Bowman v Rice Growers' Co-Operative Limited [2004] NSWIRComm 102 (23 April 2004)

Last Updated: 27 April 2004

NEW SOUTH WALES INDUSTRIAL RELATIONS COMMISSION

CITATION : Bowman v Rice Growers' Co-Operative Limited [2004] NSWIRComm 102

FILE NUMBER(S): 1061

HEARING DATE(S): 05/04/2004

DECISION DATE: 23/04/2004

PARTIES:

APPLICANT

Rod Bowman

RESPONDENT

Ricegrowers' Co-Operative Limited

JUDGMENT OF: Staff J

LEGAL REPRESENTATIVES

APPLICANT

Mr R Reitano of counsel

Solicitor: Mr P Pasfield

Slater & Gordon

RESPONDENT

Solicitor: Mr G Fredericks

Freehills

CASES CITED: Abboud v State of New South Wales (New South Wales Department of Education) (1999) 92 IR 32

Balsdon v Murray Irrigation [2003] NSWIRComm 251

Beahan v Bush Boake Allen Australia Limited (1999) 93 IR 1

Bell and Berg v Macquarie Bank Ltd & Anor [2003] NSWIRComm 363

Colgate Palmolive Co & Anor v Cussons Pty Ltd (1993) 46 FCR 225

Day v Lumley Life Ltd (1999) 90 IR 70

Euphoric Pty Ltd v Ryledar Pty Ltd and Anor [2002] NSWIRComm 136; (2002) 117 IR 1

Harcourt Brace & Co. (Aust) Pty. Limited v Cory (1997) 81 IR 321

Hogan v Employment National Administration Pty Ltd [2000] NSWIRComm 47

Lahoud v Joseph Lahoud [2003] NSWIRComm 179

Lipman and Anor v AG Lifestyle Management Pty Ltd and Anor [2003] NSWIRComm 160

Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd and others (1991) 28 NSWLR 443; (1991) 39 IR 169

Nagle (T/as W D & J L Nagle and Sons) v Tilburg (1993) 51 IR 8

Paviour-Smith and PFS-Premium Financial Group Pty. Limited v The National Mutual Life Association of Australasia Limited (1999) 91 IR 8

Ramsden v Ramsden [1954] 2 All ER 623

Russo v Quality Bakers [2004] NSWIRComm 50

Sampson v Edwards [1949] VLR 6

Sinclair v Hawker de Havilland Pty Ltd [2003] NSWIRComm 413

Steinhardt v Sapphire Bioscience Pty Ltd [2004] NSWIRComm 42

Stevenson v Barnham (1977) 136 CLR 190

Union Bank of Australia Ltd v Puddy [1949] VLR 242

United GlobalCom, Inc & Ors v McRann (No 2) [2004] NSWIRComm 16

Virtue v New South Wales Department of Education and Training (1999) 92 IR 428

Westfield Limited v Helprin (1997) 82 IR 411

Western Sydney Area Health Service v Gibson (2001) 109 IR 359

Young v Rank [1950] 2 KB 510

LEGISLATION CITED: Industrial Relations Act 1996

JUDGMENT:

- 1 -

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

IN COURT SESSION

Coram: Staff J

23 April, 2004

Matter No IRC 1061 of 2003

ROD BOWMAN v RICEGROWERS' CO-OPERATIVE LIMITED

Application under s 106 Industrial Relations Act 1996

INTERLOCUTORY JUDGMENT

[2004] NSWIRComm 102

1 In these proceedings Rod Bowman ("the applicant") has commenced proceedings against Ricegrowers' Co-operative Limited ("the respondent") claiming relief under s 106 of the Industrial Relations Act 1996 ("the Act"). The summons seeks orders and a declaration that a contract of employment made between the applicant and the respondent be declared void in whole or in part or varied. An order is also sought that the contract of employment was unfair, harsh or unconscionable.

2 By notice of motion filed on 2 December 2003, the respondent moved the Court for an order that the summons for relief be set aside for want of jurisdiction relying on the provisions of s 109A of the Act. The grounds advanced in support of this application were as follows:

a) Pursuant to s 109A of the Act, the Commission does not have jurisdiction to grant relief in respect of a contract or arrangement where an application has been or could have been made under Part 6 of the Act (unfair dismissals), or where such an application could have been made but for the provisions of s 83 of the Act;

b) An application could have been made by Rod Bowman under Part 6 of the Act but for the provisions of section 83 of the Act. The substance of the matters of fact and law set out in the summons for Relief are matters that pertain to an unfair dismissal claim and do not identify any basis upon which the contract of employment can properly be said to be unfair within the meaning of section 105 of the Act.

3 Mr Bowman commenced employment with the respondent in 1977 and was dismissed from his employment on 1 March 2002 on the grounds of alleged misconduct. Mr Bowman sought various orders including orders as follows:

(1) An order declaring that the contract or arrangement between the applicant and the respondent whereby the applicant performed work in an industry ("the Contract") is and was unfair, harsh or unconscionable and contrary to the public interest.

(2) An order declaring wholly or partly void or varying the Contract either ab initio or from some other time by inserting the following provisions:

(a) That the Contract shall not be terminated by the Respondent except for serious misconduct or incapacity unless the Respondent gives the Applicant 18 months notice in writing or pays the Applicant an amount in lieu thereof equal to the amount of 18 months remuneration payable under the Contract (including the value of bonuses, superannuation, motor vehicle provided and other fringe benefits).

(b) That the Contract shall not be terminated by the Respondent for reasons relating to the Applicant's conduct or performance unless the following mandatory requirements have been satisfied:

(i) The Respondent gives the Applicant notice of its intention to terminate the Contract and provides the Applicant with reasons for the proposed decision;

(ii) The Applicant has been given a reasonable opportunity to defend himself against any allegations made in relation to his conduct or performance;

(iii) The Respondent has undertaken a thorough investigation of any allegation made in relation to the Applicant's conduct or performance and any matters presented by the Applicant in his defence;

(iv) The Respondent shall make the decision to terminate the Contract fairly and reasonably having regard to the Applicant's personal circumstances, length of service with the Respondent, experience, seniority and contribution to the Respondent's business.

(c) That, in the event that the Contract is terminated without following the mandatory requirements set out in 2(b) above, the Respondent shall pay to the Applicant an amount of 18 months remuneration payable under the Contract plus an amount of 6 months remuneration as compensation for distress, humiliation and damage to reputation.

(3) An order that the respondent pay the applicant:

a) A sum of money to be determined by the Commission based, inter alia, on the matters set out in paragraph D below;

b) Interest on the said sum of money from a date to be determined by the Commission calculated in accordance with Section 94 of the Supreme Court Act 1970 (NSW).

4 The matters of fact set out in the summons cover the applicant's employment with the respondent including the circumstances in which the applicant's employment with the respondent was terminated.

5 The contract of employment under which the respondent employed the applicant was said to be unfair, harsh and unconscionable and contrary to the public interest for a number of reasons set out in par 27 of the summons. They are as follows:

(a) It permitted the respondent to terminate the employment of the applicant on grounds of alleged misconduct without providing the applicant with any fair and reasonable opportunity to respond to allegations made against him.

(b) It permitted the respondent to terminate the employment of the applicant without conducting any fair and reasonable investigation in circumstances in which such an investigation would have revealed that the allegations were not made out or did not provide any reasonable basis for the dismissal.

(c) It failed to require the respondent to give genuine and proper consideration to matters raised by the applicant in response to the allegations when deciding whether to terminate the applicant's employment.

(d) It failed to require the respondent to give genuine and proper consideration to the applicant's length of employment with the respondent, seniority, experience, level of remuneration, personal circumstances, age and contribution to the respondent's business when deciding whether to terminate the applicant's employment.

(e) It failed to require the respondent to give genuine and proper consideration to the effect of dismissal on the applicant when deciding whether to terminate the applicant's employment.

(f) It failed to require the respondent to pay the applicant a proper period of notice by way of compensation in circumstances in which it had summarily terminated the applicant's employment without proper grounds.

(g) It contained a provision permitting the contract to be terminated on notice of one month which was one (sic) its face harsh, unfair and unconscionable having regard to the applicant's length of employment with the respondent, seniority, experience, level of remuneration, personal circumstances, age and contribution to the respondent's business.

(h) It caused the applicant to be in a position of unequal and inferior bargaining power and permitted the respondent to act in a manner that was one-sided and contrary to the applicant's interests.

...

6 The respondent relies upon s 109A of the Act for its strike out motion. Section 109A is in the following terms:

109A Exclusion of certain contracts in connection with unfair dismissals

(1) This Division does not apply to a contract of employment that is alleged to be an unfair contract for any reason for which:

(a) an application has been or could have been made by the employee under Part 6 (Unfair dismissals), or

(b) such an application could have been made but for the provisions of Section 83 that exclude the employee from making an application under that Part.

(2) In this section:

"contract of employment" means any contract or arrangement under which work is done by a person in the capacity of an employee, and includes a related condition or collateral arrangement with respect to such a contract.

"dismissal" has the same meaning that it has in Part 6.

Submissions of the Parties

7 Mr G Fredericks, solicitor appeared for the respondent. Mr Fredericks' primary submission was that Mr Bowman's unfair contract claim was really an unfair dismissal claim in disguise and therefore s 109A operated to exclude jurisdiction. Mr Fredericks relied upon Beahan v Bush Boake Allen Australia Limited (1999) 93 IR 1 particularly at pp 20, 28, 39, 40, 41 and 42.

8 In determining whether the proceedings are at an appropriate stage for the Commission to determine an objection to jurisdiction Mr Fredericks relied on the decision of Boland J in Anthony Balsdon v Murray Irrigation [2003] NSWIRComm 251 at [13] - [17] submitting that the summons for relief contained the necessary material for the Commission to reach a clear and final decision on whether Div 2 of Pt 9 of Ch 2 of the Act applied to the contract of employment having regard to the operation of s 109A of the Act. Reference was also made to Nagle (T/as W D and J L Nagle & Sons) v Tilburg and Anor (1993) 51 IR 8 at [11] - [12] and Virtue v New South Wales Department of Education and Training (1999) 92 IR 428 at pp 447 - 448.

9 Mr Fredericks submitted that it was appropriate to take the applicant's case at its highest and for the purposes of the notice of motion was prepared to concede that all facts set out in the summons had been made out. The respondent submitted that the applicant's claim in these proceedings fell squarely within the realm of an unfair dismissal claim on the basis that the applicant is seeking compensation for the loss of his employment contract and his claim was principally concerned with whether his dismissal was harsh, unreasonable or unjust. Further, it was contended that the summons did not identify any genuine challenge to the terms of the contract of employment. In effect Mr Fredericks submitted that the essence of the applicant's claims of unfairness all relate to the manner of the termination and allegations of a lack of procedural fairness which was tantamount to an unfair dismissal claim.

10 Mr R Reitano of counsel appeared for the applicant and submitted that the principles to be applied in considering the motion to strike out a summons relying upon s 109A were to be found in Beahan. Counsel submitted that for the respondent to succeed it must show a clear case that makes plain that the invocation of the jurisdiction is wholly misconceived or lacks any arguable legal foundation, relying upon Nagle v Tilburg, Stevenson v Barnham (1977) 136 CLR 190 at 202, 203; Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd and others (1991) 28 NSWLR 443 at 446; Hogan v Employment National Administration Pty Ltd [2000] NSWIRComm 47 at [10] - [12]; Steinhardt v Sapphire Bioscience Pty Ltd [2004] NSWIRComm 42 at [14] - [15] and the authorities referred to in those cases.

11 Mr Reitano rejected the respondent's assertion that the claim was not genuinely directed towards the fairness of the express or implied or actual terms of the contract of employment and observed that the respondent brought no evidence to support its assertion in that respect.

12 Counsel further submitted that the grounds as particularised in par 27 of the summons are directed to the failure of the contract, amongst other things, to contain terms permissive of termination only upon the making of sufficient payments or the giving of certain periods of notice. It was submitted the grounds in the summons alleged in broad terms that the contract failed to contain adequate protective or security provisions so as to protect the applicant against harsh, unfair and unconscionable termination; failed to protect the applicant against the exercise of discretionary power(s) by the respondent; failed to provide protections in relation to the unequal bargaining position of the applicant; failed to protect the applicant from the prospect that he might be discriminated against. In particular, the applicant attacked those provisions of the contract relating to termination procedures, payments and notice.

13 Mr Reitano observed that there was no pleading for reinstatement, re-employment or compensation relative to an alleged unfair dismissal in the summons as was found to be the case in Balsdon. Counsel further submitted that the summons here was, in substance, no different to that considered in Beahan and Steinhardt. It was further submitted that in Balsdon the applicant had sought an order that he be "restored to duty and treated as though he had never been dismissed" as well as an order for lost wages which was, in substance, precisely what Mr Balsdon could have obtained had he pursued an unfair dismissal claim. Mr Reitano observed that there was no allegation in the summons that the dismissal itself was unfair.

14 Mr Reitano also relied on r 18A of the Industrial Relations Commission Rules emphasising that there was no evidence before the Commission and contending that the purpose of r 18A was to ensure that the Commission was placed in a position where it was able to conciliate the application. In such circumstances, it was contended that the onus was on the respondent to demonstrate that the claim was superficial or coloured.

15 Finally, Mr Reitano, submitted that the motion should be dismissed and made an application that costs should be awarded in favour of the applicant on an indemnity basis. Mr Reitano contended that the motion, as pressed, was contrary to two Full Bench decisions of the Commission: Beahan, and Bell and Berg v Macquarie Bank Ltd & Anor [2003] NSWIRComm 363 and five judgments of single Members of the Commission; Steinhardt; Hogan; Sinclair v Hawker de Havilland Pty Ltd [2003] NSWIRComm 413; Lipman and Anor v AG Lifestyle Management Pty Ltd and Anor [2003] NSWIRComm 160 and Russo v Quality Bakers [2004] NSWIRComm 50.

16 Mr Reitano relied on the principles set out in Colgate Palmolive Co & Anor v Cussons Pty Ltd (1993) 46 FCR 225 at 232 - 234, where Sheppard J discussed six applicable principles to be applied in considering whether costs should be awarded on an indemnity basis. Relevantly, principles 4, 5 and 6 are as follows:

4. In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v. Barnes (39 Ch D at 141) said the Court had a general and discretionary power to award costs as between solicitor and client "as and when the justice of the case might so require." Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v. Preston (1982) 1 All ER at (58) namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo, "The categories in which the discretion may be exercised are not closed". Davies J expressed (at 6) similar views in Ragata.

5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v. Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v. Hutchinson (1987) 10 NSWLR 525, Maitland Hospital v. Fisher (No. 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal), Crisp v. Keng (Supreme Court of New South Wales, 27 September 1993, unreported, Court of Appeal) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.

6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.

17 In the alternative, Mr Reitano sought that costs be assessed forthwith relying upon the recent decision of the Full Bench (Wright J President, Walton J Vice-President, Boland J) in United GlobalCom, Inc & Ors v McRann (No 2) [2004] NSWIRComm 16. This matter related to an appeal against a decision of Peterson J dismissing motions to strike out claims made under s 106 of the Act. The respondents sought the payment of their costs of an appeal and the proceedings at first instance to be paid forthwith. This application was granted by the Full Bench.

Submissions in Reply

18 Mr Fredericks opposed costs being awarded on an indemnity basis submitting that since the Act was amended by the insertion of s 109A on 1 October 1998 with the amendment being considered by a Full Bench in Beahan on 17 December 1999, there had only been six cases, to his knowledge, that had sought by way of motion to strike out a s 106 summons filed under s 106 of the Act.

19 In response to Mr Reitano's submission that costs be assessed forthwith in the event the applicant was successful, Mr Fredericks submitted that he had had no notice of this submission and reserved his rights to make further submissions in this regard in the event that the motion was dismissed.

20 Finally, Mr Fredericks conceded that s 109A did not exclude any consideration under s 106 of the Act whether or not there was procedural fairness. Mr Fredericks submitted that it was essential to look at the substance of the summons in order to determine whether it was coloured or an unfair dismissal claim in disguise.

Consideration

21 The issue in these proceedings is whether Mr Bowman's claim for relief under s 106 of the Act is an unfair dismissal claim in disguise and by virtue of s 109A outside the Court's jurisdiction. In Beahan v Bush Boake Allen Australia Limited, prior to undertaking an extensive consideration of the provisions of s 109A, the Full Bench (Wright J President, Walton J Vice-President and Hungerford J) said at 2:

At the outset we should make plain our reservations as to the matter proceeding as a threshold argument on jurisdiction before the applicant had opened his case or presented any evidence in these substantive proceedings. Nevertheless, both parties joined in urging us to do so on the basis of accepting for the purpose of determining the jurisdictional issue the case put for the applicant at its highest as set out in the further amended summons and supporting affidavits; a statement of agreed facts directed to certain formal matters was made available. Having in mind the nature of the preliminary issue, the importance to the operation of the relevant provisions of the Industrial Relations Act and, in particular, the view of the parties here concerned, we proceeded as requested. However, it is appropriate to record our concerns on this aspect by reference to what was said by a Full Court (Fisher CJ, Hungerford and Peterson JJ) of the former Industrial Court in Nagle (t/as WD & JL Nagle & Sons) v Tilburg (1993) 51 IR 8 at 10 - 12 as follows:

As a general proposition, we think that all issues arising should be dealt with in the substantive proceedings unless the basis for a challenge, either on jurisdictional grounds, as here, or for lack of a reasonable cause of action, be clearly demonstrated. As was said by Mason and Jacobs JJ (with whom Barwick CJ and Stephen J agreed) in Stevenson v Barham (1977) 136 CLR 190 at 202-203.

'We have been told that the Commission follows the practice of permitting questions of jurisdiction to be argued without requiring a party to elect not to call evidence. There is much to commend this approach. As a general rule it is desirable that an objection to jurisdiction be determined as early as circumstances will conveniently admit so that the tribunal does not embark on a hearing which it lacks authority to conduct.

... The discretion of a court to determine a case at an early stage, when appropriate, has been repeatedly asserted: see Young v Rank [1950] 2 KB 510; Ramsden v Ramsden [1954] 2 All ER 623 at 624; Union Bank of Australia Ltd v Puddy [1949] VLR 242; Sampson v Edwards [1949] VLR 6.'

22 In Hogan, Walton J Vice-President referred to the principles in Nagle and said at [10]:

...

As was said by Kirby P (as he then was) in Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1991) 28 NSWLR 443 at 446, the approach of determining jurisdiction at a preliminary stage is a sensible course only "where a party has a substantial threshold argument which, if it succeeds will knock out the claim"; see also Virtue v New South Wales Department of Education and Training (1999) 92 IR 428 at 447 - 448.

23 The judgments referred to by His Honour have recently been referred to with approval by the Full Bench in Western Sydney Area Health Service v Gibson (2001) 109 IR 359 at [2]; Euphoric Pty Ltd v Ryledar Pty Ltd and Anor [2002] NSWIRComm 136 at [8] - [14] and Victor Lahoud v Joseph Lahoud [2003] NSWIRComm 179 at [38].

24 In this case, the only objection raised by the respondent is that the claim is precluded by virtue of the operation of s 109A of the Act.

25 The relevant statement of principle in relation to this section was authoritatively stated by the Full Bench in Beahan. There it was made clear that this provision is directed at removing from the unfair contracts jurisdiction claims which essentially involve unfair dismissals. The Full Bench said at 42:

In short, our view is that s 109A operates to exclude a contract of employment from the operation of s 106 only where the unfair contracts claim is an unfair dismissal claim in disguise and where essentially it is of the nature of an unfair dismissal. Where a claim challenges the terms, or, operation of a contract of employment by genuine, not superficial or coloured, reasons related to the contract itself, then, in our view it is a claim properly within s 106 and 109A has no operation in relation to it.

26 As I observed in Steinhardt an examination of the operation of the contract of employment would also involve, on occasions, an examination of the conduct of the parties to the contract.

27 Where a claim challenges the terms, or operation of a contract of employment by genuine reasons relating to the contract itself, s 109A has no operation in relation to it. In Balsdon v Murray Irrigation Ltd, Boland J said at [30]:

The question, therefore, is whether Mr Balsdon's claim challenges the terms or operation of his employment contract by genuine reasons related to the contract itself. Unlike the summons considered by the Full Bench in Beahan the summons in the present proceedings did not specify why it was that the contract of employment was unfair. It seems to me, however, that Mr Balsdon was not attacking the terms or operation of his employment contract as being unfair but rather his focus was the unfairness of his employer's conduct in dismissing him from his employment prior to the dismissal of criminal charges against him and prior to any "thorough and proper investigation being undertaken by the Respondent into the allegations". In other words, the core of Mr Balsdon's complaint was that he was not accorded procedural fairness by the employer in coming to its decision to terminate his employment. That is, the decision to dismiss was unfair because of a lack of procedural fairness.

28 It was submitted by the respondent that the applicant's claim was not from any perspective genuinely directed to the fairness of the express or implied terms of the impugned contract of employment.

29 The complaint that the applicant makes as to the alleged unfairness of the contract, which I have previously set out, is in my opinion, directed to the terms of the contract of employment and not necessarily the dismissal. There is reference to the failure to provide any fair and reasonable opportunity to respond to allegations; a failure to conduct any fair and reasonable investigation; a failure to give genuine and proper consideration to matters raised in response to the allegations; a failure to give genuine and proper consideration to the applicant's length of employment including seniority, experience, level of remuneration, age and contribution to the respondent's business; a failure to give genuine and proper consideration to the effect of dismissal on the applicant, a failure to pay the applicant a proper period of notice in circumstances where it had summarily terminated the applicant's employment without proper grounds. The contract also contained a provision which permitted it to be terminated on notice of one month which the applicant contends was unfair. This claim that the notice period should be varied is similar to one of the challenges advanced in Beahan. This challenge is to the alleged unfairness of the contract and I therefore do not think that the summons can be dismissed on this basis alone.

30 I am mindful of what the Full Bench said in Bell & Berg v Macquarie Bank Ltd & Anor [2003] NSWIRComm 363 at [10]:

The third contention went to her Honour's reliance on s 109A. We consider her Honour erred in finding that a failure to provide procedural fairness "is a complaint not available to be brought under s 106" ...

Secondly, we do not consider that the introduction of s 109A had the effect of excluding from any consideration under s 106 whether or not there was procedural fairness. In this respect, we regard the decision by the majority in Abboud v State of New South Wales (New South Wales Department of Education) (1999) 92 IR 32 at 49 - 51 as good law.

31 The majority in Abboud Wright J President, and Walton J Vice-President, (Schmidt J not dissenting on this aspect) at 50 said:

In relation to contracts of employment there are many examples of cases before this Court where the termination of employment arose in circumstances held to warrant a remedy under s 106: see Westfield Limited v Helprin (1997) 82 IR 411 at 438-439 and Harcourt Brace & Co. (Aust) Pty. Limited v Cory (1997) 81 IR 321. That a particular contract, including a contract of employment, permits a situation to occur in which the contract is terminated unfairly may render the contract itself unfair: see, for example, Day v Lumley Life Ltd (1999) 90 IR 70 at 93 and Paviour-Smith and PFS-Premium Financial Group Pty. Limited v The National Mutual Life Association of Australasia Limited (1999) 91 IR 8 at 56 at 68. The initial question must be whether the contract permitted the termination of the contract in a manner which was unfair.

Later at page 51 the majority said:

...The jurisdiction of the Court is to determine whether "the contract is an unfair contract" and to exercise its discretion as to the appropriate remedy. An application under s 106 does not involve an appeal from the decision of the respondent. If the contract permits the respondent to terminate the contract in a manner which is unfair, that contract may be unfair notwithstanding the right of an applicant to bring a claim before this Court alleging the contract is unfair. The finding that this unfairness may have been ameliorated or cured by the fact of the hearing before the Court involves a misapprehension of the function of the Court in determining whether or not the contract was unfair.

32 The claim in the applicant's summons is that any termination of the contract shall not be harsh, unjust or unconscionable. This claim is directed to the terms of the contract. As I observed in Steinhardt s 109A, in my opinion, does not have the effect of excluding from the unfair contract jurisdiction any consideration of whether there was procedural fairness in relation to the termination. The initial question as stated in Abboud must be whether the contract permitted termination of the contract in a manner which was unfair. If so, this may render the contract unfair.

33 The complaint the applicant makes in his application is, in my view, directed to the operation of the contract. There is no allegation in the summons that the dismissal per se was unfair. Rather, that the contract during its operation, particularly prior to its termination and at the time of termination, operated unfairly and that a contract that could so operate was unfair. This matter is distinguishable from the decision in Balsdon where the summons contained a number of unusual orders not normally found in s 106 applications. These included an order that Mr Balsdon be "restored to duty and treated as though he had never been dismissed". This was, as his Honour observed, an order akin to reinstatement; an order that he "be paid an amount representing lost wages by him on and from his dismissal". Boland J observed this was an order of the type available under s 89(3) of the Act. A further order sought by Mr Balsdon was that he "be paid an amount representing the amount he would have earned if he remained in employment for a further two years". His Honour found this was essentially an order seeking to compensate Mr Balsdon for loss of his employment and that s 106 was not concerned with compensating an employee for loss of his or her employment contract.

34 Furthermore, the variation that was sought by Mr Balsdon was that termination of employment will not be "harsh, unjust or unreasonable" which as his Honour noted are the words contained in s 84. This was a further indication, as his Honour observed, that the subject matter was termination of employment and not unfair contract.

35 His Honour concluded that the claim had "all the hallmarks of an unfair dismissal claim" and should be treated as such. His Honour applied s 109A accordingly.

36 Inevitably some motions relying upon s 109A to strike out a s 106 summons may give rise to finely balanced considerations. In other areas motions to strike out a s 106 application may be approached with a greater degree of certainty by the Court. As was stated in Beahan, s 109A requires a close examination of whether the unfairness is directed to or arises out of the contract itself. This is a much more difficult decision for the court to make at a preliminary stage, particularly where all of the evidence has not been filed. To my mind this matter is similar to that considered by the Full Bench in Beahan.

37 It seems to me that the appropriate stage has not been reached which would enable the Court to determine whether the reasons are or are not "superficial or coloured and related to the contract itself". Such a determination cannot be made at this stage of the proceedings.

38 In Hogan, Walton J Vice-President, at [16] - [17] said:

16 An application will not be excluded merely by reason of the fact that the applicant's dismissal motivated him or her to bring the claim. The question in each case will be whether the relief sought is, in truth, directed to the unfairness in or arising from the contract itself.

17 As Beahan v Bush Boake indicates, the question posed by s 109A is not a matter which is likely to be determined solely upon the characterisation of the claim found in the pleadings. What is required is an examination of the substance of the claim.

39 Applying his Honour's reasoning, I am not persuaded that I am in a position to make a proper examination of the substance of the claims and that until that occurs determination of whether there is unfairness in or arising out of the contract cannot be made. I am not persuaded that it has been clearly demonstrated, at this stage of the proceedings, that this matter is an unfair dismissal in disguise.

40 For the above reasons, I do not think the summons should be set aside by virtue of the operation of s 109A of the Act. The summons makes allegations of unfairness that permitted the termination of the contract in a manner which denied the applicant procedural fairness and may have deprived the applicant of legitimate benefits.

41 As was observed in Virtue this does not close the issue of s 109A. The determination of whether part of the summons falls within the operation of s 109A will require a detailed examination of the substance of the claims and the circumstances of the case during the trial.

42 I am not persuaded, as a matter of law, that the factual circumstances pleaded by the applicant clearly demonstrate that this application is excluded by s 109A. It is therefore appropriate to dismiss the notice of motion.

43 Mr Reitano sought that in such circumstances costs should be awarded on an indemnity basis to the applicant. I am not persuaded that there is any basis to depart from the usual rule and order costs on an indemnity basis.

44 I will hear the parties in respect of whether an order should be made that costs be assessed forthwith.

ORDERS

1. The notice of motion filed on 2 December 2003 is dismissed.

2. The applicant has leave to seek to have the matter restored to the list for the purpose of arguing whether costs should be assessed forthwith. Such leave should be exercised within 14 days of the date of this judgment after which time the matter will be referred to the President.

LAST UPDATED: 23/04/2004