FEDERAL COURT OF AUSTRALIA

Finance Sector Union of Australia v Commonwealth Bank of Australia

[1999] FCA 1250

PRACTICE AND PROCEDURE – Representative action – Industrial law – Claim by union and one individual on behalf of 71 employees against employer for retrenchment benefits – Benefits said to be payable under award and also pursuant to individual contracts of employment which were said to incorporate terms of an agreement between the union and the employer – Whether applicants identified a substantial common question of law or fact – Relevance of possible differences in terms of individual contracts of employment – Whether representative proceeding may be brought in respect of claim for penalty – Materiality of fact that one applicant does not make a claim in respect of relief claimed a cause of action falling within the Courts accrued jurisdiction.

Federal Court of Australia Act 1976, ss 33C and 33D

Workplace Relations Act 1996, ss 178 and 356

Commonwealth Bank of Australia Officers Award 1990, cl 42

FINANCE SECTOR UNION OF AUSTRALIA AND KENNETH MACEY v COMMONWEALTH BANK OF AUSTRALIA

N262 OF 1999

WILCOX, RYAN and MADGWICK JJ

SYDNEY

10 SEPTEMBER 1999

APPLICATION FOR LEAVE TO APPEAL FROM A JUDGE OF THE

FEDERAL COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.                  The application for leave to appeal be dismissed.

APPLICATION FOR LEAVE TO APPEAL FROM A JUDGE OF THE

FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

THE COURT:

1                     On 26 August the Court dismissed an application for leave to appeal against orders made by O’Connor J on 18 June 1999.  We indicated we would give reasons at a later date.  These are our reasons.

2                     O’Connor J made the orders of 18 June in response to notices of motion filed by each of the parties:  the applicants, Finance Sector Union of Australia (“FSU”) and Kenneth Macey, and the respondent, Commonwealth Bank of Australia (“CBA”).  It is unnecessary to detail either the orders sought by the motions or the orders that were made.  Mr J Trew QC, who appeared with Mr J Fernon, for the applicant for leave to appeal, CBA, identified, and articulated for us, the three propositions that were said to justify leave to appeal.  It will be enough to discuss the issues by reference to those propositions; but first we should indicate the nature of the proceeding.

The proceeding

3                     On 1 April 1999 FSU and Mr Macey filed an application commencing a proceeding under Part IVA of the Federal Court of Australia Act 1976 ("the Federal Court Act").  The application identified the group members, on whose behalf the proceeding was brought, as 71 members of FSU “seconded by the Respondent to perform work for the company known as EDS (Australia) Pty Ltd” (“EDS”)  Those persons were named in an affidavit filed with the application.

4                     The application made two claims.  The first claim was made pursuant to s 178 of the Workplace Relations Act 1996 ("the Act").  That section relevantly provides:

“(1)     Subject to section 182, where an organisation or person bound by an award, an order of the Commission or a certified agreement breaches a term of the award, order or agreement, a penalty may be imposed by the Court or, except in the case of a breach of a bans clause, by a court of competent jurisdiction.

…

(4)              The maximum penalty that may be imposed under subsection (1) for a breach of a term of an award, order or agreement is:

(a)               where the penalty is imposed by the Court:

(i)                 if the breach is taken to have been committed under a provision included in an award or order under paragraph 111(1)(e) - $5,000 for a body corporate or $1,000 in other cases; and

(iia)     if the breach is of a term of a certified agreement and continues for more than one day – the total of:

(A)              $10,000 for a body corporate or $2,000 in other cases; and

(B)               $5,000 for a body corporate, or $1,000 in other cases, for each day for which the breach continues; and

(iib)     if the breach is of a term of a certified agreement but subparagraph (iia) does not apply - $10,000 for a body corporate or $2,000 in other cases; and

                       (ii)       in any other case - $10,000 for a body corporate or $2,000 in other cases;

(b)               where the penalty is not imposed by the Court - $10,000 for a body corporate or $2,000 in other cases.

…

(5)              A penalty for a breach of a term of an award or order may be sued for and recovered by:

(a)               an inspector;

(b)               a party to the award or order;

(c)                an employer who is a member of an organisation and who is affected by the breach;

            (ca)      a person:

(i)                 whose employment is, or at the time of the breach was, subject to the award; and

(ii)               who is affected by the breach;

(d)               an organisation that is affected, or any of whose members are affected, by the breach; or

(e)                an officer or employee of an organisation that is affected, or any of whose members are affected, by the breach where the officer or employee is authorised, under the rules of the organisation, to sue on behalf of the organisation.

            …

(6)              Where, in a proceeding against an employer under this section, it appears to the court concerned that an employee of the employer has not been paid an amount that the employer was required to pay under an award, order or agreement, the court may order the employer to pay to the employee the amount of the underpayment.”

5                     The applicants sought the imposition of a penalty on CBA for breach of cl 42(g) of the Commonwealth Bank of Australia Officers Award 1990.  That paragraph provides for the making of lump sum severance payments to officers upon “termination through retrenchment”.  It was alleged that the secondment of the 71 claimants to EDS amounted to a “termination through retrenchment” but CBA had failed to make severance payments.  The applicants also sought an order that CBA pay to each of the 71 employees the amount owing to them under cl 42(g) of the award, and an order, under s 356 of the Workplace Relations Act, for the penalty imposed on CBA by the Court to be paid to FSU.

6                     The second claim was made pursuant to the Court’s accrued jurisdiction.  The applicants claimed the contracts of employment between CBA and each of the 71 employees incorporated the terms of an agreement made between CBA and FSU, called the Redundancy, Redeployment and Retrenchment Agreement 1990.  These terms were said to provide more generous benefits to retrenched employees then under the award.

7                     The application identified five questions of law or fact that were said to be common to the claims of the group members:

“(a)     whether the Respondent in respect of each of the group members is in breach of Clause 42 of the Commonwealth Bank Officers Award 1990;

(b)          whether the terms of the 1990 Agreement became part of the contracts of employment of each of the members of the group;

(c)           whether the Respondent was entitled to unilaterally second the members of the group to perform work for EDS (Australia) Pty Ltd;

(d)          whether the purported secondment of the members of the group from the Respondent to the company known as EDS (Australia) Pty Ltd effectively terminated the contracts of employment of each of the said members of the group;

(e)           whether there has been an effective termination of the employment of each member of the group such that they were entitled to payment under Clause (h) of the Agreement and/or Clause 42 of the Award.”

Substantial common question of law or fact?

8                     The first proposition put by counsel for CBA, in support of their application for leave to appeal, was that the applicants have failed to identify a substantial question of law or fact common to the claims of all the group members.  They said it did not appear that the proceeding falls within s 33C(1) of the Federal Court Act 1976.  Section 33C reads:

“(1)     Subject to this Part, where:

(a)               7 or more persons have claims against the same person; and

(b)               the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and

(c)                the claims of all those persons give rise to a substantial common issue of law or fact;

a proceeding may be commenced by one or more of those persons as representing some or all of them.

(2)           A representative proceeding may be commenced:

(a)               whether or not the relief sought:

(i)                 is, or includes, equitable relief; or

(ii)               consists of, or includes, damages; or

(iii)             includes claims for damages that would require individual assessment; or

(iv)             is the same for each person represented; and

(b)               whether or not the proceeding:

(i)                 is concerned with separate contracts or transactions between the respondent in the proceeding and individual group members; or

(ii)               involves separate acts or omissions of the respondent done or omitted to be done in relation to individual group members.”

9                     In support of that contention, counsel referred to Silkfield Pty Limited v Wong (1998) 159 ALR 329.  In that case, at 345, O’Loughlin and Drummond JJ said that where

“an issue can be seen, in the circumstances of the particular case, to be a matter the resolution of which will have a major impact on the litigation because it is an issue at the core of the dispute between the respondent and each group member, then it can properly be described as being a ‘substantial’ common issue”. 

Counsel for CBA said this standard was not reached; there may be differences in the terms of the contracts of employment of the various individual group members.

10                  With respect, we do not see the justification for limiting the word “substantial” in s 33C(1)(c) by the use of non-statutory terms like “major impact on the litigation” and “core of the dispute”.  These considerations may be relevant to a question whether the proceeding ought to be allowed to continue as a representative proceeding:  see s 33N of the Federal Court Act.  They will certainly affect the appropriate case management directions.  But we do not think they affect the question whether the proceeding was well-commenced.  However, for present purposes, we are content to proceed on the basis that the Silkfield majority view is correct.  Even so, it is clear there are several substantial common questions of law or fact in the present case.

11                  The point may most readily be made by analysing the actual issues in the case.  There is an issue whether the secondment of the 71 employees to EDS constituted a retrenchment within the meaning of:  (a) the award; and (b) the agreement between CBA and FSU.  That issue, which lies at the heart of the dispute between the parties, is common to every claim.  If it is answered in the negative, as regards the award, the s 178 claim must fail, in respect of all claimants.  If it is answered in the affirmative, issues as to penalty and costs will arise.  They will be common to all claims.  There will also be an issue as to orders under s 178(6) of the Act.  This issue may involve distinctions between individual employees; certainly the quantum of underpayment orders would need to be separately assessed.  However, it is only at that stage that commonality disappears.

12                  Similarly, if the first issue is answered in the negative, as regards the agreement between CBA and FSU, all the contract claims must fail.  If it is answered in the affirmative, there may be distinctions between claimants in respect of the incorporation of the terms of the CBA-FSU agreement into their individual contracts of employment; and damages will have to be separately assessed.

13                  It is a fundamental mistake to argue that the existence of some non-common issues takes a case outside s 33C(1)(c) of the Federal Court Act.  Section 33C(2) provides that a representative proceeding may be commenced “whether or not the relief sought … includes claims for damages that would require individual assessment” (para (a)) and "whether or not the proceeding … is concerned with separate contracts or transactions … [or] separate acts or omissions" (para (b)).  Plainly, Parliament envisaged cases involving non-common material; that was not to be a disqualification from using Part IVA of the Federal Court Act.

Part IVA and penalty claims

14                  Counsel’s second submission was that it is not permissible to use Part IVA as a vehicle for a claim involving the imposition of a penalty.  If that is the position, it imposes a significant limitation on the utility of Part IVA.  There are many statutory provisions that empower the Court to impose penalties, either by way of primary relief or in conjunction with other orders:  see for example, Trade Practices Act 1974,  s 79 read with s 87(1B) and s 151BX read with s 151CE; Copyright Act 1968, s 132 read with s 115.  However, it seems to us this is not the position; there is nothing in the Federal Court Act that excludes the use of Part IVA in a proceeding for a penalty.

15                  The argument for CBA on this point was that a proceeding for a penalty for breach of an award, while not a criminal proceeding (see Gapes v Commercial Bank of Australia Ltd (1979) 38 FLR 431), is a proceeding for relief materially different to damages; the applicant acts as a “kind of public prosecutor”.  Counsel contended the claims contemplated by Part IVA of the Federal Court Act are “private suits in the nature of equitable relief or damages”.  They referred to s 33C(2).  In their outline of submissions, counsel said:

“23.    In proceedings under s.178 the FSU only has statutory standing to apply for a remedy.  In so doing, it has no interest of its ‘own’ to protect.  Its statutory standing is only to protect a public interest.  That is, not a ‘claim’ within the meaning of s.33C(1)(a) of the FC Act.  Lindgren J preferred a similar view when dealing with the standing of the ACCC to commence representative proceedings, but felt unable to give effect to his view in the face of contrary decisions by other members of the court sitting at first instance:  see ACCC v Giraffe World Australia Pty Ltd (1998) 156 ALR 273 at 283-284.

24.             In the two decisions referred to by Lindgren J, ACCC v Chats House Investments Pty Limited (1996) 71 FCR 250 and ACCC v Golden Sphere International Inc (1998) 83 FCR 424 neither judge considered the meaning of the words ‘on his or her own behalf’ in section 33D(1).  In this case, the words are of importance to reveal the extent of the remedy available in a representative proceeding; and in particular that a penalty for breach of an award under section 178 of the WR Act is not a remedy within those representative provisions.”

16                  In Chats House Branson J noted a contention that Australian Competition and Consumer Commission could not bring a representative proceeding because its interest in the proceeding, as a public authority concerned to protect consumer interests, was different from the interest of group members, who were concerned to recover compensation for their losses.  Her Honour thought this immaterial.  At 254 she said:

“Section 33C of the Federal Court Act specifies the circumstances in which a representative proceeding may be brought.  It does not explicitly require that all group members should have a common interest in the proceedings.  Section 33C(1) requires that the claims of all members of the group should be in respect of, or arise out of, the same or similar or related circumstances.  I accept that this is the case here.  It further requires that the claims of all members of the group give rise to a substantial common issue of law or fact.  I accept that this is the case here.”

17                  In deciding, in Golden Sphere, to follow Chats House, O’Loughlin J had regard to the long-standing (on a Part IVA time scale) decision in Tropical Shine Holdings Pty Ltd v Lake Gesture Pty Ltd (1993) 45 FCR 457.  In that case Wilcox J held that a company could bring a Part IVA proceeding against a business competitor, said to have contravened the Trade Practices Act, on behalf of itself and customers of the respondent, notwithstanding that the customers’ interest in the proceeding was materially different from that of the applicant.  In Golden Sphere at 446-447 O’Loughlin J said:

“The claim that there is a need to establish what has been described as some measure of [‘commonality’] does not stand up when one reflects upon the language of the FCA Act and s 33C(2)(a)(iv) in particular; that is the provision that expressly states that a representative proceeding may be commenced whether or not the relief sought is the same for each person.  The fact that two or more members of the group may be seeking different relief highlights the probability that there will be differences.  Furthermore, regard must be had to the language of s 33C(1)(b); it will be sufficient if the claims ‘arise out of … related circumstances’.  For these reasons, I reject the respondents’ submissions.  In my opinion, the correct way to test the matter is to examine the separate material of each claim that is intended to be included

in the representative proceedings.  In the present case that examination would show that the nature of ACCC’s claim differs from the claims of the intended group members but only in respect of the nature of the relief sought.”

18                  The comments made in Chats House and Golden Sphere may readily be applied to the present case, in which FSU has a more confined interest than Mr Macey and the named group members.  FSU is interested (in the legal sense) only in enforcement of the award.  While it may be taken that Mr Macey and the group members are also keen to see the award enforced, they have an additional interest as well:  obtaining payment of any moneys underpaid by CBA.  That does not create a problem, any more than it did in Tropical Shine, Chats House or Golden Sphere.  To the extent that Lindgren J suggested otherwise in Giraffe World, we respectfully disagree.  We see no reason for interpreting the words “sufficient interest to commence a proceeding on his or her own behalf” in s 33D(1) as invoking the limited and technical concept of standing applied in cases like Boyce v Paddington Borough Council [1903] 1 Ch 109 and Australian Conservation Foundation Inc v Commonwealth of Australia (1980) 146 CLR 493.  If a statutory provision, like s 80 of the Trade Practices Act, allows “any person” to bring an action for contravention, this means that any person has a sufficient interest to commence a proceeding on his or her own behalf.  Section 33D(1) is satisfied.  The person may act as representative applicant on behalf of others.

19                  It is true that Part IVA makes no reference to penalty claims.  That fact does not exclude its use in relation to penalty claims.  Subsection (2) of s 33C is not a limiting provision; its purpose is to make clear that it is not a legitimate objection to a representative proceeding that it involves particular claims for relief or disparate issues.

20                  Counsel for CBA also contended that the word “claims” is apposite only to civil proceedings; so this is an indication that Parliament did not intend Part IVA to be used for penalty proceedings.  This submission overlooks the fact that the word “claims” has always been used in relation to proceedings in this Court, including penalty proceedings:  see Order 4 of the Federal Court Rules.  In enacting legislation specific to the Court, Parliament must be taken to have been aware of its forms and terminology.  Further, s 22 provides:

"The Court shall, in every matter before the Court, grant, either absolutely or on such terms and conditions as the Court thinks just, all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by him or her in the matter, so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of those matters avoided." (Emphasis added)

Clearly, "claim" is used to encompass everything that might lawfully be brought before the Court for a remedy.  There is no reason to think that the same word was not used with the same general sense in s 33C.

The effect of FSU having no contract claim

21                  The third basis upon which it was contended that the proceeding was not well-commenced was that FSU has no contract claim against CBA.  It is said each applicant must assert a common cause of action in relation to each claim against a respondent.

22                  In Ryan v Great Lakes Council (1997) 149 ALR 45, Wilcox J was concerned with a case where the group representative had a personal claim against some respondents, but not all of them.  He accepted a submission that the proceeding was defective in relation to claims against the other respondents.  At 48 Wilcox J said

“in order to utilise the Pt IVA procedure against a given respondent, the applicant must have a personal claim against that respondent that is shared by at least six other persons.  The legislation does not prevent several respondents being joined to a single Pt IVA proceeding, so long as the commencement and standing requirements are met by the applicant in respect of each of them.”

23                  The present case is different from Ryan.  FSU has a s 178 claim against the respondent, although not an accrued claim.  Both parties accept the two claims constitute but a single “matter”.  We think this understanding is correct:  see Re Wakim; ex parte McNally [1999] HCA 27; 163 ALR 270 at para [140].  From this and from the wording of s 33(c)(1) it follows that FSU is entitled to bring the claims in the “matter” before the Court, notwithstanding that it would not be entitled to take any personal benefit from the success of one of them, the contract claim, and notwithstanding that it has no contract claim of its own.  There is no reason to read down the plain words of s 33(c)(1).

24                  If this view is incorrect, in practical terms it would not matter.  The second applicant, Mr Macey, has a personal claim for an order under s 178(6).  He is therefore entitled to represent the group members, who have similar claims.  It would be immaterial that there happened to be another applicant who was not so entitled.

Disposition

25                  The points intended to be raised in the proposed appeal were fully argued.  In our view, none of them had any substance.  Accordingly, we decided to refuse leave to appeal.

Associate:

Dated:              10 September 1999