FEDERAL COURT OF AUSTRALIA

National Retail Association v Fair Work Commission (No 2) [2014] FCA 664

THE COURT ORDERS THAT:

The amended interlocutory application filed 20 June 2014 be dismissed.

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

REASONS FOR JUDGMENT

1    On 21 March 2014 the Full Bench of the Fair Work Commission (“Commission”) published its decision in Shop Distributive and Allied Employees Association (SDA) [2014] FWCFB 1846. The Commission summarised the issue before it as relating to an application of the second respondent (“SDA”) to vary clause 18 of the General Retail Industry Award 2010 (“the award”), such that employees 20 years of age in the retail classification subject to the award would be paid the same minimum award rate for the classification in which they were engaged as 21 years old employees. Material before the Commission was to the effect that 20 year old employees in relevant retail classifications received 90% of the relevant adult rate. The Commission decided that the award should be varied such that new rates for 20 year old employees in retail classifications who had been with their employer for more than six months would be phased in, as follows:

    95% of the adult rate to apply from the first pay period commencing on or after 1 July 2014;

    100% of the adult rate to apply from the first pay period commencing on or after 1 July 2015.

2    An order to this effect was issued by the Commission on 11 April 2014.

3    On 8 April 2014 the applicant in these proceedings (“NRA”) filed an originating application under s 39B of the Judiciary Act 1903 (Cth), ss 21, 22 and 23 of the Federal Court of Australia Act 1976 (Cth) and s 562 and s 563 of the Fair Work Act 2009 (Cth) (“Fair Work Act”) seeking the following relief:

1.    A writ of certiorari to remove into the Federal Court the proceedings in matter AM2012/196 subject of the decision and orders of the Full Bench of the Fair Work Commission (“the Commission”) made on 21 March 2014, for the purpose of quashing the decision and orders made.

2.    A writ of mandamus or an order in the nature of mandamus commanding the Commission to hear and/or determine the proceedings according to law.

4    This originating application is currently listed for hearing before the Full Court of the Federal Court in August 2014.

5    On 16 June 2014 the NRA filed an interlocutory application seeking an order that the order of the Commission of 11 April 2014 be stayed until further order of this Court. On 18 April 2014 the NRA sought to amend its interlocutory application to seek a further alternative order, namely an interim injunction preventing the order issued by the Commission on 11 April 2014 from having effect until further order of this Court. This amendment was not opposed by the SDA.

6    Clearly there is some urgency associated with this interlocutory application, in that orders of the Commission take effect from 1 July 2014. It is the NRA’s interlocutory application to which I now turn.

The interlocutory relief sought

7    The NRA seeks either a stay of orders of the Commission, or in the alternative an interim injunction to prevent the orders of the Commission taking effect. Mr Harding for the SDA submitted that even if the Court were so minded, it was not appropriate for the Court to issue an interim injunction in these circumstances because:

    in substance, the NRA was seeking a stay of the order of the Commission;

    by its nature the purpose of an interim injunction is to restrain a person from conduct, and the only object of the injunction could be the Commission itself; and

    no undertaking as to damages had been offered, as was usual in respect of an application for an interlocutory injunction.

8    Mr Mahendra for the NRA submitted that the interim injunction the SDA sought was not intended to be a restraint, but rather in the nature of a writ of prohibition, and therefore no undertaking as to damages was required.

9    An injunction is an equitable remedy, granted at the discretion of the Court in accordance with equitable principles. In my view no injunctive relief is available in this case because:

    I agree with Mr Harding for the SDA that the NRA in substance seeks a stay of the Commission’s order, and the Court ought properly consider whether a stay should be ordered in accordance with principles relevant to a stay.

    It is not in dispute that the Court is empowered to grant a stay of orders of the Commission in suitable circumstances: Energy Australia Yallourn Pty Ltd v Construction, Forestry, Mining and Energy Union [2013] FCA 360; MI&E Holdings Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Plumbing, Postal and Allied Services Union of Australia [2013] FCA 944.

    An injunction is intended to restrain a person against whom it is directed: Maritime Union of Australia v Patrick Stevedores Operations Pty Ltd [1998] 4 VR 143, and see discussion in Spry ICF, The Principles of Equitable Remedies (9th ed, Lawbook Co, 2014) at 332-333 and Dal Pont GE, Equity and Trusts in Australia (5th ed, Lawbook Co, 2011) at 935-936. To that extent, an injunction “at large” which appears to be the tenor of the injunctive relief sought by the NRA, is not well-founded.

    I am not persuaded of the utility – or indeed, the jurisprudential foundation in these circumstances – of an order which is formally an equitable injunction, but is really in the nature of the prerogative writ of prohibition, as urged upon me by the NRA. While historically there has been some overlap between injunctions and public law remedies (see, for example, the discussion in Aronson M and Groves M, Judicial Review of Administrative Action (5th ed, Lawbook Co, 2013) at 933 et seq), I am not persuaded on the material before me that an injunction ought lie where public law remedies such as prohibition are available. This is particularly so in circumstances where the NRA, in its primary application, has sought public law remedies. To that extent, I am not persuaded that I should grant an injunction restraining the Commission from performing any act. Indeed, it is difficult to know which act or acts the Commission ought be restrained from, other than enforcing its own order.

Stay

10    In this light I now turn to the question whether a stay of the order of the Commission ought be granted in this case.

Relevant principles

11    Relevant principles to which the Court ought have regard in the present circumstances include the following:

    An order granting a stay is an interlocutory order at the discretion of the primary judge, although the discretion must be exercised judicially: National Australia Bank Limited v Norman [2009] FCAFC 13 at [44].

    Further, the discretion of the Court in granting a stay ought not be exercised lightly, and only in circumstances where there would be so adverse and serious a consequence that interlocutory intervention should take place notwithstanding that there has not been an opportunity for full consideration of the appeal: Nikolaides v Legal Services Commissioner [2005] NSWCA 91 per Bryson JA at [18]; Thomson v Young [2013] NSWCA 300 at [8]. Circumstances warranting the grant of a stay have been described as “exceptional” (Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No. 1) (1986) 161 CLR 681 at 683; Rahme v Commonwealth Bank (1993) 117 ALR 618 at 620; Petrotimor Companhia de Petroleos S.A.R.L. v Commonwealth of Australia [2003] FCAFC 82 at [24]; Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256).

    To that extent the balance of convenience plays an important role in determining whether an order ought be made: Bannister & Hunter Pty Ltd v Transition Resort Holdings Pty Ltd [2014] NSWCA 87 per Ward JA at [18].

    The Court may be minded to refuse a stay where it is satisfied that there are no serious questions for the determination in the appeal or review: Kalifair Pty Ltd v Digi-Tech (Australia) Ltd (2002) 55 NSWLR 737 at [18]; ACES Sogutlu Holding Pty Ltd v Commonwealth Bank of Australia [2014] NSWCA 84 at [6]. Conversely, the Court may be minded to grant a stay where, on a preliminary assessment of the case, the Court is satisfied that grounds of appeal or review have merit: Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 695; Attorney-General for the State of Queensland v Fardon [2013] QCA 299 at [15].

    The Court may be minded to grant a stay where it is satisfied that any subsequent appeal or review would be rendered nugatory should a stay be refused: Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 695; Jennings Construction Limited v Burgundy Royale Investments Proprietary Limited (1986) 161 CLR 681; Paringa Mining & Exploration Co PLC v North Flinders Mines Ltd (No 2) (1988) 165 CLR 452; National Australia Bank Limited v Norman [2009] FCAFC 13 at [43].

    Decisions at first instance should not be treated as merely provisional. A successful party in litigation is entitled to the fruits of its judgment, and courts should not be disposed to delay the enforcement of orders. A sufficient basis must be shown to outweigh these considerations: Keane JA in Cook’s Construction Pty Ltd v Stork Food Systems Australasia Pty Ltd [2008] 2 Qd R 453 at 455; Attorney-General for the State of Queensland v Fardon [2013] QCA 299 at [15]; Julia Farr Services Inc v Hayes [2003] NSWCA 142 at [24].

    The Court will consider whether a stay is warranted in the interests of justice: Alexander v Cambridge Credit Corporation Limited (1985) 2 NSWLR 685 at 694; NSW Bar Association v Stevens [2003] NSWCA 95 at [83]; ACES Sogutlu Holding Pty Ltd v Commonwealth Bank of Australia [2014] NSWCA 84 at [5].

Do grounds of review have merit?

12    Mr Mahendra for the NRA referred me to paragraphs 8-12 of the affidavit of Ms Corinna Dowling affirmed 8 April 2014, in which Ms Dowling deposed as to the grounds for relief in the NRA’s originating application as follows:

8.    The Full Bench asked itself the wrong question in that it asked itself if the discounted rate for 20 year old retail employees provides a fair and relevant safety net. The question the Full Bench was required to ask itself was whether the Retail Award and the National Employment Standards (NES) provide a fair and relevant safety net. That is, the Full Bench considered clause 18 of the Retail Award in isolation rather than reviewing the Retail Award as a whole as required by Schedule 5, Item 6(2) of the FWTPCA Act.

9.    The Full Bench misunderstood its function under Schedule 5, Item 6(2) of the FWTPCA Act by disaggregating Item 6(2)(a) from Item 6(2)(b) in its review and inserting in place of Item 6(2)(b) a reference to s. 284 of the FW Act in circumstances where the considerations contemplated by s. 284 of the FW Act were not relevant unless and until the review in accordance with Item 6(2) had concluded that variations to the Retail Award were necessary.

10.    The Full Bench misunderstood its function by approaching the matter as though it was dealing with an application to vary the Retail Award under s. 157 of the FW Act rather than conducting a review under Schedule 5, Item 6(2) of the FWTPCA.

11.    The Full Bench took into account irrelevant considerations including factual findings that:

a.    The most junior retail employees achieve a satisfactory level of proficiency in their roles after about six months in employment;

b.    There is little difference in the duties and responsibilities assigned to 20 and 21 year old retail employees; and

c.    There is little difference in the supervision required in relation to 20 and 21 year old retail employees.

12.    Further, or in the alternative, the Full Bench failed to act logically and rationally in finding that:

a.    Most junior retail employees achieve a satisfactory level of proficiency in their roles after about six months in employment;

b.    There is little difference in the duties and responsibilities assigned to 20 and 21 year old retail employees; and

c.    There is little difference in the level of supervision required in relation to 20 and 21 year old employees.

13    In this case there was significant dispute between the parties over the grounds of review in the NRA’s originating application had merit. Mr Mahendra addressed me extensively in respect of those grounds of review, and made detailed submissions including that:

    the Commission failed to have regard to Sch 5 Pt 1 Item 6(2) of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (“Transitional Act”);

    the Commission improperly varied the award by reference to a minimum wages analysis by reference only to work value criteria recognised in s 157(2)(a) of the Fair Work Act, rather than also considering s 157(2)(b);

    the evidence upon which the Commission relied all related to work value issues.

14    While Mr Harding for the SDA strongly contended that each of the grounds of review must fail, at this stage of the proceedings I am not satisfied that this is the case. So, for example, it is clear that the task of the Commission was to review the award in terms of the award modernisation process contemplated by the Transitional Act, and to that extent the Commission was required to consider whether the award achieved the modern awards objective defined in s 134 of the Fair Work Act and determine whether the award was operating effectively and without anomalies or technical problems. Further, as Mr Mahendra submitted – correctly in my view – the fact that the grounds of review were the subject of such detailed and lengthy submissions on both sides supports a finding that they have merit such that the Court ought not – for alleged want of merit – refuse a stay.

No exceptional circumstances

15    At the hearing Mr Mahendra submitted that the balance of convenience supported the grant of a stay because, inter alia:

    If employers are required to pay increased wages to 20 year old employees after 1 July 2014 and the Full Court of this Court subsequently made orders quashing the order of the Commission, it is unlikely that employers would recover those overpayments.

    Payments of increased wages from 1 July 2014 may lead to expectations from employees that the higher rate of pay is permanent, and employees would not understand if the Commission’s order is subsequently quashed.

    If the Full Court dismisses the NRA’s originating application and the Commission decision stands, relevant employees will be entitled to back pay from 1 July 2014 and would therefore suffer no prejudice.

16    In her second affidavit affirmed 16 June 2014, Ms Dowling deposed as to certain facts in relation to the impact on employers of the Commission’s order, supporting Mr Mahendra’s submissions. In particular, she said:

4.    I have spoken with numerous members of the National Retail Association in relation to the Decision.

5.    In particular, I was informed and verily believe that in relation to a major retailer:

a.    20 year olds make up over 13% of their workforce;

b.    The Decision will result in an additional $150,000 cost to the employer’s annual wage bill (including superannuation and on-costs);

c.    These increases come at a time when the business is already absorbing superannuation and minimum wage increases; and

d.    Should the Decision be overturned, it is unlikely that any overpayments would be recovered.

6.    In the event a stay of the Decision is not granted, and the Applicant is ultimately successful in its substantive application, the prejudice to employers affected by the Decision will be significant.

17    Mr Harding objected to Ms Dowling’s affidavit on the basis that it was primarily hearsay, however even assuming that her evidence should be accepted I do not find it persuasive. Indeed:

    Ms Dowling’s evidence concerning “a major retailer” is vague and unsubstantiated.

    Paragraph 6 of the affidavit is simply a bald assertion of alleged prejudice to “employers”.

    Mr Harding submitted that, as a mathematical calculation, the addition to the annual wage bill of the unidentified major retailer from the increased rate of pay for 20 year olds as claimed by Ms Dowling in paragraph 5 of her second affidavit would only be 0.0065% of the annual wage bill of that entity. This amount was not disputed. In this light I infer that the prejudice to that unidentified major retailer from implementing the Commission’s order, even over an entire year (which is unlikely given that any overpayments will be made only until the decision of the Full Court in the substantive application is delivered), appears to be only slight.

    Ms Dowling’s evidence does not refer to the impact on employers of an increase in wages of 20 year old employees who have been with the employer for six months or more, which is the group to which the Commission’s order applies.

18    Further, and in any event, I consider that potential prejudice to 20 year old employees resulting from a stay would also be real. In particular:

    The fact that 20 year old employees in the retail industry are, in general, in receipt of low pay, was not disputed. It is reasonable to infer that the increase in wages ordered by the Commission, while (on the evidence before the Court) of little impact on relevant employers, would be of some importance to low paid workers.

    There was no tangible evidence before the Court that overpayments to 20 year old employees could not, in some fashion, be recovered in the event that the Commission’s order was set aside. As noted in both Mitzev v Foxman [2007] NSWCA 134 at [2] and ACES Sogutlu Holding Pty Ltd v Commonwealth Bank of Australia [2014] NSWCA 84 at [7], even arguable grounds of appeal are not usually regarded as sufficient to stay orders for payment of money, where there is no evidence that the money, if paid over, would be irrecoverable.

    While the NRA submits that employers would be unable to recover overpayments in the event that the Commission’s order was quashed, equally if the Court ordered a stay and the Commission’s order was subsequently affirmed it is questionable whether 20 year old employees who had left their employment prior to the affirmation would actually receive the backpay to which they were entitled.

19    Overall, I am not satisfied that there are exceptional circumstances before the Court to warrant the grant of a stay, or that a stay is justified in the interests of justice. Further, while there may be a risk in the event that a stay is refused that employers may be unable to recover payments made after 1 July 2014, I am not satisfied that this risk is tantamount to the review being rendered nugatory should a stay be refused.

Conclusion

20    The appropriate order is that a stay of the order of the Commission of 11 April 2014 be refused, and the amended interlocutory application filed by the NRA in Court on 20 June 2014 be dismissed.

Associate:

Dated:    23 June 2014