Darc Rasmussen v Eltrax Systems Pty Ltd

PARTIES: Third Respondent Jo-Ann Schlein

Fourth Respondent John Picardi

Fifth Respondent Verso Technologies Inc (Formerly Eltrax Systems Inc)

CATCHWORDS: Unfair contract - interlocutory proceedings - Notice of Motion - applicant seeking leave to file Second Amended Summons for Relief - whether Notice of Motion annexing Second Amended Summons served on fifth respondent - application by applicant seeking leave to serve Second Amended Summons - applicable rules in relation to service of Notice of Motion on a foreign corporate respondent - whether applicant effected service of Notice of Motion in accordance with the Rules - principles in relation to leave to file Second Amended Summons - leave granted to file Second Amended Summons within seven days - leave granted to serve the Second Amended Summons on the first to fifth respondents by 4.00pm on 2 August, 2005 - costs reserved.

Industrial Relations Commissions Rules 1996 LEGISLATION CITED: Supreme Court Rules

ASIC v Sweeney (No 2) 38 ASCR 743 Castagna & Anor v Conceria Pell Mec SpA (unreported, Court of Appeal (FC) NSW No. 40561 of 1992, 15 March 1995). Darc Rasmussen v Eltrax Systems Pty Ltd (Formerly Sulcus (Australia) Pty Ltd) and Others [2003] NSWIRComm 157 Darc Rasmussen v Eltrax Systems Pty Ltd [2004] NSWIRComm 307 CASES CITED: Laurie v Carroll (1958) 98 CLR 310 Reich v Client Service Professionals of Australia Pty Ltd (2000) 49 NSWLR 551 Sydney Water Corporation Ltd & Anor v Industrial Relations Commission of NSW & Anor [2004] NSWCA 436 Verso Technologies Inc (formerly Eltrax Systems Inc) v Rasmussen (2004) 135 IR 147

Applicant: Ms K. Nomchong, of counsel Solicitor: Carroll & O'Dea LEGAL REPRESENTATIVES:

Respondent: Mr P. Newall, of counsel Solicitor: Gadens Lawyers

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

Darc Rasmussen v Eltrax Systems Pty Ltd (Formerly Sulcus (Australia) Pty Ltd) and Others

Application by way of Notice of Motion to file a Second Amended Summons against Verso Technologies Inc (Formerly Eltrax Systems Inc)

Application to serve Second Amended Summons on first to fifth respondents

1 This is an application by way of Notice of Motion, filed 20 May, 2005, in which Darc Rasmussen, ("the applicant") seeks an order that he be granted leave to file a Second Amended Summons for Relief against five named respondents in the terms set out in the draft annexed to the Notice of Motion and marked "A". 2 Consequential orders are also sought including costs against the first to fourth respondents. 3 On 8 June, 2005, when the application was set down for hearing the solicitor appearing for the first to fourth respondents indicated on behalf of those respondents that they "neither consent nor oppose the motion". There was no appearance for the fifth respondent. 4 On 24 June, 2005 when the application came before the Court for hearing, counsel for the applicant, Ms Nomchong, made a further oral application seeking to adduce evidence that service of the Notice of Motion had been effected on the fifth respondent, a corporation with its business address in the United States of America. The applicant's solicitor, Ms MacAlister, then gave some evidence and produced three affidavits sworn by United States process servers, each annexing a number of documents, including the Notice of Motion presently before the Court annexing the Second Amended Summons for Relief. 5 I will return to this evidence in more detail shortly. Background

6 This matter has had a long and complicated history. As yet it has not been set down for hearing, although the Summons for Relief was filed on 25 June, 2001. To date the original Summons has not been properly served on the fifth respondent: Verso Technologies Inc (formerly Eltrax Systems Inc) v Rasmussen (2004) 135 IR 147. 7 Much of the history of the matter has been conveniently summarised by the Full Bench of the Commission in Court Session in Verso Technologies Inc (formerly Eltrax Systems Inc) v Rasmussen (2004) 135 IR 147, and, in Boland J's judgment in Darc Rasmussen v Eltrax Systems Pty Ltd [2004] NSWIRComm 307. 8 For present purposes, reproduced below are the significant features of that history, as taken from both authorities cited above. 9 The original Summons for Relief pleaded that the applicant was an employee of Eltrax Systems Pty Limited, ("Eltrax"). Eltrax was the Australian subsidiary of Eltrax Systems Inc, a United States corporation that, on 29 September, 2000 became Verso Technologies Inc (the fifth respondent in the proceedings). 10 The original summons was served on the first, second, and third respondents, on 26 June, 2001. On 3 July, 2001 the three respondents filed Notices of Appearance. The fourth respondent was served on 18 March, 2002 and a Notice of Appearance was filed on 9 April, 2002. 11 Service of the Summons was sought to be effected on the fifth respondent at its corporate offices in the United States on 10 July, 2002. The fifth respondent did not file a Notice of Appearance, and, on 3 October, 2002, the applicant sought orders under Rule 112(4) of the Industrial Relations Commissions Rules 1996 ("IRComm Rules") to proceed against the fifth respondent. On 19 December, 2002, the fifth respondent filed a Notice of Motion under Rule 82 seeking to have the proceedings against it set aside. 12 The two applications were heard by Staunton J, who on 21 May, 2003 granted the applicant leave to proceed against the fifth respondent: Darc Rasmussen v Eltrax Systems Pty Ltd (Formerly Sulcus (Australia) Pty Ltd) and Others [2003] NSWIRComm 157. 13 On 11 June, 2003 the fifth respondent filed an application for leave to appeal and appeal against Staunton J's orders. 14 On 23 October, 2003 the fifth respondent filed a reply to the Summons for Relief. On 24 October, 2003 the matter was unsuccessfully conciliated and a certificate issued the same day. 15 On 16 April, 2004 the Full Bench held that service on the fifth respondent of the Summons for Relief had not been effected by reason of procedural irregularities associated with the service. 16 Before Boland J the applicant sought leave to file an Amended Summons for Relief and serve the Amended Summons on the fifth respondent. An application was also made seeking orders to grant an extension of time in which to serve the original Summons and the Amended Summons on the fifth respondent (The application to extend time was made because under Pt 7 r 7(1) of the Supreme Court Rules an originating process for the purposes of service is only valid for one year from the date on which it is filed, "unless the Court otherwise orders". The extension of time, in circumstances where service has not been effected was necessary as the present application is brought pursuant to s106 of the Act, and, under s108B(2) of the Act, an applicant for an order under Division 1 of Part 9 of the Act, is precluded from re issuing proceedings). 17 On 15 October, 2004 Boland J ordered that the summons was valid, and, granted leave to the applicant to file and serve the Amended Summons for Relief, and, serve the summons on the fifth respondent by 4.00pm on 8 November, 2004. 18 On 24 December, 2004 a Notice of Motion was filed in the Office of the Industrial Registrar seeking an order that the applicant be granted leave to proceed against the fifth respondent in accordance with Rule 112(4) of the IRComm Rules. On 7 March, 2005 the Notice of Motion was set down for hearing on 30 May, 2005. The Court was also informed by the applicant that it, "may be necessary to produce" a second amended summons for relief. In the interim period, various summonses for production served by the applicant were called upon, and, proceedings were commenced by way of Statement of Claim in the Supreme Court by the applicant for breach of contract. On 5 April, 2005 the hearing of the Notice of Motion on 30 May, 2005 was vacated. On 18 May, 2005 the Court was informed that the applicant anticipated removing the s106 application to the Supreme Court so that the issues could be heard in the same forum. Applicable Law

19 At this stage of the proceedings the applicant seeks leave to file a Second Amended Summons. 20 The applicant also sought orders, "...in relation to service of that summons providing us in due time in which to serve the fifth respondent". The applicant sought four weeks in which to serve the fifth respondent with the Second Amended Summons. 21 In relation to service of the Notice of Motion evidence was adduced from the applicant's solicitor. This evidence included the tender of the three affidavits of the United States process servers, and oral evidence from the solicitor, Ms MacAlister, which sought to identify the affidavits and attachments and various details concerning the fifth respondent. In summary, the evidence identified:- (i) the first affidavit, sworn by Gregory Stewart, with attachments annexing a copy of the Second Amended Summons which the applicant said was served on the fifth respondent's registered agent, CT Corporate Systems at 1201 Peachtree Street, Atlanta, Georgia, United States of America. (ii) the second affidavit, sworn by Jeffrey J Haas, annexing a copy of the Second Amended Summons which the applicant said was served on, Verso Technologies Inc's registered agent, CT Corporation Systems Inc at 405 Second Avenue, S. Minneapolis, Minnesota, United States of America. (iii) the third affidavit, sworn by Jeremiah M Lignitz annexing a copy of the Second Amended Summons, which the applicant said was served on "Verso Technology" Inc at 400 Galleria, Galleria Parkway SE No 300, Atlanta, Georgia, United States of America. 22 The Court was informed in relation to the evidence consisting of the three affidavits, and the oral evidence adduced from the applicant's solicitor in relation to that evidence, that the evidence would enable the Court to be satisfied that the fifth respondent had been properly served with the Notice of Motion annexing the Second Amended Summons, which in turn, would enable a determination as to whether the Second Amended Summons may be filed. 23 Under Rule 72 of the IRComm Rules, a Notice of Motion may be heard and disposed of in the absence of any party, if the Notice of Motion has been duly served on the absent party. 24 Here, effective service has been sought of a Notice of Motion upon a corporate respondent with its business address in the United States of America. 25 Part 15 of the IRComm Rules deals with service of "process" by parties. 26 Rule 98 of that Part provides: Except as otherwise provided by these Rules or unless the Registrar otherwise directs, service of all process, including interlocutory applications, must be effected by the parties. 27 Rule 112 of that Part provides: (1) This Rule applies where, pursuant to section 162(2)(f) or otherwise, any process or document is to be served outside the State and outside Australia.

(2) Process or documents may be served outside Australia, but must bear a note in the appropriate form.

(3) Where process served under this Rule requires or permits the filing of a notice of appearance, the period for entry of such an appearance will be 21 days after service, unless the tribunal, on application allows a shorter period.

(4) Where there is no appearance by the defendant or respondent to any process served under this Rule, the applicant must not proceed except by leave of the tribunal before which the proceedings are brought.

28 Part 1, Rule 4 of the IRComm Rules defines "process" in the following way: ... an application, reference, notice of appeal or other process by which proceedings are initiated and any other document filed or served in the course of proceedings.

29 This definition is wide enough to include a Notice of Motion. The present Notice of Motion therefore is a "process" which falls within Rule 112 of the IRComm Rules. Under that Rule a number of pre conditions must be met in order for service to be properly effected outside Australia. In the case of a Notice of Motion, it must bear a note in the appropriate form. 30 The particular requirement was discussed by the Full Bench in Verso Technologies Inc (formerly Eltrax Systems Inc) v Rasmussen. At issue there was the service of the original Summons, which, as a "process" under Rule 112 required a note in the appropriate form before proper service could be effected. After observing that the IRComm Rules do not indicate what form the note required under Rule 112(2) should bear, the Full Bench directed its attention to the relevant Rule in the Supreme Court Rules, namely, Pt 10 r 2A which was expressed in the following terms:

Where an originating process is served outside Australia a notice in the prescribed form shall be served with the originating process. 31 The prescribed form is Form 13A: Schedule F, Supreme Court Rules. Form 13A provides: The prescribed form is form 13A:

1. The Court may, on application made by you in accordance with the rules of Court, set aside the service on you of this statement of claim (or summons or as the case may be) where

(a) service is not authorised by the rules of the Court; or

(b) this Court is an inappropriate forum for the trial of the proceedings.

2. Alternatively you may submit to the jurisdiction of the Court by filing the prescribed form of unconditional notice of appearance.

3. If you do not make an application under paragraph 1 or file a notice under paragraph 2, the Court may give leave to the plaintiff to proceed against you." 32 The Full Bench also adopted the approach to proper service of process outside Australia set out in Castagna & Anor v Conceria Pell Mec SpA (unreported, Court of Appeal (FC) NSW No. 40561 of 1992, 15 March 1995). 33 In Castagna, the Court of Appeal allowed an appeal against an order at first instance granting leave to proceed against a party, resident outside Australia, on the grounds that there were fundamental and substantial irregularities in the service of process on the appellant. These irregularities were contained in documents served at the appellant's office in the United States of America. One document, an amended summons, contained an expired return date of 29 November, 1991. In addition the relevant notice (to defendant outside Australia) was unsigned and unsealed; and, a letter which was dated 28 February 1992 purported to give notice of a hearing date of 14 February 1992. 34 After referring to extracts from the judgments of Mahoney J and Handley JA in Castagna, the Full Bench in Verso Technologies Inc emphasised the importance of proper service of process on a foreign respondent, describing it as "essential", and, the subjecting of a non-submitting foreign respondent to the jurisdiction of the Court as a "serious matter". 35 With these matters in mind, I turn now to consider whether the notice of motion before the Court has been properly served in accordance with the Rules. 36 As a preliminary observation, I note that each of the three affidavits of the process servers annexes a completed and signed Form 13A which appears to be correct in all other details. It correctly nominates the parties, the IRC number, and, otherwise reproduces the text appropriate to Form 13A. 37 Personal service outside Australia of a process such as a Notice of Motion is permissible under the relevant Rules: see for example Pt 10 r 4, Supreme Court Rules; Laurie v Carroll (1958) 98 CLR 310; ASIC v Sweeney (No 2) 38 ASCR 743 at 761, 762.

38 Rule 105 of the Industrial Relations Rules deals with service of process upon corporations. It provides that service may be effected, for example, by leaving "any document" with the secretary or other principal officer of the corporation, or, with "a person" at the registered office of the corporation: Rule 105(a) and (c). 39 The affidavit of Jeremiah M Lignitz deposes that the principal executive office of the fifth respondent, Verso Technologies Inc., is found at 400 Galleria Pkwy, SE No. 300, Atlanta, Georgia, 30339-3182, USA. Elsewhere in the affidavit, Mr Lignitz deposes that on 6 June 2005, he served a number of documents including the Notice of Motion, the subject of the present application, and the second Amended Summons for Relief, on Juliet Reising, the secretary of the fifth respondent. The oral evidence of Ms MacAlister given in relation to this affidavit is that the Notice of Motion with annexures was served on the fifth respondent at its principal executive office, (referred to by Ms MacAlister as the fifth respondent's "principle address"). 40 This evidence enables me to be satisfied that personal service of the Notice of Motion has been effected upon the fifth respondent in accordance with Rule 105 of the IR Comm Rules. Leave to File the Second Amended Summons

41 The principles in relation to applications to amend pleadings have been usefully set out by Boland J in Darc Rasmussen v Eltrax Systems Pty Ltd (at [14], [15]) as follows: The approach of the Commission in Court Session to matters of procedure such as applications to amend pleadings is to avoid excessive rigidity and, upon a consideration of all of the circumstances, to ensure fairness to all parties. As the Full Bench observed in Western Sydney Area Health Service v Gibson (2001) 109 IR 359 at [16], after citing Harding v Bourke (2000) 48 NSWLR 598 at 603, the Rules of the Commission should not act so as to frustrate or otherwise limit the requirements of justice. In Delaney v Fujian Pacific Pty Ltd [1999] NSWIRComm 56 Glynn J considered that the relevant principles to be applied to an application to amend pleadings were those in an established line of cases commencing with Clough & Rogers v Frog (1974) 4 ALR 615 at 618 and in Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 at 106-7. They are as follows: (a) the proposed amendment must not be so obviously futile that it would be liable to be struck out if it had appeared in the original pleading) (i.e., it must disclose an arguable cause of action); (b) the application for leave must be made for a proper purpose; (c) the amendment must not cause prejudice to the other party that cannot be compensated by appropriate consequential orders, including an order for costs; (d) the amendment must not be contrary to the interests of the administration of justice. 42 The grounds and reasons for the Notice of Motion rely on the 1 December, 2004 judgment of Sydney Water Corporation Ltd & Anor v Industrial Relations Commission of NSW & Anor [2004] NSWCA 436 in which the Court of Appeal held, per Mason P (Hodgson and McColl JJA agreeing) that Reich v Client Service Professionals of Australia Pty Ltd (2000) 49 NSWLR 551 was wrongly decided. 43 According to the applicant, the present form of the second amended summons which was filed on 22 October 2004 requires amendment, "so that the application and orders sought are restricted to those within the jurisdiction of the Industrial Relations Commission of NSW in Court Session as circumscribed in the (Sydney Water Corporation case)." 44 In Sydney Water Corporation Ltd & Anor v Industrial Relations Commission & Anor [2004] NSWCA 436, the Court of Appeal found that a Full Bench of the Industrial Relations Commission in Court Session in Reich v Client Service Professionals of Australia Pty Ltd (2000) 49 NSWLR 551 had incorrectly held (by majority) that a contract can be found to be unfair because of conduct which is in breach of contract). 45 It is apparent from these grounds and reasons that the amendments sought by the applicant to the Second Amended Summons do not introduce new facts, but only seek to delete from the summons any material which may fall outside the jurisdiction of the Court. 46 I propose to grant Order 1 of the Notice of Motion. 47 Accordingly, I make the following orders: 1. Leave is granted to the applicant to file the Second Amended Summons for Relief within seven days of the date of this judgment; 2. The applicant is granted leave to serve the Second Amended Summons on the first to fifth respondents by 4.00pm on 2 August, 2005; 3. Costs are reserved. ooo000ooo

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