WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

CITATION : 2018 WAIRC 00046

DELIVERED : THURSDAY, 18 JANUARY 2018

FILE NO. : M 23 OF 2016

CLAIMANT

AND

Kalhaven Holdings Propriety Limited

Respondent

CatchWords : Slip Rule - Effect of taxation upon order - Whether employer obliged to withhold and remit to Commissioner of Taxation any part of an amount that the employer was ordered to pay for contravention of a modern award

Legislation : Fair Work Act 2009 (Cth)
Civil Judgments Enforcement Act 2004 (WA)
Taxation Administration Act 1953 (Cth)

Case(s) referred
to in reasons  : Paul Andrew Bennett and Craig Bradley Dix t/a Fitness Painting
    & Property Maintenance v Higgins [2005] WASCA 197
    Newmont Yandal Operations Pty Ltd v The J Aron Corporation
    (2007) 70 NSWLR 411

Result : Rectification of Order

Representation:

Claimant : Not applicable

Respondent : Not applicable

REASONS FOR DECISION

1          On 20 April 2017, after a trial, I published reasons for a judgment in favour of the claimant, Ms Zeeb, and made orders that the respondent, Kalhaven Holdings Pty Ltd (the Company), pay to the claimant $10,361.16 being $9,441.06 plus interest of $840.10, plus $80 disbursement costs (the Orders). Ms Zeeb’s claim was made under the Fair Work Act 2009 (Cth) (the FW Act). The order was made as a result of Ms Zeeb proving a contravention of a ‘civil penalty provision’ of the FW Act, which provides that the court may make orders for an employer to pay to an employee an amount that the employer was required to pay under a modern award (FW Act, s 545(3)(a)).

2          The Company has written to the registry by email on 20 September 2017, 14 December 2017, 20 December 2017 and by letter on 2 January 2017. Ms Zeeb has written to the registry by email on 15 January 2018. The effect of the communications is to suggest that, since the making of the Orders:

(a)   Ms Zeeb has taken steps to enforce the Orders, including, sometime on or before 6 June 2017, registration of the Orders and the commencement of enforcement proceedings pursuant to the Civil Judgments Enforcement Act 2004 (WA). Ms Zeeb has paid fees to the Bailiff in connection with the enforcement proceedings.

(b)   The Company has paid a total of $10,576.21 in respect of the Orders as follows:

(i)      On 8 June 2017, $8,971.21 to Ms Zeeb;

(ii)      On 8 June 2018, $1,605 to the Australian Taxation Office (the Remitted Tax). This payment was made on advice to the Company by the Australian Taxation Office of the legal obligations of the Company.

(c)   The enforcement proceedings has resulted in the Company being contacted by the Bailiff who has made a demand for further payments including a demand of:

(i)      $1,605 corresponding with the Remitted Tax;

(ii)      $642.23 on account of one or more of interest and enforcement fees.

3          Ms Zeeb’s position is that, within 21 days of the making of the Orders, the Company was required to pay her the full amount set out in the Orders. The Company seeks from this court:

(a)   ‘Clarification as to if the full amount of $10,576.21 should have been paid to Ms Zeeb without any tax deductions’ (the Taxation Question);

(b)   An order that the payment of $10,576.21 has satisfied the judgment of 20 April 2017;

(c)   An order that the enforcement proceedings be set aside and that ‘the matter be removed from the listings of the Bailiff’.

4         This Court has no power to make the orders sought by the Company per (b) and (c). On any view, there was a delay between the pronouncement of the orders and the commencement of enforcement proceedings and payments by the Company on 8 June 2017. Any consequential disputes about whether the judgment has been satisfied and about interest upon the judgment and about the costs of enforcement will be resolved by the application of Civil Judgments Enforcement Act 2004 (WA) in the relevant forum; the Industrial Magistrates Court is not the relevant forum.

5          The resolution of the Taxation Question requires the identification and the interpretation of the relevant provisions of the Taxation Administration Act 1953 (Cth): Paul Andrew Bennett and Craig Bradley Dix t/a Fitness Painting & Property Maintenance v Higgins [2005] WASCA 197. It is convenient to assume, without deciding, that the matters set out in paragraph 2 are correct. I note that the rights and obligations of an employer regarding the withholding of an amount payable to an employee are contained in the Taxation Administration Act 1953 (Cth), Schedule 1, Division 12, 15 and 16.  There is not sufficient material before me to answer the Taxation Question. Finally, (without deciding) I have doubts about whether the Industrial Magistrates Court has the jurisdiction to answer the Taxation Question.

6          Although I am unable, in these reasons, to answer the Taxation Question, the Industrial Magistrates Court has an implied power to rectify an order to avoid unintended consequences: Newmont Yandal Operations Pty Ltd v The J Aron Corporation (2007) 70 NSWLR 411. What follows in this paragraph is an adaption of relevant statements made by the WA Industrial Appeal Court in Paul Andrew Bennett and Craig Bradley Dix t/a Fitness Painting & Property Maintenance v Higgins [2005] WASCA 197 [43].  It is to be presumed that it is the intent of the Commonwealth and State Parliaments that jurisdiction conferred respectively on the Industrial Magistrates Court (under the FW Act) and the Bailiff (under the Civil Judgments Enforcement Act 2004 (WA)) will be exercised within the context and confines of existing and applicable Commonwealth taxation law. This approach has particular application where s 109 of the Constitution would otherwise render the state law invalid to the extent of any inconsistency. It also has particular application where it is not reasonable or realistic to expect Industrial Magistrates Court to explicitly address all the possible taxation consequences that might flow from an order. Applying this principle, the Orders should be interpreted as operating against the background of compliance with the Commonwealth tax law referred to above. That is, if any amount was required under Schedule 1 of the Taxation Administration Act 1953 (Cth) to be withheld by the Company from the Orders and was paid to the Commissioner of Taxation it would be regarded as having been paid to Ms Zeeb for the purposes of compliance with the Orders. Such an approach to the interpretation of the Orders does not render the Civil Judgments Enforcement Act 2004 (WA) ineffective under s 109 of the Constitution, but enables the terms and operation of both the State and Commonwealth laws to co-exist.

7          In order to avoid unintended consequences so far as enforcement proceedings are concerned, but without deciding the Taxation Question, it is appropriate to rectify the Orders as follows:

Subject to the effect of the Taxation Administration Act 1953 (Cth) (if any), the respondent shall pay to the claimant the sum of $10,361.16, being $9,441.06 plus $840.10 interest, plus $80 disbursement costs.

8          The inclusion of the words ‘(if any)’ makes clear that I am not determining the Taxation Question. That said and assuming that Ms Zeeb has no relevant outstanding taxation liability, it would be surprising if she was not entitled, upon application to the Australian Taxation Office, to have that amount remitted to her. In that event, the amount received by her must be applied to discharge the Orders: Civil Judgments Enforcement Act 2004 (WA), s 24. She ought consider initiating such an application.

Order

9          The order of the 20 April 2017 is rectified by the addition of the underlined text as follows: ‘Subject to the effect of the Taxation Administration Act 1953 (Cth) (if any), the respondent shall pay to the claimant the sum of $10,361.16, being $9,441.06 plus $840.10 interest, plus $80 disbursement costs.’

M. FLYNN

INDUSTRIAL MAGISTRATE