Bottomley v James Estate Wines

LEGISLATION CITED: Industrial Relations Act 1996

Environment Group Ltd & Anor v Croudace & Anor (Supreme Court Santow J. No 1468/98-7August 1998) CASES CITED: Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165CLR 197.

Mr.D. Stanton of Counsel Mr. R. Munro, solicitor,Halletts for and with Mr. S. Bottomley LEGAL REPRESENTATIVES: Mr. D. Allen of Counsel Mr. D. Linde, solicitor, Brookes and Co for James Estate Wines Pty Limited.

DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

IN THE MATTER OF : Stephen Bottomley and James Estate Wines Pty Limited

Application by Stephen Bottomley re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996

1 Mr Stephen Bottomley (the applicant) filed an application for unfair dismissal on 26 October 2004 as a consequence of being terminated by James Estate Wines Pty Limited (the respondent) on 22 October 2004. The reason for termination as expressed in his application was "alleged conflict of interest". 2 The application was listed for conciliation and directions on 29 November 2004 when as no successful conciliation took place, a time table for the filing and serving of evidentiary material was provided to both sides. This was subsequently varied. 3 On 13 January 2005 the respondent's legal representatives (Brooks &Co Business Lawyers ) wrote to the Newcastle Registry. It noted that proceedings had commenced in the Supreme Court of New South Wales by James Estate against Mr. Bottomley on the grounds of breach of fiduciary duty. It stated that the same issues arose in the matter before this Commission. It sought that this matter be relisted to allow for the respondent to make application that the IRC proceedings be removed into the Supreme Court and be consolidated with the other proceedings or in the alternative that the IRC proceedings be stayed until the conclusion of the Supreme Court proceedings. 4 On the same day the Manager of the Newcastle Registry responded to the correspondence and stated that the Commission required that the timetable provided to the parties on 29 November 2004 for the filing and serving of evidentiary material be complied with. The Commission required full written submissions regarding the two issues sought, that is, the application for removal or for the Commission to stay proceedings. A copy of the respondent's correspondence and the Commission's reply was directed to the applicant's legal representatives, Halletts Solicitors. 5 On 7 February 2005 the respondent filed a Notice of Motion in the Office of the Industrial Registrar seeking the following : An order that the proceedings be stayed until the determination of Supreme Court proceedings numbered 6 Attached to the Notice of motion was an affidavit of David George Brooks, solicitor for the respondent. This became ex. A in the proceedings. Annexed to this affidavit were copies of correspondence that had taken place between the applicant's and respondent's solicitors during September 2004. 7 The respondent filed their pleadings on 1 February 2005 in the Supreme Court of New South Wales Sydney Registry Equity Division, matter no 1269/05 . In their Statement of Claim the defendants named were : Stephen Bottomley Ingrid Alexandra Suijkerbuijk also known as Ingrid Alexandra Bottomley Gary Alexander Williams Roseglen Wines Pty Ltd Roseglen Estate Pty Ltd 8 A mention for the Notice of Motion was listed for 22 February 2005 and a hearing date with respect to the Notice of Motion was listed for 22 March 2005. 9 In the hearing Mr. Allen of Counsel appeared for the respondent and Mr. Stanton of Counsel appeared for the applicant. Respondent's Case

10 The respondent filed written submissions. The respondent sought orders from the Commission staying proceedings until the completion of proceedings in the Supreme Court. Both proceedings arose from the employment of Stephen Bottomley. The employee was terminated as a consequence of his breach of contractual and fiduciary duties owed to the respondent. If the respondent was successful in proving that the applicant was in breach of his duties of fidelity, the applicant's application for unfair dismissal before the Industrial Relations Commission of New South Wales (IRC NSW) must fail. 11 The substance of the respondent's case in the Supreme Court was that the applicant, his wife and a Mr. Williams did not provide full disclosure to the respondent regarding the nature of a transaction and that they did not provide the opportunity for the respondent to enter into any purchase for the Roseglen Vineyard in its own right. By this omission the applicant was in breach of his contractual, fiduciary and statutory duties of fidelity. As a consequence the respondent should receive either equitable compensation, profits from the business or an order that the business be held on constructive trust for the benefit of the respondent. 12 It was the respondent's submission that the IRC NSW proceedings and the Supreme Court proceedings will turn upon the nature and extent of the duties owed by the applicant to the respondent and whether the applicant was in breach of those duties in failing to either give the respondent full disclosure or provide the respondent the opportunity to enter into the transaction in its own right. The respondent tendered the statement of the applicant (ex.1) and emphasised the important role of the applicant being employed as the vineyard manager. Annexed to ex.1 was the applicant's termination letter dated 24 September 2004 setting out the reasons for termination that took effect on 22 October 2004. The respondent also tendered the statement of Mr. Gary Alexander Williams (ex.2). There had been previous legal action between Mr. Williams and Mr. David James the owner of James Estate Wines Pty Limited. This legal action was ongoing. 13 The respondent submitted that the Supreme Court would be the more appropriate forum to determine these issues. 14 Within the Industrial Relations Act 1996, s.162(2) (g) : "may adjourn proceedings to any time and place (including for the purpose of enabling the parties to negotiate a settlement), and...."

therefore the Commission had the power to grant the requested stay on the terms sought. 15 The respondent cited that Environment Group Ltd & Anor v Croudace & Anor held the relevant considerations to be taken into account in this case. · Which proceedings were commenced first. Whilst the IRC NSW matter was commenced first, evidence was before the Commission that showed that the respondent had formed the intention of filing the Supreme Court proceedings prior to the commencement of the IRC NSW proceedings. · Whether the termination of one proceeding is likely to have material effect on the other. Termination of either proceedings would have material effect upon the other proceeding. A finding in the Supreme Court that the applicant was in breach of his duties of fidelity ought to have the effect of a ruling against the applicant in the IRC NSW proceedings or the applicant discontinuing in the IRC NSW proceedings. · The public interest and the undesirability of two courts competing to see which of them determines common facts first. As there are common facts in both cases it is desirable that one case is stayed and it is the respondent's submission that it be the IRC NSW case. · Whether work done on pleadings, particulars, discovery, interrogatories and preparation might be wasted. Little time has been spent on interlocutory matters in the IRC NSW proceedings. Any time spent on preparation of evidence for the IRC NSW matter will not be duplicated in the Supreme Court proceedings. Granting a stay in the IRC NSW proceedings will not result in the waste of any costs incurred in the IRC NSW proceedings. · Generally balancing the advantages to each party. As the Supreme Court would be the more appropriate venue for the determination of the factual issues then it would be more appropriate for the IRC NSW to stay this matter. 16 The respondent also stated that the primary considerations are the interlocutory procedures that are available in the Supreme Court as opposed to the IRC NSW and that questions of equity are best suited to the equity division of the Supreme Court. The availability of discovery and interrogatories would make the Supreme Court the much more desirable forum to determine the issues. The applicant had yet to reveal in his witness statements what was the exact nature of the Roseglen venture. The availability of interrogatories and discovery would enable the respondent to require the applicant to reveal the true nature of the dealing and this will assist the Court in its determination. 17 There was no suggestion that the applicant would be prejudiced by the stay. It was noted that the concept of fiduciary duties is a purely equitable doctrine would be best determined in the Supreme Court. 18 The respondent advised that he had been instructed to give an undertaking that the Supreme Court proceedings would be prosecuted with diligence. Even if that is the case, short of obtaining expedition, realistically it would be 12 months if not longer before the equity case would be heard. Applicant's Case

19 At the outset of this matter the applicant accepted that the Commission had the power to stay a matter, but this was not a matter that a stay should be ordered. 20 The applicant denied that there had been a breach of fiduciary duty and directed the Commission to annex.B of ex.1. That correspondence dated 11 February 2002 expressed that the applicant had the full support of David James in the purchase of the Roseglen property.

Annex.C of ex1 was correspondence, directed to the applicant, dated 9 February 2003 under James Estate letterhead signed by a Mr. Peter Orr, General Manager/Senior Winemaker which outlined a business offer as to the purchase of grapes from Roseglen Vineyard. 21 It was the applicant's submission that it was the entry of Mr. Williams into the scene and that he was the applicant's prospective business partner, that the tide turned. 22 The applicant's legal representative agreed that the considerations in considering a stay as expressed by the respondent's legal representative, were the relevant ones. · Firstly the action in the IRC NSW commenced before that of the respondent's in the Supreme Court. There was nothing in the correspondence between the legal representatives that indicated that the respondent was going to take action in the Supreme Court. · Secondly the Supreme Court can not determine the issue that this Commission is seized with and the converse that its determination as to whether the applicant was terminated fairly or not is not going to necessarily impact upon the Supreme Court proceedings where the applicant is one of a number of defendants. The relief sought in the Supreme Court and this Commission are completely different. There is no material affect between the two proceedings. · There is nothing special or necessarily interesting to the general public with respect to these matters. Clearly under s.162 (2) (a) of the Industrial Relations Act there is a clear requirement on the Commission to act as quickly as is practicable. · The undesirability of two Courts competing to see who determines common facts first. Its clear that this Commission would get to this matter first a lot sooner than the Supreme Court. · It was the applicant's view that the two cases do not involve substantially the same issues. The respondent may bring different witnesses to the Supreme Court case as compared to the IRC NSW case. 23 The respondent stated that the Supreme Court was the more appropriate venue for the determination of factual issues between the parties. The applicant stated that this Commission on a daily basis heard witnesses, heard cross- examination and made determinations on factual issues. The respondent stated that the real issue between the parties was the question of equity. In the applicant's view the real issue was the question of fairness and this Commission was quite able to determine that issue. 24 The respondent stated the availability of discovery and interrogatories made the Supreme Court a much more desirable forum to determine these issues. Notwithstanding that the applicant had filed his evidence in chief, the respondent had stated that the applicant had yet to reveal what was the exact nature of the Roseglen venture and this would be a primary consideration when considering whether the applicant's conduct in entering into the Roseglen venture was in breach of his duties of fidelity. Now the respondent is saying -well we don't really know what the venture was. 25 It was the applicant's submission that the applicant had been in steady employment for a number of years and then terminated in circumstances where he and his wife had to leave the house that came with the job and find alternative accommodation. Clearly a delay in these proceedings would be prejudicial to the applicant. 26 The respondent had not made out a case for a stay of these proceedings and therefore the Commission should decline to make orders sought in the motion. Considerations and Decision.

27 In considering this matter I have sought to consider only the application and not make any findings as to whether there was a breach of fiduciary duty by the applicant.

28 The respondent's in the unfair dismissal matter made application by way of a Notice of Motion to have the matter stood over pending the hearing and determination of a matter brought before the Supreme Court of New South Wales. That matter has the applicant and four other parties named as the Defendants. I was advised by the respondent's legal representative that they gave an undertaking to expeditiously prosecute the Supreme Court proceedings. I was then advised that it would be 12 months or more before the Supreme Court proceedings would be heard. 29 I have a great deal of concern with that comment. S. 162(2)(a) of the Act states. The Commission : is to act as quickly as it is practicable,

Mr. Stanton for the applicant cited Deane J. in Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165CLR 197 stated: The starting point of the determination of such an application in accordance with traditional principle must be the prima facie right of a plaintiff to insist upon the exercise of competent jurisdiction which he has rightly invoked. That prima facie right of a plaintiff is not lightly be displaced or denied. 30 It is clear that the applicant filed his unfair dismissal application on 26 October 2004. The respondent filed their claim in the Supreme Court on 1 February 2005. The respondent stated that the applicant was aware that Supreme Court proceedings were pending. The only documentation that states that action is to be taken in the Supreme Court is to be found in correspondence sent by the respondent's solicitor on 20 December 2004. Nothing is expressed in the applicant's letter of termination dated 24 September 2004. 31 I agree with the submission's of Mr. Stanton with respect to the termination of one proceeding will not necessarily have a material effect on the other. The Supreme Court cannot determine the issue that is before this Commission. The determination of the unfairness or otherwise of the termination is not a matter that is going to necessarily impact upon the Supreme Court proceedings where the applicant is one of a number of defendants. 32 I do not believe there is anything special or necessarily interesting about this case that would warrant the invoking of the public interest test to award the stay. 33 It is clear that if this unfair dismissal case proceeds, common facts relevant to the matter will be determined prior the Supreme Court hearing taking place. 34 They may well be some common witnesses in the two matters but there also could be more in the Supreme Court case taking into consideration the number of defendants and what is being sought. 35 From what has been placed before this Commission I do not believe there has been a great deal of time invested in the Supreme Court documentation at this stage. 36 No Court wants substantial time and effort wasted, and I do not see that such waste would occur where the two matters in question have different outcomes being sought by the respective applicant's based on the respective powers of the two jurisdictions. 37 After considering the submissions of both parties, I do not accept that the Supreme Court would be the more appropriate venue for the determination of factual issues between the parties. The respondent raised the opportunity of interlocutory and interrogatory procedures being available in the Supreme Court and that questions of equity to be answered was best suited for justices of the equity division of the Supreme Court. I accept the submission of Mr. Stanton that the IRC NSW has a long history in the determination of issues concerning the employment contract and whether an employee has been treated fairly. 38 I do not accept the submission of the respondent that the delay sought by the respondent would not be prejudicial to the applicant. The respondent seeks for the applicant's case to be delayed for a minimum 12 months plus. The outcome of the Supreme Court hearing can not directly benefit the applicant. At the completion of the Supreme Court proceedings, if it falls in favour of Mr. Bottomley, he would then proceed with this case. This could result in a delay of well over 18 months. Such a delay I believe would not provide justice to the applicant. 39 I have noted that the respondent in this matter bears the onus of satisfying the Commission that the requirements of justice require an exercise in discretion in favour of a stay. After considering the submissions of the respondent, I do not believe they have satisfied that onus. 40 As a consequence I do not make an Order as expressed in the respondent's Notice of Motion. 41 I note from the file that both parties have filed their documentation with respect to the substantive case. The IRCNSW will contact the parties in due course and advise of a hearing date.

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