Tomlinson v Ramsey Food Processing Pty Limited

[2014] HCATrans 284

[2014] HCATrans 284

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S220 of 2014

B e t w e e n -

GRANT TOMLINSON

Applicant

and

RAMSEY FOOD PROCESSING PTY LIMITED

Respondent

Application for special leave to appeal

FRENCH CJ
KEANE J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 12 DECEMBER 2014, AT 11.23 AM

Copyright in the High Court of Australia

MR D.M.J. BENNETT, QC:   May it please the Court, I appear with my learned friend, MR R.I. GOODRIDGE, for the applicant.  (instructed by Monaco Solicitors)

MR R.A. CAVANAGH, SC:   If the Court pleases, I appear with my learned friend, MR K.W. ANDREWS, for the respondent. (instructed by AR Connolly & Company)

MR BENNETT:   If the Court pleases.  Your Honours, this application raises issues of importance at a wider and a narrower level.  At the wider level, the Court of Appeal has failed to apply two decisions of single justices, one of Justice Lee in the Supreme Court of New South Wales and one of Justice Madgwick in the Industrial Relations Court of Australia, without referring to either although both were heavily relied on and this case was a fortiori from the decisions in both.  Indeed, the case is also a fortiori from the facts and decision of this Court in Ramsay v Pigram and some United States authority which also takes a different view of the recent authority in the Supreme Court.

The narrow issue is whether an employee is bound as a privy when proceedings are brought against the employer by the Fair Work Ombudsman and that is particularly important in New South Wales where a finding that an entity is the employer where there are two companies in a group and it is a question of which one it is can have extensive statutory significance to the disadvantage of the employee who has no ability to control those proceedings.  Those are the two issues. 

If I can just develop the first a little, your Honours have the two decisions:  Eljazzar v BHP Iron Ore and Young v Public Service Board.  If I can just remind your Honours first of what was said in Eljazzar - your Honours have that and if your Honours go to the – the pages may not be numbered – to the third‑last page, your Honours will see a heading “The position of the applicant vis-a‑vis the union”.  The question here was whether the applicant was bound by an issue estoppel as to a fact found in proceedings brought by the union for his reinstatement in which the Industrial Relations Court had held that the dismissal was justified and then the employee sued for wrongful dismissal.  It was held that the union was not a privy for that purpose.  If your Honours look at the passage, the second paragraph under that heading:

The union had legitimate interests of its own to consider, which may or may not entirely have coincided with those of Mr Eljazzar.

As here, the Fair Work Ombudsman has interests to consider which may or may not coincide with Mr Tomlinson’s interests.

KEANE J:   But the Fair Work Ombudsman was only engaged because of your client’s complaint.

MR BENNETT:   No, your Honour.  There is no evidence suggesting that we complained and asked it to commence proceedings.  There is no evidence suggesting that.  There are a large number of employees and the proceedings were brought in relation to the employment of all of them.  His Honour goes on to say ‑ ‑ ‑

KEANE J:   Is it not true to say that as, I think it is Justice Emmett at page 86, paragraph 89, that:

Mr Tomlinson swore an affidavit that was relied on by the Fair Work Ombudsman ‑ ‑ ‑

MR BENNETT:   Yes, he did, your Honour.  He was asked no doubt to provide an affidavit and did so.  The affidavit was purely factual.

KEANE J:   In proceedings where the relief that was sought was an order for payment to him.

MR BENNETT:   One of the aspects was that, yes, your Honour.  But it was a matter of indifference to him whether the payment was by one company or the other in those proceedings.  There is no suggestion that he had any control or was consulted in relation to the Fair Work Ombudsman as allegation and which was upheld that the employer was the one company rather than the other.  As we now know, that operates very much to Mr Tomlinson’s individual disadvantage whereas it would not have made any difference to him if it had been the other result in those proceedings and Tempus had had to pay the money to him.  Your Honour, just reading on from Eljazzar, that middle paragraph:

It had its own obligation to refer its dispute with the respondent to the Commission.  It would have its own strategic and tactical industrial interests to consider.  It would have the interests of its members employed by the respondent other than the applicant and Mr Reid to consider.  It would have, in deciding whether or not to appeal, its own doubtless relatively scarce resources to consider.

All those factors apply here.  The considerations that the Fair Work Ombudsman would apply in making the decision to argue that company A or company B is the employer would be matters completely independent of the applicant’s interests and we know now in fact operated contrary to them. 

FRENCH CJ:   Accepting for the sake of argument that there might be a special leave point in the estoppel question and no doubt this is not the only example of cases which have regulators taking, in effect, representative actions, you have the view expressed at paragraph 99, page 90 of the application book by Justice Emmett that on the evidence:

Mr Tomlinson continued to be employed by Ramsey Food.

I know he has not expressed it as a finding but does that not feed into our consideration of whether or not the appeal is ultimately attended with sufficient prospects of success to warrant the grant of special leave?

MR BENNETT:   Your Honour, if there were a notice of contention on that basis that would no doubt have to be considered.

KEANE J:   Well, the point has been flagged, though, in your client’s submissions.

MR BENNETT:   But, your Honours, we submit that there is a very strong argument that the decision of Justice Buchanan was wrong.  The law of sham is such that something is not a sham merely because it is done for an ulterior purpose.  This Court has rejected the doctrine of fiscal nullity in relation to tax and the same would apply in relation to other regulatory reasons for setting up a particular structure.  If one sets up a structure in a different way to what might be seen as the normal way for some ulterior reason that is not a sham.  Sham does not look to motive, sham looks to not genuinely doing it and there is no suggestion here that it was not genuinely done.  So, there would be, if that argument were raised, a very serious argument that the finding of sham could not stand.

FRENCH CJ:   But is sham the logical pathway to concluding that he is an employee of Ramsey Food.  If one looks to the factors in the relationship between Mr Tomlinson and Ramsey Food set out from 97 through to 98 of the judgment of Justice Emmett he is actually looking for control, payment, et cetera, is he not, the indicia of an employment relationship with Ramsey?

MR BENNETT:   Your Honour, there were indicia the other way.  The employees were told they are now employed by the other company.  They had pay slips from the other company.  The other company was the insurer for workers compensation and matters of that sort.  The indicia, we would submit, are, in fact, stronger the other way.  That is why his Honour had to rely on sham to make the finding that Ramsey was the employer. 

But, your Honour, ultimately, the issue concerns issue estoppel.  Although the two cases - I have not taken your Honours to the other, Young’s Case - but both cases were heavily relied on below and were not referred to by the Court of Appeal, one by a federal judge, one by another State judge.  They are both in “a fortiori” situations where a member is held not to be the privy of his union which takes action whereas here it is a public body doing it in the public interest. 

Of course, the other factor there is, if one looks at Ramsay v Pigram, in that case your Honours recall there was a collision between a police car and a vehicle driven by Mr Pigram and Mr Pigram and the police officer were both injured.  The police officer sued for his injuries.  There was a cross‑claim for – sorry, not cross‑claim, a defence of contributory negligence which failed so that meant that the first court said the police officer was not negligent and then Mr Pigram sues the State Government as the owner of the vehicle and the employer of the police officer, held no privity between the police officer and the State Government which employed him and in relation to which there had been the earlier finding.

So they are both much stronger cases, one would have thought, for privity than this case, yet this Court has gone the other way.  In the United States there were a string of state decisions extending the doctrine of privity and a recent Supreme Court decision cutting it right back and saying there were six categories - which we have set out in our submissions and into which we do not fall. 

It is an important issue and one where we would submit the Court of Appeal’s decision is difficult to reconcile with this Court’s decision in Ramsay v Pigram and impossible to reconcile with the two single judge decisions we referred to and that is an issue of importance.  The Fair Work Ombudsman brings proceedings.  Very often those proceedings will include the vindication of failure to pay money to a worker and if the worker is bound by a decision as to who the Fair Work Ombudsman wants to categorise as the employer in the first set of proceedings in which the worker has no control, the worker can lose rights, as here. 

That, we submit, is a serious injustice which can and will no doubt occur in the future if this decision is not dealt with by this Court.  The tests put in those two earlier cases include absence of control of the first proceedings and, of course, we had no control at all and the fact that the ‑ ‑ ‑

KEANE J:   What do you make of the fact that you are described as a complainant?

MR BENNETT:   Your Honour, that was a shorthand expression adopted by the judge.  There is no suggestion that in any sense we were.  It was purely a shorthand expression which was a convenient shorthand expression and may have been accurate in relation to some of the others.  It may not have been.  We do not know.  He had to find a convenient word to describe them and that was a convenient word.  It was not an accurate word.  It is certainly not in any way binding on anyone. 

KEANE J:   It is not an accurate description of the circumstances in which the Fair Work Ombudsman came to bring these proceedings?

MR BENNETT:   No, your Honour.  There is no evidence suggesting that we in any way encouraged or provoked or sought the bringing of these proceedings.  All that we know is that we are one of a number of employees who were alleged to be unpaid and we gave an affidavit about factual matters.

KEANE J:   Your client must have been very happily surprised when he found himself the beneficiary of an order that the company pay him money?

MR BENNETT:   He would have been indifferent to which company was ordered to pay him the money, which is the issue we are concerned with here.  He may well have been happy to receive money.  Obviously, people are but it is not money he would not otherwise have got from ‑ ‑ ‑

KEANE J:   I was more interested in the notion that he might have been surprised if it was something that he had had nothing to do with.

MR BENNETT:   Well, your Honour, a victim of crime may be surprised when the criminal court makes an order for restitution out of the offender’s pocket.  These things happen to people but that does not make one a privy. 

KEANE J:   Not if they have been asked to swear an affidavit in support of the proceeding. 

MR BENNETT:   Your Honour, being a witness cannot make one a privy in proceedings.  One can be a witness in all sorts of situations and it would be almost a public policy reason of saying that a person should not become a privy by being a witness because that would discourage people from being witnesses in cases and no one is suggesting ‑ ‑ ‑

KEANE J:   Not solely by being a witness, just as not solely because, as the court below said, not solely because of the provisions that entitle the Fair Work Ombudsman to represent your clients, not solely for those reasons but when they accumulate it starts to suggest, perhaps, a different complexion. 

MR BENNETT:   Your Honour, we submit that they have to be weighed against the absence of control, the injustice in the present case, the indifference – the logical indifference of our client to which company is held to be the employer and those considerations.  When one looks at the way it is put in Eljazzar where all the facts are saying that the worker is not a privy of his union are listed, all those factors are present in this case.

The Fair Work Ombudsmen is a public officer doing something in the public interest as to which there is a side benefit to certain people.  But that side benefit was not affected by this finding for the reasons I have given.  We submit, your Honour, this is an important case where the decision – yes, I am reminded that it appears from our reply we have set it out that in the decision of Justice Buchanan the only basis on which Ramsey was held to be the employer was the sham transaction.  For those reasons we submit that there should be a grant of special leave.

FRENCH CJ:   Thank you, Mr Bennett.  Yes, Mr Cavanagh.

MR CAVANAGH:   Your Honours, we obviously adopt what your Honour the Chief Justice said about the result.  It may not alter, even irrespective of the issue estoppel point on the bases as Justice Emmett has suggested, although not determined, the ‑ ‑ ‑

FRENCH CJ:   I suppose if leave were granted and the appeal went forward and you had a cross‑appeal the estoppel point would have to be dealt with first.  It is logically anterior to the question of whether there is or is not an employment relationship.  The first question is is he allowed to raise it?  Then the second question would be raised no doubt by the notice of contention.

MR CAVANAGH:   Yes, your Honour, that would be the way to proceed, but we would say in the end ‑ ‑ ‑

FRENCH CJ:   In other words, that finding would not of itself render the question of issue estoppel a moot question.  It is a matter which goes to an ultimate outcome, of course.

MR CAVANAGH:   Yes, we accept that, your Honour.  I do not wish to say anything more about that other than that my learned friend suggested in some way that Justice Buchanan’s decision was just entirely based on a sham arrangement.

FRENCH CJ:   I suppose what I am looking at is the question of whether the issue estoppel issue is on any scenario going to be a live issue in the appeal if special leave is granted.  There is no scenario under which it would not be a live issue and have to be determined.

MR CAVANAGH:   Yes, your Honour.

FRENCH CJ:   So I suppose the question then is how significant is it as a question?

MR CAVANAGH:   We would say it is not significant at all for this reason, your Honour, in terms of this particular case.

FRENCH CJ:   …..surprise.

MR CAVANAGH:   Yes, my learned friend had said this is a case of some importance and those sorts of things but in the end it is a case which essentially turns on its own facts.  This is a case quite different from Effem and Eljazzar.  In this case the complainant employees and, if your Honours turn to page 107 of the respondent’s supplementary material, your Honours will see the opening words of Justice Buchanan’s reasons for judgment and this is where the term “the complainant employees” comes from:

The issue in this case is whether the first respondent (“Ramsey Food Processing”) –

the respondent in these proceedings -

as employer of 11 persons (“the complainant employees”) . . . failed to pay those employees amounts of money due on account of the termination of their employment.

So the simple point is the central issue in the Federal Court case was the relationship between those 11 complainant employees, one of whom was Mr Tomlinson and Ramsey Food, the respondent in these proceedings.  As we put it my learned friend seeks to suggest that because in some way penalties and other orders were sought as part of the Federal Court proceedings that that removes it from what Justice Emmett determined was, in fact, the same as Justice Buchanan.  The central issue in the Federal Court proceedings was the question of the relationship of employment between the applicant and respondent.

FRENCH CJ:   Does this raise any wider question about representative actions taken by regulators which result in awards being given to, for example, consumers – I am thinking of provisions in relation to the ACCC under what was the Trade Practices Act and I have a feeling there might be something similar in relation to ASIC but I am not sure about that.

MR CAVANAGH:   Yes, your Honour.  We would say no for this reason.  His Honour Justice Emmett looked at and considered the functions of the Fair Work Ombudsman - and that is at appeal book page 85 in paragraphs 85 and following of the Court of Appeal judgment.  It may be that that would be a point which could be raised if that was the only basis on which his Honour has determined that the issue estoppel applied in the sense of there being a privy but his Honour has specifically not said that the fact that the Fair Work Ombudsman was exercising functions as set out

under section 682 that in some way that determined the issue.  What his Honour has – the real basis of his Honour’s finding is set out at appeal book 86 in paragraph 89 of ‑ ‑ ‑

FRENCH CJ:   The procurator.

MR CAVANAGH:   Yes.  The reality is that his Honour has relied essentially on the particular facts in this case which are that Mr Tomlinson, the applicant in these proceedings, was a complainant employee.  He did something.  He actively sought to achieve a result through complaining to the Fair Work Ombudsman.  He then actively participated in the proceedings by swearing an affidavit.  He then was the beneficiary of an order in his favour for payment of money.  Justice Buchanan declared – made a declaration that he was employed by the respondent based on those findings. 

So we would submit this case falls for determination based on its facts.  It does not establish any particular principle and there is nothing about his Honour Justice Emmett’s consideration of the legal principles which suggests that his Honour’s consideration was infected by error.  His Honour has applied appropriate principle to the facts of the case and, in those circumstances, it is not a significant case, it stands for no principle other than that in circumstances where a worker seeks to, through the Fair Work Ombudsman, obtain payment of his statutory entitlements and actively participates in that process and actively participates in the proceedings, then, when there is a finding made that he was employed by Ramsey Food and he is entitled to the benefit he is bound by that. 

In circumstances where he then commences proceedings in another court seeking to assert the opposite – something different for the purposes of obtaining another benefit, there is nothing unusual or surprising, as Justice Emmett said elsewhere in his judgment, about the fact that the principle of issue estoppel should apply.  Unless your Honours need to hear from me further, they are my submissions.

FRENCH CJ:   Thank you.  Yes, Mr Bennett.

MR BENNETT:   If your Honour pleases.  Your Honour asked the rhetorical question about is this of general significance in relation to regulators who bring this sort of proceeding and we submit it is, your Honour, because first of all the de‑emphasis of the significance of absence of control in the previous proceedings and all the factors that I took your Honours to that were set out in Eljazzar and not referred to here, most of those factors are present in cases where there are other regulators bringing this sort of proceeding so in that sense it would have, we would submit, a general application. 

In my friend’s final submission he seems to suggest we are trying to get a double benefit and get two things to which we are not entitled.  Of course, an employee’s entitlement to benefits and the entitlement to compensation are cumulative, they are not alternative benefits.  The question is who we are entitled to the second point from and who we are entitled to the first one from.  As I say, that was a matter of indifference on the first occasion to us and we should not be bound by the incidental and almost accidental decision in that sense to lose the other parts of our entitlements.

FRENCH CJ:   Thank you, Mr Bennett.  There will be a grant of special leave in this matter.  The time estimate, I presume, will be half a day to a day.

MR BENNETT:   Yes, your Honour, there are a few authorities that will be necessary to go through and half a day to a day ‑ ‑ ‑

FRENCH CJ:   We anticipate a notice of contention from you.  Are you happy with that time estimate?

MR CAVANAGH:   Yes, your Honour.

FRENCH CJ:   All right and I think there are some standard directions available for timetabling of submissions.

MR BENNETT:   The only possibility I should refer to is the possibility that the Fair Work Ombudsman may seek to intervene.

FRENCH CJ:   Well, we will take one bridge at a time.  All right, the Court will now adjourn to reconstitute.

AT 11.48 AM THE MATTER WAS CONCLUDED