FEDERAL COURT OF AUSTRALIA

SOS Nursing and Home Care Service Pty Ltd v New South Wales Nurses’ Association [2012] FCA 398

THE COURT ORDERS THAT:

1.     The appeal be dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

REASONS FOR JUDGMENT

1    This appeal arises from a dispute between the appellant (“SOS”) and one of its employees, Ms Helen Cornish, as to the rate at which her wages were calculated from 7 December 2009 to 1 July 2010. The amount involved is relatively small but I was told from the Bar table that the proceeding was brought as a test case which has the potential to affect the entitlements of a number of employees of SOS.

2    Ms Cornish had been employed by SOS as a registered nurse since 1993. She was a member of the respondent Association.

3    The dispute has its genesis in a poorly drafted employee collective agreement which was entered into in 2007 under Part 8 of the Workplace Relations Act 1996 (Cth) (“the WR Act”). The WR Act required that the agreement be submitted to the Workplace Authority with a view to that Authority determining whether or not it satisfied what was described as the “fairness test”. If such an agreement were found by the Authority to have failed the fairness test the employer could be required to vary the agreement in a manner proposed by the Authority in order to satisfy the test. If the necessary amendments were not made the agreement ceased to have effect.

4    The agreement contained the following provisions:

“3.1    The parties to the Agreement shall be SOS Nursing & Home Care Service Pty Ltd (ABN 34050096350) (“SOS” or the “employer” or the “company”) and all casual employees (“Heath Care Workers”) appointed as such who carry out nursing related care and incidental services in the State of New South Wales and Queensland, whose classifications are identified in Appendix A of the Agreement.

This Agreement as varied from time to time, constitutes the whole Agreement between these Employees and the Employer. Unless specifically contained in this Agreement, no other explicit terms and conditions of any other contract of employment, Agreement, Determination, Award or transitional instrument and orders of any Industrial Relations Commission relating to the operations and/or employment in the industries and/or industrial pursuits governed by this Agreement prescribed in the Act including any Protected award conditions (as prescribed in Part 8 Division 7 of the Act) apart from a Confidentiality Deed, shall apply. The Deed shall not form part of this Agreement.

This Agreement shall not apply to employees who are also directors of SOS Nursing & Home Care Service Pty Ltd.

…

9.    Legal Obligations

The following provisions relate to the contract of employment and identify some essential requirements of employment and conditions of engagement. More specific obligations and legal requirements are contained in a common law Deed between the Employee and the Employer.”

…

11.1    The aggregated rates of pay in Appendix B to this Agreement incorporate all penalty rates, overtime and allowances, including, but not limited to the casual loading into a single aggregated wage. The method of calculating the total aggregated rates of pay was based on the working patterns of all employees leading up to the Agreement. These rates will be the wage level defined for superannuation purposes. Any Health Care Worker required to work on Christmas Day shall be paid double their hourly rate according to this Agreement.

11.2    Wage levels contained in Appendix B will be reviewed on an annual basis following any adjustments in the level of government funding and subscriptions provided to SOS.”

5    Clause 22 provided that employees would not pursue any extra wage claims during the life of the agreement save those which were “consistent with and contemplated by” the agreement. Appendix B contained a table which prescribed hourly rates of pay on weekdays, Saturdays, Sundays and public holidays for employees in a range of classifications.

6    The agreement was submitted to the Workplace Authority in August 2007. SOS received no response from the Authority until February 2009. In the meantime it had conducted what it considered to be a review under Clause 11.2 in March 2008. Following the review SOS increased the hourly wage rates prescribed by Appendix B.

7    By letter dated 17 February 2009 the Workplace Authority advised SOS that the agreement had not passed the fairness test. The Authority said that it was “not satisfied that, on balance, your Agreement provides fair compensation for the removal or modification of protected conditions.” It identified five protected conditions but failed to provide any detailed explanation as to why it was not satisfied that the compensation provided for in the agreement was inadequate. The Authority suggested three options which it said were available to SOS, any one of which would, in the Authority’s opinion, render the agreement compliant. One of these options was an increase in wage rates. The Authority provided a draft of undertakings which included each of the three options. Suggested wage levels were contained in a table. SOS was advised that it should choose its preferred option and send the undertaking back to the Authority within 14 days. SOS was advised that the variation to the agreement would come into effect on the day the Authority received the undertaking. The letter went on to advise SOS that if the Authority did not receive the undertaking within the required time the agreement would cease to operate and that penalties of up to $33,000 could be imposed if SOS failed to pay any back pay owed to employees as a result of the agreement failing to satisfy the fairness test. SOS was also advised that it “must” provide a copy of the letter to each employee covered by the Agreement on the date it received the letter.

8    SOS considered that the Authority had acted on inaccurate and incomplete information and that it had wrongly concluded that the agreement did not satisfy the fairness test. This view was conveyed to the Authority in a series of telephone exchanges.

9    The result was a second letter to SOS from the Director of the Workplace Authority. The letter was dated 25 March 2009. The letter did not acknowledge that the Authority had made its earlier decision in February 2009 or that there had been communication between SOS and the Authority about the matter during the preceding month. Again the Authority declared itself “not satisfied” that the agreement satisfied the fairness test. It identified the same alleged deficiencies without any detailed explanation of how it had formed its judgment. It identified the same three options to remedy the problem. It provided a new draft undertaking. This undertaking contained a new wages table containing different classifications and different hourly rates. Unlike its predecessor it prescribed different rates for SOS employees who worked in New South Wales and those who worked in Queensland. No explanation for the Authority’s changes to the table was provided.

10    This second letter also contained the salutary warnings about providing the undertaking within 14 days, the risk of penalties of up to $33,000 being imposed for failure to pay back pay and directed that a copy of the letter be given to each relevant employee on the day on which it was received.

11    The letter of 25 March 2009 was received by SOS on 30 March 2009. Shortly afterwards SOS made its own calculations and, as it had done in March 2008, increased those rates.

12    On 8 April 2009 the second appellant (“Ms Hyles”) wrote to the Director of the Workplace Authority seeking an urgent review of the determination on various grounds. The letter read:

“1.    Our Agreement was lodged on line [sic] on 3rd August 2007 and we received no response for over 18 months.

2.    We received a letter from the Authority dated 17th February 2009 which outlined rates of pay that were inconsistent with the level of worker (e.g level 4 rate was higher than level 3 and lower than level 2). When we queried this we were sent a further determination on 25th March 2009 with completely different rates some of which we believe are completely inaccurate as they do not reflect the current awards we have been using.

3.    As we have only 14 days to comply we sent correspondence to the authority 10 days prior to the expiry date to request further information and an explanation of why these awards where [sic] applied but received no response. Amanda Smith from our office and our solicitor rang several times as we were very concerned about the time frame but the phone number we were given did not answer at all.

4.    On 6th April, seven days after our written request was faxed we received an email from David Dixon at the Authority to say the phone was out of order and that he had been off sick and hadn’t received the request. He asked that the letter be refaxed which was done immediately.

5.    On 7th April our solicitor received another request from David Dixon to ask that the letter be sent yet again as he had misplaced it. Mr Dixon stated in his email that he would reply that day as we now had only 24 hours to respond. We received no response that day.

6.    At 10 am today we received an email stating there would be no extension to the 14 days. This has left us with 7 hours to respond after waiting for 20 months.

7.    The rates determined for Queensland were based on the Award for Accommodation and Care Services Employees for Aged Persons and we believe we should be under the State Nurses Award Domiciliary Nursing Services as we provide domiciliary nursing in the community not accommodation or residential care.

8.    As per our Agreement our rates were increased on 31st March 2008 and have just been adjusted on 30th March 2009, I have attached copies of both rate increases.

9.    The pay rates we have applied since March 2008 for Saturday, Sunday & Public holidays are well above the rates determined by the Authority.

10.    I am aware of other Private Nursing Services providing identical services whose Collective agreements have been approved at rates below that applied to our agreement.

In addition to the 24 hour care rates our staff are paid an extra $22.50 for meals or their meals are provided for them.

We have amended clause 14 to read:

Vii In the case of 24 hour care the employer shall provide the employee with three (3) meals per day or pay the employee an amount of $22.50 in lieu of meals.

As an alternative, we would be prepare [sic] to apply the recommended rates for NSW employees from March 2009 but would urgently request a review of the Queensland rates for the reasons stated above.

The extremely long delay in determining the validity of our agreement will obviously severely impact on our ability to meet these requirements and place this company under enormous financial difficulty.” (Emphasis added).

13    It appears that further exchanges passed between SOS and the Authority following this letter. Those exchanges were not in evidence.

14    On 31 August 2009 the Authority wrote to Ms Hyles advising that:

“On 28 August 2009 the Workplace Authority received an undertaking from you to vary the Agreement. This undertaking was lodged within 14 days of the Workplace Authority’s previous letter and came into effect on the date that it was lodged.”

15    The Authority further advised that, as varied, the agreement passed the fairness test.

16    Only the first page of this letter was in evidence. Neither the undertaking nor the Workplace Authority’s “previous letter” was before the Court.

17    Although the terms of the undertaking were not in evidence its contents may be inferred from a revised copy of the agreement which SOS prepared shortly afterwards and distributed to employees. The revised agreement contained a series of amendments to parts of the agreement relating to vehicle allowance, staff development, staff and client case conference meetings and rest breaks. These amendments were said to have been required by the Workplace Authority. There was also a revision to the table appearing in Appendix B. The revised table was headed “increased pay rates required to pass the Fairness Test.” Some, but not all, of the hourly rates were adjusted upwards. Each of the hourly rates was at a level below that provided for following the March 2009 adjustments.

18    On 17 September 2009 SOS wrote to employees covered by the agreement. A copy of the letter sent to Ms Cornish was in evidence. That letter (formal parts omitted) read:

“We are pleased to inform you that the SOS Nursing and Home Care Employee Collective Agreement (ECA) which has been in place since 3rd August 2007 has finally passed the Australian Government Work Place Authority (WPA) Fairness Test. This test ensures the ECA maintains the minimum entitlements of the Australian Fair Pay and Conditions Standard.

Please find attached the amended staff pay rates that we are obliged to enforce immediately in accordance with WPA legislation. As you can see from the attached pay rates SOS Nursing Home Care Service have been paying well above the amended rates for some time.

In accordance with the ruling from the WPA, SOS must immediately back pay any underpayments since commencement of the ECA and this is being undertaken as a matter or urgency. Any back payments made will put a heavy financial burden on the Company and as a result may impact on it’s [sic] ability to continue to operate.

We would like to ask staff for feedback with regard to the possibility of maintaining our current pay rates (which are well above the WPA rates) in lieu of back pay instead of reducing the hourly rates to those set by the Authority and receiving the back pay. The first option may not be possible as we would need approval from the WPA for this, however the alternative will be a significant reduction in hourly rates until August 2010.

We ask you to give this matter urgent consideration and respond as soon as possible to Amanda Smith via fax, mail or email to the above address by the 05/10/2009.”

19    As this letter suggests, the effect of the Authority’s determination was that, for certain periods during the life of the agreement, Ms Cornish had been underpaid and, for other periods, she had received payment at a rate higher than that to which she would have been entitled had the rates determined by the Authority to be fair been paid. It was for this reason that the trade off between past underpayments and current overpayments was proposed.

20    The variations in the pay rates during the life of the agreement and the comparative rates fixed on by the Authority in August 2009 were recorded in tabular form and incorporated in the Federal Magistrate’s reasons:

21    Ms Cornish responded to the proposals in SOS’s letter by advising her preference for back payment to be paid to her and by stating that she understood that “the pay rate may then revert to the WPA issued rates.” As a result of this intimation SOS paid Ms Cornish back pay for the period between 3 August 2007 and 31 March 2008. Between 1 April 2008 and 7 December 2009 Ms Cornish had been paid at or above the rate required by the Workplace Authority Director’s determination at the end of August 2009.

22    In December 2009 SOS determined to reduce the hourly rates of pay which were payable to Ms Cornish and other nurses. The hourly rate for weekdays was the same as that prescribed following the March 2008 adjustment, namely, $28.60. This was $1.10 more than the amount prescribed by the version of Appendix B which was approved by the Authority in August 2009. The Saturday and Sunday rates were the same as those appearing in the post-August 2009 Appendix B. These figures were both lower than those fixed in March 2008. The public holiday rate was the same as that appearing in the post-August 2009 version of Appendix B and was lower than the March 2008 rate.

THE LEGISLATION

23    The period covered by the life of the agreement saw a good deal of change to the legislation governing industrial agreements. When the agreement was first entered into in 2007 the WR Act was in force. It ceased to have effect from 1 July 2009 when the Fair Work Act 2009 (Cth) (“the FWA”) came into force. Under both Acts the parties to agreements were required to comply with them. If they did not comply, both Acts made provision for remedial orders to be made and penalties to be applied.

24    The parties were agreed as to the applicable legislation and no issues of construction of the legislation arose on this appeal. It is, therefore, possible to provide a short summary of the relevant provisions.

25    The WR Act, as it stood in August 2007, provided for various types of workplace agreement. Relevantly, ss 327 and 328 provided for collective agreements. Employees could vote to approve a collective agreement: see s 340(2). If a majority voted in favour of a collective agreement s 342 required the employer to lodge the agreement with the Workplace Authority Director. The Director was required to apply what was described as the “fairness test” to the agreement: see 346M. The broad terms of the test were set out in s 346M(1) of the WR Act. It provided that:

“(1)    A workplace agreement passes the fairness test if:    

(a)    …

(b)    in the case of a collective agreement—the Workplace Authority Director is satisfied that, on balance, the collective agreement provides fair compensation, in its overall effect on the employees whose employment is subject to the collective agreement, in lieu of the exclusion or modification of protected award conditions that apply to some or all of those employees.”

26    Reference instruments included awards: see s 346E. If, having applied the test, the Director determined that the agreement passed the test he or she was required to notify the parties and advise them that the agreement would come into operation on the day the notice was issued: see s 346P.

27    If the Director determined that the agreement did not pass the fairness test, he or she was required to so notify the parties and also to advise that the agreement had not come into operation because it had not passed the test. There was also an obligation to advise the parties as to how the agreement could be varied such that it passed the test: see s 346P(3). Provision was then made for the lodgement and testing of a varied agreement: see ss 346S to 346U. A variation would come into effect when a declaration, with a copy of the variation attached, was lodged with the Director by an employer: see s 380.

28    Once it was in operation an agreement was binding on the employer and employee parties: see s 351.

29    The relevant agreement passed through these processes.

30    The provisions of the WR Act in relation to the fairness test were amended by the Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008 (Cth), which came into effect on 28 March 2008. One of the amendments was the re-badging of the “fairness test” as the “no-disadvantage test”. Its operation was preserved in relation to collective agreements, such as the one presently under consideration, which had been made and lodged with the Director before 28 March 2008: see Schedule 7B, item 2(1)(c) of the Workplace Relations Amendment (Transition to Forward with Fairness) Act..

31    Relevantly, the no-disadvantage test continued in operation until the repeal of the WR Act on 1 July 2009. Notwithstanding this repeal, the no-disadvantage test continued to operate as a result of transitional provisions: see Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth), Schedule 7, Part 2. Part 2 of Schedule 3 of this Act also preserved the agreement which continued to have effect notwithstanding the repeal of the WR Act.

32    Under the WR Act the Court had power to impose a penalty on a person who breached an agreement by which that person was bound: see ss 719(1) and 717(a)(iv). By s 719(6) the Court could also order the employer to pay the amount of any underpayment to an employee. Similar provisions are contained in the FWA: see ss 545(1) and (2) and 546. See also Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth), Schedule 16, Item 2(2).

33    The legislative scheme thus produced the result that any contraventions of the agreement which occurred between its inception in August 2007 and the repeal of the WR Act on 1 July 2009 could be dealt with under s 719 of the WR Act and any contraventions which occurred thereafter could be dealt with under ss 545 and 546 of the FWA.

THE APPLICATION TO THE FEDERAL MAGISTRATES COURT

34    The Association commenced a proceeding in the Federal Magistrates Court in which it sought declarations, damages and the imposition of pecuniary penalties against the respondents for contraventions of the agreement. The alleged contraventions related to an alleged failure by SOS to pay Ms Cornish for the time it took her to travel between clients where her work involved consecutive and continuous visits and what was described as SOS’s unilateral reduction in her hourly rate of pay.

35    In respect of the latter complaint it was alleged that SOS had failed to pay Ms Cornish the applicable rate of pay after 7 December 2009 in contravention of Clause 11 of the agreement or, alternatively, that the failure to pay the rates prescribed in the agreement constituted a breach of the contract of employment between Ms Cornish and SOS.

36    The respondents denied that either of the alleged contraventions had occurred.

THE DECISION OF THE FEDERAL MAGISTRATES COURT

37    The Federal Magistrate found that SOS had contravened the agreement by failing to pay “travel time” to Ms Cornish. She made a declaration and granted other relief in respect of this contravention. These orders are not challenged on this appeal and no more need be said about them.

38    The Federal Magistrate also found that SOS had contravened the agreement by underpaying Ms Cornish after 7 December 2009, when it reduced the hourly rates which it had been paying since March 2009, an underpayment which continued until 1 July 2010.

39    The Federal Magistrate accepted that Ms Cornish had been paid, under the agreement, as it had been varied in accordance with the terms of Clause 11.2 in March 2008 and March 2009, until her wages were reduced on 7 December 2009. The March 2008 and March 2009 variations had been incorporated in the agreement. They remained binding on SOS notwithstanding the determination, by the Workplace Authority Director, at the end of August 2009, that a lower rate would and did satisfy the no-disadvantage test. This was because such a determination did not prevent more favourable terms being prescribed in an agreement.

40    Having made the finding that the agreement had been contravened, the Federal Magistrate did not find it necessary to rule on the alternative claim based in contract.

THE APPEAL AND NOTICE OF CONTENTION

41    By their amended notice of appeal the appellants challenged the Federal Magistrate’s finding that SOS had contravened Clause 11.2 of the agreement and the consequential orders made by her.

42    The Association filed a notice of contention in which it claimed that, even if a contravention of Clause 11.2 of the agreement had not occurred, the underpayment of Ms Cornish’s wages between 7 December 2009 and 1 July 2010 constituted a breach of her contract of employment.

THE ISSUES ON APPEAL

43    The parties were agreed that two issues arose on the appeal. They were:

(a)    whether the learned Federal Magistrate had erred in finding that SOS had breached Clause 11 of the agreement by reducing the rates of pay to nursing employees in December 2009; and

(b)    alternatively, whether the reduction of the rates of pay being paid to the nursing employees constituted a breach of contract because the employees retained a contractual entitlement to the higher rates of pay notwithstanding the variation to the agreement.

THE CONTENTIONS

44    The grounds on which the appellant sought to challenge the Federal Magistrate’s ultimate finding that SOS had contravened the agreement was that the Federal Magistrate had erred in finding that the March 2009 adjustment in rates of pay had been made pursuant to Clause 11.2. It was contended that there was no evidence before the Federal Magistrate to support such a finding and that, on the contrary, there was evidence which compelled a finding that the wage rates were adjusted under pressure from the Authority.

45    The respondent Association objected that these submissions amounted to an attempt by the appellants to run a different case on appeal from the one which they had conducted before the Federal Magistrate. Because evidentiary issues were involved, the appellants, it was contended, should not be allowed to raise a new argument which, whether deliberately or by inadvertence, they had failed to put during the hearing when they had an opportunity to do so.

46    The appellants accepted that they had not argued before the Federal Magistrate that the March 2009 adjustments had not been made pursuant to Clause 11.2 of the agreement. What they had argued was that Ms Cornish was not entitled to be paid any more than the hourly rates which the Authority had found to be consistent with the fairness test. Nonetheless, they countered, it was the respondent Association which pleaded that the March 2009 variations had been made pursuant to Clause 11.2 and it was for it to establish, by evidence, that this had occurred. It had failed to do so.

CONSIDERATION

47    The Association’s original statement of claim did not allege that the March 2009 variation had occurred pursuant to Clause 11.2 of the agreement or otherwise deal with that variation.

48    At the start of the hearing before the Federal Magistrate the Association sought and was granted leave to amend its statement of claim by adding a new paragraph 9A and a new sub-paragraph 13c. When read together these amendments alleged that SOS was required, by Clause 11 of the agreement, to pay Ms Cornish the rates prescribed in Appendix B to the agreement as varied on 30 March 2009 “following a review of wage levels conducted pursuant to Clause 11.2 of the … agreement.”

49    The appellants did not oppose the Association’s application, nor did they seek to file an amended defence denying the allegations.

50    In opening the appellants’ case before the Federal Magistrate, after the statement of claim had been amended, the appellants’ counsel appeared to accept that there had been a variation of wage rates pursuant to Clause 11.2 in both March 2008 and March 2009. He referred to there having been “two reviews” prior to the Authority’s determination.

51    The respondents read an affidavit from the general manager of SOS, Ms Amanda Hawkins. Ms Hawkins deposed that, on or around 30 March 2009, she received the Authority’s letter dated 25 March 2009. After she had received the letter she had a telephone conversation with a Mr David Dixon from the Authority. Her purpose was to impress on him that the Authority had acted unfairly by introducing discriminatory rates for New South Wales and Queensland employees and the urgency of resolving these issues. The date on which this conversation took place was not given. Later in her affidavit Ms Hawkins deposed that, at some unstated time after receiving the letter of 25 March 2009, she was told by either Mr Dixon or his manager Ilona that “you must put the rates up as per the letter dated 25 March 2009 to avoid being fined.” As a result of this conversation she had “authorised this and in March 2009 the interim rates were implemented until the final rates were established.”

52    Ms Hawkins exhibited to her affidavit the Authority’s letter of 25 March 2009 (see above at [9]-[10]) and Ms Hyles’ response to it dated 8 April 2009 (see above at [12]).

53    It is true that the Authority’s letter contained some salutary warnings. SOS was advised that the agreement, in the form then considered by the Authority, had not passed the fairness test. It was advised that unless a variation or undertaking was given within 14 days, the agreement would cease to operate. At that point any back pay owed to employees would have to be paid and if it was not, SOS would become liable to penalties. These statements did not amount to a threat that, unless the rates were put up, SOS would be fined. Having received the letter SOS did vary the rates but did not do so in accordance with the Authority’s recommendations. Indeed, as has already been noted, the Authority suggested differential pay rates for New South Wales and Queensland employees. In these circumstances it is difficult to accept Ms Hawkins’ assertion that she put up the rates “as per the letter dated 25 March 2009” in order to avoid being fined.

54    Given the state of the pleadings Ms Hawkins was not cross-examined about her reason or reasons for adjusting the rates in March 2009. It does not follow, however, that there was uncontradicted evidence that the only reason for the variation was a perceived threat from the Authority or that there was no evidence which would have entitled the Federal Magistrate to find that there had been a March 2009 variation and that it had been implemented pursuant to Clause 11.2 of the agreement. In her letter of 8 April 2009 Ms Hyles summarised the lamentable history of the dealings between SOS and the Authority going back over some 20 months. In the course of recounting that history she told the Authority that: “as per our Agreement our rates were increased on 31 March 2008 and have just been adjusted on 30 March 2009. I have attached copies of both rate increases.” Ms Hyles was a director of SOS who made this statement in the course of seeking an urgent review of the Authority’s determination. She did not complain that the variations had been forced on SOS by the Authority’s threats. Rather she recorded that the increases had occurred “[a]s per our Agreement.”

55    In their submissions to the Federal Magistrate the appellants did not seek to rely on the parts of Ms Hawkins’ evidence to which reference has been made. The way they put their case, as recorded in the Federal Magistrate’s reasons, was:

“Upon the receipt of the determination of the [Authority], following its application of the fairness test that the rate of pay as at 3 August 2007 was required to be $27.30, the respondents contended that Ms Cornish was not entitled to be paid any more than the hourly rate as varied by the fairness test. The first respondent contended, therefore, that it was entitled to reduce the March 2009 hourly rate from $30.35 to $28.60 from December 2009.”

56    This was the argument considered by the Federal Magistrate and rejected by her. She was not invited to consider the evidence of Ms Hawkins or Ms Hyles about the reasons for the March 2009 variation and she was not asked to find that those variations had not been made following a review under Clause 11.2 of the agreement. Had she been invited to make such findings this would, in all likelihood, have led the Association to draw her attention to the state of the pleadings.

57    A further difficulty confronts the appellants. Had they filed an amended defence which denied the allegation that the March 2009 variations had been effected under Clause 11, the Association would have been required to prove its allegation. This may have required it to adduce evidence on the point and to test, in so far as it was necessary to do so, the evidence of Ms Hawkins. Because of the manner in which the appellants’ case was conducted before the Federal Magistrate, it was denied the opportunity to do so.

58    Appeals lie to this Court from the Federal Magistrates Court pursuant to s 24(1) of the Federal Court of Australia Act 1976 (Cth). Such appeals are conducted by way of rehearing: Minister for Immigration and Multicultural Affairs v Jia (2001) 205 CLR 507. On such appeals the general principle was stated by the High Court in University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481 at 483 to be that:

“It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.”

59    This principle was elaborated on by the plurality in Coulton v Holcombe (1986) 162 CLR 1 at 7-8 where it was said that:

“To say that an appeal is by way of rehearing does not mean that the issues and the evidence to be considered are at large. It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish. The powers of an appellate court with respect to amendment are ordinarily to be exercised within the general framework of the issues so determined and not otherwise. In a case where, had the issue been raised in the court below, evidence could have been given which by any possibility could have prevented the point from succeeding, this Court has firmly maintained the principle that the point cannot be taken afterwards …”

60    Had issue been joined at trial as to the reason that the March 2009 variations were made, the Association may have been in a position to adduce evidence that the variations had been made pursuant to Clause 11 of the agreement. They would certainly have been in a position to invite the Federal Magistrate to conclude (as she did) on the evidence, that the variations occurred following a review undertaken by SOS pursuant to Clause 11.2 of the agreement.

61    In these circumstances the appellants ought not be permitted to run a different case on this point on appeal from that which they argued before the Federal Magistrate.

62    The appellants further argued that SOS was entitled under the agreement to pay Ms Cornish the rates of pay determined by the Authority. This argument depended on a finding that the March 2009 increase was not made pursuant to the terms of the agreement.

63    Once, however, it is accepted that the March 2009 increase occurred in accordance with the provisions of Clause 11.2, there was an obligation on SOS to pay its employees in accordance with the adjusted rate schedule. The fact that the Authority subsequently and retrospectively determined that lower rates could be paid consistently with the fairness test, in no way impinges on that obligation.

64    None of the appellants’ grounds of appeal has been made out. The appeal must be dismissed.

CONCLUDING OBSERVATIONS

65    My decision that the appeal should be dismissed renders it unnecessary for me to deal with the notice of contention. It also makes it unnecessary to determine whether the Association has standing to pursue a contract claim on behalf of Ms Cornish.

66    Before parting with the appeal I would make two further observations. The first is that nothing in my reasons should be understood as suggesting that SOS did not do all that it reasonably could in order to obtain, from the Authority, determinations on the issue of whether or not the agreement met the fairness test. Repeated attempts to contact the Authority failed through no fault of SOS. Telephone calls were not returned. The Authority was tardy in responding to correspondence and when it did many of its responses were vague and uninformative and did not deal with material issues which had been raised by SOS. SOS was left in an unenviable position of not knowing for over a year whether the agreement passed the fairness test. This left it in a state of uncertainty as to whether or not it would be confronted with the mounting costs of back pay claims. This uncertainty was also unfair to SOS’s nursing employees.

67    The second observation is that, in large measure, the outcome of this appeal has been determined on pleading and evidentiary issues. It may not, therefore, serve the purpose of a test case which will assist in the resolution of similar claims by other employees and former employees of SOS.

DISPOSITION

68    The appeal should be dismissed.

Associate:

Dated:    20 April 2012