuant to s 69 of the Supreme Court Act 1970 (NSW). Decisions of the Industrial Relations Commission of NSW are subject to a privative clause, which denies any right of appeal or review by a court, but does not extend to “a purported decision of the Commission on an issue of the jurisdiction of the Commission”, being a purported decision of the Full Bench of the Commission in Court Session: Industrial Relations Act 1996 (NSW), s 179(4)(a).

71 The present proceedings are brought in respect of a decision (or purported decision) of the Full Bench of the Commission in Court Session, properly identified as the Full Bench of the Industrial Court of New South Wales: Industrial Relations Act, s 151A. It was assumed in the course of these proceedings that the privative clause permitted review by this Court in circumstances where the decision of the Full Bench revealed some form of jurisdictional error: it was not necessary to find an issue which had been expressly isolated for separate consideration, so long as the final determination depended upon a particular view as to a question of jurisdiction: cf Grygiel v Baine [2005] NSWCA 218 at [29] in relation to an appeal limited to a decision of a “question with respect to a matter of law”. That assumption may be accepted and the case approached on the basis that the phrase “purported decision” in s 179(4) includes not only express decisions identified by the Industrial Court, but also reasoning necessarily underpinning its final determination.

72 The limitation on the jurisdiction of this Court means that the applicant must identify jurisdictional error on the part of a Full Bench in exercising its appellate jurisdiction pursuant to ss 191 and 192 of the Industrial Relations Act, set out at [35] above. Those provisions are not identical with the terms of s 45 of the Workplace Relations Act 1996 (Cth) considered in Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; 203 CLR 194 and set out therein at [5], but they are in conformity with such provisions and may generally be characterised as involving an appeal by way of rehearing: see Coal & Allied at [17] (Gleeson CJ, Gaudron and Hayne JJ). It was therefore necessary in the present circumstances for the Full Bench to identify error on the part of the primary judge. If the Full Bench had purported to exercise broader powers of intervention, it would have exceeded its jurisdiction; if more limited powers, there would have been an actual or constructive failure to exercise jurisdiction: Coal & Allied at [29]. The question for this Court is whether the Full Bench misunderstood the nature of its jurisdiction, or misconceived its duty, or failed to apply itself to the question which was prescribed by the statutory conferral of jurisdiction, or misunderstood the nature of the opinion which it was to form: see R v Connell; Ex parte the Hetton Bellbird Collieries Ltd [1944] HCA 52; 69 CLR 407 at 432 (Latham CJ); Ex parte Hebburn Ltd; Re Kearsley Shire Council (1947) 47 SR(NSW) 416 at 420 (Jordan CJ); Coal & Allied at [31].

73 Before referring to the jurisdictional errors supposedly committed by the Full Bench, it may be noted that the primary complaint made by the applicant (T D Preece & Co Pty Ltd) in its appeal from the primary judge (Backman J) was that her Honour had in effect given damages for breach of an implied term of the employment contract, namely that the respondent had been entitled to reasonable notice, in the absence of any grounds for summary dismissal. Because the Commission’s jurisdiction had been invoked on the basis that the employment contract was “an unfair contract” for the purposes of s 106 of the Industrial Relations Act and required variation, the Commission had no jurisdiction to award damages under the general law for breach of a term which would have been implied in any event. The applicant contended that to the extent that her Honour awarded damages, she therefore exceeded her jurisdiction and failed to act in accordance with the decisions of this Court in Sydney Water Corporation Ltd v Industrial Relations Commission of NSW [2004] NSWCA 436; 61 NSWLR 661 and Alliance Motor Auctions Pty Ltd v Industrial Relations Commission of NSW [2005] NSWCA 355; 146 IR 99. The course taken by the Full Bench was, as explained by Spigelman CJ, to adopt a different approach, namely to vary the contract to include certain provisions protective of the respondent’s interests, which might have prevented summary dismissal without notice, and then award the same amount of money, pursuant to s 106(5), as that ordered by the primary judge.

74 The applicant identified in its summons four grounds said to involve jurisdictional error, which may be summarised as follows:

(a) failure to address the question for determination, namely whether the primary judge had applied the principles in Sydney Water Corporation ;

(b) deciding the case on a different basis without giving the applicant an opportunity to be heard in that regard, in breach of the principles of procedural fairness;

(c) misconstruing ss 191 and 192 of the Industrial Relations Act , and

(d) failing to uphold the appeal on the basis that there was jurisdictional error on the part of the primary judge.

75 Only the third of these grounds requires further comment. In respect of the first and second grounds, I agree with the Chief Justice that the Full Bench did address the Sydney Water Corporation issue and, in the same context, discussed with counsel the possibility of an alternative approach. There was no denial of procedural fairness in those circumstances.

76 In relation to the fourth ground, the fact that the primary judge exceeded her jurisdiction did not mean that no order was appropriate. Indeed, it would not be sufficient for the applicant to satisfy this Court that the primary judge did exceed her jurisdiction but that the Full Bench held otherwise: see Coal & Allied at [30]-[31]. Neither error, taken alone or in combination, would be sufficient to demonstrate jurisdictional error on the part of the Full Bench. It was necessary for the applicant, in order to succeed, to demonstrate that the Full Bench exceeded its jurisdiction in making the order on a different basis, namely ordering a payment of money otherwise than as damages for breach of an implied term in the contract.

77 I agree with the Chief Justice that the Full Bench did not demonstrate any misunderstanding or misconception as to the nature of its jurisdiction and powers under ss 191 and 192. The fact that the appeal was “not by way of a new hearing” (s 191(1)) precluded the Full Bench from forming its own view, in the absence of any need to identify error on the part of the primary judge. It did not take that course. Further, the requirement that it “cannot merely substitute its decision on the matter, but must follow the principles applying to appeals from discretionary decisions” (s 191(3)) is not in terms a constraint on the kind of orders which may be made, but rather upon the basis for a finding of error. It is only when the Full Bench has identified an error of the kind referred to in House v The King that its powers to quash or vary the decision of the primary judge are attracted. However, once a relevant error has been identified, s 192 imposes no specific constraint on the manner in which the Full Bench may “vary” the decision. There is no reason to hold in the present case that the Full Bench was not entitled to reach a decision of a kind which could have been reached by the primary judge, without jurisdictional error.

78 The applicant needed to demonstrate that there was no basis upon which the Commission could have ordered the payment of an amount of money equal to two months wages, in exercise of its powers under s 106(5) of the Industrial Relations Act. It assayed that task by relying upon the separate jurisdiction of the courts in relation to a claim for damages for breach of contract and of the Commission in respect of a claim for variation of an unfair contract. In other words, the applicant’s case was not that the respondent was not entitled to a payment, but that he was not entitled to a payment from the Commission.

79 The difficulties caused for claimants by the splitting of jurisdiction, so that a non-colourable claim brought in one jurisdiction does not attract any accrued jurisdiction in relation to an alternative basis of claim, though unattractive, may be accepted. However, it does not follow that such a result has automatic operation. As explained by Rothman J in Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2007] NSWSC 104; 69 NSWLR 198 at [150], the common law “does not give a right to terminate a contract of employment on payment in lieu of reasonable notice”. What the general law provides, absent an express contractual term, is an implied right to reasonable notice and relief by way of damages for failure to give such notice. On the other hand, if the Commission considered that a contract which merely contained such an implied term was unfair, it might be minded to vary the contract so as to provide a contractual right to payment in lieu of notice and then to award a payment of money in circumstances where there had been neither reasonable notice nor an appropriate payment. (Arguably, that is what the primary judge did: Murton v T D Preece & Co Pty Ltd [2006] NSWIRComm 367 at [48] and [65](2).)

80 Whether such an approach would be consistent with Sydney Water Corporation need not be considered here. Similarly, it is not necessary to consider whether an application made on such a basis would involve an allegation that the contract was unfair for a reason which could give rise to a claim that the dismissal was harsh, unreasonable or unjust, for the purposes of s 84 of the Industrial Relations Act, so that the claim under s 106 would be precluded by s 109A. The answer is by no means self-evident. Similar difficult issues could arise where a contract was sought to be varied to include an entitlement to payment of damages in respect of the manner of a termination found to be wrongful, being a form of relief available under the general law only in limited circumstances: see Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2008] NSWCA 217 at [34].

81 Because the applicant could not make good a case that the Industrial Court had no authority to give the identified remedy, it follows that I agree with the Chief Justice that the summons in the present matter should be dismissed: the applicant should pay the respondent’s costs.

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