Campbells Cash & Carry v Overmyer Industrial Brokers

3131/02 - CAMPBELLS CASH & CARRY PTY LIMITED v OVERMYER INDUSTRIAL BROKERS PTY LTD JUDGMENT 1 By summons filed on 13 June 2002, the plaintiff seeks an order restraining the defendant from taking any further steps in certain proceedings initiated by the defendant in the Industrial Relations Commission of New South Wales. Those proceedings, although commenced before the District Court judgment to which I am about to refer, will, in the plaintiff's submission, so undermine that judgment that they must not be allowed to continue. 2 On 29 April 2002, the plaintiff obtained judgment against the defendant in the District Court in the sum of $117,970 together with interest. The District Court held that the sum in question was remuneration recovered or retained by the defendant for services rendered by the defendant as a licensee under the Property, Stock and Business Agents Act 1941. Entitlement to that remuneration was, in the circumstances found by the District Court, denied by s.42AA(1) of that Act, with the result that a statutory right of recovery arose in the plaintiff under s.42AA(4). This brief description may be better understood if the terms of s.42AA are set out in full: "42AA. Agency agreements to be in writing (1) A licensee shall not be entitled to: (a) any remuneration by way of commission, fee, gain or reward for services performed by the licensee in his or her capacity as licensee, or (b) any sum or reimbursement for expenses or charges incurred in connection with services performed by the licensee in his or her capacity as licensee, from the person for whom or on whose behalf those services were performed unless: (c) the agreement pursuant to which those services were performed is in writing and signed by or on behalf of: (i) the licensee, and (ii) that person, (d) the agreement contains such terms (if any) as may be prescribed, and (e) a copy of the agreement was served by the licensee on that person within 48 hours of the agreement being signed by or on behalf of that person. (2) Subsection (1) does not apply to a prescribed agreement, transaction, circumstance or person or an agreement, transaction, circumstance or person of a prescribed class or description. (3) Any provision in, or applying to, an agreement referred to in subsection (1) and purporting to exclude or restrict the operation of the terms (if any) required to be contained in that agreement has no force or effect. (4) Where a licensee has recovered or retained from a person any remuneration or sum to which the licensee is not entitled by virtue of subsection (1), the person who would be entitled to the remuneration or sum so recovered or retained by the licensee had that remuneration or sum not been so recovered or retained may bring proceedings in any court of competent jurisdiction for the recovery of that remuneration or sum, or both, as a debt. (5) A licensee who recovers or retains any remuneration or sum to which the licensee is not entitled by virtue of subsection (1) is guilty of an offence against this Act." 3 The present defendant (being the licensee or estate agent) argued unsuccessfully in the District Court that the agreement under which it performed services as a licensee was put beyond the reach of s.42AA(1) by the combined operation of s.42AA(2) of the act and clause 10(2) of the Property, Stock and Business Agents (General) Regulation 1993 on the footing that the agreement was a "prescribed agreement". Clause 10(2) is as follows: "An agreement is prescribed as an agreement to which section 42AA (1) of the Act does not apply if: (a) the agreement is solely for the performance of services that relate only to: commercial land, being land used or intended to be used solely or principally for commercial, business or industrial purposes, or land used or intended to be used solely or principally for agricultural or pastoral purposes, and (b) the agreement is in writing and signed by or on behalf of the licensee and the person for whom the services are to be performed, and (c) the agreement is subject to terms specifying: the period for which the agreement is to be in force or, if there is no such period, the manner in which the agreement may be terminated by a party to the agreement, and the circumstances in which the licensee is entitled to remuneration for services performed under the agreement, and the amount of the remuneration or the way in which it is to be calculated, and when the remuneration is due and payable, and a warranty by the principal that the principal has authority to enter into the agreement with the licensee, and (d) as well as providing the proposed agreement signed by or on behalf of the licensee for signature by or on behalf of the person for whom the services are to be performed, the licensee served a copy of the agreement on that person before it was signed by or on behalf of that person." 4 The District Court held that four factors prevented the agreement in question being a "prescribed agreement" as referred to in s.42AA(2): first, the agreement was made with the defendant (as licensee or agent) by the parent company of the plaintiff in circumstances where the authority of the parent company to contract for the plaintiff was not shown (s.42AA(1)(c) and clause 10(2)(c)); second, the agreement was not in writing (clause 10(2)(b)); third, the agreement did not contain the terms required by clause 10(2)(c); and, fourth, a copy of the agreement was not served by the agent as required by clause 10(2)(d). 5 By its summons filed in the Industrial Relations Commission on 4 September 2001 (that is, before the District Court proceedings were heard), the defendant claims as against the plaintiff: "1. An order varying the Agency Agreement between the Applicant and the Respondent ab initio by the inclusion of such of the terms referred to in Part 3, Regulation 10(2) of the Regulations to the Property Stock & Business Agents Act 1941 as may be found to be absent from the Agency Agreement between the Applicant and the Respondent. 2. An order that the Respondent pay to the Applicant the sum of $145,000.00, to be in part satisfied by the retention by the Applicant of the sum of $116,000.00 retained by it upon the sale of the property being Lot 2 Gibbes Street, Jamisontown." 6 The plaintiff contends that pursuit by the defendant of the proceedings in the Industrial Relations Commission should be restrained on the basis emerging from the decision of the Court of Appeal in Tszyu v Fightvision Pty Ltd (2001) 104 IR 225. In that case, proceedings in the Industrial Relations Commission directed towards variation of a contract were held to be an abuse of process because this court had already awarded damages for breach of the contract. The judgment by which damages were awarded created an issue estoppel that could not be called in question in separate proceedings. 7 In the present case, the plaintiff seeks to mount the argument that was successful in Tszyu, namely, that the agency agreement with which the application to the Industrial Relations Commission is concerned represents the foundation of the judgment of the District Court, so that variation of it in the manner sought in the summons filed on 4 September 2001 would remove the basis of that judgment. Accordingly, the plaintiff says, continuation of the Industrial Relations Commission proceedings would be an abuse of process and should be restrained. 8 The defendant views matters differently. It says that the application in the Commission is properly to be regarded as consistent with the District Court judgment. That judgment, it is said, proceeded on the basis that the agreement between the parties did not contain certain terms and that that, plus the course of conduct in relation to the agreement, led to the conclusion that entitlement to remuneration was denied by s.42AA(1) and a concomitant right of recovery arose under s.42AA(4). For the defendant, as applicant in the Commission, to seek to have the agreement reformed does not, in the defendant's submission, entail an attempt to remove the basis of the judgment: rather, it involves an acceptance of the District Court's findings as to defects in the agreement (from the perspective of the Act and Regulation) and is a means whereby the defendant seeks a revision of what it accepts to be the agreement as found by the District Court. 9 Before turning to the decision in Tszyu, I should set out the relevant provisions of the Industrial Relations Act since much turns upon the nature and extent of the Commission's jurisdiction which is, of course, wholly statutory. Sections 105 and 106 of that Act are as follows: "105. Definitions In this Part: 'contract' means any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument. 'unfair contract' means a contract: (a) that is unfair, harsh or unconscionable, or (b) that is against the public interest, or (c) that provides a total remuneration that is less than a person performing the work would receive as an employee performing the work, or (d) that is designed to, or does, avoid the provisions of an industrial instrument. Note. The jurisdiction of the Commission under this Part is exercisable only by the Commission in Court Session. 106. Power of the Commission to declare contracts void or varied (1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract. (2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason. (3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time. (4) In considering whether a contract is unfair because it is against the public interest, the matters to which the Commission is to have regard must include the effect that the contract, or a series of such contracts, has had, or may have, on any system of apprenticeship and other methods of providing a sufficient and trained labour force. (5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case. (6) In making an order under this section, the Commission must take into account whether or not the applicant (or person on behalf of whom the application is made) took any action to mitigate loss." 10 The scope of these Industrial Relations Act provisions was the subject of the following observations of Mason P (with whom Priestley and Powell JJA concurred) in Tszyu: "The jurisdiction of the Commission in relation to 'contracts' is significantly broader than that of a court of general jurisdiction. The Commission may examine arrangements related to formal contracts (s105). It applies a broad statutory concept of unfairness (ibid) and it may take account of unfairness arising after contract formation (s106(2)) probably going beyond equity's jurisdiction to frustrate unconscionable conduct (cf Stern v McArthur (1988) 165 CLR 489). The Commission's remedial powers are broader than those of a court relying upon common law or equitable doctrines (see s106). The breadth of the Commission's jurisdiction and powers has recently been expounded authoritatively (see Reich v Client Server Professionals of Australia Pty Ltd (2000) 49 NSWLR 551). It is no answer that the relevant contract has been duly terminated before the Commission's jurisdiction is invoked (see Walker v Industrial Court of New South Wales (1994) 53 IR 121, Beahan v Bush Boake Allen Australia Ltd (1999) 47 NSWLR 648 at 683-685, Reich at 564)." 11 Mason P then stated certain conclusions as to courses under s.106 that are not precluded by a prior judgment of a court in relation to matters the subject of the s.106 application: " The appellant submits that merely because the monetary relief claimed in the Commission is calculated by reference to the judgment awarded against him by the Supreme Court does not render the industrial proceedings an abuse of the proceedings in the Supreme Court or otherwise improperly interfere with the processes of the Supreme Court. I agree. The appellant further submits that merely because the industrial proceedings are promoted for the purpose of defeating the effect of the Supreme Court judgment does not render them an abuse of process any more than resort to a statutory or constitutional right of appeal to the High Court of Australia with similar intent. I also accept these submissions. 12 The reasons why the determination of the court as to breach of contract precluded resort by one of the contracting parties s.106 were then stated: As indicated previously, I am prepared to assume that the appellant is correct in submitting that the Commission will not be prevented from considering the "unfair contract" issue by reference to the issues of unconscionability fought before and decided by Bainton J. But this still leaves the contract, novation, breach and damages issues resolved conclusively between the parties by virtue of the application of the principles of issue estoppel to the Supreme Court judgment. The appellant acknowledges that these principles will apply in the further prosecution of the industrial proceedings. This concession is properly made when it is recognised that the Commission is a superior court of record in its present role. It is exercising judicial power ( Tana v Baxter (1986) 160 CLR 572). The contract formed upon the due exercise of the option in 1995 was the basis upon which the issue of breach was addressed and concluded in the contract proceedings and the yardstick against which damages were calculated (see especially 47 NSWLR at 491-496, 497). Conversely, the award of damages was the enforcement of a secondary obligation necessarily based upon the primary obligation of the contractual terms cf Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 848-849). For that contract now to be declared void or varied in its terms (an essential precursor to relief pursuant to s106(5) whether against Fightvision or those standing behind it) would be to contradict the very basis upon which the judgment stands, together with issues necessarily decided by that judgment. Cf also Caird v Moss (1886) 33 Ch D 22. Viewed in this way, the continued prosecution of the industrial proceedings would run smack into the principles of issue estoppel and for that reason their continuation was properly held to be an abuse of process. It is well established that the preclusive effect of an issue estoppel cannot be sidestepped by resort to fresh proceedings which are 'unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings' (per Mason CJ, Deane J and Dawson J in Walton v Gardiner (1993) 177 CLR 378 at 393). It is no answer that the proceedings may be cast in a different mould ostensibly invoking a fresh cause of action (see generally Reichel v Magrath (1889) 14 App Cas 665, Hunter v Chief Constable of the West Midlands Police [1982] AC 529, Rogers v The Queen (1994) 181 CLR 251). It is equally well established that proceedings whose success depends upon litigating afresh an issue foreclosed by these principles may itself be permanently stayed for abuse of process and consequently dismissed for futility ( Ridgeway v The Queen (1995) 184 CLR 19 at 41, 43). In a proper case of an anti-suit injunction will also lie (CSR at 393-394). This was a proper case for such an order." 13 The contract that was the subject of the s.106 application in Tszyu was the contract for breach of which this court had already awarded damages. That contract was "the yardstick against which damages were calculated" and the source of the obligation enforced by the damages award. The contract therefore represented "the very basis on which the judgment stands", so that an order of the Commission declaring it void or varying it would remove the foundation on which the court's earlier decision to award damages was built. Implicit in this approach is the proposition that once damages have been awarded for breach of contract, the contractual controversy resolved by the award - that is, the controversy going to questions of breach, causation and remoteness - cannot be subjected to collateral scrutiny which may result in any of the essential elements of the successful cause of action being changed in such a way as to destroy the foundation of the decision. 14 In the present case, the terms or content of the contract for the provision of estate agency services by the defendant cannot be viewed as the direct source of the monetary award made in the plaintiff's favour by the District Court. The cause of action upon which the plaintiff successfully sued was the statutory cause of action created by s.42AA(4) of the Property, Stock and Business Agents Act, that is, a statutory cause of action for the recovery of money received by a person identified by the statute as having no entitlement to the money. One of the elements of the denial of entitlement to the money (and therefore of the cause of action to recover) was that the agreement between payer and payee did not contain certain terms. The payer pursuing the statutory cause of action for recovery therefore sought to rely not on a claim based on a right to have a contractual promise performed, but on the circumstance that the content of the contract did not conform to a statutory norm. The sum recovered was not damages by way of vindication of a right created by and grounded in contract. It was a sum the statute said must be paid because of the existence of a state of affairs described in the statute. One element of that state of affairs was a discrepancy between the content of the parties' contract and the legislature's requirements as to its content. The relevance of the contractual terms was wholly confined to the part they played in that discrepancy. 15 It is necessary to look at the consequences that will follow if the defendant's application for the first order sought under s.106 is successful. If the Commission makes an order varying the parties' contract by inserting into it such of the terms called for by clause 10(2) of the Regulation as were not originally included, nothing underpinning the existing District Court judgment based on s.42AA(4) will change. The plaintiff's recovery pursuant to that section will stand. The variation may or may not be declared by the Commission to be effective from the contract's commencement (see s.106(3)). If such a declaration is made, the variation will have a form of retrospective operation. But even if there is a retrospective variation, it will only change the positions of the parties so that they come to have, as between themselves and from the time of the Commission's order, new rights and obligations that are to be enjoyed and performed by the parties as if they had existed since commencement of the contract. What the variation cannot do, even if it is expressed to be effective from the contract's commencement, is to cause the content of the parties' contract, viewed objectively, to have been, at some past time, something that, in truth, it was not. While a variation of contract produced by order of the Commission with retrospective effect will change the parties' rights and obligations in such a way that they must act towards one another as if the reformed contract had existed between them from inception, the objective realities about what terms the contract actually contained or did not contain at some past time will be in no way altered. 16 This point about the way in which s.106 of the Industrial Arbitration Act operates is emphasised in the decision of the Court of Appeal in Fisher v Madden (2002) 54 NSWLR 179. The question in issue there was whether, if an employment contract was varied by the Industrial Relations Commission to provide for a retrenchment payment to an employee, it would be possible to say, for the purposes of corporations legislation, that the employee had been entitled to such a payment at an earlier time when a receiver was appointed. The effect of the judgment of Sheller JA (with whom Beazley JA agreed) on that issue is summarised in the headnote: "If an employee who has been made redundant by a receiver then applies to the Industrial Relations Commission for a variation of the employment contract under s.106 of the Industrial Relations Act 1996 to include a provision for a retrenchment payment, any such payment ordered by the Commission, even if the contract were varied ab initio, would not be an entrenchment payment entitled to priority within the meaning of s.556(1)(h) of the Corporations Law , because at the date of the receiver's appointment there was no legally enforceable obligation to make a retrenchment payment." 17 The making by the Commission of the order the present defendant seeks for variation of the contract would not cause the content of the contract, objectively viewed at some earlier time, to be something that it was not. Such an order could not cause an agreement that in fact did not contain certain terms at a past time to be viewed, for the purposes of assessment against the criteria in the estate agency legislation, as if it did contain those terms at that time. The order the defendant seeks in the Industrial Relations Commission will therefore not undermine in any relevant way the decision of the District Court based on s.42AA(4). There is also the point that no order under s.106 can ever remedy at least two deficiencies that caused the statutory cause of action to arise under s.42AA. I refer to the circumstance that the agreement was not in writing as required by clause 10(2)(b) of the Regulation and the circumstance that a copy of it was not served as required by clause 10(2)(d). Nothing that the Commission may order under s.106 can ever change those circumstances which turn wholly on simple matters of fact and are of themselves enough to sustain the judgment based on s.42AA(4). 18 It is clear that the s.106 application will be pursued by the defendant in the hope of obtaining not only an order varying the relevant contract but also an order for the payment of money. The Commission's power to order the payment of money is conferred by s.106(5) as an adjunct to the jurisdiction to declare contracts void or to vary them. A money award can be made only if the contact is avoided or varied and the award is seen as "just in the circumstances of the case". It is not for this court to speculate on what the Commission might decide in relation to monetary award should it accede to the defendant's application for an order varying the agreement. Any such award would be of a restitutionary nature by way of remedial measure in order that justice might be done: Brown v Rezitis (1970) 127 CLR 157. Furthermore, as Schmidt J pointed out in Electronic Tracking Systems Pty Ltd v Pronet Inc [1999] NSWIRComm 325, the direction in s.146(2) of the Industrial Relations Act that the Commission, in exercising its functions, take into account the public interest applies as much to that aspect of the Commission's functions arising under s.106 as to any other. The continued operation of the statutory disentitlement under s.42AA(1) of the Property, Stock and Business Agents Act, despite any variation of the agreement made by the Commission, would no doubt be a relevant public interest or public policy consideration when the Commission came to decide any question of monetary award under s.106(5). 19 Two things are plain: the monetary relief sought by the defendant in the Commission is calculated by reference to the sum awarded by the District Court; and the Commission proceedings are being pursued for the purpose of defeating the effect of the District Court judgment. But neither of those factors is sufficient to cause those proceedings to be an abuse of process. So much was expressly stated in the part of Mason P's judgment in Tszyu quoted at paragraph 11 above. Furthermore, and for the reasons I have outlined, the Commission proceedings cannot produce an outcome that demolishes any part of the foundation upon which the District Court judgment is built. The conclusions that produced the finding of abuse of process in Tszyu (see the part of Mason P's judgment quoted at paragraph 12 above) are accordingly not available here. 20 The plaintiff's summons filed on 13 June 2002 is dismissed with costs.

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