Donald F Hagans v UnitedGlobalCom, Inc. & ors

Industrial Relations Act, 1996, s 170 - amendment - consideration of operation of s 170, Rule 148(1) and Rule 83(c) dealing with joinder - application of Rule 84(1) - relevance of approach of Supreme Court Rules

LEGISLATION CITED : Industrial Relations Act 1996 s 170 108B Rule 148(1) Rule 83(c) Supreme Court Rules Pt 8 Pt 20 Australia and New Zealand Banking Group Ltd v Larcos (1987) 13 NSWLR 286 BP Australia Ltd v Brown (2003) 46 ACSR 677 Baldry v Jackson [1976] 2 NSWLR 415 Browne v Reizitis (1970) 127 CLR 157 Cardile v LED Builders Pty Ltd (1999) 198 CLR 380-400 Crowe v USC Development Pty Ltd [2003] NSWIRComm 234 Gough & Gilmour Holdings Pty Ltd & ors v Caterpillar of Australia Ltd (No 2) (2001) 106 IR 274 CASES CITED : Green & anor v AMP Financial Planning Pty Ltd & ors [2004] NSWIRComm 135 Harris v Western Australian Exim Corp (1994) 129 ALR 387). Industrie Chimiche Italia Centrale v Alexander Tsavirilis and Sons Maritime Co (The Choko Star) [1996] 1 All E R 114. Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 623, 630-631 McGee v Yeomans [1977] 1 NSWLR 273 at 280 Mullins v Peoplebank Australia Pty Ltd [2003] NSWIRComm 457 Sneade v Wotherton [1904] 1 KB 295 at 297 Yorkshire Regional Authority v Fairclough Building Ltd [1996} 1 WLR 210 HEARING DATES: 05/17/2004; 05/18/2004 DATE OF JUDGMENT: 06/10/2004

APPLICANT: Mr J West QC with Mr Smith of counsel SOLICITORS: Mr D Stewart Harmers Workplace Lawyers LEGAL REPRESENTATIVES: DEFENDANTS: Mr G Hatcher SC with Mr G McGrath and Mr M Easton of counsel SOLICITORS: Mr Malcolm Davis Acuiti Legal

JUDGMENT: - 14 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

10 June 2004 Matter No. IRC 517 of 2000 Donald F Hagans v UnitedGlobalCom, Inc. and ors. Application under s 106 of the Industrial Relations Act 1996 JUDGMENT [2004] NSWIRComm 164

1 In February 2000, the applicant Donald Hagans commenced proceedings under s 106 of the Industrial Relations Act 1996. The proceedings arose in relation to his employment in a variety of senior positions in what might be described as the pay TV industry. The applicant commenced the proceedings against six corporate respondents and two personal respondents. Three of the corporate respondents were created under the laws of the United States of America with the other three being Australian corporations said to have registered offices and/or headquarters in New South Wales. The individual respondents were said to occupy executive positions with corporations which were themselves nominated as respondents.

2 The applicant alleged that, in a variety of contractual arrangements including representations, he was not only promised certain levels of salary but at various times was also promised options to take up fully paid shares in the issued capital with the first respondent, formerly known as United International Holdings, Inc., but referred to in the pleadings as UnitedGlobalCom, Inc. The pleadings set out at length the relationship between the corporate respondents and the positions held and duties performed by the applicant in relation to them in their intersecting interests. The Summons for Relief alleged that the first respondent's option plan together with various representations and promises were either conditions related to the initial contract or were arrangements collateral to it. The applicant sought a variety of orders for the payment of money but principally: (a) the value of options at approximately $A15.5 million; (b) the value of an incentive compensation package of approximately $A10 million; (c) approximately $A1 million in relation to remuneration and other financial benefits the applicant would have earned had his employment continued in accordance with its terms.

3 By Notice of Motion the applicant has sought to amend the original Summons for Relief in the following manner: 1. An order that the first named respondent, UnitedGobalCom, Inc.., be changed to Old UGC, Inc.. 2. An order that the second named respondent, UIH Asia/Pacific Communications, Inc., be changed to United Asia/Pacific Communications, Inc.. 3. An order that UnitedGlobalCom, Inc.. the currently listed NASDAQ entity, be joined as the ninth respondent. 4. An order that the Applicant be granted leave to file and serve Amended Summons for Relief, in the form attached to this notice of motion ..., amending Summons filed on 14 February 2000 ... .

4 In the grounds and reasons in support of the Notice of Motion it was stated that the applicant was employed by the first respondent, a publicly listed company, pursuant to contracts and/or arrangements that were the subject of the proceedings. The proceedings were said to involve share options and incentive plans conducted by the first respondent for the benefit of its employees. The applicant was a participant in the option plans and the failure to deliver options under the option plans and/or compensate the applicant for his option rights under the options plans formed a "principal element of the applicant's proceedings".

5 In early 1999, the first respondent changed its name to UnitedGlobalCom Inc.. a publicly listed company. Affidavits filed by the respondents disclosed that there had been a re-organisation of the UnitedGlobalCom group of companies. Between 2001 and 2004, the first respondent and its successor companies had entered into a series of transactions whereby Liberty Media Corp, Inc.. ("Liberty"), of Denver, Colorado, USA had become the controlling shareholder in the UnitedGlobalCom. "family" of companies. In January 2002, a new company, UnitedGlobalcom, Inc. ("New UGC") was created and became 100 per cent owned by the first respondent. The first respondent then changed its name to UGC Holdings, Inc.. and new UGC assumed the name UnitedGlobalCom, Inc. and is listed on the NASDAQ under that name. The first respondent then changed its name to old UGC, Inc.. ("Old UGC").

6 In 2002, New UGC became the formal successor to all share options and plans that were initiated by Old UGC and options for shares in Old UGC held by the various executives and directors became options for shares in New UGC. In the process, and based on a review of the evidence of the respondents in the proceedings, the applicant alleged that it appeared that the current name of the subsidiary of New UGC (that is, the owner of shares in Austar United Communications Ltd, the sixth respondent) was now United Asia/Pacific Communications, Inc. and not UIH Asia/Pacific Communications, Inc. (the current second respondent). 7

It was submitted that the orders sought were necessary in order for all parties to the contracts and arrangements to be before the commission and for all relevant matters and claims arising from the arrangements and related or collateral arrangements, to be considered and determined as part of the proceedings. It was stated: (a) the contracts and arrangements involved share options under the option plans. New UGC controlled the option plans which now deal with options for shares in New UGC. Any order relating to the option plans required New UGC to be a party; and (b) the arrangement also involved an incentive scheme whereby certain employees obtained shares in the sixth respondent. The members of the UGC group which is the owner of the shares in the sixth respondent was the second respondent. If an order was made relating to this incentive scheme, the second and sixth respondents were necessary parties. The applicant also sought to amend the name of the second respondent to properly record its title.

8 Affidavit evidence in support of the motion was sworn by a partner in the firm of solicitors acting for the applicant. The affidavit referred to: affidavits filed in the proceedings by the respondent; a proof of claim served on the applicant issued out of the United States Bankruptcy Court for the Southern District of New York naming Old UGC, Inc. as debtor; a notice received by the applicant of commencement of Chapter 11 Case and Meeting of Creditors pursuant to s 341 of the Bankruptcy Code issued by the United States Bankruptcy Court Southern District of New York; a Rule 1007-2 affidavit received from solicitors instructed by the applicant in relation to the Chapter 11 proceedings in the United States being an affidavit sworn by Frederick G Westerman 111 together with its exhibits; an Order Establishing Deadline for filing Proofs of Claim approving form and manner of notice thereof received by the applicant in relation to the Chapter 11 proceedings; copy of an extract of a form 8-K Report in relation to UnitedGlobalCom, Inc. obtained from the United States Securities and Exchange Commission; a motion pursuant to Rules 9006(b) and 9027 of the Federal Rules of Bankruptcy Procedure for Enlarging the Time Within Which to File Notices of Removal of Related Proceedings; and, certain correspondence from solicitors acting for the respondents in these proceedings. The affidavit also asserted that UGC Holdings, Inc. had changed its name to Old UGC, Inc. The applicant's solicitors had not been informed by solicitors for the respondent of Chapter 11 proceedings in respect of old UGC, Inc.

9 The affidavits filed on behalf of the respondent in the substantive proceedings dealt with the following developments: (a) the first respondent, UnitedGlobalCom, Inc. was now known as UGC Holdings; (b) the second respondent, UIH Asia/Pacific Communications, Inc. was now known as United Asia/Pacific Communications, Inc.; (c) the third respondent, United International Management, Inc. was a related corporation to the first respondent; (d) the first respondent was formerly known as United International Holdings, Inc. and in January 2002 was restructured and several companies were merged - the first respondent ultimately changed its name to UGC Holdings, Inc.; (e) a new company was created and given the name UnitedGlobalCom, Inc., and became the parent of UGC Holdings, Inc.; (f) the new parent company assumed the name UnitedGlobalCom Inc. and was referred to as "New UGC"; (g) bankruptcy proceedings in the United States have been taken against "Old UGC, Inc." which is asserted to be a wholly owned subsidiary of UnitedGlobalCom, Inc. Old UGC, Inc. does not conduct any business operations but serves as a holding company for its direct and indirect subsidiaries, collectively referred to as "Old UGC Group"; (h) as at 30 November 2003, Old UGC, Inc. held directly approximately $US9.5 million cash and cash equivalents and was the holder of a promissory note made by UnitedGlobalCom, Inc. having an outstanding balance of principle and accrued interest of approximately $US17.7 million. Holding companies, subsidiaries of Old UGC, held approximately $US37.5 million in cash and cash equivalents and were themselves holders of approximately 4.7 million shares of Class A common stock of UnitedGlobalCom, Inc.; (i) in January 2002, as a result of transactions with Liberty Media Corporation there was a re-structuring. Prior to the 2002 re-structuring, Old UGC was the publicly held parent company of the Old UGC Group. As part of the 2002 re-structuring and subsequent transactions, UnitedGlobalCom, Inc. became a publicly held company; Old UGC became a wholly owned subsidiary of UnitedGlobalCom, Inc.; (j) the decision to file the petition in Bankruptcy and to seek to re-structure Old UGC's outstanding obligations was prompted primarily because Old UGC was unable to meet its payment obligations, and it ultimately determined that the Chapter 11 process offered the most efficient means of re-structuring its obligations; (k) Old UGC was a defendant in three legal proceedings, Inc.luding two employment related matters pending in Australia; (l) Old UGC has no employees and functions through UGC and its officers, all of whom are employees of UnitedGlobalCom, Inc. The services of those and other employees are provided to Old UGC by UnitedGlobalCom, Inc. under a shared services agreement pursuant to which those employees perform services on behalf of Old UGC and the expenses of those employees and other overhead expenses are shared between UnitedGlobalCom, Inc. and Old UGC; (m) as the result of a plan of merger, New UGC would be the surviving entity. Each share of UnitedGlobalCom, Inc. Class A stock outstanding immediately prior to the merger was to be converted into and represented a right to receive and was to be exchangeable for one share of the Class A common stock of New UGC. At the time of merger, all outstanding options to purchase shares of UnitedGlobalCom, Inc. Class A stock under its option plan or any other contract would remain outstanding and be assumed by New UGC and thereafter be exercisable at the same per share exercise price and pursuant to the same terms and conditions as was exercisable immediately prior to the effective merger; (n) in the proceedings in the United States old UGC seeks an extension of the applicable deadline for filing Notices of Removal of what is referred to as "the Australian actions" under the Federal Rules of Bankruptcy procedure. These actions are described as two employment relations matters pending in Australia. Old UGC, in its documents filed in the United States, states that, although it does not currently anticipate that it will remove any particular action, it seeks the extension out of an abundance of caution.

10 The respondents did not oppose the name of the first respondent being changed to "Old UGC, Inc." nor the name of the second respondent being changed to "United Asia/Pacific Communications, Inc.". The respondents did oppose an order that a new ninth respondent be added, namely, New UnitedGlobalCom, Inc. being the currently listed NASDAQ entity. The respondents also raised consequential issues in the proposed amended Summons for Relief. The respondents did not cross-examine on the affidavit evidence relied upon by the applicant in support of the Notice of Motion, nor did they call any evidence. Although the relationship between the proposed ninth respondent and the other respondents, and in particular the first respondent, was evident the Notice of Motion had not been served formally on the proposed ninth respondent and there was no appearance for the proposed ninth respondent at the hearing of the Notice of Motion.

11 In oral submissions, senior counsel for the applicant stated that it was not until late last year when the respondents filed their evidence that he was aware of the extent of the re-organisation of the first respondent and inferentially the existence of the proposed ninth respondent. That information was added to by the applicant receiving information from the United States Bankruptcy Court whereby it appeared that the first respondent had become a holding company in the UnitedGlobalCom Group and had changed its name to Old UGC, Inc. That material also showed that New UGC was to be formed and would acquire the business operations of Old UGC including its seat on the NASDAQ plus the issued capital of Old UGC. The New UGC was to be the holding company and to take the place of Old UGC and effectively Old UGC would be stripped of its assets, although there were some assets left: it would derive income but cease to trade and to employ staff. The office bearers of New UGC would perform the tasks needed to be performed for Old UGC. This was an effective transplantation of New UGC for Old UGC.

12 Further, the documents showed that the equity of Old UGC, at least of the kind to which the applicant's claims were addressed, were transferred out of Old UGC to New UGC (that is, the option agreements regarding the Class A stock). This state of affairs had not been fully revealed in the evidence of the respondents' witnesses whose evidence suggested that there had been no more than an administrative re-organisation. However it was clear that it was part of a substantial re-structuring. When the applicant looked to this Court for orders in the nature of compensation or for restitution of the applicant's position then the Court and the applicant needed to look to New UGC which now held all the equity rights of Old UGC which seemed to be left to wither. The addition of the ninth respondent was therefore necessary in order to ensure that any order for the payment of money made by the Court in favour of the applicant could be met out of that part of the proposed ninth respondent's financial resources which were attributable to Old UGC.

13 Senior counsel for the existing respondents made it clear that he was not appearing for the proposed ninth respondent. Nonetheless, the existing respondents opposed the joinder of the proposed ninth respondent as there would be consequences for the proceedings and therefore costs incurred by the respondents. The existing respondents would be entitled to consider the pleadings and evidence filed by the new respondent as well as any discovery given by the new respondent. There may well be additional discovery from the existing respondents in relation to the new respondent. There would presumably be a need for further conciliation in relation to the proposed ninth respondent. There was no utility in any of these additional steps having to be taken.

14 Although not appearing for the proposed ninth respondent, the existing respondents rejected any suggestion that "New UGC" had been created in some way to escape any entitlement that the applicant might otherwise have had against "Old UGC". The evidence showed that Old UGC continued to exist and had shares and assets.

15 Another issue, which also arose in Gough & Gilmour Holdings Pty Ltd & ors v Caterpillar of Australia Ltd (No 2) (2001) 106 IR 274, was whether it was appropriate, at this stage, to consider the application of Rule 112(4) in circumstances where it was proposed to join a foreign corporation but as yet the motion for joinder and the proposed amended Summons for Relief had not been served on the foreign corporation. In Gough & Gilmour, Boland J, in a preliminary way, was prepared to consider the operation of Rule 112(4) of the Commission's Rules because of a practical consideration, namely that if the Court was not prepared to grant leave to proceed against the foreign corporation then there was little point in making the initial order for joinder prior to service. In Gough & Gilmour it was also argued that to seek joinder merely to secure the ultimate payment of any money order pronounced by the Court was an abuse of process: the same considerations were said to apply in the present case.

16 There was a further complication. The proposed amended Summons did not distinguish between Old UGC and New UGC and frequently referred to them in a way which did not distinguish who was the contracting party at the relevant time. It was said this mode of amendment lead to confusion and placed impossible barriers in the way of the existing defendants in their defence of the applicant's case. The reference in the amended Summons to "UIH/UGC" was a deliberate ploy adopted by the applicant to introduce confusion as to which entity was responsible at each step of the applicant's case.

17 While the existing respondents did not put in issue the jurisdiction of the Commission to join parties to existing proceedings, the decision of the High Court in Browne v Reizitis (1970) 127 CLR 157 had application. The terms of that decision made it clear that merely being a shareholder, for instance, would not ground within jurisdiction an order that the shareholder pay money to the applicant. It was beyond power to make a money order against one entity simply because it had received money from another entity that might be culpably involved in an arrangement. Here, the proposed ninth respondent did not even exist at the time that the arrangements were made which were sought to be impugned by the applicant. The ninth respondent could not be said to be culpably involved in the relevant transaction. 18 Even if some slight basis for joinder could be established the provisions of s 108B applied. The proposed joinder of the ninth respondent was now made more than 12 months after the termination of the contract identified by the applicant - the point could not be avoided by categorising the motion as a mere joinder and a procedural step as this joinder involved the pleading of a new case.

19 The respondents accepted that the Court was bound by the Full Court decision in Crowe v USC Development Pty Ltd [2003] NSWIRComm 234. It was submitted that the reasoning in Mullins v Peoplebank Australia Pty Ltd [2003] NSWIRComm 457, even though it dealt with s 108A, was to be preferred. The position being dealt with in this case was no different to the substance of the issue which was dealt with in Mullins: in Mullins the applicant unsuccessfully sought to exercise an accrued right to commence proceedings in circumstances where no application had been filed until after s 108A was introduced. The same issue arose in this case because after the introduction of the amendment by way of s 108B the applicant had sought to introduce a ninth respondent and a new case outside the time limit permitted by s 108B. Joinder was to be equated with the commencement of proceedings and that was the approach taken by the Supreme Court Rules dealing with the addition of parties.

20 Reliance was also placed upon the Second Reading Speeches in both the Legislative Assembly and the Legislative Council as well as the Explanatory Memorandum to the Industrial Relations Amendment (Unfair) Contracts Bill 2002. The respondents submitted that the clear legislative intention was to limit highly paid executives, such as the present applicant, in the commencement of proceedings under s 106. Cases had to be brought within 12 months of termination of the contract: here the applicant sought to commence a new case against the proposed ninth respondent which could not have been culpably involved in the termination of the contract because it was not in existence at the time of termination, and sought to do so four years after the relevant termination.

21 In relation to the evidence relied upon by the applicant to support joinder, that evidence did not support an inference or conclusion that something untoward was occurring in the financial arrangements of the present respondents and the re-structuring of the existing first respondent or that the complex re-structuring was designed to avoid any order which might be made for the payment of money in the present proceedings. Old UGC continued to have shares and the applicant had been kept informed of the bankruptcy proceedings in the United States. The affidavit filed in the bankruptcy proceedings showed that, as a matter of caution, proceedings in other jurisdictions such as the present application under s 106 were listed for "removal" but at the same time the affidavit clearly stated that removal of the actions was not presently being sought.

22 Finally it was submitted by the respondents that in New South Wales a court would not immediately join a holding company with a company in liquidation. The Chapter 11 proceedings were likely to be lengthy and the company was being re-structured to enable it to continue. There was a public interest in ensuring that the incoming supporters of the new company did not become unwittingly exposed to litigation.

23 In reply, senior counsel for the applicant said that the respondents had not faced up to the position disclosed in the United States in relation to the first respondent. The terms of what was the equity scheme administered by the first respondent was now administered by New UGC: a beneficiary who had equity rights in Old UGC in its Class A stock, now had equity rights in the Class A stock of the new company. It was not suggested that Old UGC still had available the options that had been promised to the applicant and which had been given to other employees. Nor was it any answer to say that Old UGC still had shares because they were all owned by New UGC. The applicant was not seeking to categorise what was happening in the United States in a particular way, or to allege mala fides. The applicant was not able to say precisely what was happening with the re-structuring in the United States and the reasons behind it.

24 The method of pleading which referred to the first respondent and the proposed ninth respondent, in the amended Summons, as "UIH/UGC" was in fact a description utilised by the respondents in their affidavits. The applicant merely adopted a description of the respondent interests which had been used and seemed to be understood by the respondents. In those circumstances their complaint was hollow. Nevertheless, the applicant was prepared to re-draft the proposed amended Summons in order to identify the precise legal entity being referred to at each point in the Summons. The form of the proposed amended Summons was not a ploy, was not designed to simply introduce confusion, and, it was abundantly clear from the evidence filed in support of the Notice of Motion for joinder that the applicant was not suggesting that New UGC existed before 2002. The evidence addressed the situation that after New UGC came into existence the Court had to deal with the fact that the case involved an equity scheme which held the benefits in trust for the applicant and which was under administration by the first respondent which had then transferred its responsibility.

25 In relation to the s 108B point, the respondents had put nothing by way of analysis to distinguish the judgment of the Full Court in Crowe. The applicant had made it clear that he was not seeking to bring a new and different case against anybody. The joinder motion was little more than a "mopping exercise" to make sure that all the correct parties were before the Court. Nothing in the Rules of the Commission nor in the judgment of the Full Court in Crowe prevented that happening.

26 The issue of amendment is dealt with in s 170 of the Act. The Commission may, in any proceedings before it, make any amendments to the proceedings that the Commission considers to be necessary in the interests of justice [sub-section (1)]; any such amendment may be made at any stage of the proceedings and on such terms as the Commission thinks fit. [Sub-section (2)] Rule 148(1) states that a Tribunal may, at any stage of any proceedings, on application by any party or of its own motion, order that any document in the proceedings be amended, or that any party have leave to amend any document in the proceedings, in either case as in such manner as the Tribunal considers to be necessary in the interests of justice. The power to amend is conferred in broad terms. The modern approach to amendment by all courts is to eschew technicality and to have regard to the substance of the matter. Section 170 of the Act and Rule 148 compels attention to the interests of justice. As can be seen these provisions are modelled upon the procedure of the Supreme Court contained in Pt 20 of the Supreme Court Rules but are not as detailed. In Ritchie's "Supreme Court Procedure NSW" the introductory note to Pt 20 refers to the liberal use of the power to amend as being "one of the hallmarks of a modern judicial system and that generally speaking amendments ought to be allowed if they give rise to an arguable cause of action or matter of defence. The power to permit amendment is very wide and, in general, a party who seeks to amend will be permitted to do so to enable the real questions in dispute between the parties to be tried ( McGee v Yeomans [1977] 1 NSWLR 273 at 280)".

27 Under the Supreme Court Rules there are four propositions that define the limits of the general discretion to grant leave to amend: the proposed amendment must not be a futility; the application for leave to amend must be made for a proper purpose; the amendment must not cause prejudice to the other party that cannot be compensated by an appropriate consequential order including costs; and, the amendment must not be contrary to the interests of the administration of justice. These considerations have equal application under the provisions of s 170 of the Act and r 148(1).

28 While Pt 8 of the Supreme Court Rules makes detailed provisions for the joinder of parties and Pt 8 r 8 deals with the addition of parties with some particularity, the Industrial Relations Commission Rules in Rule 83(c) simply states that a Tribunal, in addition to its powers generally under the Act may in relation to any proceedings before it direct parties to be joined or struck out. It may be thought that r 89(5) has application in that where there is no relevant provision and there is no established practice, procedure or usage and there is no rule, order or direction or practice direction in force then the practice, procedure or usage from time to time of the Supreme Court is to regulate the practice, procedure and usage of the Tribunal. In light of the Industrial Relations Commission Rules dealing with amendments and joinder and further the provision of Rule 84(1) there appears to be little room for the application of the provisions of r 89(5) although the general procedure of the Supreme Court will frequently be of assistance in deciding matters which arise under the Rules of the Commission. Rule 84(1) provides that a Tribunal may generally give all such directions and do all such things as in its opinion will enable expense or delay to be reduced and will help to achieve a prompt hearing of the matters in issue between the parties and will contributed to the expeditious conduct of the proceedings and the just determination of the matter or dispute and the equitable disposal of the proceedings. The thrust of the Commission Rules, not surprisingly, is similar to that of the Supreme Court Rules and focuses on the fundamental objective of the judicial process achieving justice between the parties.

29 Having regard to the generality of the Industrial Relations Commission Rules as to amendment and joinder, I propose to be guided by the manner in which the Supreme Court addresses these issues but nevertheless keeping firmly in mind the provisions of s 170(1) of the Act requiring the Commission in making amendments to do so by having consideration for what is necessary in the interests of justice.

30 I turn then to consider whether or not the applicant has made out a case for the joinder of the proposed ninth respondent and the amendments that are necessary to properly identify the parties in the Summons for Relief. I am satisfied on the evidence called by the applicant that the purpose of joining "New UGC" is to ensure that the applicant has access to the share options under the options plan which is now administered by New UGC should the applicant be otherwise successful in its case. The evidence demonstrates that while Old UGC does have shares, the options scheme which forms such a significant part of the applicant's case is now within the control of the proposed ninth respondent. It is not disputed that New UGC came into existence after the applicant was terminated: the applicant does not allege that New UGC was or could have been culpably involved in that decision. The applicant has, however, established an evidentiary basis for its concern that it might otherwise succeed against the existing first respondent yet find that the options or their monetary worth are no longer able to be delivered to the applicant if he succeeds in this part of his case. The proposed ninth respondent is the result of a recent and somewhat complex restructure of the affairs of the existing first respondent. While there is nothing in the evidence presently before the Court to permit a finding that the first respondent's re-structure was designed or influenced by an intention to deprive the applicant of the monetary proceeds of success in this litigation, the fact is that on the current state of the evidence that is a distinct possibility. None of the respondents called evidence on this motion nor was there an assurance proffered that the joinder of the proposed ninth respondent was unnecessary because arrangements would be made by the first respondent or any combination of the respondents to ensure that the applicant's claim would be satisfied if he succeeded in the substantive proceedings. It is not suggested that the first respondent or any of the other respondents were required to take that step but the absence of such an assurance lends weight to the applicant's claim that the proposed ninth respondent needs to be joined in order that all the necessary parties are gathered for the effective hearing of the Summons for Relief.

31 Having reached the view that the applicant has established a case, in the interests of justice, for the joinder of New UGC as the ninth respondent, it is necessary to consider the remaining arguments raised by the present respondents. Firstly, it was submitted that the joinder of New UGC was an abuse of process if its only purpose was to ensure that there would be present in the proceedings a respondent with sufficient assets to meet any eventual judgment. This point was canvassed before Boland J in Gough & Gilmour and was rejected. In that case the process of discovery revealed a corporate re-organisation which the applicants alleged required the joinder of a new corporate respondent. The respondents argued that joinder in such circumstances, mainly to secure the payment of any judgment should the applicants succeed, was an abuse of process and that the appropriate course was to seek an asset preservation order. In rejecting this argument his Honour stated: [62] I do not consider that the joinder application was an abuse of process. It was open to the applicants to choose which form of relief they considered appropriate in the circumstances and it could not be said that a joinder application is an asset preservation order in disguise. I do consider, however, that a significant reason for the applicants' seeking joinder of Caterpillar Inc. was a concern on their part that there was to be a dismantling of the Caterpillar operation in Australia and that there was a risk if orders were ultimately made in the applicants' favour, they would be of no effect because Caterpillar Australia would have been rendered an empty shell. In other words, in the absence of information that Caterpillar's re-structuring plan it is probable that the applicants would have been content to pursue their remedy against the respondents notwithstanding there may have been concern on the applicants' part about what they perceived to be Caterpillar Inc.'s culpable involvement in the decision to terminate the dealership. The applicants' fear about the consequence of Caterpillar's re-structuring plan appears to have caused the applicants to focus more closely on Caterpillar Inc.'s involvement and thereby triggered the joinder application. It is open to the Court to take these considerations into account in exercising its discretion as to whether or not to order joinder. That reasoning is equally applicable to the present case and I shall, respectfully, adopt his Honour's approach.

32 Secondly, it was argued that the joinder of New UGC resulted in an entirely new case being pleaded by the applicant. That submission was baldly stated and was not accompanied by any analysis of the proposed amended Summons. Consideration of the proposed amended Summons does not bear out the respondents' assertions. The applicant's claims remained basically unaltered with the addition of the ninth respondent limited to satisfying that part of the applicant's case, if successful, relating to the options scheme. The respondents' contention in this regard is rejected.

33 In relation to the alleged prejudice to the present respondents in that there would be a necessity for further discovery from the new respondent, further conciliation and further pleadings which would have to be considered closely by the existing respondents, I am not persuaded that the prejudice so described is so significant at to require the rejection of the joinder motion. The parties are aware that the hearing of the substantive case, because of the time required to deal with it, will not occur until next year. Bearing in mind the limited basis upon which the ninth respondent is to be joined and uninformed by any evidence as to what might be involved in additional discovery, I find it difficult to envisage that prejudicial delay and costs would be incurred by the existing respondents: nor am I convinced that in the circumstances surrounding the necessity to join the ninth respondent that further conciliation would be required although that would undoubtedly take place if the parties saw utility in such an approach.

34 The respondents next raised the provisions of s 108B as prohibiting the joinder of the ninth respondent. Section 108B(1) provides that an application for an order under the unfair contracts provisions of the Act in relation to a contract that has been terminated must be made not later than 12 months after the termination of the contract. Section 108B(2) provides that the Commission does not have jurisdiction to extend the time for making any such application or to accept an application made after the period of 12 months after the termination of the contract. The respondents submit that the proposed amended Summons which, inter alia, adds the ninth respondent, amounts to a new case and thus the time limit in s 108B applies in view of the fact that termination of the contract occurred in 2000. I have already ruled in relation to discretionary arguments that in substance the proposed amended Summons is not a new case.

35 The respondents then argue that under the joinder rules of the Supreme Court, joinder will not be permitted to defeat a time limit. As pointed out earlier the Rules of the Commission provide a simple power of joinder in terms that are quite different to the provisions of the Supreme Court Rules. However, even under the Supreme Court Rules joinder is permissible where it is (and in effect no more than) the substitution of a party which has succeeded to the rights or obligations of an existing party against whom the proceedings were commenced within the limitation period (Yorkshire Regional Authority v Furlough Building Ltd [1996} 1 WLR 210; Industrie Chimiche Italia Centrale v Alexander Tsavirilis and Sons Maritime Co (The Choko Star) [1996] 1 All ER 114). Further, joinder is also permissible if, as a matter of construction, the limitation period does not apply in the circumstances of the proposed joinder (BP Australia Ltd v Brown (2003) 46 ACSR 677). In this case the only reason for the joinder of the ninth respondent is because of the corporate re-structure whereby the administration of the first respondent's option scheme has been passed to the proposed ninth respondent. The last cited authorities would therefore permit joinder in the circumstances disclosed by the evidence in this case.

36 It is worthy of note that under the Supreme Court Rules dealing with amendments, generally the rights and liabilities of parties are determined as at the date of commencement of the proceedings - an amendment is regarded as taking effect from the date of the original pleading rather than from the date the amendment is actually made (Sneade v Wotherton [1904] 1 KB 295 at 297; Baldry v Jackson [1976] 2 NSWLR 415; Australia and New Zealand Banking Group Ltd v Larcos (1987) 13 NSWLR 286; Harris v Western Australian Exim Corp (1994) 129 ALR 387). The applicant has primarily relied upon the wide power of amendment contained in s 170 of the Act and I see no reason to depart from the usual approach to amendment referred to in the Supreme Court Rules.

37 The respondents accept that the Court, as presently constituted, is bound by the recent Full Bench decision in Crowe. Like the present case, Crowe involved the proposed joinder of additional respondents. The applicant submitted that the relevant power of amendment was to be found in s 170 of the Act and that the substantive question of joinder raised the issue of whether the proposed respondents had a sufficient connection with or involvement in the contract or arrangement that was the subject of the proceedings. It was argued that the provisions of s 106 and s 170 of the Act were remedial and beneficial legislation which should be construed so as to give the fullest relief which the fair meaning of its language would allow.

38 The Full Court considered the terms of the Explanatory Memorandum to the Bill but stated: [35] While it is clear that the amendments were intended to, and will, have significant effects on any application for an order made after 24 June 2002, the present case cannot be described as simply or merely as "an application for an order" made after 24 June 2002. In substance, the questions referred required consideration of the effect of s 108B on proceedings commenced prior to 24 June 2002 and, in particular, the effect of s 108B on an application seeking to amend proceedings presently on foot so as to add additional respondents, in circumstances where more than 12 months have elapsed following the termination of the contract to which the proceedings relate. The Full Court identified the real issue as being the characterisation of the application to amend the Summons for Relief. It was significant that s 108B imposed a limitation by reference to "an application for an order under [the relevant] division in relation to a contract" rather than by reference to, for example, the parties to the contract. The Full Court held that the "application" referred to in s 108B was a reference to an application to exercise the substantive power of the Division dealing with unfair contracts. The original summons filed in that case constituted an application for an order under s 106 in respect of a particular contract or arrangement and was filed well before the commencement of s 108B - that original Summons or the order sought were therefore not affected by the limitation period created by s 108B. Ultimately, what was important was that the proposed amended Summons still had as a substantial focus the contract of employment between the applicant and the second respondent and his employment by the first and second respondent. In those circumstances the amendment did not constitute a fresh application for an order but was in substance an amendment to an application for an order made under s 106 prior to s 108B coming into effect.

39 The Full Court did draw attention to the possibility of an amendment to an original application being so substantial (or by its nature) as to amount to an application caught by s 108B. I have already decided that the substance of this amendment does not alter the focus of the original proceedings but merely adds an additional party because of the corporate re-structure of the first respondent and the powers exercised over the first respondent's option scheme by the proposed ninth respondent. The reasoning in Crowe is equally applicable to the present case.

40 Reference was then made to the judgment of the High Court in Browne v Reizitis. The respondents submit that the decision of Browne v Reizitis means that an order cannot be made against a person or entity simply because it received money from another person or entity that may have been culpably involved in the contract. In the general way in which that submission is put I would not totally disagree with that submission but that is not a proper categorisation of the role of the proposed ninth respondent and why it is just in the circumstances that it be joined in these proceedings. It is to be remembered that although Browne v Reizitis is often referred to in arguments concerning joinder, in fact it is a case dealing with the evidentiary basis that establishes the necessary connection between the impugned contract and the final orders for payment of money. Joinder applications usually occur before all the evidence has been heard and sometimes when very little evidence has been filed. In the present case substantial affidavit evidence has been filed although it is likely that further affidavits will be filed before the final hearing. It will be at the final hearing that the decision will be made, on all the evidence, as to whether any order for the payment of money or any direction for the payment of money on behalf another respondent, should be made by the ninth respondent.

41 The respondents submit that Browne v Reizitis is often cited as authority for the proposition that the jurisdiction of the Commission to order the payment of money extends beyond the immediate parties to the contract when, in truth, the judgment places a significant limitation on the making of such orders. In a sense Browne v Reizitis stands for both those propositions. Chief Justice Barwick clearly stated that even if the proceedings for the variation or avoidance of the contract or arrangement must be initiated by one of the parties to the contract or arrangement, the parties to the proceedings are not necessarily limited to those parties. There may be persons involved in a subterfuge who are not parties to the contract or arrangement but who are in reality the actors deriving benefit from the making or execution of the contract or arrangement. In some cases there will be persons who are not the parties to the contract but who in have fact participated in its making and there may be persons who have received money indirectly from one of the parties to the contract or whom may be holding money derived therefrom for one of the parties. The expression "in connection with" was of wide import and did emphasise the need for a closer connection between the order made and the contract or arrangement varied or avoided. The power would extend to ordering the payment of money where the order, on the larger view of the jurisdiction given by the sub-section, could be considered to be appropriate to effect wholly or partially the restitution of the parties to their former position upon the variation or avoidance of the contract or arrangement. In his separate judgment, Menzies J stated that without exhausting the meaning of the phrase "in connection with", a payment of money in respect of work done, or money spent, or obligations incurred under the avoided contract or arrangement, was properly to be regarded as a payment in connection therewith so long as the person who is ordered to make the payment is a person who was connected "in some way" with the making of the contract, the work done or the expenditure made "or the obligation incurred hereunder".

42 The High Court was dealing with a particular case when these expressions were adopted and it would be erroneous to take a narrow view of the examples referred to by the court. The court used broad language, as indicated by the above summary, and I see no limitation flowing from the judgment which would require the rejection of the joinder, at this stage, of the proposed ninth respondent. There are aspects of the respondents' submissions that suggest a much narrower operation of the decision in Browne v Reizitis but a proper reading of the judgment does not support such an approach. The respondents' approach would deny joinder because the ninth respondent was not directly involved in any culpable conduct in relation to the termination of the applicant's contract. It is precisely the type of circumstance that arises in this case and the type of circumstance exposed in Crowe which requires, in the interests of justice, that respondents be added because of the way in which a potentially culpable respondent has arranged it affairs, whether legitimately or otherwise. It would be a curious result for an unfair contracts provision of the width of s 106 to be defeated by such a hollow technicality as proposed by the respondents. Further, if it was necessary to go further than what has already been decided I would hold, in exercising the jurisdiction granted under s 106 and s 170 of the Act, that there is given by implication whatever jurisdiction and powers as may be necessary for the effective exercise of the jurisdiction expressly conferred (Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 623; 630-631; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380,400). In this case because of the width of the jurisdiction and powers conferred on the Commission, it is unnecessary to rely on this implied power to support the joinder of the ninth respondent.

43 The approach I have adopted in this matter seems to be supported by a recent decision of the Full Court in AOS Group Australia Pty Ltd (In Liquidation) v Arrogante & ors [2004] NSWIRComm 80. That case involved arrangements between corporate entities where the assets remained in the hands of one entity but employment was undertaken by a second entity which did not have assets. On appeal the issue primarily was whether the Commission had jurisdiction to vary a contract between two respondents in proceedings where neither respondent sought to have the contract varied and whether there was jurisdiction to create a contract of employment between persons who at no time had been in a contractual relationship. In dismissing the appeal the Full Court stated: [28] In this case, we are satisfied that the approach to jurisdiction urged by the appellant would require that the Court ignore its wide powers to vary or even declare void, unfair arrangements wider than any single contract (or even related conditions or collateral arrangements). [29] Were it otherwise, notwithstanding the wide meaning of the word or expression 'arrangement' and the definition of 'unfair contract' in s105, s106 would still leave available to the unscrupulous, a large opportunity to construct sham arrangements or subterfuges, by use of corporate vehicles which entered a series of contracts with each other. Employees would have no proper redress when made the victim of arrangements designed to shelter business assets, so as to ensure that they are deprived of the contractual, award and statutory benefits of their employment. The result would be that, even if together, the contracts comprised an arrangement to which the section applied, the remedy of variation of the arrangement, could not be utilised in order to rectify any unfairness found, if the end result would be to make one party to the arrangement, a new party to one of the contracts which comprised the arrangement. We are well satisfied that such a restricted construction of the sections is not properly available.

44 Although the precise point raised in the AOS Group case is not the same as the issue that arises in the present case, the reasoning of the Full Court is relevant and supports the approach that I have determined to take to this joinder application. The same may be said of the recent judgment of Marks J in Green and anor v AMP Financial Planning Pty Ltd & ors [2004] NSWIRComm 135.

ORDERS 45 The Court makes the following orders: 1. The name of the first respondent, UnitedGlobalCom, Inc. be altered to "Old UGC, Inc." 2. The second respondent, UIH Asia/Pacific Communications, Inc., be altered to "United Asia/Pacific Communications, Inc. " 3. UnitedGlobalCom, Inc., the currently listed NASDAQ entity, be joined as the ninth respondent. 4. The applicant is granted leave to file and serve an Amended Summons for Relief amending the Summons for Relief filed on 14 February 2000.

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