BEA Systems Pty Ltd v Industrial Relations Commission of New South Wales in Court Session & Anor

CATCHWORDS: CONTRACTS - unfair contracts - jurisdiction of Industrial Relations Commission - no jurisdiction where contract terminated 12 months before application - INDUSTRIAL LAW - unfair contracts - jurisdiction of Industrial Relations Commission - no jurisdiction where contract terminated 12 months before application - STATUTES - retrospective effect - presumption against - limitation period - contrary intention - D

Industrial Relations Act 1996 LEGISLATION CITED: Interpretation Act 1987

Brown v Rezitis (1970) 127 CLR 157 Colley v Futurebrand FHA Pty Ltd [2005] NSWCA 223 Crowe v UCS Developments Pty Ltd (2003) 130 IR 266 CASES CITED: Solution 6 Holdings Ltd v Industrial Relations Commission (2004) 60 NSWLR 558 Unitedglobalcom Inc & Ors v Industrial Relations Commission of New South Wales & Anor [2005] NSWCA 131 Visalli v Southwell (1988) 12 NSWLR 502

BEA Systems Pty Ltd (Claimant) PARTIES: Industrial Relations Commission of New South Wales in Court Session (First Opponent) David Arthur Lowe (Second Opponent)

J J Fernon SC (Claimant) Submitting appearance (First Opponent) COUNSEL: J de Meyrick (Second Opponent)

Baker & McKenzie (Claimant) SOLICITORS: I V Knight, Crown Solicitor (First Opponent) Lakos & Company (Second Opponent)

LOWER COURT JURISDICTION: Industrial Relations Commission

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40225/05

MASON P HANDLEY JA GILES JA

22 JULY 2005 BEA SYSTEMS PTY LTD & ANOR v INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION & ANOR CATCHWORDS

CONTRACTS - unfair contracts - jurisdiction of Industrial Relations Commission - no jurisdiction where contract terminated 12 months before application

INDUSTRIAL LAW - unfair contracts - jurisdiction of Industrial Relations Commission - no jurisdiction where contract terminated 12 months before application

STATUTES - retrospective effect - presumption against - limitation period - contrary intention FACTS

On 21 March 2002 Mr Lowe commenced proceedings against BEA Systems Pty Ltd in the Industrial Relations Commission under s 106 of the Industrial Relations Act 1996 seeking the avoidance or variation of a contract with that company. Section 108B which came into force on 24 June 2002 provided that a s 106 application must be made with 12 months of the termination of the contract. On 17 December 2004, Mr Lowe sought to add the US parent of BEA Systems Pty Ltd as an additional respondent for the purpose of having his contract with that company avoided or varied. That contract had been terminated on 7 September 2000. BEA Systems Pty Ltd and its parent sought an order restraining the Commission from ordering that the parent company be joined as a respondent. HELD: (1) The Commission had no jurisdiction to amend the summons to add the US parent as a party; (2) The Commission has power to join additional respondents for the purpose of obtaining consequential relief against them; (3) The Commission does not have power to join an additional respondent to initiate an application for the avoidance or variation of a different contract after the expiration of the limitation period; (4) Section 108B applied to contracts terminated before it came into effect. Neither s 30(1) of the Interpretation Act 1987 nor the common law presumption that Parliament does not intend to interfere with vested rights excluded the contract with the US parent from the scope of s 108B. ORDERS

1. Order that the Industrial Relations Commission be prohibited from granting leave to David Arthur Lowe, the applicant in proceedings No IRC 1645 of 2002, to file the Further Amended Summons for Relief annexed to his notice of motion of 17 December 2004 which would join BEA Systems Inc as a respondent to those proceedings.

2. Order that the second opponent pay the claimant's costs of the proceedings including the costs of the first opponent as a submitting party.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40225/05

MASON P HANDLEY JA GILES JA

22 JULY 2005 BEA SYSTEMS PTY LTD & ANOR v INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION & ANOR Judgment 1 MASON P: In my reasons in Colley v Futurebrand FHA Pty Ltd I reserved my decision with respect to the juristic nature of the power exercised under s106 Industrial Relations Act 1996 in the context of retrospectivity issues. Subject to that same reservation I agree with the reasons of Handley JA in the present matter. 2 HANDLEY JA: The claimants seek an order in the nature of prohibition directed to the Industrial Relations Commission (the Commission) restraining it from hearing and determining a notice of motion in which Mr Lowe seeks to join BEA Systems Inc as an additional respondent in proceedings he commenced under s 106 of the Industrial Relations Act 1996 (the Act). The claimants, the present respondent in the Commission and the respondent proposed to be added (the US parent), submit that s 108B of the Act deprives the Commission of jurisdiction to make the order sought. They fear that, if the Commission did make that order, the privative section, s 179, would prevent them challenging it in this Court. The right of the claimants to take this course was established in Solution 6 Holdings Ltd v Industrial Relations Commission (2004) 60 NSWLR 558. 3 Mr Lowe commenced proceedings under s 106 against BEA Systems Pty Ltd (the respondent) on 21 March 2002. The summons contained 11 specific prayers for relief and a general one. The first order sought was a declaration that the contract between the applicant and the respondent for the performance by the applicant of work in an industry was unfair etc, the second an order that such contract be declared wholly or partly void or varied, the third a declaration that the applicant was an employee of the respondent, and the fifth sought variations of the contract. The fourth prayer sought a declaration of the applicant's entitlements under his contract and the other specific prayers sought monetary and other relief. 4 The party against whom relief was sought was identified in the heading, the orders and in the formal parts of the summons on pp 4-5, as BEA Systems Pty Ltd, an Australian company. Schedule 1 to the summons (pp 6-28) contained a narrative of the material facts upon which the applicant relied. Paragraph 4 stated "the respondent is the Australian subsidiary of its parent company BEA Systems Inc". Annexure A to the schedule contained a copy of an agreement between the applicant and the US parent signed by both parties. 5 Schedule 1 also annexed a letter dated 7 May 2000 from the respondent offering the applicant appointment as a consultant an offer he rejected. The Schedule alleged that his services with the US parent were terminated with effect from 7 September 2000. 6 Section 108B which was inserted in the Principal Act by Act No 32 of 2002 and commenced on assent on 24 June that year provides: "(1) An application for an order under this Division in relation to a contract that has been terminated must be made not later than 12 months after the termination of the contract. (2) The Commission does not have jurisdiction to extend the time for making any such application or to accept an application made after the time prescribed by subsection (1)." 7 Act No 32 of 2002 did not contain any savings or transitional provisions. However cl 3 of sch 1 amended cl 2 of sch 4 of the Principal Act to authorise the Governor to make savings or transitional provisions by regulation. None have been made. Section 108B took effect immediately so as, prima facie, to bar would be applicants whose contracts had been terminated 12 months before or earlier, and to impose limitation periods varying from 1 to 365 days on other would be applicants whose contracts had already been terminated. 8 The proceedings against the respondent in the Commission were commenced before s 108B came into force and are not affected. On 16 July 2002 the respondent's Reply to the summons was filed. It contained in para 57(f) an assertion that the respondent was not "the appropriate party to the arrangement and conduct of which the applicant complains". The applicant's response of 22 August did not deal with this assertion. 9 The summons in the Commission was extensively amended on 25 September 2003 and then on 17 December 2004 the applicant filed a notice of motion seeking leave to join the US parent as a respondent. The affidavit in support provides prima facie proof that the respondent is a wholly owned subsidiary of the US parent and that its directors were executives of the latter. A draft Further Amended Summons containing the amendments sought was annexed to the notice of motion. On 24 March the claimants instituted the proceedings in this Court, and on 11 April Tobias JA restrained the Commission from giving judgment on the motion until the present proceedings had been heard and determined. 10 Section 108B narrows the jurisdiction of the Commission, and any doubt as to the effect of sub-s (1) is removed by sub-s (2). The section operates in respect of "An application … in relation to a contract". The notice of motion seeking to join the US parent as an additional respondent is not itself "An application for an order under this Division". It is an application for an interlocutory order in a matter of practice and procedure. However if the purpose sought to be achieved by the amendment is to enable "An application for an order under this Division" to be made "in relation to a contract that has been terminated", and that application would be barred by s 108A the amendment would be futile, and the Commission would have no jurisdiction to grant it. 11 The Commission has a wide power of amendment (s 170) and its Rules, made pursuant to s 185, confer power to direct parties to be joined (r 83(d)). Compare Visalli v Southwell (1988) 12 NSWLR 502. If no other relevant provision has been made the Supreme Court Rules apply (r 89(5)). The Act and the Rules do not in terms authorise an amendment, or the joinder of a new party, which would defeat an accrued time bar. SCR Pt 8 r 8 gives power to add additional parties as plaintiff or defendant, but r 11(3) makes it clear that, except in cases under Pt 20 r 4(3), such an order does not defeat an accrued time bar. The exception in r 4(3) is not applicable. It provides: "(3) Where there has been a mistake in the name of a party and the Court is satisfied that the mistake was not misleading or such as to cause reasonable doubt as to the identity of the person intended to be made a party, the Court may make an order for leave to make an amendment to correct the mistake, whether or not the effect of the amendment is to substitute a new party." 12 There was no such mistake in this case. The summons in the Commission identified both companies by their correct names and made it clear that it was the Australian company that was being sued. 13 The jurisdiction and power of the Commission to order that additional respondents be added by amendment after the 12 months limitation period in s 108B has expired was considered by the Full Bench in Crowe v UCS Developments Pty Ltd (2003) 130 IR 266 (Crowe) and by this Court in Unitedglobalcom Inc & Ors v Industrial Relations Commission of New South Wales & Anor [2005] NSWCA 131 (Unitedglobalcom). These cases establish that s 108B does not prevent the Commission adding additional respondents outside the limitation period where this is done for the sole purpose of obtaining orders against them under s 106(5). 14 Brown v Rezitis (1970) 127 CLR 157 establishes that orders for the payment of money may be made under s 106(5) against persons who are not parties to the contract avoided or varied provided, in the words of Barwick CJ at 165, there is "a close connexion between the order made and the contract or arrangement varied or avoided". 15 In both Crowe and Unitedglobalcom the amendments did not seek the avoidance or variation of a different contract. There was no claim that the additional respondents were parties to the contract attacked in the original proceedings or were parties to a different contract whereby the applicant worked in an industry. The applicants sought their joinder for the sole purpose of obtaining consequential relief against them. 16 The present case is fundamentally different. The original summons in the Commission sought the avoidance or variation of a contract with the respondent. The summons as proposed to be further amended seeks an order declaring void the contract between the applicant and both companies jointly or severally. The operative provisions are not alleged to be different, but a contract with both companies jointly, or one with the US parent severally, would not be the same contract as that alleged in the original summons. 17 The applicant in the Commission does not seek to add the US parent for the sole purpose of obtaining consequential relief against it. The terms of the proposed further amended summons demonstrate that he seeks to initiate "a separate application for an order under the Division" (Crowe (above) at 280). The Full Bench there said: "… the amendment in substance … [would] amount to an application for an order in respect of a different contract or arrangement." 18 Mr de Meyrick, for Mr Lowe, contended that the contracts were really, or in substance, the same, that the respondent was not independent from its US parent, and that initially the proceedings were conducted on the basis that the respondent was being sued on behalf of itself and its parent. There is no trace of any consensus on the latter point since para 57(f) of the respondent's Reply alleged that the applicant had sued the wrong party. 19 Mr de Meyrick's other submissions must also be rejected. The original summons in the Commission sought relief against the respondent based on a contract made with it, and no order could have been made against the US parent. Monetary orders under s 106(5) are enforceable in the manner provided in s 182. The Industrial Registrar must give a certificate as to the amount due which "must identify the person liable to pay the certified amount" (s 182(2)). The certificate can then be filed in a court having jurisdiction to give judgment for a debt of the same amount and when filed operates as a judgment of that court (s 182(3)). The identity of the party or parties against whom relief is sought under s 106(1) is a matter of substance and the case made by the claimants cannot be answered in the manner suggested. 20 Mr de Meyrick submitted that s 108B applied on its proper construction only in the case of contracts terminated after 24 June 2002. The words of the section do not permit that operation. He submitted that s 108B had no operation at all in relation to an interlocutory application in an existing summons but it does if the application is to join an additional respondent whereby there will be an application for an order in relation to a contract terminated more than twelve months previously. To the extent that he submitted that s 108B did not preclude such an application because, on the termination of the contract, he had a right protected by s 30 of the Interpretation Act or s 108B should be read down on the common law presumption that Parliament does not intend to interfere with vested rights, the reasons in Colley v Futurebrand FHA Pty Ltd [2005] NSWCA 223 (which was heard at the same time as the present case) require that the submission be rejected. 21 In my judgment the Commission has no jurisdiction to amend the summons to add the US parent as a respondent sued as a party to a contract with the applicant. The following orders should be made:

(1) Order that the Industrial Relations Commission be prohibited from granting leave to David Arthur Lowe, the applicant in proceedings No IRC 1645 of 2002, to file the Further Amended Summons for Relief annexed to his notice of motion of 17 December 2004 which would join BEA Systems Inc as a respondent to those proceedings.

(2) Order that the second opponent pay the claimant's costs of the proceedings including the costs of the first opponent as a submitting party. 22 GILES JA: I agree with Handley JA. **********

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