Adams and anor v Noakes and anor

SECOND RESPONDENT Fiona Gai Noakes

Appeal - Application for leave to appeal and appeal - Stay application - Unfair contract - Principles governing the granting of a stay - Stay refused CATCHWORDS: Stay of proceedings - Appeal - Application for leave to appeal and appeal - Stay application - Unfair contract - Principles governing the granting of a stay - Stay refused

LEGISLATION CITED: Industrial Relations Act 1996

Campbells Cash & Carry v National Union of Workers, New South Wales Branch (2001) 104 IR 400 Knowles v Anglican Church Property Trust (No 2) (1999) 95 IR 380 Mayne Nickless Limited v Industrial Relations Commission of New South Wales [2004] NSWCA 359 Michael John Burgess and others v Mount Thorley Operations Pty Limited (2002) 119 IR 52 Mitchforce v Industrial Relations Commission (2003) 57 NSWLR 212 Noakes and Anor v Adams & Anor (2002) 117 IR 94 CASES CITED: Noakes and Anor v Adams and Anor (supplemental) [2005] NSWIRComm 107 Noakes and Anor v Adams and Anor [2005] NSWIRComm 48 Re Transport Industry - Waste Collection & Recycling (State) Award (2000) 102 IR 192 Solution 6 Holdings Limited v Industrial Relations Commission of New South Wales [2004] NSWCA 200, (2004) 60 NSWLR 558, 208 ALR 328, 137 IR 123 Sydney Water Corporation v Industrial Relations Commission of New South Wales [2004] NSWCA 436

APPELLANTS Mr M Jacobs QC with Mr P Bambagiotti of counsel Solicitor: Mr K Stapleton JDK Legal LEGAL REPRESENTATIVES:

RESPONDENTS Mr R Alkadamani of counsel Solicitor: Mr P Hayward Hayward Solicitors

• 4 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

Application by Tony Adams and another for leave to appeal and appeal against an interlocutory judgment of Justice Marks given on 14 March 2005 and 1 April 2005 in Matter No IRC 1798 of 2001

1 This matter concerns an application for leave to appeal and, if leave is granted, to appeal by Tony Adams and Ellen May Adams from two judgments given by Marks J on 14 March and 13 April 2005. A stay is sought in respect of the orders made by his Honour. This judgment deals with the stay application. Background 2 In March 2001 Paul Anthony Noakes and Fiona Gai Noakes ("the respondents") commenced proceedings under s 106 of the Industrial Relations Act 1996 against the appellants. The summons sought orders declaring void or varying a "contract or arrangement or collateral arrangement between the applicants and the respondents under which the applicants performed work in an industry …" The appellants filed a notice of motion seeking, inter alia, a declaration that the Court did not have jurisdiction with respect to the proceedings or, in the alternative, that the Court ought to decline to exercise any such jurisdiction. 3 In Noakes and Anor v Adams & Anor (2002) 117 IR 94 Marks J dismissed the motion. Subsequently, the respondents sought to amend the summons and filed a motion to that effect. The appellants opposed the motion. In a further interlocutory judgment given on 14 March 2005, Marks J dismissed the appellants' motion: Noakes and Anor v Adams and Anor [2005] NSWIRComm 48. In a Supplementary Interlocutory Judgment given on 13 April 2005, Marks J clarified his earlier judgment by granting leave to the respondents to amend the proceedings in the form of the amended summons, the subject of the appellants' notice of motion filed on 4 November 2004: Noakes and Anor v Adams and Anor (supplemental) [2005] NSWIRComm 107. 4 The background to the matter is summarised in the interlocutory judgment given by Marks J on 14 March 2005 at [4]-[13]: 4 In late November or early December 1998 the applicants became aware that a café/restaurant business known as "Troy's on Market" was available for sale by its proprietor, a Mr Baggett. The business was run from premises attached to the Woolpack Hotel in Mudgee, although they were detached from the hotel building and had a separate entrance. The applicant's were advised that the premises were owned by the respondents and that one of the respondents, Mr Tony Adams, was the licensee of the hotel. The applicants understood that Mr Baggett did not then currently operate the business under a lease from the respondents. There was an arrangement in place where Mr Baggett sold alcohol in the restaurant on behalf of Mr Adams. 5 Subsequently the applicants met with Mr Adams and were advised that a long-term lease would be provided and that profits from the sale of alcohol sold in the business would be dealt with in the lease. Mr Adams is also alleged to have told the applicants that he was keen to build a bistro area in the beer garden within the hotel premises, which would be serviced by the restaurant/café business.

6 On 5 December 1998 Mr Baggett signed a "letter of intent" to sell the business to the applicants conditional inter alia on the signing of a 12 month lease by them with Mr Adams. The handover date was said to be 1 January 1999. 7 Solicitors acting for the respondents forwarded a form of lease to solicitors acting for the applicants by letter dated 11 December 1998. The applicants' solicitor queried two of the terms of the lease but eventually they advised the respondents' solicitors that the amendments were no longer required. By letter dated 5 January 1999 the applicants' solicitors forwarded the lease document executed by them, together with the stamp duty, to the respondents' solicitor. 8 Meanwhile on 4 January 1999 the applicants had entered into an agreement to purchase the business from Mr Baggett. Completion date was said to be "on or about 31 December 1998". The applicants commenced working in the café/restaurant with Mr Baggett from 4 to 11 January 1999. After that time they operated the business in their own right.

9 By letter dated 18 February 1999 the respondents' solicitor wrote to the applicants' solicitors noting that a clause in the lease had been amended which was to be the subject of instructions from the respondents and also noting that the lease might require the consent of the Liquor Administration Board. The lease had been referred to a solicitor with expertise in licensing matters for this purpose.

10 Sometime in about March 1999 the parties became aware that the basis upon which alcohol was purchased by the applicants and sold by them in the restaurant was unlawful under the relevant legislation governing the sale of alcohol in licensed premises. This necessitated a change in those arrangements and, in effect, the applicants provided alcohol to patrons of the café/restaurant without any profit to them. This was the reason why the original lease arrangement did not proceed. Based on advice from a new solicitor, the respondents offered the applicants a catering agreement by which they could utilise the café/restaurant premises. This was rejected by the applicants, in part, because of conflicting advice they had received concerning the type of arrangement which would be regarded as lawful for the sale of alcohol in the premises.

11 Ultimately, the respondents did not proceed to install a bistro in the hotel which they operated from the premises.

12 In addition to operating the café/restaurant the applicants alleged that there were other responsibilities imposed on them as part of an arrangement made with Mr Adams. They were required to provide counter meals for sale to bar patrons at the hotel operated by the respondents to the specifications set by the respondents. They were also required to provide snacks to the hotel each Tuesday night to be consumed in conjunction with a dart competition and to provide hot finger food to the hotel every Friday afternoon. This was said to be a continuation of an arrangement which Mr Baggett had with the respondents. The respondents paid for the cost of ingredients but not for the cost of the preparation of these snacks.

13 The lease document contained certain provisions requiring the applicants to run a café/restaurant at the premises, to open at times usual for a business of a café/restaurant, to keep the property clean and dispose of waste properly and to maintain the property in its condition at the time of the lease, promptly undertaking any necessary repairs. The applicants were also required to maintain and decorate the shop front.

5 It was unclear on the face of the original summons just what constituted "the contracts or arrangements" that were alleged to be unfair. In fact, the whole summons was somewhat vague. The proposed amended summons, however, sought to overcome the many deficiencies in the original summons and identified, with particularity, the alleged unfair contracts or arrangements and how it was alleged that the contracts or arrangements were contracts or arrangements whereby work was performed in an industry. 6 Marks J in his judgment of 14 March 2005 identified the factual circumstances by which the respondents asserted that there was in existence a contract such as would ground jurisdiction under s 106. The circumstances were described by his Honour at [16]-[24] of his judgment: 16 The applicants asserted jurisdiction by reference to five matters which they said led directly to the performance of work in an industry. These were as follows: Certain obligations imposed on the applicants by the lease document, which, although not executed, was said to govern the arrangement by which the applicants conducted the business from the premises.

17 These were requirements that the applicants use the property for the purpose of a café/restaurant, open the business at times usual for that type of business, keep the property clean and properly dispose of waste. The sale of alcohol in the restaurant premises by the applicants on behalf of the first respondent.

18 Because of variations in the arrangements made from time to time in order to comply with the relevant legislation, an arrangement was ultimately put in place that the sale of alcohol to the patrons of the business operated by the respondents would be made by them on behalf of the licensee, Mr Tony Adams. This was said to create a situation whereby the respondents "were almost in the same position as staff of the hotel who simply sell alcohol to Mr Adams, collect the money and make no profit at all from the alcohol sales". 19 The contrary position put by the respondents was that the applicants were not obliged by any contract or arrangement with the respondents to sell alcohol. Taken at its highest, the evidentiary material was indicative that if the applicants wished to sell alcohol to patrons of the café/restaurant then there was a facility in place to enable them to acquire it through the license held by Mr Tony Adams. The provision of counter meals.

20 In her affidavit, Mrs Noakes deposed to the fact that she had created a menu for counter lunches to be provided at the hotel which was approved by the respondents on the basis that none of the meals were priced in excess of $10. A menu for the counter lunches was displayed on a black board menu in a bar of the hotel, together with a "specials black board". Orders for the counter meals in the hotel were taken by staff employed by the respondents, who would then convey the orders to employees of the applicants who would then prepare the meals and deliver them to the hotel. Counter meals were supplied Monday to Saturday at lunchtime and on some occasional evenings. The proposed amended summons alleges that there was an arrangement between the applicants and the respondents in relation to the provision of counter meals to the hotel by which the applicants "were required to provide counter meals to patrons of the hotel …". This connotes an obligation to provide counter meals, albeit one which might not be enforceable at law.

21 The respondents disputed that the evidence to which I have referred was capable of constituting an arrangement which led directly to the provision of services by the applicants. It was submitted by the respondents that whilst the provision of meals may have been in the contemplation of the parties the transaction which led directly to the provision of meals was in each case an order placed by a patron of the hotel with the applicants through the medium of the respondents' employees.

22 It was the evidence of Mrs Noakes that she observed Mr Baggett preparing finger food on a Tuesday evening and was told by him that he prepared finger food each Tuesday and Friday night for a dart night which was conducted in the hotel. She was told by Mr Baggett that Mr Adams paid for the food and it was prepared by him without charge. Mrs Noakes said that she continued to provide these snacks on the same basis. Mr Adams paid the supplier of the items used for this food direct upon presentation of an invoice from the applicants. 23 On behalf of the applicants it was asserted that there was an arrangement whereby snacks would be provided by the applicants in the manner described and that Mr Adams was fully aware of this arrangement and concurred with it. It was said also that such an arrangement was inconsistent with the characterisation of the overall arrangement between the applicants and the respondents as being one confined to the lease of premises.

24 The respondents denied that there was any such compulsion on the part of the applicants and endeavoured to characterise what occurred as being a continuation of a practice which had been developed by Mr Baggett. This was obviously with the knowledge and concurrence of Mr Adams. 7 At [38] of his 14 March judgment Marks J stated that "Taking the factual assertions contained within the proposed amended summons at their highest in favour of the applicants, I am of the opinion that they are capable of supporting an allegation that there is such an arrangement." His Honour also held there was nothing in Mayne Nickless Limited v Industrial Relations Commission of New South Wales [2004] NSWCA 359, Solution 6 Holdings Limited v Industrial Relations Commission of New South Wales (2004) 60 NSWLR 558, Sydney Water Corporation v Industrial Relations Commission of New South Wales [2004] NSWCA 436 or Mitchforce v Industrial Relations Commission (2003) 57 NSWLR 212 that prevented him from allowing the respondents to proceed with their amendments to the summons for relief. 8 In seeking a stay of the orders made by Marks J the appellants relied on two main contentions: (1) That the Commission in Court Session does not have jurisdiction under s 106 of the Act to determine any of the issues, or at the very least, most of the issues submitted to it for determination by the Noakes either as raised in the original summons for relief or the amended summons. (2) That the case has cost the parties a very substantial amount of money thus far and it should not be proceeded with and advanced in the Court below until such time as the application for leave to appeal and appeal has been heard. 9 It is not the Court's role in determining whether a stay should be granted to decide whether or not the necessary jurisdictional fact has been established, although in this case, given the extensive territory covered by the appellant's written and oral submissions on the stay application, one could be forgiven for being mistaken about that role. 10 As the respondents' counsel submitted, the relevant principles in relation to the grant of a stay pending the hearing of an appeal are well settled in this jurisdiction. In Re Transport Industry - Waste Collection & Recycling (State) Award (2000) 102 IR 192 Wright J, President said, at 199-200: The principles relevant to the grant of a stay pending the hearing of an appeal against a decision of a member of the Commission pursuant to s 190 of the Act are now well settled. See, for example, the judgment of the Court of Appeal in Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685, as adopted by the Industrial Commission of New South Wales in Court Session in Water Industry Salaried Officers' Union v Professional Officers' Association (NSW) (1987) 22 IR 178. See also the recent judgment in Green v Brown [2000] NSWIRComm 222. It is clear that special circumstances are not required for the grant of a stay, it being sufficient that the applicant demonstrates a reason or an appropriate case to warrant the relevant exercise of discretion. Although that very limited criterion has been established here, nevertheless, as the authorities make clear, that consideration may be merely the initial consideration as to the grant of the stay. In other words, should that limited criterion or test not be satisfied then the stay application fails in limine . However, should it be satisfied then there may very well be other factors which require consideration. These considerations are helpfully set out in the detailed discussion of the principles set out in the judgment of the Court of Appeal in the first case referred to (at 694 - 695) in the following terms: There are other principles to be kept in mind. The onus is upon the applicant to demonstrate a proper basis for a stay that will be fair to all parties: Trlin v Marac Finance Australia Ltd (unreported, Court of Appeal, 4 March 1985). The mere filing of an appeal will not, of itself, provide a reason or demonstrate an appropriate case, nor will it discharge the onus which the applicant bears: see Supreme Court Rules, Pt 51, r 10; Waller v Todorovic (unreported, Court of Appeal, 21 December 1979). The Court has a discretion whether or not to grant the stay and, if so, as to the terms that would be fair. In the exercise of its discretion, the Court will weigh considerations such as the balance of convenience and the competing rights of the parties before it: Attorney-General v Emerson (1889) 24 QBD 56. Where there is a risk that if a stay is granted, the assets of the applicant will be disposed of, the court may, in the exercise of its discretion, refuse to grant a stay: cf Clyne v Deputy Commissioner of Taxation (1982) 56 ALJR 857. Sometimes as a condition of the grant of a stay, where funds are available, a court will impose on the applicant the payment of the whole, or part, to the judgment creditor: Andrews v John Fairfax & Sons Ltd [1979] 2 NSWLR 184 … Two further principles can be mentioned. The first is that where there is a risk that the appeal will prove abortive if the appellant succeeds and a stay is not granted, courts will normally exercise their discretion in favour of granting a stay … Thus, where it is apparent that unless a stay is granted an appeal will be rendered nugatory, this will be a substantial factor in favour of the grant of a stay … Secondly, although courts approaching applications for a stay will not generally speculate about the appellant's prospects of success, given that argument concerning the substance of the appeal is typically and necessarily attenuated, this does not prevent them considering the specific terms of the stay that will be appropriate fairly to adjust the interest of the parties, from making some preliminary assessment about whether the appellant has an arguable case. This consideration is protective of the position of a judgment creditor where it may be plain that an appeal, which does not require leave, has been lodged without any real prospect of success and simply in the hope of gaining a respite against immediate execution upon the judgment. I consider that the following considerations derived from the discussion in the Cambridge Credit case are those relevant to apply in this matter: (1) The mere filing of an appeal will not of itself provide a reason or demonstrate an appropriate case nor will it discharge the onus which the applicant bears.

(2) A court has an appropriate discretion whether or not to grant the stay and as to the terms that would be fair if a stay be granted.

(3) The onus is upon the applicant for a stay to demonstrate a proper basis for a stay that will be fair to all the parties.

(4) In the exercise of its discretion all considerations including the balance of convenience and the competing rights of the parties need to be considered and weighed.

(5) Where there is a risk that the appeal will prove abortive or nugatory if the stay is not granted then the normal exercise of discretion will result in the grant of a stay.

(6) Although, generally speaking, it is inappropriate in relation to an application for a stay to speculate as to the appellant's prospects of success, this does not prevent a court, in the context of considering the specific terms of the stay that will appropriately and fairly adjust the interests of the parties, from making a preliminary assessment as to whether the appellant has an arguable case.

See also Michael John Burgess and others v Mount Thorley Operations Pty Limited (2002) 119 IR 52 at [19]-[20] and Campbells Cash & Carry v National Union of Workers, New South Wales Branch (2001) 104 IR 400 at [49]-[62]. 11 As to the appellants' prospects of success on appeal the issues raised are not without some complexity and will involve the Full Bench on appeal (if leave is granted) considering a number of jurisdictional issues arising from recent decisions (referred to above) in the Court of Appeal regarding the Commission in Court Session's jurisdiction under s 106 of the Industrial Relations Act. There are aspects of what I understand to be the appellants' case that are clearly arguable and to that extent it could not be said their case is futile. 12 On the other hand, however, the orders appealed against arise out of interlocutory judgments of Marks J and the issues have not been fully developed and tested in substantive proceedings. Further, in my opinion, it was entirely open to his Honour to find that the factual assertions contained within the proposed amended summons taken at their highest in favour of the respondents, were capable of supporting an allegation that there was an arrangement or arrangements. It is no answer to that, as the appellants appear to contend, that in the absence of a 'contract' in the strict sense there is no jurisdiction to make orders under s 106.

13 Whilst the appellants may have an arguable case on appeal, another consideration is the fact that the appeal is from interlocutory judgments and although the appeal raises jurisdictional issues, that will not, of itself, establish a basis for the grant of leave: Knowles v Anglican Church Property Trust (No 2) (1999) 95 IR 380 at 381. The appellants will face the hurdle on appeal of satisfying the Full Bench leave should be granted in circumstances where there has only been interlocutory determinations on the basis of the factual assertions in the amended summons and not a full consideration by the trial judge of the evidence relevant to the jurisdictional issue.

14 Further, it is most certainly not the position, as the appellants appeared to submit, that it is beyond argument that the Commission in Court Session has no jurisdiction to entertain the applicants' claim for relief, either as pleaded in the original summons or the later amended summons, on the basis of pronouncements in the recent Court of Appeal decisions relied upon by the respondents. It seems to me, to take one example, that there is a serious issue to be tried as to whether there was a contract as defined in s 105 of the Act whereby work was performed in an industry in circumstances where it was alleged representations were made that led the Noakes into signing a lease, entering premises for the purpose of conducting the business of a café/restaurant, paying lease payments for a number of months and providing counter meals and snack foods to customers of the hotel.

15 The appellants submitted that the parties in these proceedings have expended a substantial amount of money and that if the matter proceeds it is likely to involve a 7-10 day trial at "unbelievable expense". Senior counsel for the appellants drew the Court's attention to evidence filed in the proceedings that it was suggested showed the respondents were without assets and he expressed concern at being able to recover any costs if the appellants were successful at first instance. However, counsel for the respondents submitted that it had not been shown to a degree the Court would find acceptable that the respondents were without assets and that they could not meet any costs. I agree. On this issue, therefore, there is no proper basis to conclude that proceeding to trial would be futile. 16 In my opinion, the appellants have not established reasons supporting the exercise of discretion in their favour to grant a stay. The application for a stay is refused and I order accordingly. ________________________________

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