Englebrecht v Cordukes Ltd & Anor

LEGISLATION CITED : Industrial Relations Act 1996 s 106

Summergreene v Parker (1950) 80 CLR 304 Vickery v Woods (1952) 85 CLR 336 CASES CITED : Olsson v Dyson (1968-1969) 120 CLR 365 Christianos v Rohrlach (1981) 55 ALJR 681 Bell & Anor v Macquarie Bank Ltd & Anor (unreported 17 December 1999 IRC4040 of 1999) Bartolacci v Permanent Custodians Ltd (1992) 44 IR 388 HEARING DATES: 09/02/1999; 09/03/1999; 03/12/2000; 03/14/2000 DATE OF JUDGMENT: 04/14/2000

APPLICANT (RESPONDENT TO THE NOTICE OF MOTION) Mr J V Murphy of Counsel SOLICITORS Minter Ellison

LEGAL REPRESENTATIVES: RESPONDENT (APPLICANTS ON THE NOTICE OF MOTION) Mr P M Kite SC with Mr J J E Fernon of Counsel SOLICITORS Baker & McKenzie

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

Matter No IRC5159 of 1998 GEOFFREY ROBERT ENGLEBRECHT v CORDUKES LIMITED & ANOR Application under s106 of the Industrial Relations Act of New South Wales 1996

1 This interlocutory judgment concerns a notice of motion filed on behalf of the respondents seeking an order that these proceedings be dismissed. The basis for the application is an assertion that this Court lacks jurisdiction to deal with the proceedings because the subject matter of the proceedings does not have a sufficient nexus with the State of New South Wales. 2 The proceedings are based on a further amended summons for relief brought under s 106 of the Industrial Relations Act 1996 ("the Act") commenced by the applicant Geoffrey Robert Englebrecht (who was the respondent to the notice of motion) against the first respondent Cordukes Limited and the second respondent John Edwin Cordukes. 3 The further amended summons for relief seeks orders directed to a contract of employment entered into between the applicant and the first respondent dated 23 March 1993 or in the alternative orders directed to "any contract, arrangement and/or collateral arrangement between the applicant and the first respondent and/or the second respondent whereby the applicant performed work for Cordukes Thai Ltd." 4 The respondents' solicitors sought particulars of the contract of employment which were furnished. Those solicitors also sought particulars of the "contract, arrangement and/or collateral arrangement" between the applicant and the first respondent and/or the second respondent whereby the applicant performed work for Cordukes Thai Ltd. The applicant's solicitors advised that "the terms of that contract, arrangement and/or collateral arrangement are not relevantly different from the terms of the contract of employment between the applicant and the first respondent ….". 5 Accordingly, the parties proceeded on the basis that the terms and conditions of employment were relevantly the same as the terms and conditions of the alternative basis upon which the applicant proceeded namely the contract, arrangement and/or collateral arrangement to which I have referred. I shall refer to the relevant terms later in these reasons for judgment.

THE BASIS UPON WHICH THESE INTERLOCUTORY PROCEEDINGS WERE CONDUCTED 6 These interlocutory proceedings were the subject of directions given by the Acting President of this Court requiring inter alia the service of affidavits upon which the moving party relied, a list of evidence which was to be relied on and the service of any affidavits and the provisions of a list of evidence by the respondent to the motion, the applicant in the substantive proceedings. A direction was also given with respect to the seeking and furnishing of particulars. 7 When the matter initially came on for hearing before me I raised with counsel appearing (Mr Kite SC with Mr Fernon for the respondents and Mr Murphy for the applicant) whether the proceedings had reached an appropriate stage to allow this interlocutory application to be dealt with. Mr Murphy indicated that whilst both parties had filed, or were ready to tender into evidence all of the material upon which they relied for the purpose of the interlocutory proceedings "…. we make no concession that that is all the material that may or may not be available and relevant. We have not yet gone through the process of discovery of issuing subpoenas and the like ….". After hearing submissions from counsel for both parties and after a brief adjournment both parties asked that I proceed to hear the interlocutory application on the basis that they both agreed that an appropriate stage in the proceedings had been reached which would enable the determination of this interlocutory issue. Both the applicant and a witness to be called on his behalf in the interlocutory proceedings resided in Bangkok and had made themselves available to give evidence in the interlocutory proceedings. On this basis I accepted the submissions of counsel for all parties and proceeded to determine the matter. 8 However, during the course of final submissions Mr Kite submitted that the usual rule concerning the approach to evidence on interlocutory applications would not apply because of the manner in which the proceedings were being conducted. That is, the evidence of the applicant should not be taken at its highest for the purpose of determining evidentiary matters but that I should make rulings, presumably on the balance of probabilities, with respect to evidentiary matters concerning those issues which needed to be determined in dealing with this interlocutory application. Mr Murphy submitted to the contrary namely that any issues need only be considered by taking the evidence in favour of the applicant at its highest. 9 I am concerned that in adopting the approach contended for by Mr Kite that I would be embarking upon a process fraught with danger in that I could conceivably make a finding about a factual issue for the purpose of determining interlocutory proceedings which issue might also be relevant to the determination of any final proceedings, assuming that the interlocutory application did not succeed. In such case, the parties might wish to adduce additional evidence about a matter which was of significance also for the purpose of the substantive proceedings, but upon which a finding had already been made. To state the possibilities in this manner is sufficient to determine that the difficulties far outweigh any benefits in terms of the overall determination of the substantive proceedings. 10 Accordingly, I propose to proceed to deal with this interlocutory application on the normal basis, namely by taking the evidence at its highest in favour of the applicant.

THE FACTUAL BACKGROUND 11 The narrative which follows is based on an agreed statement of facts prepared by the parties, documentary evidence and oral evidence given in the proceedings. 12 The first respondent was at all material times a building contractor, construction manager and project manager primarily involved in the construction of commercial, industrial and institutional buildings in New South Wales, Queensland and Victoria. The second respondent, Mr John Edwin Cordukes, is the Executive Chairman of the first respondent. 13 In 1992 the directors of the first respondent decided that it should pursue business opportunities in South East Asia. Mr Cordukes and a fellow director travelled to a number of countries in South East Asia in September 1992 and met with representatives of a number of local construction companies and other organisations. During the course of those travels Mr Cordukes met with directors of Raimon Land Company Ltd a publicly listed Thai property development company based in Bangkok. The board of the second respondent determined to negotiate a joint venture arrangement between that company and Raimon Land Company and entered into discussions in February 1993. The discussions were on the basis that the first respondent would contribute its construction and project management skills to the venture. The first respondent was to become responsible to recruit the manager of the joint venture. 14 In early February 1993 an advertisement was placed in the Sydney Morning Herald seeking the appointment of a Manager - Building Contracting South East Asia. The advertisement said in part: "A long established Australian Building Contracting Company is seeking to appoint a Manager to establish and be responsible for the successful operation of a South East Asian Joint Venture company. …. The appointment is a permanent one and could involve a transfer back to Australia after serving a five year period in Asia. …." 15 The advertisement was answered by the applicant who held a series of meetings with Mr Cordukes at the offices of the first respondent at Concord, a Sydney suburb. During the course of those discussions the applicant and Mr Cordukes discussed the proposed salary and Mr Cordukes mentioned the possibility of either a 10 percent share option or a 10 percent profit share. 16 There were also discussions about the precise role that the manager of the joint venture operation would perform. There is a difference in emphasis in the evidence given by Mr Cordukes and the applicant in this regard. Mr Cordukes alleges that he told the applicant that he would be employed by the joint venture company and would be responsible to that company but would report to Mr Cordukes as Chairman of the Board of Directors of the joint venture company. The applicant alleges that Mr Cordukes said that the first respondent "will have the management rights, so therefore you will work for Cordukes and would always be responsible to Cordukes. If this is at times difficult, the next most important directive would be to understand that your appointment would be as manager of the Thai company and therefore you protect the interests of that company. …." 17 Sometime in March 1993 Mr Cordukes indicated to the applicant that his application for the position had been successful. On about 17 March the applicant was informed that Mr Cordukes was to travel to Bangkok on 29 March to meet with a potential joint venture partner and asked the applicant to accompany him. The applicant requested that he be given a formal letter of appointment which was handed to him by Mr Cordukes immediately before boarding their flight to Bangkok. Upon reading the letter the applicant told Mr Cordukes that there were certain matters which had been discussed which had been omitted including payment of medical and housing expenses. Mr Cordukes agreed to remedy this. The letter of appointment also omitted mention of share options. Mr Cordukes explained that he was unaware at that stage of the attitude of the proposed joint venture partner. The applicant decided not to pursue this aspect. 18 The letter of appointment which is dated 26 March 1993 was addressed to the applicant and issued on the letterhead of the first respondent. It was signed by Mr John Cordukes as Managing Director. In it, it described the applicant's appointment to the position of "Manager Cordukes Thailand (or such other name as is decided). You will be responsible for the establishment and successful operation of this company, and will report to the Chairman and Joint Managing Director of the company, John Cordukes." 19 The letter of appointment also provided for participation in the Cordukes superannuation scheme with a contribution of 10.25 percent by "the company" and a 10 percent share of the audited after tax profits of "the company". 20 There was subsequently issued to the applicant a further letter dated 26 March 1993 in identical terms save for the addition of material dealing with housing and expatriate health expenses and save that the profit share was then shown as 7 percent of the audited pre-tax profits of "the company". 21 The applicant and Mr Cordukes participated in a meeting with representatives of Raimon Land Co in Bangkok on 30 March 1993 which discussed the formation of the proposed joint venture. That meeting emphasised the necessity for the Cordukes organisation to exercise a high degree of site control and management of sub contractors. The parties agreed to incorporate an entity for the purpose of operating the joint venture. The second respondent was to have 49 percent of the shareholding, was entitled to appoint an equal number of directors and the Chairman of Directors who was to be Mr John Cordukes would have a casting vote. 22 Mr Cordukes under the letterhead of the first respondent had earlier written to Raimon Land Co stating inter alia that: "In broad terms, we believe that the venture would be most successful if we managed it as if it were an operating division of our company, with Raimon Land Co having a major voice and that we jointly set strategy." Mr Cordukes had also proposed that the operating responsibilities of the first respondent would extend to the recruiting of staff and appointment of a managing director, all necessary management control systems and the implementation of internal controls as well as management of the building process which "it is expected …. would be run along similar, but not necessarily identical lines, to all branch operations in Australia." 23 Proposed budgets discussed between the first respondent and Raimon Land Co showed the salary and other expenses payable to the manager of the joint venture operation to be payable by the joint venture. 24 Upon return to Australia, the applicant commenced carrying out work from the Sydney offices of the first respondent which was substantially concerned with preparation for and establishment of the joint venture company operations. Apart from a short period of work on unpaid leave, the applicant worked in the Sydney office of the first respondent which is situated in Concord until late June 1993. During this period the applicant was paid remuneration by the first respondent. 25 The representatives of Raimon Land Co had objected to the payment of superannuation to the applicant, apparently because this was an unusual employment condition in Thailand. On 26 May 1993 Mr R B Harman the Financial Controller of the first respondent wrote to superannuation administrators saying inter alia: "As you are aware we are participating in a joint venture in Thailand. Mr Geoff Englebrecht has been appointed Managing Director, and will be leaving Sydney in the next 4-8 weeks to take up residence. Geoff will continue to be a Cordukes superannuation fund member and the fund or Geoff are not to be prejudiced as a result of him working in Thailand. …." 26 The applicant received a group certificate issued by the first respondent showing employment by that company for the period 29 March 1993 to 30 June 1993. 27 In June 1993 the first respondent and Raimon Land Co executed a memorandum of understanding by which they agreed to form a joint venture company to be known as Cordukes Thai Ltd and which embodied the matters previously discussed and which were the subject of agreement between the parties. From late June 1993 the applicant worked in Thailand as Manager of the joint venture. During that period the applicant returned to Sydney on a number of occasions. On some of these occasions he reported to Mr Cordukes at the Sydney office of the first respondent concerning the current status of the joint venture. 28 Whilst working in Thailand the applicant was paid his other benefits by the joint venture except for superannuation which continued to be paid by the first respondent. 29 On 20 August 1993 a company known as Cordukes Thai Ltd was incorporated in Thailand. The first respondent held 49 percent of the shares in that company. Raimon Land Co also held 49 percent of the shares with the remaining 2 percent being held by five Thai nationals who were associated with Raimon Land Co. Mr Cordukes was appointed Chairman of the company. 30 In June 1996 the applicant was issued 25,000 share options in the first respondent. Eligibility to employee options was said to repose in "any permanent employee of the Group with more than 6 months' service ….". The only personnel who worked for Cordukes Thai who were offered share options were the applicant and a Mr Dennis Elford who was an expatriate Australian, who had formerly worked for the first respondent in Australia. Whilst the employee share option plan prospectus states that eligibility to participate reposes in "employees of the Group" the rules do not appear to refer to the Group or define the Group. Employee is defined to mean "a full time or permanent part-time employee …. of the company " (defined to mean Cordukes Ltd) or "a subsidiary (as defined in the Corporations Law) of the company….". No submissions were made on behalf of either party as to whether Cordukes Thai Ltd was a subsidiary of the first respondent as defined in s 46 of the Corporations Law . Accordingly, the issue of shares could equally be explained on the basis that the first respondent considered the applicant to be one of its employees or, as an employee of Cordukes Thai Ltd, an employee of a subsidiary. 31 In 1996 the first respondent had been listed on the Australian stock exchange. The prospectus described the first respondent as a building contractor which provided services for the design, development, construction and maintenance of industrial, commercial, institutional and selected residential buildings throughout New South Wales, Queensland and Victoria to clients in the private, public and government sectors "and through a 49 percent owned joint venture business in Thailand." The prospectus described Cordukes Thai as being "a joint venture company established in July 1993, following the company entering into the Thai joint venture agreement, ….". A section in the prospectus referred to a senior management team in Australia comprising 10 regional and divisional managers and contained a flow chart naming a number of senior personnel including the applicant under the heading "Cordukes Thai (49 percent)". The applicant was shown as reporting directly to the Executive Directors of the Company, Mr Cordukes as Executive Chairman and Mr Norman as Managing Director. 32 The applicant attended a number of meetings in Australia of the operations management group of the first respondent and had originally received training in the first respondent's managing and administrative systems. 33 The applicant was expected to furnish monthly management reports to the first respondent in the same form and consistent with monthly management reports provided by divisional heads within the first respondent's Australian operations. Monthly management reports issued by the first respondent gave details of the operations of each regional area showing the Thailand operations under "other". 34 The applicant appears to have been placed on a mailing address for dispatch of operating management reports from the first respondent to regional and divisional heads. 35 Whilst performing his duties in Thailand the applicant at all times reported to Mr Cordukes and liaised with him about a number of issues. He also liaised with personnel from Raimon Land Co. 36 The Thai joint venture employed approximately 30 expatriate staff who were recruited from various countries throughout the world, including the United Kingdom, India, France and Australia. 37 For reasons which are not presently relevant the applicant ceased to perform his role as manager of the joint venture company and ceased any association with that company. There is some controversy as to whether he resigned or whether his position was terminated. All his dealings in connection with the cessation of his position with the joint venture company were conducted between the applicant and Mr Cordukes. 38 After the applicant ceased to be manager of the joint venture, he commenced proceedings in Thailand against Cordukes Thai Ltd alleging that he was employed by that company. Cordukes Thai Ltd filed a defence alleging that the applicant was employed by the first respondent. In these proceedings the applicant alleges that he was not an employee of Cordukes Thai Ltd but an employee of the first respondent. The first respondent denies that the applicant was at any stage its employee and maintains that the applicant was an employee of Cordukes Thai Ltd. The parties have taken contrary positions in these proceedings. I do not regard these circumstances as setting up any estoppel and no such position was contended for by either party in these proceedings.

THE RESPONDENTS' SUBMISSIONS ON THE CONTRACTUAL BASIS. 39 In order to deal with the respondents' submissions as to whether the relevant nexus existed, it is first necessary to deal with the relationship between the applicant and each of the respondents, or the lack of such relationship, as contended for by the respondents. 40 It was submitted that "it was always intended that the manager of the joint venture company would be employed by that company." This may have been the intention of Mr Cordukes, and thus of the first respondent, but there is no evidence, or at least for present purposes insufficient evidence that such was the intention of the applicant. In fact, the applicant said in oral evidence that he had always intended that he be employed by the first respondent, such employment affording him greater security than employment by an overseas entity. 41 It is obvious that at the time that the applicant was recruited, no joint venture company had been incorporated, nor indeed had any joint venture been established. The negotiations between the first respondent and Raimon Land Co did not advance to a stage which produced agreement in principle until after the applicant became employed by the first respondent. 42 The respondents conceded that a company cannot directly or indirectly be made a party to a contract prior to its incorporation, relying on the judgment of Williams J in the High Court of Australia in Summergreene v Parker (1950) 80 CLR 304 at 318. I do not apprehend that any of the judgments of the other three members of the Court were to contrary effect. Accordingly, taking the evidence in favour of the applicant at its highest, there came into existence on or about 26 March 1993 a contract of employment between the applicant and the first respondent. 43 The respondents submitted: The joint venture company, once incorporated, became a party to the pre-incorporation contract by mutual acceptance of the novation of the rights and obligations of each party under the contract: Vickery v Woods (1952) 85 CLR 336 at 348-9 per Williams J.

Until that point J P Cordukes remained liable as the employer party to the contract. That liability ended on novation by the joint venture company: Vickery v Woods at 348-9 per Williams J.

At that time J P Cordukes ceased to be a party to any contract or arrangement whereby the applicant performed work. The parties to that contract or arrangement were the applicant and Cordukes Thai. 44 It will be seen that the respondents relied on a process of novation in order to justify a conclusion that upon the incorporation of Cordukes Thai Ltd there came into existence a contract of employment between that company and the applicant. 45 The process of novation was described by Windeyer J in the High Court of Australia in Olsson v Dyson (1968-1969) 120 CLR 365. Although his Honour was in dissent in the overall result in that case, his Honour's description of the novation process at pp 388-9, albeit in relation to the assignment of debts, provides a useful statement of the relevant principles. His Honour said: In Scarf v Jardine (1882) 7 App.Cas. 345, at p 351 Lord Selborne said novation "means this - the term being derived from the civil law - that there being a contract in existence, some new contract is substituted for it, either between the same parties (for that might be) or between different parties; the consideration mutually being the discharge of the old contract". In that sense "novation" means simply a new contract standing in the place of the old. It may be a new contract between the parties to the old contract, A (in this case Dyson) and B (in this case the company); or it may be a contract between them and a new party, or parties, e.g., between A, B and C (in this case the respondent). It is in the latter sense that the word is most often used in common law countries in connexion with the transfer of debts from one creditor to another. As put in Corbin on Contracts , vol. 6, p 189, speaking of the law in the United States: All novations are substituted contracts; and the converse is also true that all substituted contracts are novations, unless we follow the more usual custom of using the word novation only in cases where the substituted contract involves a substituted debtor or creditor as a new party. 46 It follows that if there was to be a novated contract between Cordukes Thai Ltd and the applicant, this would require some indicia of assent and acknowledgment by the first respondent, Cordukes Thai Ltd and the applicant. That is there has to be some evidence or facts from which it can be inferred that a new contact was entered into between Cordukes Thai Ltd and the applicant. (see the observations of Williams J in the High Court of Australia in Vickery v Woods (1951-1952) 85 CLR 336 at 348-9). 47 No evidence was given in the proceedings concerning any formal or, indeed, informal termination of the contract of employment between the applicant and the first respondent. If that contract of employment came to an end this would need to be inferred from the overall facts. In the same way there is in my opinion no evidence of any contract of employment being entered into between the applicant and Cordukes Thai Ltd in a formal sense, that is by way of specific offer and specific acceptance. Any evidence of any such new contract of employment would need to be inferred from all of the circumstances. (For completeness I should add that no party contended there had been an assignment of the contract of employment between the applicant and the first respondent to Cordukes Thai Ltd, probably for good reason given that contracts of employment being contracts of personal service are not capable of being assigned.) 48 An example of the requirements needed to satisfy the application of the novation principle is provided by the decision of the High Court of Australia in Christianos v Rohrlach (1981) 55 ALJR 681 to which I was referred by Mr Murphy. An Australian resident reached agreement in a conversation with another person in Australia to perform work in certain mining operations being conducted in Brazil. The resident travelled to Brazil and took up a position as a mine manager. Subsequently a company was incorporated in Brazil which was controlled by the person who had offered him the position. The Australian resident was later killed and his widow brought a claim for workers' compensation benefits under legislation in South Australia. This raised the question as to whether the deceased was employed by the individual (the appellant in the proceedings in the High Court) or by one or other of two Brazilian companies. 49 In the course of a joint judgment (Mason, Murphy Aickin, Wilson and Brennan JJ) said: In the absence of other evidence, proof that a person worked for a particular company and was paid wages by that company would establish that he was employed by that company. But the appellant's task here is to establish much more than this - it is to show that the deceased's existing contract of employment with the appellant personally was rescinded and replaced by a fresh contract or contracts of employment with Mineracao and/or Emibra. It is not enough for the appellant to show that the deceased became an employee of the companies or one of them unless it can be shown that he did so in circumstances which resulted in a rescission of the earlier contract of employment. Dixon J in Vickery v Woods (1952) 85 CLR 336 at p 345, after pointing out that "Rescission and novation ultimately depend on intention", went on to say of the facts there that no such intention existed in fact and "nothing was done from which such an intention must necessarily be implied". The circumstances of this case are incapable of yielding an inference that the parties acted with the intention of rescinding the contract of employment which the primary judge found was made. The deceased's relationship with the Brazilian companies was quite consistent with the continued existence of his initial contract of employment with the appellant. Indeed, when all the facts are taken into account they serve to confirm this hypothesis. 50 Admittedly, the factual situation in Christianos was somewhat different to that which pertains in these proceedings namely a company controlled by the appellant paid part of the deceased's wages in Australia. However, Christianos emphasises the necessity to demonstrate, in the context of an alleged application of the novation principle, an intention to enter into a new contract. 51 Taking the evidence at its highest in favour of the applicant I am not persuaded that the only conclusion which can be drawn is that there was a subsequent contract of employment entered into between the applicant and Cordukes Thai Ltd by reason of the application of the principles of novation to which I have referred. 52 Even if such a contract of employment between the applicant and Cordukes Thai Ltd did come into existence upon incorporation of Cordukes Thai Ltd, taking the evidence at its highest in favour of the applicant, any such contract of employment would have been collateral to the original contract of employment between the applicant and the first respondent. 53 None of these possibilities foreclose the characterisation of the totality of what occurred as being an arrangement between the applicant and the first respondent, taking the evidence in the proceedings at its highest in favour of the applicant.

RELEVANT PRINCIPLES - NEXUS 54 A Full Bench of this Court has recently undertaken an extensive examination of the requisite nexus with the State of New South Wales in order to sustain jurisdiction under s 106. That examination is contained within the judgment of the Full Bench in Bell & Anor v Macquarie Bank Ltd & Anor (unreported 17 December 1999 IRC4040 of 1999, Wright J President, Peterson and Kavanagh JJ). 55 The question for determination in those proceedings, was whether there was a "good arguable case" that there was a contract or arrangement whereby a person performed work in any industry "in and of" New South Wales. Without hopefully detracting from the analysis of decided cases and the principles distilled therefrom undertaken by their Honours I shall attempt to summarise the relevant principles as follows:

1. Jurisdiction under s 106 depends upon the existence of a "contract, arrangement, related condition or collateral arrangement" answering the relevant statutory description.
2. The proper law of any relevant contract will be relevant but not determinative as to whether jurisdiction exists.
3. The place where work is performed under the contract or arrangement is one factor but not a decisive factor which must be considered. "….work may be performed in an industry 'in and of' New South Wales notwithstanding that the majority of the work is not physically performed in this State. This may be the case so long as there are other factors present which establish, or assist in establishing, a relevant connection with New South Wales. Factors which may indicate such a connection include that the contract or arrangement was negotiated or made in the State of New South Wales or that the contract or arrangement involves the performance of work overseas in furtherance of a New South Wales industry."
4. Consistent with the line of authority confirmed by the judgment of Hungerford J in Bartolacci v Permanent Custodians Ltd (1992) 44 IR 388 as subsequently approved on many occasions, " …. It may ordinarily be sufficient if the applicant demonstrates the existence of an arrangement which is collateral to another contract or arrangement whereby work is performed in an industry 'in and of' New South Wales." That is, once there is a primary contract or arrangement under which work is performed as contemplated by the application of the definitions in s 105 of the Act to s 106, and such primary contract or arrangement is one possessing the necessary nexus and otherwise fulfilling the statutory requirements to vest jurisdiction, any related arrangement which is collateral to the primary contract or arrangement under which work may be performed does not of itself need to possess any territorial nexus with New South Wales. 56 Accordingly, it is only necessary for the applicant in these proceedings to demonstrate that taking the evidence at its highest in his favour that there was a collateral arrangement related to an underlying contract or arrangement having the necessary territorial nexus to defeat the respondents' notice of motion. Thus, if one could conclude that taking the evidence in favour of the applicant at its highest there was an underlying contract or arrangement made between the applicant and either the first or second respondent which possessed the necessary territorial nexus, and that there was an arrangement between the applicant and Cordukes Thai Ltd which was related to and collateral to the first contract or arrangement, it would not be necessary that the related collateral arrangement possessed the necessary territorial nexus and the respondents' motion would be defeated. The same result would be achieved if the applicant's primary position contended for in these proceedings were capable of being upheld taking the evidence in favour of the applicant at its highest, namely there was but one arrangement or contract made between the applicant and the first respondent in New South Wales pursuant to which the applicant first performed work in New South Wales, and which furthered an industry undertaken by the first respondent within New South Wales namely the expansion of its construction activities beyond New South Wales not only beyond existing activities within Australia but also extending to Thailand. The applicant also relied in this connection on substantial direction and control given to him by the second respondent and on the fact that the applicant's work and the affairs of Cordukes Thai Ltd were controlled by the first respondent as if Cordukes Thai Ltd was a division within the first respondent's overall operations. Thus, it was said, a relevant nexus was established.

HAS THE RESPONDENT MADE OUT ITS CASE? 57 I have stated above the relevant principles which need to be considered in connection with the establishment of the necessary nexus to found jurisdiction. I have also expressed certain conclusions with respect to the state of the evidence for the purpose of determining this interlocutory application. 58 Taking the evidence in favour of the applicant at its highest, I am not persuaded that the respondents should succeed in this interlocutory application. There is evidence available to the applicant which is capable of establishing the relevant nexus no matter which way one characterises the contractual relationship between the parties. There can be no doubt that there was initially a contract of employment between the applicant and the first respondent. That contract of employment was arguably made in New South Wales, (depending perhaps on whether or not the flight to Thailand had left New South Wales at the time that the oral negotiations were concluded), it was made between New South Wales residents and it contemplated that the applicant would be performing work in New South Wales arguably in connection with an industry in and of New South Wales. That industry was one which was conducted by the first respondent from its premises in New South Wales by way of undertaking certain construction work in New South Wales and other States of Australia with a view to expansion beyond Australia. A measure of control was exercised by the first and second respondents and the applicant was required to comply with certain administrative and management requirements initiated from the offices of the first respondent. The original advertisement is, approaching it in the most favourable light to the applicant, capable of being characterised as an invitation to treat issued by a New South Wales based company seeking the appointment of a person to a "permanent" position with the company involving employment out of Australia for 5 years but the possibility of a transfer back to Australia after that time. The applicant became a member of the first respondent's superannuation fund and was issued share options in the first respondent well after the joint venture had commenced operations. The first respondent's prospectus showed the applicant as reporting directly to the second respondent and the managing director of the first respondent. 59 If there was no novation and that contract of employment continued in existence until termination, then it is arguable for the purpose of this interlocutory application that the relevant nexus remained throughout. 60 If there was a novation of the original contract of employment, it is arguable for the purpose of this interlocutory application that the novated contract was an arrangement collateral to the original contract of employment and did not, of itself, require any relevant jurisdictional nexus, as demonstrated by the decision of the Full Bench in Bell, to which I have previously referred. 61 For these reasons the notice of motion fails and is dismissed. The respondents must pay the applicant's costs of these interlocutory proceedings to be assessed in default of agreement.

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