Field & Anor v Jenolan Caves Reserve Trust and Ors

DIRECTOR GENERAL DEPARTMENT OF ENVIRONMENT AND CONSERVATION Third Respondent

THE CROWN IN THE RIGHT OF THE STATE OF NEW SOUTH WALES Fourth Respondent

CATCHWORDS: Practice and Procedure - Notice of Motion - order seeking extension of time for filing application - section 108B of the Industrial Relations Act 1996 - exceptional circumstances justifying late application required - no evidence of exceptional circumstances - application declined

LEGISLATION CITED: Industrial Relations Act 1996 National Parks and Wildlife Amendment (Jenolan Caves Reserves) Act 2005

Burden v Walgett Shire Council [2006] NSWIRComm 169 CASES CITED: Custom Credit Corporation Ltd v Goldsmith [1976] AR (NSW) 98 Hawkesbury Developments Co Ltd v Landmark Finance Pty Ltd [1969] 2 NSWLR 782 Skelly v Prouds Jewellers Pty Ltd (1994) 53 IR 3

APPLICANT: Mr JW Shaw SOLICITORS: The People's Solicitors Pty Limited LEGAL REPRESENTATIVES: RESPONDENTS: Ms E Brus of counsel SOLICITORS: IV Knight, Crown Solicitor

ARCHER FIELD & ANOR v JENOLAN CAVES RESERVE TRUST AND OTHERS Application under s.106 of the Industrial Relations Act 1996

1 These proceedings were commenced under s 106 of the Industrial Relations Act 1996 ('the Act'), on 15 February 2007, supported by an affidavit of urgency. There were unsuccessful conciliation proceedings in April. On 23 April, Mr Field filed a notice of motion, seeking various orders, including an order under s 108B of the Act, for extension of the time for filing the application. This judgment deals with that application, which was opposed. 2 In an amended summons filed on 1 March 2007, Mr Field complained about the fairness of an 'overall arrangement' under which he claimed to have performed work in an industry, by administering and operating Jenolan Caves House and related businesses. Other orders were sought in relation to 'collateral arrangements or related conditions' constituted by the Jenolan Caves Reserve Plan of Management, a lease of Jenolan Caves House and a services agreement. Orders of variation of the overall arrangement were sought, as well as a number of declarations pursuant to s 154 of the Act and money orders, later quantified in another amended summons filed on 27 April, at over $46 million. 3 In a reply filed in May 2007, the respondents denied the existence of the alleged arrangement, or any contract between the parties; claimed that only the first and fourth respondents were proper parties to the proceedings; denied that the Court had jurisdiction to deal with various of the matters raised and took issue with various of the matters of fact and law relied upon by Mr Field. It was also claimed that the lease had been breached by the lessee. It is unnecessary to outline the detail of Mr Field's response to this reply. 4 Mr Field's case was that he was a working director of Jenolan Caves House Resort Pty Ltd ('JCHR'), the lessee, operator and manager of Jenolan Caves House. It was claimed that these proceedings had been brought within time, the arrangement under which he worked having come to an end in June 2006, when JCHR's lease of Jenolan Caves came to an end. These proceedings, brought in February 2007, were therefore commenced within the statutory 12 month limitation period. In the alternative, it was argued that if the arrangement had come to an end in December 2005, the Court should exercise its discretion to grant an extension of time. 5 The respondents' case was that the asserted arrangement came to an end when Mr Field was excluded from involvement with the operation of Jenolan Caves House, with the appointment of a receiver to JCHR in December 2005. Accordingly, the proceedings were brought out of time. It was also argued that the necessary 'exceptional circumstances' for an extension of time under s 108B(3) had not been established on the evidence. It followed that there was no basis upon which any discretion could be exercised in Mr Field's favour. 6 Section 108B of the Act provides:

108B Time for making application (1) An application for an order under this Division in relation to a contract that has been terminated must be made not later than 12 months after the termination of the contract. (2) The Commission does not have jurisdiction to extend the time for making any such application or, subject to subsection (3), to accept an application made after the time prescribed by subsection (1). (3) The Commission may accept an application made within 3 months after the time prescribed by subsection (1) if the applicant satisfies the Commission that there are exceptional circumstances justifying the making of the late application. 7 The respondents accepted that for the purpose of determining the extension of time application, the existence of the arrangement, the subject of the proceedings, must be accepted. At this stage, it is unnecessary therefore, to consider whether such an arrangement in fact existed, despite the respondents' denial of the existence of that arrangement. 8 JCHR was the lessee of Jenolan Caves House, operating a hotel and a number of other businesses at Jenolan Caves. The lease was entered in 1990, for a term of 99 years. On his evidence, Mr Field was the managing director of the company, working in the business which JCHR conducted at Jenolan Caves, while also residing there. Receivers were appointed to JCHR in December 2005, as the result of steps taken by St George Bank. On 10 December, Mr Field was advised of his exclusion from further involvement in the business by one of the receivers, Mr Billington. He was also told that his statutory obligations as a director of the company continued. 9 Mr Field was also a guarantor of JCHR's loans from St George Bank under an arrangement required by the Trust. Mr Field claims that he had ongoing responsibilities under that guarantee, which were unaffected by the appointment of the receivers. On his evidence, after the appointment of the receivers, Mr Field endeavoured to attend to all of his ongoing obligations; unsuccessfully sought to have the receivers removed, by re-arranging JCHR's financing and accepted that ultimately, the arrangement he attacks in these proceedings came to an end in July 2006, when JCHR's lease came to an end. 10 Mr Billington advised Mr Field of his exclusion from JCHR's operations, by letter of 9 December 2005, which provided:

As a consequence of the appointment, the Joint & Several Receivers & Managers will take full responsibility for the management and operations of the company and the control of its assets.

Without the express written authority of the Joint & Several Receivers & Managers you must not, nor must you permit anyone else to:

Place any orders for goods or services, unless they have been duly authorised by the Joint & Several Receivers & Managers.

Accept delivery of any goods or services, unless they are the subject of a duly authorised order.

Supply any services to customers or dispatch any goods to customers.

Enter into any commitments with suppliers or customers.

Make any compromise or arrangement with any debtor or creditor of the company, including the allowance of any setoffs.

Incur any debts or liabilities in the name of the company or pledge its assets.

Remove any assets of the company from the company's custody or control.

You are required to secure all assets against theft under lock and key, and to ensure that no assets of the company are removed from the company's custody.

The Joint & Several Receivers & Managers will not be responsible for payment for goods and services supplied or other debts incurred after the appointment unless the orders have been duly authorised by the Joint & Several Receivers & Managers in writing.

Every invoice, order for goods, business letter or similar document shall have the words "(Joint & Several Receivers & Managers Appointed)" immediately following the name of the company.

All monies received are to be forwarded to Grant Thornton or, if so instructed, paid to the credit of a bank account styled Jenolan Caves Resort Pty Limited (Joint & Several Receivers & Managers Appointed).

Whilst the directors' power of control over the operations of the company is suspended, the appointment does not remove the statutory responsibilities of the directors i.e. the holding of annual general meetings, the preparation and lodging of accounts, the filing of annual returns and the maintenance of registers. The Joint & Several Receivers & Managers will make available such information as is necessary to enable the directors to perform the above functions.

All known breaches of the law or regulations (eg occupational health and safety, environmental, hygiene, fire, etc.) are to be notified to the Joint & Several Receivers & Managers in writing immediately.

These responsibilities should be communicated to all staff members. 11 There was no suggestion that JCHR was not entitled to take these steps, once the receivers were appointed, even though Mr Field was a director and shareholder of JCHR (through other entities). 12 Mr Field met with Mr Billington on 10 December 2005 and on 12 December, in a further letter, his exclusion from the business was confirmed. He was also told by Mr Billington in the 12 December letter:

You are no longer an employee of the Company but your role as a director of the company continues. To that end I provided you at our meeting with a copy of the Standard Notification of Appointment and the Request for the Provision of a Statement of Affairs. I also confirmed that your letter of termination as an employee had been faxed to you the previous evening. 13 That termination letter was not in evidence. Whether the termination of any employment had been effective was disputed for Mr Field. Nevertheless, Mr Field acknowledged that he had nothing further to do with the management or operation of JCHR's business, including the administration and operation of the hotel and other businesses, after receipt of this correspondence in December 2005. Mr Field later provided an ASIC Form 507 report as to the company's affairs, as the receiver had requested. 14 It follows from this evidence that Mr Field's involvement as a working director of JCHR, 'administering and operating' the hotel at Jenolan Caves House and the associated businesses conducted there by JCHR, came to an end on 10 December 2005, when Mr Billington gave him the letter of 9 December. Thereafter, JCHR's business, including the administration and operation of the hotel and other businesses, continued under the direction of the receivers, but without Mr Field's involvement, until July 2006, when the lease came to an end. 15 Mr Field's statutory obligations as a director of JCHR continued. As was submitted for Mr Field, this was because the appointment of a receiver does not displace the company officers' internal administrative structure and duties (see Hawkesbury Developments Co Ltd v Landmark Finance Pty Ltd [1969] 2 NSWLR 782), so that directors retain their statutory responsibilities for the company placed into receivership. On the evidence, Mr Field attended to those obligations. That is not, however, what arises for consideration in these proceedings, at this point. 16 Here, the question to be resolved is the time at which the arrangement with the respondents under which Mr Field claims he worked and which he seeks to attack in these proceedings as having been unfair, came to an end. On the evidence, on 10 December 2005, Mr Field was entirely removed from the work he had performed in JCHR's business to that point, at Jenolan Caves. JCHR's employees thereafter reported to the receivers, who continued to conduct the business. Mr Field, no doubt, had ongoing responsibilities as a director of the company. He also claimed to have other responsibilities under the guarantee he had earlier provided, to which he also endeavoured to attend. The evidence was, however, that the work which the arrangement required him to perform in administering and operating Jenolan Caves House and the associated businesses conducted there, came to an end with the appointment of the receivers, when they excluded him from performing that work. 17 As was submitted for Mr Field, it was possible that the receivership may have later come to an end, so that Mr Field might have resumed the role he had formerly undertaken, as a working director of JCHR. That did not occur, however, despite the steps which he pursued. 18 The result of the appointment of the receivers and the actions they took, was to preclude Mr Field from performing any further work in connection with the business JCHR conducted at Jenolan Caves. While JCHR's lease and the business it conducted thereunder continued until June 2006, Mr Field no longer had any involvement. 19 It appears from the amended summons that the arrangement Mr Field seeks to vary flowed from the lease between JCHR and the second respondent, the Tourism Commission of New South Wales; a service agreement between JCHR and the Jenolan Caves Reserve Trust; and the Jenolan Caves Reserve Plan of Management. Mr Field was not himself a party to any of these. His involvement in the arrangement flowed from the work he performed in the business JCHR conducted at Jenolan Caves House, as a director of JCHR. It was JCHR which was a party to the lease and the service agreement. While Mr Field remained a director of JCHR, his control of JCHR ceased with the appointment of the receivers, as did his involvement in JCHR's operations. 20 I am satisfied in those circumstances that the arrangement sought to be attacked in these proceedings, came to an end when Mr Field's involvement with JCHR's operation of Jenolan Caves House was brought to an end. That was a step which the receivers were entitled to take. Thereupon, the work Mr Field had performed under the arrangement ceased, even though the lease and the business conducted by JCHR under it, continued. There can be no doubt that the receivers were entitled to bring Mr Field's work with JCHR's business to an end and that they did so. Thereafter he no longer worked in the administration and operation of Jenolan Caves House or the associated businesses conducted there. 21 On the evidence, the arrangement Mr Field claims existed is not one which itself had any legally enforceable basis, so far as Mr Field was concerned, flowing as it did from various transactions or contracts to which he was not himself a party. It was rather the company of which he was a director which had enforceable legal rights in relation to those transactions or conditions. (see Custom Credit Corporation Ltd v Goldsmith [1976] AR (NSW) 98). That evidence does not, however, properly leave open the possibility that the arrangement can have survived the steps taken by JCHR, after the receivers were appointed, to remove Mr Field from further working in its operations at Jenolan Caves. That the lease to which JCHR was a party continued until June 2006, cannot alter that conclusion. Mr Field was not a party to the lease and did not claim to have any rights or obligations under the lease. 22 Given the claims advanced and the material relied on, I am satisfied that it could not properly be concluded that the arrangement whereby Mr Field worked at Jenolan Caves House in JCHR's business continued, despite the steps taken by the receivers in December 2005, to exclude Mr Field from JCHR's business operations. 23 It follows that the question of the extension of time must be considered. 24 Haylen J considered s 108B in Burden v Walgett Shire Council [2006] NSWIRComm 169 at [42] to [43]:

42 In the present case, it is the terms of s 108B(3) that need to be considered having regard to the fact that the primary 12 month limitation on commencing proceedings expired on 1 January 2006 and that the Notice of Motion was filed within three months of that date, namely, 23 March 2006: the first requirement for the operation of s 108B(3) has therefore been satisfied. In addition to being brought in the extended three month period, the Court has to be satisfied that there are exceptional circumstances to justify the making of a late application. The term "exceptional circumstances" is not defined and might therefore be approached on the basis of ordinary English usage. According to the Macquarie Dictionary, 3rd ed. the word "exceptional" means "forming an exceptional or unusual instance; unusual; extraordinary". In Re Z (1970) 15 FLR 420, Joske JA was considering the terms of the Marriage Act and whether the circumstances of the case were "so exceptional and unusual as to justify" the making of an order. His Honour considered dictionary meanings of the word, stating: The Shorter Oxford English Dictionary gives to 'exceptional' the meaning 'of the nature of or forming exception, unusual', and to 'unusual' the meaning 'not often occurring, different from what is usual, out of the common, remarkable, exceptional'. To 'usual' it gives the meaning 'something which ordinarily happens'; to 'remarkable', 'extra-ordinary, unusual, uncommon'. It will be seen that 'exceptional' and 'unusual' have much the same meaning and that the addition of 'unusual' to 'exceptional' does not elucidate the meaning of either and does little more if anything than add emphasis. In Martin v Martin (1941) N1 1 it would seem that the meaning given to 'exceptional' is 'out of the ordinary' and this view, together with the dictionary meanings cited, leads me to the opinion that the legislation enables the Judge to exercise his discretion in the case which appears to him to be 'out of the ordinary'. In considering whether a case appears to him to be 'out of the ordinary' it is proper to bear in mind the objective of giving the judge a discretion is to protect the institution of marriage so that it does not fall into disrepute and also to protect the particular parties who are seeking to marry, since the marriage of such young people is often subject to substantial pressures and frequently breaks down almost immediately or very soon after it takes place owing to these pressures.

43 In K v Cullen (1994) 125 ALR 38, Moore J adopted the analysis of Joske J in Re Z : I intend to be guided by this approach. In the present case, insofar as any application has to meet the requirements of s 108B(3), I am satisfied that there are "exceptional circumstances" justifying the making of the late application. The circumstances of the present application are indeed unusual if not unique: the claim had already been filed within time and the Trustee had given retrospective authority, within time, to commence and continue the proceedings. If the form of the application had been attended to in May 2005 and even at the time of conciliation in November 2005 then the application would have been within the primary 12 months set down by s 108B(1). In addition, the respondent was aware of Mr Burden's status as a bankrupt well before the termination of his employment and at the time that he filed the proceedings in May 2005. No attempt was made to disclose the respondent's objection to the proceedings until they were listed in November 2005. That combination of circumstances is sufficiently unusual and out of the ordinary to constitute exceptional circumstances for the purposes of the operation of s 108B(3).

25 For the respondents, it was submitted that nothing exceptional had been established on the evidence. For Mr Field it was submitted that his claim was bona fide and ought to be heard and that if it were concluded that the arrangement had come to an end in December 2005, that would be a highly technical way to defeat his claim. In those circumstances, the exercise of the discretion given by s 108B(3) would be warranted, because of the evidence as to the 'absence of full and complete legal advice'; the complex legal and commercial arrangements existing in relation to the management and upgrading of Jenolan Caves House and the difficulty for Mr Field in understanding what legal avenues of redress he may have had. Mr Field had difficulty in refinancing after the appointment of receivers. Serious points of public law were raised by the application, which it was in the public interest for a court of superior record to determine. Questions of the validity of the appointment of an administrator under the National Parks and Wildlife Amendment (Jenolan Caves Reserves) Act 2005 arose. There had been a hiatus in the way the Jenolan Caves and Jenolan Caves House had been administered. The extent of the loss Mr Field had suffered, as well as his hurt, distress and the diminution of his reputation were great. The result of the unfairness had been a ruinous financial position for Mr Field and his family, in circumstances where the exercise of the discretion involved a short period in temporal terms and no serious prejudice to the State of New South Wales. It followed that the Court's discretion should be exercised, as a matter of justice. 26 The evidence showed that JCHR was represented by a firm of solicitors, who wrote in November 2004 to the Jenolan Caves Trust, foreshadowing, among other things, that proceedings would be brought under s 106 of the Act in relation to the lease. 27 On his evidence, Mr Field was not certain whether or not he had received a copy of this correspondence. In December 2005, he had been excluded by the receivers from his house at Jenolan Caves and so had been denied access to his documents. He believed that some had been disposed of and what he had later been given, was in disarray. He could not remember receiving any advice about s 106 in 2004. He did take advice from another firm of solicitors, shortly after 9 December 2005, when the receivers were appointed. They had not given him any advice about his rights under s 106. He had not received such advice until January 2007, when he consulted his current lawyers. He had then given instructions for these proceedings to be commenced. As to the delay until January 2007, Mr Field's evidence was that he was under great stress, when these events developed. The commercial and legal arrangements were complex and he had difficulty in comprehending 'what legal avenues of redress I may have.' In cross examination, he explained that until the middle of 2006, commercial matters took precedence over legal matters and after the lease was transferred in June 2006, he had a different set of problems to deal with. 28 Mr Field also gave evidence about the very considerable sums which he expended in upgrading the facilities of Jenolan Caves House, using family assets and the personal consequences which these events had for him and his family. 29 The question to be resolved at this stage of the proceedings is whether these circumstances are such as to warrant the conclusion that they are 'exceptional', the prerequisite to the exercise of the discretion granted by the section. It was not in issue that the application was made within the limitation period provided by s 108B(3). 30 That question must be resolved by considering the reasons why these proceedings came to be brought out of time and whether they may properly be considered to be 'exceptional', justifying the late application. The section is not concerned with whether or not the claims sought to be advanced in the proceedings, might properly be characterised as 'exceptional'. 31 So seen, it must be concluded that the onus which falls on Mr Field has not been met. In 2002, the legislature introduced a 12 month time limit on s 106 applications. In 2005, that limit was relaxed, not by giving the Court a general discretion to permit an application brought out of time, as, for example ss 85(3) or 189 of the Act permit. Rather, an extension was permitted only 'if the applicant satisfies the Commission that there are exceptional circumstances justifying the making of the late application'. 32 In this case, that onus was sought to be discharged by an explanation that while Mr Field might have received advice about s 106 of the Act in 2004, the advice he received after the termination of the arrangement in December 2005, did not alert him to the fact that he had rights under the section, which could be exercised. Mr Field was then concerned with commercial considerations and it was not until June 2006 when the lease was terminated, that he had time to further pursue his legal rights. On the evidence it appears that he did nothing further to pursue such advice until the following January, with the result that he then took steps to initiate these proceedings, which were brought in February 2007. 33 I can find nothing 'exceptional' about such circumstances, which would justify the late application. The authorities dealing with applications which are brought out of time, where there is a general discretion available to be exercised by the Court or the Commission to extend time, are replete with cases where legal advice has not been pursued in a timely way, or where incorrect legal advice has been received. In some cases a discretion is exercised in favour of such an applicant, in others it is refused. An extension of time has frequently been granted in cases where there has been a failure to bring an appeal within time, because of a mistake made by a legal advisor. That there has been such a mistake made here, is not clear, of course. The existence of the alleged arrangement is denied; the Court's jurisdiction has been challenged by the respondents and it must be accepted that the claim which has been brought, has features which takes it out of the ordinary. Nevertheless, had there been a general discretion to extend time available to be exercised here, on balance I would have been inclined to exercise it in Mr Field's favour, in the circumstances in which he comes before the Court. (See the discussion in Skelly v Prouds Jewellers Pty Ltd (1994) 53 IR 3 at 5-6). 34 I cannot, however, find anything 'exceptional' about these circumstances, as Haylen J was able to find in Burden. It was not suggested that his Honour erred in the approach he adopted to the construction of s 108B. I respectfully agree with it. Section 108B does not involve merely a consideration of the type of factors discussed in Skelly and the cases which have applied it. Mr Field had to show that the circumstances in which the application came to be made late were exceptional - that is unusual or extraordinary, so as to justify the late application. Given Mr Field's explanation of those circumstances, I am unable to conclude that he has satisfied the onus which fell upon him under the section and accordingly, the application must be declined. 35 For those reasons, the application must be declined. I order accordingly.

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