Cunningham & Ors who are currently trading as, or who have traded as, Flower & Hart (a firm) v Hart [2008] QIRC 39 (2008) 188 QGIG 10

[Extract from Queensland Government Industrial Gazette, Dated 9 May 2008, Vol. 188, No. 2, pages 10-16] QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations Act 1999 - s. 331 - dismiss or refrain from hearing or further hearing or deciding a cause Robert James Cunningham Michael John Douglas Meadows David John Herbert Watt Brian Walter Smith Warren Grant Denny Robyn Gay Lyons Stephen John Tonge Brian Francis Ward James William Alley Sharon Ann Winn who are currently trading as, or who have traded as, Flower & Hart (a firm) AND William Hamilton Hart (B/2008/11) DEPUTY PRESIDENT BLOOMFIELD 30 April 2008 Application for declaration under s. 274A - Application for unpaid wages and superannuation relating to same issues filed in Magistrates Court - Application to dismiss or refrain from hearing the s. 274A application on basis whole matter can be dealt with more appropriately in Magistrates Court - High Court decisions considered - Process and procedure in two jurisdictions is different - Held Applicant entitled to pursue s. 274A application in Queensland Industrial Relations Commission. DECISION Background On 21 December 2007 Mr William Hamilton Hart (the Applicant) filed an application (B/2007/79) in the Queensland Industrial Relations Commission (the Commission) in which he sought the following declarations: "(a) A declaration under section 274A of the Industrial Relations Act 1999 (the Act) that the remuneration paid to me as an employee of Flower and Hart, Solicitors should have been paid without deduction of superannuation contributions; (b) A declaration under section 274A of the Act that remuneration should have been paid to me by Flower and Hart, Solicitors for periods of annual leave taken during my employment at the rate specified in the Act; and (c) A declaration under section 274A of the Act that remuneration should have been paid to me by Flower and Hart, Solicitors for periods of accrued but unused annual leave as at the termination of my employment at the rate specified in the Act.". In the affidavit accompanying the application, the Applicant indicated that from 1 January 2002 until 3 June 2006 he was employed by the Respondent firm as a consultant solicitor. He also said that during his employment, the firm: (i) without his consent deducted superannuation contributions from his remuneration; (ii) paid his remuneration for periods of annual leave taken during the first year of his employment but failed to pay him remuneration for any periods of annual leave taken during the second and subsequent years of his employment; and (iii) failed to pay his remuneration for periods of accrued but unused annual leave as at the termination of his employment. The application was later amended to record the names of the various partners in the firm during the Applicant's employment. On 21 January 2008 the Applicant filed an application in the Industrial Magistrates Court at Brisbane in which he sought the sum of $72,720.38 which was said to represent the amounts underpaid by the Respondents in respect of the three matters listed immediately above. -- 1 of 6 -- 2 On 20 February 2008 the Respondents filed an amended response to the Applicant's application in the Commission, which included the following points: (i) the Applicant was employed as a pieceworker within the meaning of the Act; (ii) the contract of employment contained no express or implied terms which conferred on the Applicant any entitlement to annual leave, or payment therefore; (iii) the superannuation contributions made by the Respondent on the Applicant's behalf were deducted from, and thereby form part of, the Applicant's remuneration; (iv) the superannuation contributions were paid in a manner whereby they formed part of the Applicant's remuneration. Throughout his employment the Applicant was given monthly statements showing his remuneration and the superannuation deductions therefrom. He was expressly informed of this position in 2003 and continued to perform and extend the terms of his contract of employment without demur thereafter. The Respondents also applied (at point 9 of the amended response) for the application by the Applicant to be dismissed and/or, in the alternative, for the Commission to declare that the Applicant has no entitlement to payment by the Respondents of any amount on account of annual leave or superannuation. On 3 March 2008 the Respondents filed the present application (B/2008/11) in the Commission which seeks: "(a) A decision pursuant to section 331(b)(ii) of the Industrial Relations Act (1999) dismissing the applicant's amended application for a declaration or alternatively an order that the Commission refrain until further order from hearing or deciding the cause on the basis that further proceedings by the Queensland Industrial Relations Commission are not necessary or desirable in the public interest as: - (i) the applicant has commenced proceedings dated 21 January 2008 relating to the same subject matter between the same parties in the Industrial Magistrates Court ("the Industrial Magistrates Court proceedings"); (ii) the Industrial Magistrates Court has jurisdiction to hear and determine in the Industrial Magistrates Court proceedings all matters which are in issue in the applicant's amended application for a declaration; (iii) it is vexatious and oppressive to require the respondents to defend two contemporaneous proceedings in two jurisdictions and two courts in relation to the same substantive matter between the same parties, and it is contrary to the fair administration of the Act to permit the Applicant to divide the substantive proceedings in this way, when the whole of the matters in issue can be lawfully determined in one of the two proceedings presently instituted by the Applicant. (b) An order under section 331(c) of the Industrial Relations Act (1999) that the applicant pay the respondents' costs of and incidental to the application for a declaration, the amended application for a declaration and this application.". The Respondent's Submissions Mr A. Herbert, who represented the Respondents, argued that the Applicant's application to the Commission fell fairly and squarely within the category of case described by the High Court as being an abuse of process. The Commission, being a court of record, should step in and ensure that the Respondents were not subjected to the vexation of being required to deal with the application in two tribunals, with two sets of disturbance costs and appearances and with two exposures, one more real than the other, to the award of costs. The Commission was empowered by the terms of the Act, Mr Herbert said, to look past questions of form or technicality at the "pith and substance" of the matter before it. Whilst the claim was purported to be brought under section 274A of the Act it was, in reality, a matter involving unpaid wages and superannuation contributions and was an attempt to circumvent the legislative prescription which prevented the Commission from considering such claims if the amount involved exceeded $50,000. The Applicant had adopted a process whereby he was breaking up his claim into two parts, Mr Herbert said. The first half, "or maybe the first three-quarters or seven-eighths" have been brought before the Commission "so that there is nothing in essence to be decided once the proceedings before this Commission have been determined, other than to add the numbers on to the end of the determinations being sought in this jurisdiction". On the other hand, if an Industrial Magistrate heard the matter the Magistrate would have to decide all of the issues involved in the matter, including the issues of whether the Applicant was a pieceworker, whether annual leave was payable and whether the superannuation deductions were entitled to be made, as well as to calculate the actual amounts owing, if any. -- 2 of 6 -- 3 Mr Herbert said if the Commission was precluded by legislative direction from hearing the whole of the matter, because the claim exceeded the Commission's jurisdiction of $50,000, then, by necessary implication, it must be taken that the legislative intention was that the Commission must also be precluded from hearing the operative seven-eighths of the matter. By declining to grant the decision sought by the Respondents in the present application then the Commission would be giving its imprimatur, as it were, to the kind of "creative engineering" and evasion of the clear statutory limitations that the Applicant was attempting, Mr Herbert said. He also said that s. 274A ought not be interpreted in such a way as to permit an applicant to deliberately subdivide a claim which is otherwise within the jurisdiction of the Industrial Magistrates Court and outside the jurisdiction of the Commission. To endorse such approach would be anathema to the scheme of the Act. In the circumstances where the Commission had such a cynical example of an attempt to evade the clear legislative scheme of the Act, Mr Herbert said, the Commission was plainly entitled, under s. 331, to prevent its processes being misused in that way, even though the Applicant's application might fall within the literal terms of the Act. The issue confronting the Commission is whether or not the Commission is prepared to be seen to be acting in a way that encourages manipulations of the provisions of the Act in a way that the Parliament never intended. Mr Herbert said that his clients were merely seeking that the issues in dispute be determined in the one place, at the one time, without the "smart manoeuvring" involved here, which would require the Respondents to battle in two different Tribunals to have the matter heard and determined. In support of his submissions that the Commission should grant the relief sought by the Respondents, Mr Herbert referred me to the decisions of the High Court in Batistatos v Roads and Traffic Authority of New South Wales [2006 226 CLR 256]; Voth v Manildra Flour Mills Proprietary Limited and Another [1990 CLR 538]; and, Walton v Gardiner and Others [1992-1993 CLR 378]. In particular, Mr Herbert referred me to what the High Court had to say in Voth (supra) under the heading "Comparison between the 'clearly inappropriate forum' test and the 'clearly more appropriate forum' test" (at page 557). Relying upon what the High Court said under that topic, Mr Herbert argued that the Industrial Magistrates Court was clearly the more appropriate forum to have the issues between the Applicant and the Respondents determined. It was not appropriate for the Commission to adopt the "chauvinistic notion" that it could deal with a matter better than the Industrial Magistrates Court because it didn't matter how well the Commission might deal with the issues, the parties would still have to go to the Industrial Magistrates Court after the s. 274A proceedings were finished. That was the essence of the Respondent's argument, he said. Mr Herbert also said that Walton v Gardiner (supra) (at 393, citing Voth) was authority for the proposition that "proceedings within the jurisdiction of a court will be unjustifiably oppressive and vexatious of an objecting defendant, and will constitute an abuse of process, if that court is, in all the circumstances of the particular case, a clearly inappropriate forum to entertain them.". Finally, Mr Herbert referred me to Batistatos (supra) at [63] and [65] where Gleeson CJ, Gummow, Hayne and Crennan JJ said: "[63] ... The plaintiff certainly has a 'right' to institute a proceeding. But the defendant also has 'rights'. One is to plead in defence an available limitation defence. Another distinct 'right' is to seek the exercise of the power of the court to stay its processes in certain circumstances. On its part, the court has an obligation owed to both sides to quell their controversy according to law. ... [65] The 'right' of the plaintiff with a common law claim to institute an action is not at large. It is subject to the operation of the whole of the applicable procedural and substantive law administered by the court, whose processes are enlivened in the particular circumstances. This includes the principles respecting abuse of process.". Relying upon the above decisions in toto, but more particularly the two paragraphs immediately above, Mr Herbert indicated that if the Commission "quells the controversy" by exercising the powers available to it under s. 331(2)(b), and stayed or dismissed the proceedings before the Commission, then the Applicant would suffer no detriment other than he would be required to have the matter litigated in another court in circumstances where those proceedings were already on foot. -- 3 of 6 -- 4 The Applicant's Submissions At the outset of his submissions Mr K. Watson, who represented the Applicant, categorically rejected Mr Herbert's suggestion that the s. 274A application was brought, somehow, as a cynical exercise in a way which was an attempt to circumvent the "obvious restrictions" which are set out in s. 278 and s. 399, respectively, of the Act. Importantly, Mr Watson stressed that Mr Herbert had not attacked the jurisdiction of the Commission to deal with the s. 274A application but, rather, had suggested there were implications that arose out of the use of that section which somehow fettered what it could be used for. However, such implications were not real, he said. Mr Watson indicated that the Applicant had indicated to the Respondent that the Industrial Magistrates Court proceedings would not be progressed until the proceedings in the Commission were finalised. As such, it was not correct to argue that the Respondent faced two sets of proceedings. The application in the Industrial Magistrates Court had only been lodged at the time it was to protect the Applicant's position because of the statutory time limit of 6 years. It was only intended that it be pursued once the proceedings in the Commission concluded and a declaration was obtained. Mr Watson said that there were four relevant issues which related to the Applicant's amended application seeking declaratory relief pursuant to s. 274A of the Act, as follows: (a) the Commission may make a declaration about an "industrial matter". An "industrial matter" is defined in s. 7 of the Act as including - "a matter that affects or relates to - ... (b) ... (ii) the ... rights ... of - persons who have been employees". (Plural words include the singular, see s. 32C(b) of the Acts Interpretation Act 1954); (b) the declaratory relief can be given whether or not consequential relief can be claimed; (c) the Applicant is a person who may bring the application because he may be directly affected by the declaration; (d) subject to Chapter 9 of the Act (which chapter deals with appeals and are not of moment here), the declaration is binding in any proceeding under the Act in relation to the issue determined by the declaration. (Mr Watson's emphasis). Mr Watson said that the Applicant's claim for declaratory relief indisputably sought a declaration with respect to his rights to receive payment for annual leave and for his agreed remuneration without deduction unless authorised which, in the case of the superannuation deductions, were not. The Applicant wished to have that matter decided by the Commission and it was not a question of "judicial chauvinism, sycophancy or whatever". The issue of whether the Applicant was a pieceworker "is a very, very live issue and ... we want that issue determined in the jurisdiction which we think is best suited to that purpose, and that's here, in this Commission. Why? Because this Commission deals with that sort of issue, day in, day out.". In respect of (b) Mr Watson stressed that the Commission may make a declaration whether or not consequential relief is, or could be, claimed. That power was not available, however, to an Industrial Magistrate, he said. The ability to make the declaration in relation to an industrial matter was particularly important because (as highlighted in (d)) such declaration was binding in any proceeding under the Act in relation to the issue determined by the declaration. As such, if the Commission granted the declarations sought, it would then be open to the Applicant to take that declaration to the Industrial Magistrates Court, Mr Watson said. It would not be a question of there being two sets of proceedings. The Applicant would seek to enforce the declaration obtained in the Commission in relation to the real issues in dispute. Mr Watson said that the fact that there may be successive proceedings was expressly contemplated by the legislature in the very words used in s. 274A of the Act. This stems from the fact that it permits the Commission to make declaratory relief without any other relief being sought and also provides that any declaration is binding in any proceeding under the Act. There is no limitation with respect to when that proceeding is to be brought and there is no expression in the legislation suggesting that another proceeding cannot be commenced until after the declaration has been given in the Commission in the proceedings leading to the declaratory relief, he said. If the legislature wished to place some limitation with respect to wage proceedings in s. 274A it could easily have said so, Mr Watson said. The fact that it hasn't, and the fact that it says "any proceeding under the Act" really defeats Mr Herbert's argument on the point, Mr Watson said. The legislature doesn't say "in the proceeding in which the declaration is made", it says "in any proceeding", he said. -- 4 of 6 -- 5 In response to Mr Herbert's arguments about the application being an abuse of process, and the authorities to which he referred, Mr Watson referred me to Morning Star Research Pty Ltd v Fiduciary Ltd (2003) 131 FCR 236 at 240; Moore v Inglis (1976) 9 ALR 509 at 513 and 515; Saffron v Commissioner of Taxation (1991) 30 FCR 578 at 583; and, Henry v Henry (1996) 185 CLR 571 at 590-591. Relying upon an observation by Mason J (as he then was) in Moore (supra) at 513-514, Mr Watson said that the proceedings in the Commission and in the Industrial Magistrates Court were not the same for two reasons. Firstly, the relief sought by the Applicant in the Commission is not available in the Industrial Magistrates Court. Secondly, the procedure in the Industrial Magistrates Court is quite different to the procedure in the Commission. Whereas the rules of evidence would apply to the matter were it to all take place in the Industrial Magistrates Court, the provisions of s. 320(2) and (3) would allow the proceedings in the Commission to be determined on a vastly different basis. The Commission would not be bound by technicalities, legal forms or the rule of evidence. It would be governed in its decisions by equity, good conscience and the substantial merits of the case having regard to the interests of, in particular, the persons immediately concerned. Further, and importantly in the eyes of the Applicant, Mr Watson said, the regime covering costs was different in the two jurisdictions. In the Industrial Magistrates Court costs normally followed the event. In the Commission, costs could only be considered if a party was held to have made an application vexatiously or without reasonable cause. Even then, the Commission possessed a discretion as to whether it would award costs or not. Mr Watson said it would be absurd if the Applicant was denied relief in the Commission because he had simply instituted proceedings in the Industrial Magistrates Court to protect the 6 year time limit referred to at s. 399(3) of the Act. If he had not been forced to lodge that application when he did he could have waited until the Commission made its determination on his s. 274A application and then brought proceedings in the Industrial Magistrates Court, relying upon that declaration. To have to delay the proceedings to wait until the conclusion of the Commission proceedings would work an injustice to the Applicant because he would have to abandon those parts of his claim that went outside the 6 year time limit. That could only work to the benefit of the Respondent. Further, the Respondent's application ran counter to the principal that it is up to the Applicant to decide which entitlement he might pursue and where he might pursue it (see Walker v Industrial Court of New South Wales (1994) 53 IR 121 at 134-135). If the Respondents' application succeeded they would be the ones choosing the forum, not the Applicant, Mr Watson said. Finally, and in summary, Mr Watson urged the Commission to consider the following matters in making its decision on the Respondent's strike out/refrain from hearing application: "(a) the QIRC is a specialist jurisdiction better equipped to deal with issues such as who is a 'pieceworker' than the Industrial Magistrates Court; (b) a lot of work has already occurred in these proceedings such as the Response and further and better particulars as well as working on witness statements which may be thrown away if the matter does not proceed in the QIRC. A hearing of the relevant issues is a lot closer in the QIRC than in the Industrial Magistrates Court; (c) s. 335 which restricts the power to award costs does not apply to Industrial Magistrates Courts; (d) s. 320(2) and (3) apply in the QIRC but not in the Industrial Magistrates Court in this instance. Therefore the proceedings are not the same; (e) the effect of the binding nature of the declaration in the QIRC is such that once obtained those issues will never be the subject of litigation in the Industrial Magistrates Court.". Conclusions After considering the submissions and the authorities to which the respective Counsel have referred I find Mr Watson's arguments to be compelling. The Respondent's strike out/refrain from hearing application under s. 331 of the Act is based solely on the fact that the Applicant in the proceedings proper has been forced to lodge an application in the Industrial Magistrates Court in order to protect his position because of the 6 year time limit mentioned at s. 399(3) of the Act. Had it not been for that application one must presume that the present s. 331 application would not have eventuated. In any event, Counsel for the Applicant has indicated that it is not the Applicant's intention to pursue the matter in the Industrial Magistrates Court until after the s. 274A application is heard and determined. He has also indicated that the Applicant is prepared give a binding undertaking to that effect. Mr Watson has also made it clear that it is the Applicant's preference to have his application dealt with pursuant to s. 274A of the Act because of the procedural and other advantages associated with having the issues involved determined in the Commission. Leaving aside the issue of which of the Commission or the Industrial Magistrates Court is best placed to decide the real issues in dispute, because it is not helpful nor proper to consider such matters, the procedural issues associated with the Applicant's choice of forum cannot be disregarded or simply pushed aside. If they -- 5 of 6 -- 6 were, it would be tantamount to the Commission allowing the Respondent, rather than the Applicant, to choose the forum in which the substantive proceedings are to occur. The real issue for determination, however, is not whether it should be the Applicant, or the Respondent, who chooses the forum. The real issue, on the authorities, is whether the Commission or the Industrial Magistrates Court is the "more appropriate" forum. Taking into account what the High Court said in Voth (supra), and confirmed in Henry (supra) and Batistatos (supra), I am not able to conclude that the Industrial Magistrates Court is the more appropriate forum for the matter to be decided. Whilst it is certainly true that the underlying issues in dispute can be heard and determined in the Industrial Magistrates Court the processes that would be observed there are vastly different to those which will apply if the matter is dealt with under s. 274A. Further, the nature of the proceedings is quite different. The s. 274A application seeks a declaration which can then be used as a binding outcome in any other proceedings under the Act in relation to the issue determined by the declaration. Such remedy is not available in the Industrial Magistrates Court, a fact which has heavily influenced my thinking. If the Commission were to accede to the Respondent's s. 331 application it would, in effect, be accepting the argument that s. 274A is not available to an applicant if there are other ways by which a particular outcome, or remedy, may be pursued under the Act. Such interpretation flies in the face of the provision itself which empowers the Commission at s. 274A(2) to make a declaration whether or not consequential relief is, or could be, claimed. Importantly, on my reading, s. 274A contains no qualification on the purpose to which a declaration made by the Commission can be used. S. 274A(4) envisages that a declaration made by the Commission is binding in any proceeding under this Act. There is no suggestion that such provision is to be read down to limit a declaration solely to matters within the "normal" jurisdiction of the Commission. Had the legislature intended such restriction it would have so provided. In all of the circumstances I have concluded that the Applicant is entitled to pursue his s. 274A application in this Commission and is also entitled to use any declaration which might arise from those proceedings in any later proceeding which might follow, whether it be in this Commission or (as currently intended) in the Industrial Magistrates Court. There is nothing inappropriate or oppressive about the way that the Applicant has chosen to seek to recover the monies allegedly owed to him by the Respondents. Whilst it is true that the Respondent will (most probably) face the prospect of two cases in two places those proceedings will be vastly different in form and process. On Mr Herbert's submissions something like three-quarters or seven- eighths of the case will be decided in this Commission with the remaining one-eighth to one-quarter being decided in the Industrial Magistrates Court where the Magistrate concerned will only have to act on any (binding) declaration which might be made by the Commission to, as Mr Herbert essentially put it, "add up the numbers". That small disadvantage, in terms of possible increased costs, to the Respondent does not outweigh the forensic and other disadvantages which the Respondent seeks the Applicant to forego by forcing to him to pursue the whole of the matter in the Industrial Magistrates Court, rather than this Commission. For the foregoing reasons I dismiss the Respondent's application (B/2008/11) to dismiss or refrain from hearing, or further hearing, Matter No. B/2007/79. I shall refer the matter to Vice President Linnane for her to issue directions in respect of the conduct of Matter No. B/2007/79. The Commission determines and orders accordingly. A.L. BLOOMFIELD, Deputy President. Hearing Details: 2008 17 March 11 April (Transcript available) Released: 30 April 2008 Appearances: Mr A. Herbert (Counsel), instructed by Flower & Hart Lawyers for the Applicants. Mr K. Watson (Counsel) instructed by Milner Lawyers for the Respondent. Government Printer, Queensland The State of Queensland 2008. -- 6 of 6 --