WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES THE DIRECTOR GENERAL OF THE DEPARTMENT OF JUSTICE

APPELLANT

 -and-

 THE CIVIL SERVICE ASSOCIATION OF WESTERN AUSTRALIA (INC)

RESPONDENT

CORAM FULL BENCH

HIS HONOUR THE PRESIDENT P J SHARKEY

COMMISSIONER J F GREGOR

COMMISSIONER S J KENNER

DELIVERED FRIDAY, 24 DECEMBER 2004

FILE NO. FBA 32 OF 2004

CITATION NO. 2004 WAIRC 13765

Catchwords Industrial Law (WA) – Appeal against a decision of the Public Service Arbitrator – Paid sick leave entitlement – Over-utilisation of sick leave entitlement – Jurisdiction – Industrial matter - Industrial nature – No work no pay – Appeal upheld and decision at first instance varied -  Industrial Relations Act 1979 (as amended), s6, s7, s7(a), (b), (c), (ca)(i), (d), (e), (f), (g), (h), s26(1)(c), s44(9), s49D, s80E(1), Division 3 Part II – Industrial Relations (General) Regulations 1997, Regulation 4 – Public Sector Management Act 1994, s7 – Property Law Act 1969, s125.

Decision Appeal upheld and the decision at first instance varied.

Appearances

Appellant Mr D J Matthews (of Counsel), by leave, and with him Ms V Jabr (of Counsel), by leave

Respondent Mr M Amati, as agent

Reasons for Decision

THE PRESIDENT:

INTRODUCTION

1         The appellant employer brings this appeal against the decision of the Commission, constituted by the Public Service Arbitrator, made on 19 August 2004 in PSACR 21 of 2004.  The appeal is against the whole of the decision.  The appeal is brought under s49 of the Industrial Relations Act 1979 (as amended) (hereinafter referred to as “the Act”).

2         The decision appealed against, constituted by an order, formal parts omitted, is as follows:-

“That Mr Gilbert Dinnie be hereby deemed to have been on paid on sick leave for the 22.1 days prior to his return to work on 5 May 2003.”

GROUNDS OF APPEAL

3         It is against that decision that the appellant employer now appeals on the following grounds:-

“1. The Commissioner erred in law in finding that the Commission had jurisdiction to enquire into and deal with the matter.

PARTICULARS

1.1 The Commissioner erred in his characterisation of the matter as “the over-utilisation by an employee of his or her sick leave entitlement” or “the issues between the parties about the situation now faced by Mr Dinnie resulting from the Respondent seeking to recoup the excess leave entitlement”.

1.2 The matter was properly characterised as the recovery of money paid out of the Consolidated Fund without proper authorisation.

1.3 The recovery of such a payment is not an industrial matter.

 2. Further, and in the alternative, the Commissioner, having found that there was jurisdiction to enquire into and deal with the matter, erred in not dismissing the matter on the basis that further proceedings were not necessary or desirable in the public interest pursuant to section 27(1)(a)(ii) Industrial Relations Act 1979.

PARTICULARS

2.1 The Commissioner acted upon a wrong principle, namely that the right of the State to recover payments made out of the Consolidated Fund without proper authorisation was merely a consideration to be taken into account in the exercise of a discretion related to fairness, whereas the correct principle is that the State is entitled and obliged to recover such payments.

2.2 The Commissioner allowed extraneous or irrelevant matters to guide or affect him, namely:

2.2.1 delays on the part of the Department in maintaining its employment records;

2.2.2 that the Department was in breach of two employment statutes;

2.2.3 that Mr Dinnie acted in good faith, and most appropriately and properly and that the overpayment was not attributable to any representation he had made;

2.2.4 section 125 Property Law Act 1969;

2.2.5 the amount of the overpayment; and

2.2.6 the size of the risk of unauthorised expenditure on a potentially grand scale.

 3. The Commissioner erred in law in making an order that had the effect that the Respondent was paid for not rendering service.

PARTICULARS

3.1 Mr Dinnie was neither working nor accessing a leave entitlement during the period to which the order of the Commission relates. The order of the Commission offends the principle of “no work, no pay”.”

(Particular 2.2 was acknowledged by Counsel for the appellant as having fallen away because it was not addressed.)

BACKGROUND

4         The abovenamed respondent, an organisation of employees (hereinafter referred to as “the CSA”), brought a claim on behalf of Mr Gilbert Dinnie, an employee of the appellant, and presumably a member of the CSA.  Mr Dinnie was ill with meningitis between 26 September 2002 and 2 May 2003 and was paid sick leave.  He was paid 22.1 sick leave days more than his then current entitlement to sick leave.  In other words, he had no entitlement to the amount of 22.1 sick leave days paid at that rate.  He was credited with this leave by the error of an employee of the appellant.  The appellant has required him to reimburse this amount, either by deducting the amount from his annual leave, by his repaying the cash equivalent or by his not accessing any further sick leave entitlements until his pro rata credits accumulate to cover the over utilisation.  The amount is $4,858.50.  Mr Dinnie objected to being required to repay the monies and refused to do so or to enter into any other arrangement for the repayment.  The nature of the order sought in the matter, indeed, was an order which would effectively bar the employer from taking action to recover the monies overpaid.

5         The details of the matter were that, during the seven months of an illness, Mr Dinnie contacted Mr Palm, an employee in the appellant’s personnel area, every three to four weeks to obtain advice on how many sick days were remaining to him.  He told Mr Palm that, if his health permitted, he wished to avoid having to use any of his annual leave entitlements.  He regularly submitted medical certificates and was advised in writing by Ms King, Acting Team Coordinator, Personnel Services, of the receipt of the certificates and his sick leave application forms.

6         On 1 April 2003, Ms King advised Mr Dinnie that a sick leave application was received from him for the period 30 January 2003 to 16 April 2003.  However, this application had not been “processed” until 1 September 2003, some five months after its receipt.  According to Ms King, Mr Dinnie’s final sick leave application for the period 17 April 2003 to 2 May 2003 had been received in Personnel Services on 10 June 2003.  Mr Dinnie was told by Mr Palm on 1 April 2003 that he had 27 sick leave credits remaining.

7         At this time, his illness had reached a plateau and his doctor was allowing him to determine when he felt well enough to return to work.  On Mr Palm’s advice, Mr Dinnie made the decision that he had to attempt to return to work on 5 May 2003, which would leave him with approximately eight days of sick leave credit which he could use if he needed to.  Mr Dinnie said that, if he had been told that he had run out of sick leave entitlements, he would have attempted to return to work earlier, rather than have to use his annual leave.  Therefore, he returned to work on 5 May 2003.

8         Between 17 June 2003 and 15 June 2004, Mr Dinnie made contact with the appellant regarding the correct calculation of any outstanding entitlements.  He discovered that he had an amount of leave which had been deducted from his annual leave credits to cover the shortfall in his sick leave entitlements.  When he questioned this, the leave credits were restored to him.  Mr Dinnie at all times thought that he had done nothing wrong in dealing with the matter.  Indeed, he thought that he had done what was right in raising it with his employer.

9         On 15 June 2004, the appellant advised Mr Dinnie that he had “over utilised” his sick leave by 22.1 days.  The order which the appellant sought was an order that Mr Dinnie not be penalised for an over utilisation of sick leave entitlements with respect to the period of his illness, when he was not entitled to sick leave.  The total period was 26 September 2002 to 2 May 2003.  It was submitted on behalf of the CSA that the appellant was obliged by s7 of the Public Sector Management Act 1994 (hereinafter referred to as “the PSM Act”) to maintain proper standards at all times in the creation, management, maintenance and retention of records.

10     The nature of the matter was this, to put it shortly.  Mr Dinnie was mistakenly told by an employee of the appellant that he had sick leave entitlements which it is not disputed he did not have.  He was paid as if he did have those entitlements.  The appellant wanted the money back because it claimed that it is an overpayment and a void payment.  The amount paid was $4,858.50.  The appellant wished to take action in the Local Court at Perth to recover the monies.  As a result, upon application of the CSA, the Arbitrator ordered that Mr Dinnie be deemed to have been paid on sick leave for the 22.1 days prior to his return to work on 5 May 2003.

11     The appellant objected to the claim that the monies should be refunded by Mr Dinnie or deducted from his remuneration by the respondent employer.

12     By s49D(2)(f) of the Act, an employer must ensure that details are recorded of all leave taken by an employee, whether paid, partly paid or unpaid.  Regulation 4 of the Industrial Relations (General) Regulations 1997 states that an employer is to ensure that the employment records of the employer are kept in a manner which enables compliance with s49D of the Act to be readily ascertained.

13     It is to be noted that the appellant submitted at first instance that, although the money had been properly paid to Mr Dinnie and was related to the employment relationship between them, Mr Dinnie’s present obligation to pay the money back to the appellant and his ability to pursue it by legal action were not “industrial matters”.  Therefore there was no jurisdiction in the Public Service Arbitrator to inquire into and deal with it.  It was submitted that the proper forum for resolution of this matter was the Perth Local Court.

FINDINGS AT FIRST INSTANCE

14     The Public Service Arbitrator made findings as to jurisdiction and in relation to the merits.

15     The Public Service Arbitrator found as follows:-

(a) That the Public Service Arbitrator has the jurisdiction to inquire into and deal with any industrial matter relating to a government officer and that Mr Dinnie was and is a government officer.

(b) Pursuant to s44(9) of the Act, the Public Service Arbitrator can hear and determine the question, dispute or disagreement presently before her/him and it must be a question, dispute or disagreement “in relation to” an “industrial matter”.

(c) That the over utilisation of an employee of his or her sick leave entitlement, which was the question at issue here, is a matter which relates to or pertains to leave of absence, as that is referred to in the definition of “industrial matter”.  Therefore, the question, dispute or disagreement to be heard and determined under s44(9) of the Act is an “industrial matter”, as defined.

(d) The words “in relation to” used in the definition of “industrial matter” in s7 of the Act should not be read down.

(e) That it is a consideration which the Public Service Arbitrator is obliged by s26(1)(c) of the Act to take into account, namely the importance to the State of recovering public monies.

(f) However, the Arbitrator also found that he should take into account the following:-

i. That the circumstances leading to the present situation arose from delays in the respondent maintaining its employment records, which delays were in contravention of s49D of the Act and s7 of the PSM Act.

ii. That the fact that the respondent was in breach of two employment statutes was a material factor which makes it more difficult for the Director to justify his position.

iii. That the position in which the respondent found itself was caused by its own lack of compliance with the law.

iv. Mr Dinnie comes to the Public Service Arbitrator with clean hands and throughout his period of illness regularly made contact with the respondent’s officers for the express purposes of monitoring his sick leave entitlements.

v. That Mr Dinnie acted in good faith and most appropriately and properly.

(g) The circumstances giving rise to the matter are not in any sense attributable to Mr Dinnie making a representation that he was entitled to the sick leave he was paid.

(h) That, by s125 of the Property Law Act 1969, the receipt by Mr Dinnie at the time of the payment during the entire period of his absence was “in good faith” and his remaining absent accordingly in reliance upon the information given to him by the respondent is a relevant consideration.

(i) That section, s125, also obliges the Public Service Arbitrator to have regard to all possible implications in respect of the parties, other than the union or Mr Dinnie, to that payment.

(j) The Property Law Act 1969 was a relevant consideration.

(k) That the union had made out its claim and the appropriate order was that Mr Dinnie be deemed to have been on paid sick leave for the 22.1 days prior to his return to work on 2 May 2003.

16     There were three issues which were raised on this appeal.

17     The first was that the Arbitrator had no jurisdiction to hear and determine this matter because it was not an “industrial matter”, as defined in s7 of the Act.  There is no doubt that the Commission, constituted by a Public Service Arbitrator, as was the case here, has jurisdiction to hear and determine an “industrial matter” and that was not in dispute before the Full Bench.

DID THE COMMISSION HAVE JURISDICTION?

18     The first question raised on appeal was whether the matter at first instance was a matter within the jurisdiction of the Commission.  The Commission, constituted by the Public Service Arbitrator, has jurisdiction conferred by s80E(1) of the Act, subject to Division 3 Part II, to enquire into and deal with any industrial matter relating to a Government officer, a group of Government officers or Government officers generally.  The Commission was taken to Association of Drafting, Supervisory and Technical Employees, WA Branch v Building Management Authority (1992) 72 WAIG 2162 (FB) (“the BMA case”), a decision of the Full Bench of this Commission.  That case is authority for the proposition that, where an employee claims to be entitled to an amount from his employer to which he is not entitled, then such claim is not an “industrial matter”.  That is because the true nature of an amount paid to which the employee was not entitled where lack of entitlement is not a matter in dispute is not an “industrial matter” in that:-

(a) It does not relate to the right of an employee as an employee if she/he is not entitled to it under her/his contract of employment.

(b) It relates to the right of the employer, but not in relation to the contract merely as a person who alleged that the employee will unjustly enrich her/himself by mistake.

(c) It certainly does not relate to the duties of employers or employees.

(d) It is not a matter which relates to the wages, salaries, allowances or other remuneration of employees because it is not remuneration, it is not part of the salary, and it is not part of the allowance (see definition in s7(a) of the Act).

(e) It does not relate to any other matters on what was put before us as defined in s7(b), (c) or (d) of the Act of the definition of “industrial matter”, or s7(e), (f), (g) or (h).

(f) In particular, it does not relate to the work, rights or duties of employers or the work, rights or duties of employees.

19     That is borne out by the order sought at first instance which was an order that Mr Dinnie not be penalised for any over utilisation of sick leave for the period of his extended illness.  “Penalised”, as I understood it, meant to be exposed to an action to recover the amount of sick leave paid to him, and to which he was not entitled, from him.

20     Further, that differs from the situation where the question is whether the entitlement of the employee to be paid an amount under a contract is in issue.

21     That was a case in which there was an overpayment by a Government employer to an employee in an attempt by the employer to recover the amount and an attempt by the employee to prevent that.  The Arbitrator was wrong to distinguish that case and not to regard himself as bound by it.  That is because, too, for the purposes of this conclusion, the matter is properly characterised in accordance with the BMA case’s characterisation.

22     Assistance can also be derived, too, from Robe River Iron Associates v The Metal and Engineering Workers Union, Western Australian Branch (1995) 75 WAIG 2478 (IAC) (“the Robe River case”).  The Industrial Appeal Court held in that case that the employer’s attempts to claim damages against for negligence at work, an employee was not “an industrial matter”.  In that case, as it was held, “the common law duty owed which arose out of the employer and employee’s legal and factual proximity which just happened” (see per Murray J and also see the dicta of Scott J) and the matter was not an “industrial matter”.

23     This was such a matter and therefore is, on the definition of “industrial matter” in s7 of the Act, not an industrial matter, at least before that definition was amended.

24     I would also add that, even the addition of the words “or pertains to” in the 2002 amendments are not sufficient to render this an “industrial matter” (see the discussion of the amendment in CFMEU v Sanwell Pty Ltd and Another (2004) 84 WAIG 727 (FB) and also Hanssen Pty Ltd v CFMEU (2004) 84 WAIG 694 (FB)).  The matter, properly characterised, was a matter affecting, relating or pertaining to none of the matters referred to in the first six lines of the definition of “industrial matter” and in any of the paragraphs of the definition, except perhaps (ca) and (i).

25     It is necessary, however, to consider whether, having regard to the amendments to the definition of “industrial matter” in s7, this matter was an “industrial matter”.  The only provision which might extend the definition of industrial matter is paragraph (i), as amended, which now reads as follows:-

“(i) any matter, whether falling within the preceding part of this interpretation or not, where — 

(i) an organisation of employees and an employer agree that it is desirable for the matter to be dealt with as if it were an industrial matter; and

(ii) the Commission is of the opinion that the objects of this Act would be furthered if the matter were dealt with as an industrial matter;”

26     That provision was considered in CFMEU v Sanwell Pty Ltd and Another (FB) (op cit).  Part (i) of the definition expressly in its own terms includes a matter which does not fall within the preceding part of the definition.  Thus, for the reasons expressed in CFMEU v Sanwell Pty Ltd and Another (FB) (op cit), and for that reason, a matter does not have to have the character prescribed by the earlier parts of the definition to be an “industrial matter”, as defined.

27     For the purposes of considering the definition of “industrial matter” generally, it was submitted on behalf of the appellant that, definition notwithstanding, the amendments to the definition applied by the Labour Relations Reform Bill of 2002, nonetheless, to be an industrial matter the matter must have a direct relationship to the employment relationship and not an indirect or incidental relationship.  Thus, if the matter has no industrial content or is only incidentally related to the employment relationship, then it will not be an industrial matter.  Further, so the submission went, this like the Robe River case, was a case which related to a common law duty of care owed by the employee which arose because of the legal and factual proximity and just happened in the case to arise factually out of the work in which the employee was engaged.  In this case, the matter arose because there was a common law right to recover a debt, so that submission went.

28     It might actually be better expressed as an action to recover monies had and received.  However, so the submission went, it had nothing to do with the employment relationship, that is, the attempt to recover “the debt” had nothing to do with the employment relationship.  In my opinion, an industrial matter, least in one case does not have to relate to an employment relationship and that is where “employee” is, as defined, a person whose usual status is that of employee.  Further, it is the case, in my opinion, that where the “industrial matter” fits the definition in paragraph (ca) of the definition of “industrial matter”, and also (d), (e), (f) and (g), there is no requirement for an employment relationship or for the matter to relate to one directly or indirectly.  None of those definitions, with the exception of (ca), is apposite here.  The question here is, however, whether this matter was and is:-

“any matter affecting or relating or pertaining to:-

 (i) any matter whether falling within the preceding part of this interpretation or not, where -

 (i) an organisation of employees and an employer agree that it is desirable for the matter to be dealt with as if it were an industrial matter; and

 (ii) the Commission is of the opinion that the objects of this Act would be furthered if the matter were dealt with as an industrial matter;

 and also includes any matter of an industrial nature the subject of industrial dispute or the subject of a situation that may give rise to an industrial dispute….”

29     Then there are listed certain matters expressly excluded from element (i) of the definition.  It is of course clear that a matter is, by virtue of paragraph (i), an “industrial matter” even if it does not otherwise constitute an industrial matter within any part of the definition of “industrial matter” in s7 of the Act.  In particular, for the purposes of paragraph (i) of definition of “industrial matter” upon this appeal, this matter is and was an “industrial matter” only if it is and was a matter of an industrial nature, the subject of an industrial dispute or the subject of a situation that might give rise to an industrial dispute.

30     The Arbitrator did not accept the characterisation of this matter by the appellant (the respondent at first instance) as a dispute about an alleged overpayment.  The Arbitrator did not accept that the matter could be narrowly characterised as the action which the respondent must properly take to recover the money which had been overpaid.  Thus, it could not be said to be an “industrial matter” because it did not relate to the work, rights and duties of an employee.  In my opinion, however characterised, for the reasons which I have expressed above, the matter was not an “industrial matter” because there was, as admitted, no right to the payments and never was. 

31     The Arbitrator specifically held that the right to sue in the Local Court was not a part of the matter before the Arbitrator and it clearly was not.  Indeed, he held that the matter before the Arbitrator was a claim that there be an order that Mr Dinnie not be penalised for “over utilisation” of his sick leave.  The Arbitrator did not refer to CFMEU v Sanwell Pty Ltd and Another (FB) (op cit) or Hanssen Pty Ltd v CFMEU (FB) (op cit) in his consideration of the definition of “industrial matter”.

32     The Arbitrator held correctly that an “industrial matter” includes a matter of an industrial nature.  The Arbitrator held, too, that the issue of the amount of sick leave available to Mr Dinnie and his utilisation of it and the payment in excess of his entitlements by the respondent for his entire period of absence were matters of an industrial nature, within the meaning of the definition of “industrial matter”.  A matter is a matter of industrial nature if it can have about it industrial character.  That is, of course, consistent with the definition of “industry” which includes various definitions, whether or not apart from this Act, it is or is considered to be industry or of an industrial nature.  Matters of an industrial nature probably are best not defined with and cannot be defined with exactness.  Suffice it to say that a matter of an industrial nature has a quality about it of the industrial, and it pertains to industries, as defined, employers, employees and the nature and quality of the industry, and it is not necessary at all for there to be any employment relationship in existence.  Nor is it necessary that any element in any other part of s7 of the Act applies to the matter.

33     Most specifically, there is not required to be any direct relationship, as required by the authorities, before the amendments of 2002 were enacted.  The words of an “industrial nature” are a clear recognition that now there is not required to be an employment relationship provided that there is a dispute, the matter is one of an industrial nature and/or there is a situation likely to give rise to a dispute.  In this case, there was clearly a dispute.  It is to be noted that the words “industrial nature” are to be interpreted according to their popular meaning and as they would be understood by the person in the street.  Thus, if, as he did, Mr Dinnie, an employee, sought that he be not penalised in a matter where he had been overpaid through no fault of his own by his employer; and there was an issue between them as to whether he should pay or whether he should not pay the monies back; and whether that was fair or unfair; and whether there was an obligation or no obligation; that matter was clearly a matter of an “industrial nature”, for the reasons which I have expressed above.

34     That Mr Dinnie was to be sued was correctly characterised as not part of the industrial matter because it is not of an industrial nature, quite clearly.  The enforcement of rights in another court is not part of an “industrial matter”, on any definition of that term.

35     Next, in my opinion, this was a matter properly characterised as being a matter affecting, relating or pertaining to the relationship between employers and employees which it self-evidently was (see definition (ca)).  The term “industrial matter” must be interpreted liberally and generously and so as to provide a platform to carry out the objects of the Act (s6) rather than not.  In particular, the approach of interpretation requiring a Commission as a sort of jurisprudential rodent, taking bites around cheese definition of “industrial matter”, is entirely wrong.

36     For all of those reasons, the Arbitrator correctly held that the Commission had jurisdiction to hear and determine the matter.

37     This matter was clearly a matter of an industrial nature which was the subject of an industrial dispute, which industrial dispute was to be heard and determined by the Public Service Arbitrator.

THE MERITS

38     The second attack on the decision in the grounds of appeal was on the merits of the decision and, in particular, it was alleged that the exercise of the discretion at first instance had miscarried.  Thus, it was necessary for the appellant to establish that the exercise of the discretion at first instance, in accordance with the principles laid down in House v The King [1936] 55 CLR 499, had miscarried.

39     Next, the Arbitrator considered that the law was a relevant consideration in reaching which he did at first instance.  The Arbitrator in fact erred in his duty to apply the law as he was required to do (see Director General, Department of Justice v Civil Service Association of WA Inc (2003) 83 WAIG 908 (FB) (paragraphs 59 and 60) and see Qantas Airways Ltd v Gubbins and Others [1992] 28 NSWLR 26).

40     The law is expressed in Attorney General v Gray (1977) 1 NSWR 406 (CANSW) (“Gray’s case”) per Hutley, Glass and Samuels JJA in which Their Honours cited the long standing Privy Council authority of Auckland Harbour Board v The King [1924] AC 318 at pages 326-327.  The principle appears as follows:-

“….. any payment out of the consolidated fund made without Parliamentary authority is simply illegal and ultra vires, and may be recovered by the Government if it can, as here, be traced.”

41     Gray’s case was a case of overpayment in excess of salary to a public servant.  At page 409, Hutley J said:-

“Where a determination has been made as to the salary which is fairly appropriate to the work to be performed, that is the only salary which may be paid for that work.  There is no capacity in any servant of the Crown to make an offer capable of acceptance so as to bind the Crown, or accept an offer made to the Crown.  Any such arrangement is, qua the Crown, void, and provides no basis for the disbursement of the moneys appropriated by Parliament.”

42     This is such a case and the government had a duty to recover the monies because they were paid out of the consolidated fund without parliamentary authority and the payment was illegal and ultra vires.  It was not a relevant consideration.

43     It is quite clear that there is an absolute right, and I might suggest a duty, in a Government employer to recover monies paid out of the consolidated fund without authority and no estoppel can operate against such an employer in respect of those monies paid out without authority.  The Arbitrator was bound to consider that principle and to apply it as the law (see Director General, Department of Justice v The Civil Service Association of Western Australia Inc (FB) (op cit) (“Bowles case”) (paragraphs 59 and 60)).  A principle of law, on the authority of Bowles case, and in any event, is not a consideration or not to be taken into account.

44     The question of the application of s125 of the Property Law Act 1969 was not considered and again was said to be a relevant consideration and that is an error.  The crux of this matter was this, as a matter of merit.  The employer paid monies to which he was not entitled, albeit by error, to Mr Dinnie as an employee.  He, although not entitled to the monies paid to him by error, retains them and refuses to refund the monies or otherwise make arrangements to repay them.  Under the principle in Gray’s case (op cit), the payment was made entirely without authority by the employer from the consolidated fund and was therefore required to be recovered.  It was made without authority because there was no obligation to pay it under the contract of service or any award or agreement to Mr Dinnie, nor was it asserted that the contrary was the case.

45     The appellant had a duty to recover the monies as a matter of law and principle (see Gray’s case (op cit).  The CSA’s member had a duty to repay the monies to which he had no entitlement.  As a matter of law, that is where the matter begins and ends.  Nothing was unfair about the pursuit of proper principle and the discharge of the duty of the employer in this case.  There is nothing which is contrary to equity, good conscience or the substantial merits of the case in so doing.  As to questions of s26(1)(a) and (c) of the Act, if it is necessary to take the matter further, there was nothing unfair in requiring Mr Dinnie to repay the monies and therefore it would be unfair to allow him to unjustly enrich himself by receiving monies to which he was not entitled and which were paid to him by error and which, therefore, constituted a windfall.  Thus, his interests should not be allowed to supersede his employer’s interests and duty and the community interest under s26(1)(d) which requires that he not be allowed to benefit at the public expense from his employer’s error.

FINALLY

46     For all of those reasons, I would find that there is no merit in the claim.  I would find that the exercise of the discretion at first instance miscarried according to the principles laid down in House v The King (op cit) because irrelevant factors were considered and because the relevant fact of unjust enrichment was not.  I am of opinion that the Full Bench should substitute its decision for that of the Commission at first instance, making the findings which I have said above should be made and dismissing the application.

47     In addition, on the “no work no pay” principle, Mr Dinnie was said not to be entitled to recover the monies and there is some substance in that argument.  However, it is not necessary to decide it in this matter, having regard to what I have otherwise found.

48     For those reasons, the appeal is made out.  I would uphold the appeal.  I would vary the decision at first instance by dismissing the application made by the CSA.

COMMISSIONER JF GREGOR:

49     I have had the benefit of reading the decision of His Honour the President in draft.  I generally agree with him but add the following comments. The key issue in deciding whether there was an industrial matter is whether there was any right to the sick leave payments. Clearly Mr Dinnie never had any right because his sick leave was exhausted.  That there was over utilisation of sick leave could not create a right that never existed.

50     The issue of sick leave in my view is a matter of an industrial nature.  I respectfully agree with His Honour’s exposition of this issue and with his determination that the Public Service Arbitrator could hear and determine the matter.

51     This does not mean that the Respondent as a government employer was not under an obligation to recover the monies which are incorrectly and in particular without the requisite authority paid out of the consolidated fund.  This was its duty as a matter of law and principle as is set out in the Attorney General v Gray (1977) NSWR 400.

52     It was not unfair that Mr Dinnie repay the money which after all was a benefit at the public expense arising from an error.  These matters should have been considered by the Commission at first instance and if the commands of s26 (1) (a) and (c) had been applied would have overwhelmed the conclusion reached.

53     For these reasons I would allow the appeal and substitute a decision at first instance with an Order dismissing the application.

COMMISSIONER S. J. KENNER:

54     The background to this appeal and the issues arising have been set out in the reasons of the President which I gratefully adopt on this occasion.

55     The first issue to be determined is whether the claim by the respondent (the applicant at first instance), was within the jurisdiction of the learned Arbitrator for the purposes of s 80E of the Industrial Relations Act 1979 (“the Act”).  Relevantly, s 80E provides as follows:

“80E.  Jurisdiction of Arbitrator

(1) Subject to Division 3 of Part II and subsections (6) and (7), an Arbitrator has exclusive jurisdiction to enquire into and deal with any industrial matter relating to a Government officer, a group of Government officers or Government officers generally.

(2) Without limiting the generality of subsection (1) the jurisdiction conferred by that subsection includes jurisdiction to deal with — 

 (a) a claim in respect of the salary, range of salary or title allocated to the office occupied by a Government officer and, where a range of salary was allocated to the office occupied by him, in respect of the particular salary within that range of salary allocated to him; and

 (b) a claim in respect of a decision of an employer to downgrade any office that is vacant.

(3) An Arbitrator also has the jurisdiction conferred on an Arbitrator as a relevant industrial authority by —

 (a) Part VID Division 5 Subdivision 3;

 (b) section 97WI; and

 (c) section 97WK.

(4) The jurisdiction referred to in subsection (3) is to be exercised in accordance with the relevant provisions of Part VID, and the provisions of —

 (a) subsection (6); and

 (b) section 80G,

 do not apply to the exercise of any such jurisdiction by an Arbitrator.

(5) Nothing in subsection (1) or (2) shall affect or interfere with the exercise by an employer in relation to any Government officer, or office under his administration, of any power in relation to any matter within the jurisdiction of an Arbitrator, but any act, matter or thing done by an employer in relation to any such matter is liable to be reviewed, nullified, modified or varied by an Arbitrator in the course of the exercise by him of his jurisdiction in respect of that matter under this Division.

(6) Notwithstanding subsection (1), but subject to subsection (7), an Arbitrator may —

 (a)  with the consent of the Chief Commissioner refer an industrial matter referred to in subsection (1) or any part of that industrial matter to the Commission in Court Session for hearing and determination by the Commission in Court Session; and

 (b) with the consent of the President refer to the Full Bench for hearing and determination by the Full Bench any question of law, including any question of interpretation of the rules of an organisation, arising in a matter before the Arbitrator,

 and the Commission in Court Session or the Full Bench, as the case may be, may hear and determine the matter, or part thereof, or question, so referred.

(7) Notwithstanding subsections (1) and (6), an Arbitrator does not have jurisdiction to enquire into or deal with, or refer to the Commission in Court Session or the Full Bench, any matter in respect of which a procedure referred to in section 97(1)(a) of the Public Sector Management Act 1994 is, or may be, prescribed under that Act.”

56     For the application at first instance to be within the learned Arbitrator's jurisdiction, it needed to deal with any “industrial matter relating to a government officer”.  It was not in issue that the individual concerned, the subject of the proceedings at first instance, was a “government officer”.  The definition of “industrial matter” is set out in s 7 of the Act as follows:

  “industrial matter” means any matter affecting or relating or pertaining to the work, privileges, rights, or duties of employers or employees in any industry or of any employer or employee therein and, without limiting the generality of that meaning, includes any matter affecting or relating or pertaining to — 

  (a) the wages, salaries, allowances, or other remuneration of employees or the prices to be paid in respect of their employment;

  (b) the hours of employment, leave of absence, sex, age, qualification, or status of employees and the mode, terms, and conditions of employment including conditions which are to take effect after the termination of employment;

  (c) the employment of children or young persons, or of any person or class of persons, in any industry, or the dismissal of or refusal to employ any person or class of persons therein;

  (ca) the relationship between employers and employees;

  d) any established custom or usage of any industry, either generally or in the particular locality affected;

  (e) the privileges, rights, or duties of any organisation or association or any officer or member thereof in or in respect of any industry;

  (f) in respect of apprentices or trainees —

   (i) their wage rates; and

   (ii) subject to the Industrial Training Act 1975 — 

    (I) their other conditions of employment; and

    (II)  the rights, duties, and liabilities of the parties to any agreement of apprenticeship or training agreement;

  (g) any matter relating to the collection of subscriptions to an organisation of employees with the agreement of the employee from whom the subscriptions are collected including —

   (i) the restoration of a practice of collecting subscriptions to an organisation of employees where that practice has been stopped by an employer; or

   (ii) the implementation of an agreement between an organisation of employees and an employer under which the employer agrees to collect subscriptions to the organisation;

  (h) deleted]

  (i) any matter, whether falling within the preceding part of this interpretation or not, where — 

   (i) an organisation of employees and an employer agree that it is desirable for the matter to be dealt with as if it were an industrial matter; and

   (ii) the Commission is of the opinion that the objects of this Act would be furthered if the matter were dealt with as an industrial matter;

  and also includes any matter of an industrial nature the subject of an industrial dispute or the subject of a situation that may give rise to an industrial dispute but does not include — 

  (j) compulsion to join an organisation of employees to obtain or hold employment;

  (k) preference of employment at the time of, or during, employment by reason of being or not being a member of an organisation of employees;

  (l) non­‑employment by reason of being or not being a member of an organisation of employees; or

  (m) any matter relating to the matters described in paragraph (j), (k) or (l);”

57     In determining whether the respondent's claim at first instance fell within the jurisdiction of a Public Service Arbitrator pursuant to s 80E of the Act, it is necessary to characterise the nature of the claim that came to the learned Arbitrator in this case.  The terms of the notice of application originating the proceedings at first instance, are set out at AB 4 - 6.  The schedule to the application, sets out the history in relation to the issue concerning Mr Dinnie in relation to his applying for and taking sick leave.  This ultimately involved the utilisation of some of Mr Dinnie's annual leave, to make up a shortfall in his sick leave entitlement, for the period of his absence.  Importantly, there seemed no dispute between the parties in the proceedings at first instance that ultimately, Mr Dinnie took a period of sick leave in respect of which he had no lawful entitlement to be paid.  That is, there was no dispute in existence at first instance, about Mr Dinnie's entitlement to the sick leave in issue.

58     It seems clear from pars 9 and 10 to the schedule to the application, that having received sick leave payments to which he was not entitled, the appellant was seeking to recover from Mr Dinnie those payments and various options were proposed for that purpose.  Additionally, the remedy sought from the learned Arbitrator at first instance, was “an order that Mr Dinnie  not be penalised for any over utilisation of sick leave entitlements with respect to the period of his extended illness ie. 26 September 2002 to 2 May 2003.”  It seems common ground that the sum of the over payment of sick leave to Mr Dinnie, was in the amount of $4,858.50.  Given that the various options outlined by the appellant to Mr Dinnie had not been agreed, the appellant had given notice that it intended to commence proceedings in the Local Court to recover the over payments from Mr Dinnie.

59     At AB 17 in his reasons for decision, the learned Arbitrator at par 42, characterised the claim before him as in essence, “an issue as to the quantum of sick leave available to Mr Dinnie and the payment by the respondent to Mr Dinnie  for his entire period of absence on sick leave”.  The learned Arbitrator therefore characterised the matter before him as a matter of an “industrial nature” falling within the definition of “industrial matter” under s 7 of the Act.

60     In my opinion, the learned Arbitrator erred in characterising the claim before him in this way.  The background to the matter referred for a compulsory conference under s 80E of the Act, disclosed that the appellant and the respondent were in dispute in relation to payments made to Mr Dinnie by the appellant, to which he had no lawful entitlement.  As I have already said, there was no dispute that this was the case.  What the background to the matter reveals, is that the appellant was trying to recover from Mr Dinnie, by various suggested means, this over payment.  The respondent, in referring the matter for determination under s 80E of the Act, was clearly in my opinion, attempting to avoid that outcome as against Mr Dinnie, such that he would “not be penalised for any over-utilisation of sick leave entitlements”, as set out in the notice of application.  Ultimately, the respondent was successful at first instance, as the order issued by the learned Arbitrator, had the effect of conferring upon Mr Dinnie, an entitlement for the period of sick leave in dispute, hereby depriving the appellant in my opinion, of any remedy to recover that amount.  Seen in its entire context, in my view, the essence of the dispute at first instance was an attempt by the appellant to recover from Mr Dinnie amounts of salary overpaid to him and in relation to which, he had no lawful entitlement under his contract of service with the respondent.

61     That being so for the following reasons, the matter before the learned Arbitrator was not an “industrial matter” for the purposes of ss 7 and 80E of the Act, and was beyond jurisdiction and power.

62     A similar circumstance as the instant case was the subject of appeal proceedings before the Full Bench in The Association of Draughting, Supervisory and Technical Employees, Western Australian Branch v Building Management Authority (1992) 72 WAIG 2162.  In that case, a dispute existed between the parties concerning an over payment of wages to an employee.  As in the present matter, there was no dispute that the employee in question had been overpaid a sum of money, in error by the employer, to which he had no lawful entitlement under his contract of service.  In characterising the claim in that matter as one relating to the over payment of an employee, the Full Bench came to the conclusion at 2165, that the claim was not one relating to an “industrial matter” under the Act, as it only indirectly related to the relationship of employer and employee.  This was so, notwithstanding the naturally broad meaning of “industrial matter” under the then s 7 of the Act. 

63     In my opinion, the present matter is on all fours with the BMA case.  This decision bound the learned Arbitrator at first instance and in my view, required him to dismiss the application as being beyond the jurisdiction of the Arbitrator.

64     As I have said, given that the matter should have been characterised as an attempted recovery by the appellant of the over payment of sick leave to Mr Dinnie, in my opinion, on the authority of BMA, the matter before the learned Arbitrator, although it arose from the employment relationship, did so only indirectly and as counsel for the appellant submitted, was not in “any meaningful way affected or related to the work of an employer and employee in an industrial sense, and nor was it “dependant on the existence of an employer/employee relationship”: Robe River Iron Associates v The Metal and Engineering Workers Union, Western Australian Branch (1995) 75 WAIG 2478 per Murray J at 2479 and per Scott J at 2482.

65     Whilst s 7 of the Act was amended in 2002 by amending Act number 20 of 2002, to expand the definition of “industrial matter” I am not persuaded that the extended definition brought the claim at first instance within the jurisdiction of an Arbitrator under s 80E of the Act.  It is the case that s 7 of the Act as to the definition of “industrial matter” has been broadened to include the words in the penultimate part of the definition set out above, “and also includes any matter of an industrial nature...”.   However, the meaning of “industrial nature” must be read in my view, in the context of the preceding parts of the definition of “industrial matter” that being the relevant dispute of an industrial nature must have an industrial character or complexion: Hotcopper v Saab (2002) 83 WAIG 2020.  The issue of the repayment of monies by an employee of an employer, which monies are unconnected with the contract of employment or any other industrial instrument applicable between the parties, and which is only indirectly related to the employment relationship, is not a matter of an industrial nature as defined.  I am therefore of the view that the BMA case remains sound authority for the proposition which it enunciated and is unaffected by the amendments to the definition of industrial matter in s 7 of the Act.

66     I would therefore uphold ground one of the grounds of appeal.

67     If I am incorrect in concluding that the matter before the learned Arbitrator was not an industrial matter, then by ground two of the grounds of appeal, the appellant asserts that the learned Arbitrator erred in not dismissing the matter on the basis that further proceedings were not necessary or desirable in the public interest, pursuant to s 27(1)(a)(ii) of the Act.  The basis of this submission was that the learned Arbitrator erred in exercising his discretion to make the order he did, because it contravened the principle that a “payment out of the consolidated fund made without Parliamentary authority is simply illegal and ultra vires, and may be recovered by the Government if it can be traced”: Attorney General v Gray [1977] 1 NSWLR 406; Auckland Harbour Board v R [1924] AC 318. 

68     The fact of the matter was in this case, that it was not in dispute that Mr Dinnie had been paid funds out of consolidated revenue to which he had no entitlement.  That being the case, irrespective of the quantum of the sum of monies involved, the State has a right, and arguably a duty, to seek to recover those monies overpaid consistent with the principle enunciated in Gray.  In my opinion, to the extent that the learned Arbitrator did not apply this general principle and sought to apply s 26 of the Act, having regard to the circumstances of Mr Dinnie, then this was in error.  Whilst s 26(1)(a) of the Act requires an Arbitrator and the Commission to deal with a matter in accordance with equity, good conscience and the substantial merits of the case, this does not permit an Arbitrator or the Commission to depart from the duty to apply the general law: Ory and Ory v Betamore Pty Ltd and Others (1993) 60 SASR 393; Qantas Airways Ltd v Gubbins and Others (1992) 28 NSWLR 26 per Gleeson CJ and Handley JA; Director General, Department of Justice v The Civil Service Association of Western Australia, Incorporated (2003) 83 WAIG 908. 

69     The effect of the order made at first instance, was to prevent the appellant from seeking to recover the over payment made to Mr Dinnie, contrary to the principles set out in Gray.  It is to be noted that in Gray, as in the present case under consideration, the monies were paid to the employee in question by mistake.  In that case it was held that there was no room for the equitable doctrine of estoppel to prevent the Crown from recovering the monies paid to the employee: per Hutley JA at 410; Glass JA at 412-413 (Samuels JA agreeing at 414). 

70     There may be circumstances, for example, where the action of the employer is occasioned by malice or bad faith, to warrant the exercise of the discretion under s 26(1)(a) in favour of an employee, in such a case, after having applied the principle in Gray. The present circumstances did not give rise to such considerations in my opinion.  In this case, the equity and good conscience lay with the appellant being able to prosecute its lawful right to recover the monies overpaid to Mr Dinnie and indeed, for him to pay it back.

71     As to the application of s 125 of the Property Law Act 1969 (WA), I am not persuaded that its provisions would alter the approach that should have been taken to this matter at first instance.  There must also be some doubt that this legislation would overturn the very longstanding principle referred to in Gray, without some clear indication to that effect: Potter v Minihan (1908) 7 CLR 277. 

72     I do not need to consider ground 3.  In my view the discretion at first instance miscarried for the foregoing reasons.  The appeal should be upheld and the decision of the learned Arbitrator be varied by dismissing the respondent's application.

THE PRESIDENT:

73     For those reasons, the appeal is upheld and the decision at first instance varied.

Order accordingly