Craig Horsell v Chegwyn Insurance Broking Services Pty Limited [2002] NSWIRComm 293 | Case summary

1 The Commission has two Notices of Motion before it. Both were to have been heard on 16 September 2002. The first was filed for Craig Horsell, the applicant both in the substantive proceedings and on the first Notice of Motion, on 11 April 2002 and seeks the following orders: 1 That Alexander Jerome Chegwyn be joined as a Respondent to this application. 2 That the Respondent pay the Applicant's costs of and incidental to this motion. 2 The second was filed for Chegwyn Insurance Broking Services Pty Limited (the respondent) moving for the following orders: 1 That the Applicant provide security in the sum of $59,000 or such other sum as to the Commission thinks fit for the costs of the Respondent(s) herein. 2 Unless such security is provided within twenty one days (21), the Summons be struck out. 3 In the alternative to 2, that until such security is provided these proceedings be stayed. 4 Such further order as the Commission sees fit. 5 Costs. 3 That second Notice of Motion has been stood over until 20 December 2002 in order to allow the respondent time to study documents already produced, and still to be produced, by the applicant. Costs are reserved in relation to that Motion. 4 The background to the Notices of Motion is that on 28 January 1999, Craig Horsell filed a Summons for Relief under s 106 of the Industrial Relations Act 1996 (the Act) against Chegwyn Insurance Broking Services Pty Limited. The application relates to a period of employment between 1 September 1997 to 30 November 1998. The relief sought was the avoidance and/or variation of various clauses in the employment contract between the applicant and the respondent executed on 1 September 1997 and the payment of moneys in relation to notice, unpaid bonus and an equity incentive agreement. Somewhat ironically, in the light of the period that has now elapsed, an order was also sought that the proceedings be heard on an urgent basis. 5 The impetus for the filing of this Notice of Motion was set out in the submissions of Mr S Prince of counsel on behalf of the applicant: 9 On 9 February 2001, the respondent sold its business to Finn Foster Direct Pty Limited and Finn Foster & Associates Pty Ltd. 10 On or about 10 September 2001, solicitors for the applicant became aware that the respondent's business had been sold by way of asset sale to Finn Foster Direct Pty Limited and Finn Foster & Associates Pty Limited. 11 On 23 October 2001, the applicant's solicitors wrote to the respondent seeking consent to the joinder of Mr Chegwyn. 12 On 28 February 2002, the respondents solicitors formally confirmed that they would oppose the proposed joinder. 6 He said that these proceedings had been brought under the Industrial Relations Commission Rules 1996 (the IRC Rules) r 18 and the Summons was read in conjunction with the affidavit filed in support of the originating Summons on 28 January 1999, for the purpose of determining the scope of the issues between the parties at the Notice of Motion stage. 7 The applicant's Notice of Motion was supported by the affidavit of the applicant sworn 10 September 2002 (the first affidavit) together with reference to certain paragraphs of the applicant's affidavit filed on 28 January 1999 (the second affidavit). The applicant also relied upon another affidavit (the third affidavit) filed on 19 June 2002 that annexes some documents and was sworn by the applicant's solicitor, Robert Gorczyca. It sets out some summonses which have been filed in these proceedings and documents produced in answer to the summonses. That affidavit formed a background to some factual matters which appear from the affidavit in support of the application, and was formally read for the purpose of the notice of motion only. 8 In his affidavit supporting the Notice of Motion now being considered the applicant deposed: 10 In these proceedings I am bringing a claim against the Respondent company in connection with the terms of my Employment Contract in relation to a restrictive covenant which applied following the termination of my employment and also a claim in relation to the terms of, and the quantum of, any entitlement to equity participation in the shares of the Respondent company. I am now concerned that any determination by the Industrial Relations Commission in my favour in these proceedings may not be capable of enforcement because the documents now obtained from the Respondent and other parties show that the Respondent sold its assets to Finn Foster Direct Pty Limited. 9 The respondent had no evidence to tender in relation to the Notice of Motion. 10 Mr A Britt of counsel on behalf of the respondent and of Mr Chegwyn objected to the paragraphs in the second affidavit being before the Court. 11 Mr Prince submitted that it is readily apparent the Summons has not been amended to become a IRC Rules r 18A type Summons and thus all the Court has before it is a bare bones Summons which does not give the Court any context of what the case is about. It would be almost meaningless if the Court did not have regard to the affidavit filed in conjunction with the summons. The only purpose to take the Court to those parts of the affidavit is simply to indicate certain allegations have been made and certain matters have been raised in the affidavit in support of the summons. He did not put the matters any higher than that. 12 Mr Britt responded that the matters upon which the applicant relies are not peripheral in relation to this Notice of Motion but are matters that go to the very heart of this particular application, they being representations made by the involvement in any benefit that the proposed respondent would have received under what is alleged to have been an unfair contract. The applicant seeks to rely upon the second affidavit as establishing the evidentiary basis for joining this proposed respondent and in those circumstances the respondent should have been provided with an opportunity to cross-examine the applicant on those particular paragraphs. 13 Mr Prince accepted that representations are said to have been made by Mr Chegwyn and those representations are relied upon in the proceedings. They can be tested by cross-examination at the appropriate time in the hearing as to the substantive matters. Submissions - Applicant on the Motion 14 The essential authority on the question of whether or not joinder should be granted is the most recent of Bowker v Software Engineers (NSW) Pty Limited (Bowker) [2002] NSWIRComm 135, a decision of Schmidt J of 11 June 2002. 15 This matter has had quite a long history before the Commission and many procedural steps have occurred within the course of it. Proceedings were initially commenced at the end of January 1999 under r 18. 16 The nub of the reason for seeking joinder is that the company, which is the respondent to the proceedings, has been sold. That sale came to light in September of 2001. The circumstances which are revealed in the sale of the business is that there was an inextricable link between Chegwyn Insurance Broking Services Pty Limited and Mr Chegwyn himself. The operations of the respondent have ceased by the sale of the business to the new company, although Mr Chegwyn himself has continued to work for the new company. 17 Mr Chegwyn was to enter into a service agreement with the purchaser for a term of five years. It is not a situation where Mr Chegwyn has sold his business and moved completely out of the picture. He has transferred the business out of one corporate shell into another and he stands to have an employment arrangement in the new shell. Mr Chegwyn was the principal beneficiary of that sale and the applicant sought to proceed against Mr Chegwyn. 18 The matters falls quite squarely within the approach adopted by Schmidt J in Bowker. It is also consistent with other decisions of the Commission. 19 In Bowker, Schmidt J made orders allowing the joinder of the fourth and fifth respondent in proceedings which had also been commenced in 1999. The joinder of the fourth and fifth respondents in that case was sought in order to deal with the fact that the new respondents operated the former business of the first respondent and the applicants had a basis for concern that the existing respondents would not be in a position to meet any orders made against them in the proceedings. 20 In Bowker, Schmidt J says that the only question then currently before the Court for determination was whether a sufficient evidentiary basis has been established for the joinder sought. That is consistent with the interlocutory nature of what is being sought here, simply an application to effectively amend a summons by the inclusion of a new party. 21 The proposition that this person, Mr Chegwyn could properly be a respondent really is not a matter of great controversy. If, as accepted by counsel for the respondent, Mr Chegwyn could have been named in the original summons then logically he could be added by way of amendment in order to put all the issues before the Commission so they may be dealt with in their entirety. 22 The balance of convenience in the present case would favour the joining of a person who prima facie could be a respondent in the proceedings. The provisions of the Act have changed since Bowker was decided and a new provision s 108B puts a time factor on applications from which the Commission has no discretion to extend the time limit. The question is does s 108B change the situation from a prima facie approach adopted in this Commission in allowing the joinder to occur to bring all the parties before the Commission? 23 The submission is that s 108B does not change the situation. 24 The applicant submitted that joinder does not constitute a fresh application for the purpose of time limitation periods. 25 It conceded that Fernance v Nominal Defendant and Anor (Fernance) (1989) 17 NSWLR 710 is authority for the proposition that a defendant may not be joined to proceedings in circumstances under Pt 8 r 11(3) of the Supreme Court Rules 1970 (SC Rules), where that potential defendant would be able to avail himself of a defence under the Limitations Act 1969. 26 However it is unlikely that resort will need to be had to the SC Rules to allow for joinder in light of the specific power to allow amendment of proceedings under Pt 20 of the IRC Rules. Alternatively an order or direction (within the meaning of r 89(5)(c) ) may be made in accordance with r 85 without recourse to the prescriptive and specific provisions of Pt 8 r 11(3) of the SC Rules. 27 There is no equivalent to Pt 8 r 11 in the IRC Rules. Fernance does not assist the respondent. It is clearly distinguishable because the specific conflict that existed in the SC Rules does not exist here. Part 20 of the IRC Rules is the only provision in those Rules which deals with amendment and the Court of Appeal did not appear to have made any comments which said the general provision in the SC Rules, in the absence of Pt 8, would not be sufficient in order to allow the court to make the amendment sought. 28 In the absence of the conflict as existed in the SC Rules the applicant submitted that an amendment, once made, takes effect not from the date of the amendment but from the date of the original document (in the present case the original summons). 29 In Pt 20 of the IRC Rules, r 148(1) is the power which enables the court to make the orders which the applicant seeks. No amended summons has been filed with the Notice of Motion. That does not pose a bar to the orders being made which have been sought by the applicant. The orders which were made in Reich v Client Server Professionals of Australia Pty Limited (No 2) (Reich) [2000] NSWIRComm 196 (3 October 2000) by Hungerford J envisage the filing within 14 days of an amended process to reflect the orders made to join the parties as was sought in that matter. Schmidt J in Bowker makes orders for the amendment to occur and also makes orders for the matter to be referred to the President for reallocation for conciliation given the joinder of a new party. Nothing turns on the question of the form of the Notice of Motion which has been sought. 30 Unlike the situation presented in Fernance the present case involves a time limit which has been enacted since the unfairness alleged to give rise to the action occurred. 31 Even if the respondent can say that Fernance is authority for the proposition that time runs from the date of the application or from the date the orders are made to join a party so that s 108B applies, when the Court comes to consider whether or not s 108B operates in that particular circumstance with retrospective effect so that it deals with all contracts which were terminated prior to the enactment, the correct interpretation of the section is not to impose retrospective derogation of rights to the parties. Section 30 of the Interpretation Act 1987 would provide that s 108B of the Act does not operate to deny the accrued rights of parties who were terminated before the enactment of s 108B. 32 If s 108B was purely a procedural provision then it may well not fall within s 30B of the Interpretation Act or within the common law rule that amendments to the legislation affecting rights ought not be retrospective. Section 108B is not procedural. 33 Rights under s 106 are extant rights (see Fisher v Madden (2002) 54 NSWLR 179). In that case, the Court of Appeal held that an order of this Commission which creates an entitlement to redundancy under s 106 does not retrospectively create the right to redundancy payment which would then qualify for priority as an existing debt for the purposes of the Corporations Law. It was said at [44] that Ms Fisher had only a right to take proceedings in the Industrial Relations Commission to vary the contract to that end and at [45] "A right is created by the provision that a court may make an order". 34 The proposition is relatively uncontroversial, that is a right to bring proceedings or a suit is a valuable right and it is a chose in action (see Georgiadis v Australian Oversees Telecommunications (1994) 179 CLR 297). That case spans the bridge between the right described by the Court of Appeal in Fisher v Madden as a right to bring proceedings. That bridge is a substantive right, and that substantive right may not be interfered with by amending the Act by reason of s 30(1)(c) of the Interpretation Act. 35 In light of s 30(1)(c) of the Interpretation Act, if the effect of s 108B were to remove the rights of the applicant in this case to bring proceedings against the proposed respondent, then it would need to have express words which would allow it to operate in such a way. There are no transitional provisions contained in the Industrial Relations Amendment (Unfair Contracts) Act 2002, and on the face of it, s 108B does not expressly provide for the abrogation of accrued rights to bring proceedings under s 106 as they may already exist. 36 If there is any ambiguity at all in the way s 108B may apply, the Court would read it down by reference to s 30(1)(c) of the Interpretation Act. 37 Furthermore, s 108B is not merely procedural in that it constitutes a complete bar to proceedings and the Commission is not permitted any discretion in extending time (see Maxwell v Murphy (1957) 96 CLR 261). 38 In any event, it is submitted, s 108B has no application to the present application for joinder in that the application was made by way of Notice of Motion filed on 11 April 2002 and was pending in the Court prior to the enactment and entering into force of s 108B of the Act. 39 Counsel for the applicant went through the company extracts and other documents attached to the first affidavit of the applicant to show the involvement of the proposed respondent with the respondent, other companies and the company, a third party, to which the business of the respondent has been sold. He stressed that the applicant made no complaint against that third party. 40 Mr Chegwyn is identified in the summons and in the affidavit in support of the summons as the principal player in the same way that this Commission sees individuals as respondents in proceedings all the time where that individual has made some contribution to what is alleged to have been the unfairness. 41 Whether or not that is so, whether or not ultimately Mr Chegwyn has behaved unfairly, or whether or not orders ought be made against him, are ultimately matters for trial, but the applicant ought not be denied the opportunity to have Mr Chegwyn joined and dealt with by the Commission. Given the material before the Commission, Mr Chegwyn is clearly no stranger to these proceedings and ought to be given the right to be here. Submissions - Respondent 42 The applicant on this notice of motion seeks a number of types of relief. It seeks that Alexander Jerome Chegwyn be joined in this application, and secondly that the respondent pay the costs of and incidental to this motion. 43 In relation to the first of these matters the respondent says that this application should not be granted on three bases (1) the application itself is futile, (2) the court does not have before it sufficient evidence to provide a basis for the joinder of Mr Chegwyn and (3) that the application itself is now statue barred by force of s 108B of the Act. 44 The Court does not have before it an application to amend the summons, as envisaged in r 148 of the IRC Rules, albeit it will ultimately be the respondent's submission the same principle should apply in relation to joinder or alternatively an application to vary the summons by way of Notice of Motion. What the Court is being asked to do is to join Mr Chegwyn as a respondent to this application. In these circumstances there are no specific rules in relation to the issue of joinder under the IRC Rules and in such circumstances this court should apply r 89 of those Rules. 45 In those circumstances the Court should then take note of the SC Rules, and in particular r 8 of Pt 8 of those Rules. 46 Application to actually join Mr Chegwyn is a futile application. The actual summons was filed in this matter on 28 January 1999. The applicant conceded that Mr Chegwyn was not referred to in this summons. In the event that Mr Chegwyn is joined to these proceedings as a party, the summons as it currently stands sets out no claims against Mr Chegwyn, and against him no relief is sought. The fact that no relief is being sought against Mr Chegwyn in the event he is joined to this summons would indicate that the issue of joinder is not "necessary" within the meaning of r 8(1)(b) of the SC Rules (see Walker v Commonwealth Trading Bank of Australia (1985) 3 NSW LR 496). 47 In relation to the summons the court's jurisdiction in hearing a claim under s 106 is to focus on the summons, and award any relief awarded within the confines of that summons. If Mr Chegwyn is joined to the proceedings, the court has no jurisdiction to grant relief against Mr Chegwyn as the summons is currently formulated. In those circumstances it is said the issue of joinder is futile and the court should not join Mr Chegwyn. 48 Contrary to the situation in Bowker, the deficiency is not merely that the applicant has not filed or foreshadowed an amended summons with both the current respondent and Mr Chegwyn attached to the notice of motion, the deficiency is that no relief is ultimately sought against Mr Chegwyn in these proceedings. In those circumstances what would be proper to occur would be another Notice of Motion seeking to amend the summons. 49 In relation to the respondent's second argument there is no case disclosed against Mr Chegwyn in the affidavits filed in these proceedings. The affidavit of Robert Gorczyca does not disclose any evidence at all in relation to Mr Chegwyn, his involvement in the contract with the applicant and any benefit arising from the contract with the applicant. 50 In relation to the applicant's second affidavit Mr Chegwyn is first mentioned in the affidavit in paragraph 11, dealing with letters from the applicant's solicitors to the respondent's solicitors asking whether Mr Chegwyn will personally become a party to the proceedings. Whether the applicant writes to the respondent's solicitors about that is not a basis upon which Mr Chegwyn can in fact be made a party to these proceedings. That is the first time the matter is raised as an issue. What is not being alleged in that affidavit is that Mr Chegwyn somehow benefited from either his or other persons' unfair conduct. 51 The basis upon which the Notice of Motion is being made as to joinder is that Mr Horsell is concerned that any determination by the Industrial Relations Commission in his favour may not now be capable of enforcement, but not as a result of any unfair conduct said to have been committed by Mr Chegwyn or any benefit which Mr Chegwyn is said to have obtained under the contract. 52 Contrary to the assertion by counsel for the applicant that the respondent, or as it is now known, Mattam Consultancy Pty Limited, is no longer trading, there is not one iota of evidence before the Commission to support that statement. There is no evidence in these proceedings as to the financial position of that particular respondent and as to whether it can meet any order in the event the Court decides to grant an order to the applicant. 53 Mr Horsell has not set out any basis for this belief other than it has sold its assets to Finn Foster Direct Pty Limited. In respect to that, what in fact is sold is the insurance portfolio and the business and the business assets of the business. The contract does not provide that all of the assets of the respondent have in fact been sold, only the business assets as set out in this particular contract. 54 The respondent concedes that in determining this issue the court is not concerned with a final determination as to any potential liability on the part of Mr Chegwyn, but some evidence has to be advanced to suggest that it would be appropriate to join Mr Chegwyn as a respondent (see Delaney v Fujian Pacific Pty Limited (unreported, Glynn J, IRC3246/97, 26 February 1999). 55 It is conceded it would have been possible for the applicant to commence proceedings against Mr Chegwyn under s 106 of the Act if he chose to do so. He did not seek to do so. 56 It is conceded that compensation could be awarded against Mr Chegwyn as a party, if he was a party, if he had derived benefit from the making and operation of the contract, where that contract was found to be unfair, or he had been culpably associated with the making or operation of a contract or an agreement. There is no evidence that he derived a benefit from the making or operation of the contract, that contract of course being the applicant's contract of employment. The company extracts relied upon by the applicant provide no evidence upon which the court can determine that Mr Chegwyn either received a benefit from the employment contract or was culpably associated with the making or operation of that contract, and in the absence of such evidence he should not be joined to these proceedings. 57 With respect to the matters raised in the affidavit dated 27 January 1999 none of those matters goes to that first limb, that is whether Mr Chegwyn derived benefit from the making or operation of the contract. The best that can be said about that is that he was associated with the making and the operation of the contract or arrangement. 58 That particular affidavit is not evidence in these proceedings, and the Court should not treat the statements within that particular affidavit as evidence in these proceedings. Absent that type of evidence, there is no evidence in the proceedings that Mr Chegwyn has in fact been culpably associated with the making or operation of the applicant's contract of employment. There is no evidence to support a foundation that Mr Chegwyn should be joined to these proceedings. 59 The joinder of Mr Chegwyn to these proceedings is barred by s 108B of the Act. The words are quite explicit. 60 In essence what is potentially being sought in this application, if the Court is against the respondent in relation to the futility argument, is an order under Pt 9 Div 2 against Mr Chegwyn, and that order is being sought more than twelve months after the contract was terminated on 30 November 1998. The application to join Mr Chegwyn to the proceedings as a respondent is barred by s 108B (see Fernance). 61 The effect of Fernance is that where an application is made to commence proceedings against a particular party, either by way of joinder or by way of an application to amend the proceedings, that the relevant limitation periods apply, such that if a person is sought to be joined outside the limitation period, either by way of a joinder application or some broader application under Pt 20 of the SC Rules, that such an application can be defeated in the event the application is statute barred as a result of some statute of limitations. That is what in fact has occurred in these proceedings. 62 The effect of s 108B is to act as a limitation statute and a party should not be joined where, if they were joined, it would defeat the purposes of s 108B. The terms of s 108B go to any application for an order under this Division and the application to join Mr Chegwyn is an application for an order under this Division. The term "order" should be given the same meaning throughout the Division, that is, an order that the contract is unfair, an order that the contract be varied, an order that the amount be paid and an order that no future contracts of this type be entered into, are all orders referred to in s 108B. 63 Section 108B is clearly a limitation period. The Court should be cognisant of the limitation period and allowing the summons to be amended to join Mr Chegwyn serves no useful purpose in these proceedings on the basis that any claim against Mr Chegwyn is statute barred. 64 The applicant could have commenced proceedings against Mr Chegwyn initially. The question is, could they commence proceedings now against Mr Chegwyn? The answer to that question is now "No" because of the effect of s 108B of the Act in that more than 12 months have elapsed since the termination of the applicant's contract of employment. 65 Baldry v Jackson ([1976] 2 NSWLR 415) does not assist the applicant. The amendment being sought in this case is not to correct a mistake in relation to the naming of the party, but to add a new party to the proceedings. 66 The time of joinder does not run in the decision of Austen J in Brown from the date of the application but from the actual date of joinder (see Brown and DML Resources Pty Limited (No 3) [2001] NSWSC 719). 67 The applicant refers the Court to s 30(1)(c) of the Interpretation Act. He points out that the amendment of an Act does not affect any right, privilege or obligation or liability acquired, accrued or incurred under the [amended] Act or statutory rule. However, the respondent submits that the ability to commence proceedings under s 106 of the Act is not a right, privilege, obligation or liability acquired, accrued or incurred under the Act. What in fact is applicable under s 106 is, at best, the right to take proceedings. It is no other right. It is certainly not a right envisaged in s 30(1)(c) of the Interpretation Act. 68 The Court is bound by r 89 of the SC Rules in these particular circumstances and this Court should adopt a similar approach to the joinder of parties where those parties have a defence under a statute of limitation and thus not allow a party to get around a statute of limitation or a provision with similar effect to s 108B of the Act. 69 Even if the Court is not convinced to adopt a similar approach to the SC Rules, it was submitted that Pt 20 of the Rules of this Court have to be read subject to the terms of the Act. The Rules of this Commission cannot override the terms of the Act such that if the claim is prevented by s 108B of the Act, the Rules cannot be outside the general restrictions contained within the Act. Nothing in Pt 20, in particular r 148 or r 149, allows the Court to circumvent that statutory provision in s 108B. That is made abundantly clear by s 108B subs (2). 70 In relation to the issue of costs, the [proposed] respondent has been put to significant costs in this matter. He has already attended conciliation and has had to prepare documents for conciliation and have conferences prior to conciliation. 71 In essence, if the Court joins Mr Chegwyn to these proceedings, it will be necessary for the matter to go back to conciliation. Now, in those circumstances all of the costs associated with the previous conciliation process by the respondent have been thrown away. They have not been thrown away as a result of any action on the part of the respondent. In those circumstances, an order should be made that the applicant pay those costs as agreed or assessed. 72 Secondly, in relation to the costs of the Motion, if the Court is against it, the respondent says that the costs arise as a result of the applicant not initially making Mr Chegwyn a party to these proceedings and the respondent should not have to meet the costs of the applicant. In those circumstances, costs should be in the cause. Submissions - Applicant In Reply 73 Going to the SC Rules is a last resort for this Tribunal. The respondent has not referred to any cases in this Commission where the Commission has said its power of joinder is reliant on Pt 8 of the SC Rules and the applicant's researches have been unable to find any cases where that has been expressly said by the Commission. 74 Rule 89 of the IRC Rules provides three hurdles before the Supreme Court Practice and Procedure can be applied. Only when all those three categories are made out, does the Commission then turn to the practice, procedure and usage for the time being in the Supreme Court. 75 It is simply a matter of practice that the Commission does allow joinder in s 106 proceedings. That would certainly allow the Court to make directions and give such orders in respect of procedures in accordance with r 85(1) and then r 85(2). 76 In respect of Pt 20, the respondent has said one cannot apply Pt 20 because all one is applying for here is a joinder and not an amendment. There is no basis for bifurcating this process in that way and then turning that bifurcation into some sort of limiting strict two-set test. Schmidt J was not persuaded to do that. The substance of what is now before the Court is that the applicant wants the proposed respondent to be here and the respondent concedes that had Mr Chegwyn been attached to the summons when it was originally filed, then the applicant would have been entitled to do that. The respondent says that it is not to the point that the applicant could have done that because it now had to face s 108B. 77 It is entirely to the point of the respondent's submissions about the appropriateness of this joinder that Mr Chegwyn could have been joined in the proceedings at the initial step. Just leaving aside s 108B and going back to the garden variety test for joinder which was applied in Bowker, as a matter of discretion once the proposed respondent makes that concession, that issue is dealt with. 78 In Bowker, Schmidt J expressly allowed the amendments to be made and indeed made orders that the applicant file and serve this amended summons as a matter of urgency. Her Honour also dealt with the question of conciliation and further costs being involved and significantly no order was made as to costs. In that instance no order appears to have been made as to the cost of the conciliation thrown away, even though her Honour noted it was regrettable that process would have to continue. 79 The difficulty with the construction placed upon s 108B by the respondent becomes very clear when one considers the implications and the submissions that have been made that it applies to all applications for orders that may be made after the commencement of the Act. That includes applications for orders under s 106(5). 80 Adopting that reasoning would lead to the absurd result as follows: an application which has been made under the Act and a matter which is before the Court and in the course of arbitration, after conciliation has been finished, could not then be amended by any party ever to seek another order for any other compensation under s 106(5). No additional claims could be made whatsoever upon the respondent's construction of s 108B. 81 For s 108B to apply in the way the respondent says it applies, it must apply with s 31C of the Interpretation Act. The right to bring proceedings is a valuable right. It is a classic right. It is the very right that the respondent seeks to deny by the operation of s 108B. There needs to be clear and express words in order to do that but they do not appear in s 108. 82 The evidence reveals that there has been a corporate restructure. The evidence reveals that there has been a sale of a significant business. There is no indication that that has been limited to a particular aspect of the business. The sale of the business came to light in September 2001. That matter could not have been known back when the original application was filed and so pointing to a period of time since the beginning of 1999 is not appropriate. 83 There is evidence before the Commission that the paid up share capital of the business is $12. True it is that the paid up shared capital of the business does not necessarily reflect its actual value but it certainly does reflect the exposure of any shareholder to any judgments and orders against the company in the absence of any breach of directors' duties, going behind the corporate veil. It is a sound, rational basis for concern which is held by the applicant, particularly in combination with what is an apparent sale of the assets of the business to another entity. 84 Mr Chegwyn is still employed by the respondent. The respondent is certainly before the Commission. The respondent could clearly have given that evidence to show that it was a company of substance and no empty vessel which would frustrate the orders that the Commission may eventually make. It has not led any such evidence and that is a matter which is peculiarly within the knowledge of the respondent. 85 (On that last point Mr Britt responded by pointing to the documents relating to "Purchase price and due dates for instalments." In essence there is a payment of four instalments in the matter, commencing from the ninth day of January 2001 and it would be appear that those payments are going into 2004 as set out in Schedule 9). 86 Mr Prince did not say anything about the costs of the Motion except that costs would follow the event, the event, that is of the Motion and that would only be the costs of the Motion. 87 In terms of whether or not an order for costs ought to be made against the applicant should the applicant succeed apart from the normal rule that costs follow the event, there is simply no evidence, nothing before the Court which would suggest that conciliation has been futile. Costs ought not be granted if the application is successful in respect of what has gone before. Consideration Use by Court of Applicant's Affidavit filed 28 January 1999 88 This application was filed prior to the operation of r 18A in accordance with the then current procedures i.e. the originating process comprised a Summons for Relief (Form 12) supported by the applicant's affidavit (Form 43). Although it is by no means certain, at some later time the parties apparently agreed to proceed by way of r 18A. 89 There have not been any affidavits filed by the respondent which supports the respondent's contention that the matter was being in accordance with r 18A rather than in accordance with r 18. The outcome, in my view, has been an unfortunate hybrid of the s 18 and s 18A procedures which has not assisted in the smooth resolution of this joinder application. 90 However, the original originating process is on the Court's file and includes claims of various conversations between the applicant and Alex Chegwyn in which Alex Chegwyn is said to have made representations in relation to the applicant's employment relationship with the respondent. 91 The respondent has filed its reply and the applicant has filed a response in relation to those matters. In those circumstances, it was submitted by the respondent that the Court should not take note of the paragraphs set out in the second affidavit. 92 The respondent did not deny that the allegations have been made by the applicant in an affidavit in relation to the Summons in this matter. There is an issue as to who they are made against, the respondent to the proceedings or a proposed respondent to the proceedings. The respondent does not deny allegations have been made but does deny the truth of those allegations. 93 Whether or not the applicant was seeking, as was alleged by the respondent, to rely on the second affidavit as establishing the evidentiary basis for joining the proposed second respondent, (a course later disclaimed by the applicant) is not the point. The point is that allegations were made by the applicant in his second affidavit against the proposed second respondent in relation to his Summons for Relief against the first respondent. They are contained in an affidavit filed in support of a Summons for Relief under r 18. They are not evidence of anything except that those were claims which the applicant advanced in support of that Summons for Relief. Whether or not those claims are eventually proved or disproved in the substantive proceedings is a different issue. 94 In the absence of the query raised as to the application of s 108B to this joinder application, the orders I would have made were: 1 Alexander Jerome Chegwyn be joined as a respondent to application No IRC 310 of 1999; 2 The applicant file and serve its amended summons as a matter of urgency. 95 Referral of the application to the President for reallocation for conciliation would in any event have had to be deferred until the determination of the respondent's Notice of Motion set for hearing on 20 December 2002. 96 I now turn to the submission that the Commission cannot make an order to join Alexander Chegwyn as the second respondent to these proceedings because the making of such an order, in the circumstances of this case, is forbidden by s 108B. Effects of enactment of s 108B 97 Section 108 sets out who may make an application for an order to be made under Div 2 - Unfair contracts may be declared void or varied of Pt 9 - Unfair Contracts, of the Act. 98 Section 108A - Employment contracts in respect of which applications cannot be made and s 108B - time for making application for an order under Div 2 were inserted into the Act by No 32 of 2002 and commenced on 24 June 2002. 99 Insofar as may be relevant, s 108A(1) provides that: 108A(1) [Remuneration exceeds remuneration cap] An application cannot be made for an order under this Division if the application relates to a contract of employment under which: (a) a remuneration package that exceeds the remuneration cap is paid or received (or is payable or receivable) during the period of 12 months immediately before the application is made (or, if the application concerned relates to a contract that has been terminated, immediately before the termination), or (b) a remuneration package is paid or received (or is payable or receivable) during a period of less than 12 months immediately before the application is made (or, if the application concerned relates to a contract that has been terminated, immediately before the termination) that would, if the remuneration package had been paid or received (or been payable or receivable) for a period of 12 months, have exceeded the remuneration cap. … 100 Section 108B is in the following terms: 108B(1) [Timing] 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. 108B(2) [No extension] 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). 101 Section 108A and s 108B have to be seen in the context of Pt 9, Unfair Contracts, as a whole. 102 Section 105 of Div 1 of Pt 9 defines an unfair contract. Section 106(1) of Div 2 of Pt 9, provides that "the Commission may make an order (my emphasis) 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". The remainder of the sub-sections go to what the Commission may find or do in the course of, and as a result of, its consideration. In particular, s 106(5) provides that in making an order (my emphasis) under s 106, the Commission may make such order (my emphasis) as to the payment of money in connection with any contract declared wholly or partly void or varied. 103 Section 107 provides that the Commission may make an order (my emphasis) to prohibit certain persons from entering into specified contracts. 104 Section 108 sets out who may apply for an order under Div 2 of Pt 9. 105 Section 108A provides that there are certain contracts in relation to which an application cannot be made for an order (my emphasis) under Div 2 of Pt 9. 106 Section 108B limits the time within which an application for an order (my emphasis) under Div 2 of Pt 9 can be made. 107 Section 109 provides that the Commission must endeavour to settle a matter under Div 2 of Pt 9 by conciliation. 108 Section 109A provides that Div 2 of Pt 9 does not apply to certain contracts of employment in connection with unfair dismissals. 109 Division 3, ss 110 and 111, applies to certain contracts for carrying out building work, door-to-door handbill delivery work or door-to-door sales work. Division 3 is not relevant for the present discussion. 110 Examination of Div 1 and of Div 2 shows that provision for orders to be made occurs in only two sections: s 106(1) and s 107(1). An order under s 107(1) can only be made at the time of, or later than, the making of an order under s 106(1). I do not consider it further in this judgment. 111 Who may apply for orders under s 106(1) is set out in s 108. Prior to the enactment of s 108A and s 108B there was no time limit placed on the making of an application for an order under s 106(1). 112 The Hon Eddie Obeid, moving in the Legislative Council on behalf of the Hon John Della Bosca, that the Industrial Relations Amendment (Unfair Contracts) Bill (the Bill) be read a second time, stated: It is also intended that a time limit will be imposed on the making of applications under the unfair contracts provision. This time limit will operate only in respect of contracts that have terminated. Given the complexity often attached to cases of this nature, it has been decided that a period of 12 months is appropriate for unfair contract claims. No discretion will be provided to the Industrial Relations Commission to extend this period of time. (Hansard, Legislative Council, Thursday 11 April 2002.) 113 (A similar statement, omitting the words "for unfair contract claims", is to be found at the end of the Second Reading Speech in the Legislative Assembly (Hansard, Legislative Assembly, 19 June 2002 at 3407.) 114 In debate In Committee on 12 June 2002 in relation to the Bill (Hansard, Legislative Council, at 3016) the Hon John Della Bosca (relevantly for the purposes of this consideration, Minister for Industrial Relations), in opposing a motion to amend the proposed s 108B stated: The Government believes that a fixed 12-month time frame is more than appropriate for lodging unfair contract claims. Given this relatively generous period, it is not appropriate to provide the Industrial Relations Commission discretion to extend the period. 115 The terminology "lodging unfair contract claims" used by the Minister for Industrial Relations is suggestive, on one reading of it, of referring to the initial lodgement of such claims, but it could equally suggest that any unfair contract claim against any person, including a claim raised by means of a joinder application, would have to be lodged within that 12-month time frame. 116 Section 108B sets a time limit upon the period within which an application for an order under Div 2 of Pt 9 may be made. Upon the analysis set out earlier, that order is one that s 106(1) provides may be made and, other than what may be described as a follow up order in special circumstances provided for in s 107(1), that seems to me to be the only order that s 108B would refer to in Div 2 of Pt 9. 117 Section 108B(1) does not, in terms, spell out that the time limitation of 12 months provided in it is restricted to the time for initiating proceedings by application for an order under Div 2 of Pt 9. 118 There may be no problem at all if the "application for an order under this Division" [Div 2 of Pt 9] in s 108B means, and is limited to, the "Summons for Relief under Section 106" which is filed in the Industrial Registry to initiate proceedings in relation to allegedly unfair contracts. 119 However, r 68 of the IRC Rules provides that "unless a tribunal directs otherwise, an interlocutory or other application (my emphasis) in relation to proceedings already commenced must be made by motion". In accordance with that rule, the Notice of Motion now being considered prima facie can be described as an "application", though not one directly seeking "an order" under s 106. 120 The application presently before the Commission by way of Notice of Motion is that Alexander Chegwyn be joined as a respondent to the substantive application for relief pursuant to s 105 and s 106 filed on 28 January 1999. Mr Britt accepted that it had been open to include Mr Chegwyn as a respondent at the time the application was filed. 121 Mr Britt submitted that there are no specific rules in relation to joinder under the IRC Rules. Therefore, in those circumstances, the Court should apply r 89(5) which provides for the application of Supreme Court practice and procedure. 122 I consider that submission to be incorrect. The difficulty with it is that r 89(5) of the IRC Rules provides that recourse is only to be had to the Supreme Court practice and procedure: Where: (a) there are no relevant provisions; and (b) there is no established practice, procedure or usage; and (c) there is no Rule, order, direction or Practice Direction in force, the practice, procedure or usage for the time being of the Supreme Court or, in the case of appeals, the practice, procedure or usage for the time being of the Court of Appeal or the Court of Criminal Appeal, as may be appropriate, is, as far as practicable, to regulate the practice, procedure or usage of the tribunal. 123 In relation to the general powers of the Commission, Pt 13, General Procedure, r 83(c) is very specific: 83 A tribunal, in addition to its powers generally under the Act, may in relation to any proceedings before it: … (c) direct parties to be joined or struck out. 124 Recent decisions of the Commission dealing with applications for joinder of parties in matters before it have considered the powers of the Court as to joinder and to the authorities going back many years on that issue. Those decisions include not only Bowker but also Lyons v Caltex Australia Petroleum Pty Limited [2001] NSWIRComm 11 (Schmidt J, 7/2/2001) and Eslick v Exben Pty Limited (unreported, Boland J, 5/1/2001). 125 Fernance involved consideration of conflict between Pt 8 r 11(3) (8.11.3) and Pt 20 r 4(3) (20.4.3.) of the SC Rules. Part 8 r 11 is headed "further conduct of proceedings". Part 20 r 4 is headed "Statute of Limitation". 126 Part 8 r 11(3) of the SC Rules provides: (3) Where in any proceedings a party is added otherwise than pursuant to an order under rule 10 [death, transmission etc] or Part 20 rule 4(3) [amendment to correct a mistake in the name of a party] the date of commencement of the proceedings so far as concerns him shall be - (a) where he is added as a defendant - the date on which the amendment adding him as a defendant is made or the date of entry of his appearance or the date of filing his defence, whichever is earliest; (b) otherwise - the date on which the amendment adding him as a party is made. 127 Under the heading "Statutes of limitation" Pt 20, r 4 provides: 4 (1) Where any relevant period of limitation expires after the date of filing of a statement of claim and after that expiry an application is made under rule 1 for leave to amend the statement of claim by making the amendment mentioned in any of subrules (3), (4) and (5), the Court may in the circumstances mentioned in that subrule make an order giving leave accordingly, notwithstanding that that period has expired. … (3) Where there has been a mistake in the name of a party and the Court is satisfied that the mistake was not misleading nor 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. … (5A) An amendment made pursuant to an order made under this rule shall, unless the Court otherwise orders, relate back to the date of filing the statement of claim. (6) This rule has effect in relation to a summons as it has effect in relation to a statement of claim. 128 In relation to 20.4.6 it was noted in the Supreme Court Procedure (NSW) Vol 1 at 2459 that 20.4.6 together with Pt 8 r 11(3) now makes clear that a joinder authorised by subrule (3) relates back to the commencement of proceedings. Any other result would defeat the intention of Pt 20 r 4(3). 129 The importance for the respondent of the adoption of the Supreme Court practice and procedure is twofold. Part 8 r 11(3) of the SC Rules deals with the date of commencement of the proceedings insofar as any party who is added as a party is concerned. Part 20 r 4 is concerned with the effect of statutes of limitation. There is authority (detailed in the Supreme Court Procedure Vol 1 at 2229 - 2230) that joinder cannot deprive a party of an accrued defence under the Limitation Act. (Ultimately, it seems to me that the respondent's reliance upon the SC Rules and, in particular, of Pt 20, of those Rules, would have relevance for these proceedings, not so much as to the application of those Rules in this Commission, but in relation to the discussion of principles in authorities as to actions becoming statute barred by virtue of limitation provisions.) 130 The position of the applicant as to those two issues, is, as to the first, that time for joinder runs from the date application for joinder is made, which in this instance was before s 108B commenced on 24 June 2002. (I have not dealt with that issue as it is, it seems to me, caught up in the question of the effect of s 108B on the application for joinder.) 131 In relation to the second it is contended that the right to bring the application under s 105 and s 106 is a substantive right, and one which, in the light of s 30(1)(c) of the Interpretation Act, would require express words in s 108B to abrogate it. 132 One question sometimes raised with a party opposing joinder when an application for joinder is made is, if the applicants chose to discontinue the current proceedings and to issue fresh summonses naming the existing and proposed respondents, whether any complaint could be made against that procedure. The answer, until the enactment of s 108B would certainly have been that that procedure was open to be adopted. On that point, it is common ground that the proposed second respondent could have been included as a respondent at the time the application was originally filed. 133 However, if that course of action were sought to be taken now in relation to a contract that had been terminated more than twelve months prior to the filing of such an extended Summons for Relief, as would be the situation here, then it seems to me that the effect of s 108B has to be considered. 134 In my view a question now arises in relation to the order now sought to join Mr Chegwyn. It may be that, on a literal interpretation of s 108B, the making of such an order is not affected by the provisions of s 108B. However, the fact is that joinder of Mr Chegwyn is sought because the applicants seek that orders pursuant to s 106(1) and (5), which could be caught by s 108B, be made against him. 135 The immediate effect of granting that application would be that Mr Chegwyn would become a party to the proceedings. In the event that findings of unfairness in terms of s 105 and s 106 were eventually made by the Commission, orders for payments of money pursuant to s 106(5) could be made in relation to a contract of employment which was terminated more than twelve months before Mr Chegwyn was joined as a respondent. 136 Putting aside the extreme effects of the respondents' submission taken to its limits as discussed later, in the ordinary course of events, there would be no problem with those orders being made against the original respondent, Chegwyn Insurance Broking Services Pty Limited. Prior to the enactment of s 108B there would similarly not have been a problem making those same orders against Mr Chegwyn, in the event that he had been joined as a party, initially or prior to 24 June 2002. 137 That formerly clear cut position has been changed because of the enactment of s 108B with its commencement date of 24 June 2002. 138 If the respondent's submissions as to the effect of s 108B are correct and are taken to the limit, that would have the result that no orders pursuant to s 106 could be made in respect of any application now before the Commission, notwithstanding the date it was filed, if that application was brought in relation to a contract of employment terminated twelve months prior to 24 June 2002. 139 The arguments advanced in support of the applicant's position raise other matters for consideration. For instance, in relation to the submission that s 30(1)(c) of the Interpretation Act refers to accrued rights, might it not be said that the substantive right of seeking relief pursuant to s 106 has already been exercised by way of matter no IRC99/310? Does the applicant say that that substantive right carries with it the further substantive right to seek to take steps, initially or later in proceedings, against persons from whom relief might be sought by the applicant, so that, for instance, to seek joinder of another respondent would be protected by the Interpretation Act against time limitations that may be contained in s 108B? 140 On my analysis of Pt 9 of the Act, the order of joinder in itself is not literally barred by s 108B. 141 The contract of employment ended on 30 November 1998. 142 The application in the substantive proceedings against (currently) the only respondent was filed on 28 January 1999. 143 The Notice of Motion seeking joinder was filed on 11 April 2002, that date being more than 12 months after the termination of the contract, the subject of the original application for relief under s 105 and s 106. 144 Sections 108A and 108B commenced on 24 June 2002. 145 The first stage effect of making an order of joinder in this case is that Mr Chegwyn would become a party, as the second respondent, to this application. 146 The possible second stage effect of ordering joinder, is that ultimately an order pursuant to s 106, the order which on my analysis, is the order that is referred to in s 108(A) and s 108(B), may be made against the (then) two respondents. 147 The question is, is joinder of the proposed respondent, which could lead to that possible second stage effect of an order being made under s 106, statute barred by the provisions of s 108B? 148 Or alternatively, if the making of an order for joinder is not statute barred, would the Commission as a matter of discretion refrain from making, as being futile in the event of an order under s 106 being made, an order as to joinder of the proposed respondent? 149 I note that in these proceedings, submissions went to question of the joinder of respondents in particular, not to joinder of further applicants nor to other orders that might be sought in interlocutory proceedings in relation to applications under s 106. 150 During the proceedings, I raised with counsel the possibility of referring to the Full Bench the question as to whether, as the result of the enactment of s 108B, applications for joinder of persons as additional respondents to proceedings which were instituted prior to 24 June 2002 and which related to employment contracts terminated more than twelve months before the date joinder is sought, were statue barred. 151 Counsel deferred to the Commission as to the action it might decide to take. 152 In my view, this issue requires authoritative determination, as being an issue that is likely to arise not infrequently in relation to applications for relief under s 106. 153 Pursuant to s 193(1) of the Industrial Relations Act 1996, I refer to the President, for decision by a Full Bench of the Commission the question raised above in par [150].

Craig Horsell v Chegwyn Insurance Broking Services Pty Limited

At a glance

Court

Decision date

Before

Source

Judgment (8 paragraphs)

Parties

Cases Cited (11)

Cited By (2)