Kellogg (Aust) Pty Limited v Kozelj [1996] IRCA 440

DECISION NO: 440/96 CATCHWORDS PRACTICE AND PROCEDURE - application for order staying reinstatement order pending appeal - no point of principle. No. NI 2858 of 1995 KELLOGG (AUST) PTY LIMITED v HERMAN KOZELJ Moore J Sydney 19 September 1996

IN THE INDUSTRIAL RELATIONS COURT ) ) OF AUSTRALIA NEW SOUTH WALES ) No. NI 2858 of 1995 ) DISTRICT REGISTRY GENERAL DIVISION ) BETWEEN: KELLOGG (AUST) PTY LIMITED Appellant AND: HERMAN KOZELJ Respondent JUDGE: Moore J PLACE: Sydney DATE: 19 September 1996 ORDER OF THE COURT THE COURT ORDERS THAT: 1. (a) Subject to proviso in paragraph (b), Order 2 of the orders made by Wilcox CJ on 26 July 1996 be stayed pending the hearing of the appeal. (b) The operation of this order is subject to Kellogg (Aust) Pty Ltd undertaking to the Court to pay to Mr Kozelj the sum of $391.60 per week, less tax, from 26 July 1996 till the appeal has been heard and determined and that it will not seek to recover payment of that sum. 2. The hearing of the appeal be expedited. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE INDUSTRIAL RELATIONS COURT ) ) OF AUSTRALIA NEW SOUTH WALES ) No. NI 2858 of 1995 ) DISTRICT REGISTRY GENERAL DIVISION ) BETWEEN: KELLOGG (AUST) LIMITED Appellant AND: HERMAN KOZELJ Respondent JUDGE: Moore J PLACE: Sydney DATE: 19 September 1996 REASONS FOR JUDGMENT This is an application for an order staying an order of Wilcox CJ made on 26 July 1996 pending an appeal from the whole of his Honour's judgment. The substance of the relevant order made on 26 July 1996 was that Kellogg (Aust) Pty Limited ("the Company") reinstate Mr Herman Kozelj ("the applicant"). The applicant commenced proceedings under s170EA of the Industrial Relations Act 1988 ("the Act") alleging that the termination of his employment by the Company on 7 July 1995 was in contravention of provisions of the Act. That application was heard by a Judicial Registrar and dismissed on 16 March 1996. A review was sought of the decision of the Judicial Registrar which was heard by Wilcox CJ. The facts as found by Wilcox CJ may be briefly summarised. The applicant was employed by the Company as a painter/handyman and commenced employment on 25 September 1990. He was forty-seven years old and, at the time of his engagement, things were said to him that suggested his employment was secure. Kellogg's is a cereal manufacturer and its Australian operations are principally at a plant in Botany where the applicant worked. During the last decade that plant has been modernised and a decision was recently taken to alter the structure of the workforce. That resulted in the retrenchment of all but the production staff, and involved the termination of the applicant's employment in July 1995. In the review the Chief Justice concluded that the termination of the applicant's employment was for a valid reason of the type referred to in s170DE(1) of the Act. However his Honour went on to conclude that the termination was in contravention of s170DE(2) of the Act, that is, it was harsh, unjust or unreasonable. No issue was raised in the proceedings before the Judicial Registrar or the Chief Justice concerning the validity of that latter provision. However its validity had been raised in proceedings in the High Court of Australia and on 4 September 1996 the Court answered a range of questions concerning the validity of various provisions of the Act including s170EA(2). As to whether that provision was valid, the Court answered it was invalid. Thus the decision of the Chief Justice was based on a provision of the Act which was invalid. The Company has made plain that in the appeal it will seek to raise a fresh issue, namely that s170DE(2) is invalid. In this respect the appeal is an unusual one. In my opinion the Company has reasonable prospects of being able to put in issue the validity of s170DE(2): for a recent consideration of the relevant principles see Australian Fisheries Management Authority v P.W. Adams Pty Ltd 17 May 1996, Full Court of the Federal Court, not yet reported, and if it does the Full Court of the Industrial Relations Court of Australia will be bound by the opinion of the High Court. Accordingly the Company has a real prospect of succeeding in its appeal. Apart from the issue of validity, the Company points to other matters that, it is submitted, indicate it has a strong case in the appeal. One concerns a finding of his Honour that there was no suggestion that the applicant was an unsuitable person to be trained as an operator as part of the production staff. The Company has pointed to evidence which suggests this finding might not have been open. I accept that this point is an arguable one of substance as is the related point concerning whether or not consideration was given by the Company to providing other work to the employees who were retrenched. Other points the Company will seek to rely upon appeared to me to be of less substance. The Construction, Forestry, Mining and Energy Union ("the Union") appeared on behalf of the applicant. In resisting an order staying the operation of the reinstatement order of Wilcox CJ, it submitted that notwithstanding the pronouncement of the High Court about the validity of s170DE(2), the applicant would seek to maintain the reinstatement order of Wilcox CJ on grounds which did not depend upon s170DE(2). The Union proposes to put in issue the finding of his Honour that the termination of the applicant's employment was for a valid reason as provided for in s170DE(1). Reference was made to a decision of Marshall J in Ferry v Minister for Health, Western Australia 25 August 1995, unreported in which his Honour expressed the view that: "To terminate an employee in breach of the employer's obligations under state and federal awards is not to terminate an employee's employment for a valid reason." In the present case, Wilcox CJ concluded that when terminating the applicant's employment the Company breached provisions of the applicable award though his Honour did not expressly deal with the argument that had been put to him by the Union based on the decision of Marshall J in Ferry (supra). The decision of Marshall J had been the subject of an appeal on which the Chief Justice sat as a member of the Full Court. The appeal was dismissed though the language of the reasons for judgment of the Full Court does not indicate that they embraced entirely the unqualified statement of Marshall J concerning the effect of a termination in breach of an award. It must be accepted, however, that the issue sought to be raised by the Union is an arguable one. My consideration of whether a stay order should issue has been substantially influenced by the decision of the High Court determining that the legislative provision founding the judgment of Wilcox CJ was invalid. Notwithstanding the contention that the Union wishes to raise in the appeal, the prospect of the Company succeeding in the appeal must be reasonable. There is, of course, the consideration that the basis upon which they might succeed arises, not from an issue raised in the proceedings, but a determination by another Court that a critical legislative provision was invalid at a time when the Company could avail itself of that determination. Nonetheless the legal consequences of the High Court's determination cannot be ignored. Though it has been fortuitous for the Company that the determination was made at the time it was, that factor does not diminish such rights as the Company might have as a consequence of that determination. Were it not for the determination of the High Court, I would not grant a stay. While the Company has points of substance it proposes to raise in the appeal so to, in one respect, does the Union. The termination of the applicant's employment occurred over a year ago and, in other circumstances, I would have adopted the view that the applicant should enjoy the benefits of his success before Wilcox CJ. However, as I have already indicated, regard must be had to the intervening decision of the High Court. The Company has indicated, by way of compromise, that it would accept the imposition of a condition on the grant of a stay. The condition would involve it paying to the applicant, till the appeal was heard and determined, half of his weekly ordinary time pay ($783.19) less tax without requiring the applicant to repay the sum in the event of it succeeding in the appeal. This it would do from the date of the Chief Justice's judgment, namely 26 July 1996. My initial reaction to what might be characterised as an open offer, was that the Company was being somewhat parsimonious in its approach. That initial reaction has not dissipated entirely, though it must be acknowledged that the offer includes the element that the money paid will not be recovered irrespective of the outcome of the appeal. There is a controversy between the Union and the Company about the implementation of the reinstatement order in circumstances where the Company says, with some justification, that the assumption made by the Chief Justice that the applicant could work as an operator was not well founded in fact. In those circumstances, and having regard to the intervening determination by the High Court, I have concluded that the appropriate course is to make an order staying the operation of the reinstatement order of the Chief Justice and to impose the condition offered by the Company. I do so on the basis that it will be open to the Full Court, having heard the arguments of the parties in full, to determine what is an equitable means of disposing of the appeal consistent with principle if it transpires that the Company succeeds only on the ground based on the determination of the High Court concerning the validity of s170DE(2). I certify that this and the preceding .... (...) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore. Associate: ...................... Dated: ..../..../.... APPEARANCES Counsel for the Appellant: Mr M Holmes, QC Solicitor for the Appellant: Blake Dawson Waldron Representative of the Respondent: Mr Reiss of the Construction, Forestry, Mining and Energy Union Dates of Hearing: 6 & 12 September 1996 Date of Judgment: 19 September 1996