Gough & Gilmour Holdings Pty Ltd & Ors v Caterpillar of Australia Ltd and Ors

Gough & Gilmour Holdings Pty Ltd & Ors v Caterpillar of Australia Ltd and Ors - [2007] NSWIRComm 3 - NSWIRComm 2007 case summary — Zoe

[9]

Unfair contract - Application by applicants to amend pleadings - Application by respondents to dismiss or permanently stay proceedings - Principles governing dismissal motions - Whether jurisdiction to proceed to deal with claims for compensation in circumstances where the law had changed since Court's finding in 2002 that contracts were unfair - Whether contracts were contracts whereby a person performs work in any industry - Related condition - Collateral arrangement - Consideration of s 106(2A) of the Industrial Relations Act 1996 - Whether 106(5) only authorises an order for the payment of money in the nature of restitution - Loss of opportunity - Goodwill - Principles governing amendment to pleadings - Whether amendments objectionable - Whether amendments met requirements of r 18A of the Industrial Relations Commission Rules 1996 - Whether amendments amounted to further causes of action - Whether amendments were futile - Whether amendments gave rise to prejudice - Whether amendments were in good faith - Whether delay on the part of the applicants was a basis for refusing amendments - Dismissal application refused - Leave granted to amend pleadings CATCHWORDS: Practice and Procedure - Unfair contract - Application by applicants to amend pleadings - Application by respondents to dismiss or permanently stay proceedings - Principles governing dismissal motions - Whether jurisdiction to proceed to deal with claims for compensation in circumstances where the law had changed since Court's finding in 2002 that contracts were unfair - Whether contracts were contracts whereby a person performs work in any industry - Related condition - Collateral arrangement - Consideration of s 106(2A) of the Industrial Relations Act 1996 - Whether 106(5) only authorises an order for the payment of money in the nature of restitution - Loss of opportunity - Goodwill - Principles governing amendment to pleadings - Whether amendments objectionable - Whether amendments met requirements of r 18A of the Industrial Relations Commission Rules 1996 - Whether amendments amounted to further causes of action - Whether amendments were futile - Whether amendments gave rise to prejudice - Whether amendments were in good faith - Whether delay on the part of the applicants was a basis for refusing amendments - Dismissal application refused - Leave granted to amend pleadings

[17]

(2) Distribution Agreement for Engines, Parts and Services dated 1 July 1991; and (3) Product Support Agreement for Engines, Parts and Services dated 12 November 1997. ("the Dealership Agreements"). 3 The relief sought by the applicants was in the alternative. The primary relief sought was continuation of the Dealership Agreements, albeit with substantial variations. Variations were also sought to what was alleged to constitute an "Overall Arrangement". The alternative relief sought, in the event that the Court did not vary the Dealership Agreements in the manner sought by the applicants, was compensatory orders for the payment of money pursuant to section 106(5) of the Act. 4 In an interlocutory judgment given on 23 November 2000 it was determined that the applicants' summons for relief would be heard in two parts. The first part would address the alleged unfairness of the Dealership Agreements and Overall Arrangement and whether they should be varied in the terms sought. The second part would deal with issues of compensation but only in the event that unfairness had been found and the primary relief sought, that is variation of the contracts, was refused. 5 In Gough & Gilmour Holdings Pty Ltd and ors v Caterpillar of Australia Ltd and anor (No. 9) [2001] NSWIRComm 260, a decision given on 23 October 2001, the Court made orders by way of interlocutory injunctive relief. The effect of those orders was to keep the Dealership Agreements on foot until further order of the Court and in the intervening period to prevent the respondents taking any steps inconsistent with or prejudicial to the ongoing operation of the Dealership. The applicants gave an undertaking as to damages. 6 In Gough & Gilmour Holdings Pty Limited v Caterpillar of Australia Limited (No. 11) [2002] NSWIRComm 354, given on 19 December 2002, the Court summarised its findings at [780]. Relevantly, the Court found: 1. The dealership agreements between the applicants and the first respondent constituted contracts for the purpose of s 105 of the Industrial Relations Act. The dealership agreements constituted part of an Overall Arrangement between the applicants and the respondents as pleaded by the applicants except in relation to the first and second assurances and part of the Fourth Assurance, which did not constitute part of any arrangement. That part of the Fourth Assurance that did constitute part of the Overall Arrangement was the assurance that the sale process would be conducted on an amicable and reasonable basis without duress and the respondents would assist the applicants to receive a fair value for the shares.

[27]

(7) The Overall Arrangement as determined by the Court in Gough & Gilmour Holdings Pty Limited v Caterpillar of Australia Limited (No 11) [2002] NSWIRComm 354 to have existed between the applicants and the respondents is varied as follows: (i) Harcourt David Gough and Anthony Lansley Gilmour will have a period of 90 days ("the additional sale period") commencing on the day following the date of this judgment to sell their shares in the dealership business to that person nominated by Caterpillar of Australia Limited as the "preferred dealer candidate". Subject to Orders 7(ii), 7(iii) and 7(iv) hereof, after the expiry of the additional sale period Caterpillar of Australia Limited may give 26 weeks' notice of termination of the dealership agreements and the notice of termination period will commence to run from a date seven days after the expiry of the additional sale period. (ii) In the event that Messrs Gough and Gilmour decide that they do not wish to sell their shares, that decision will be conveyed to Caterpillar of Australia Limited within 30 days of the date of this judgment and the additional sale period will terminate on the day after the date that Messrs Gough and Gilmour advise Caterpillar of Australia Limited they do not wish to sell ("termination date of the additional sale period"). Upon being so advised Caterpillar of Australia Limited may give 26 weeks' notice of termination of the dealership agreements and the notice of termination period will commence to run from a date seven days after the termination date of the additional sale period. (iii) In the event that a sale occurs or a binding agreement to sell is made prior to the expiration of the additional sale period, Messrs Gough and Gilmour will advise Caterpillar of Australia Limited to this effect. Upon being so advised Caterpillar of Australia Limited may give 90 days' notice of termination of the dealership agreements and the notice of termination period will commence to run from a date seven days after the date of sale or the date of a binding agreement to sell, whichever is the earlier. (iv) The date upon which the 26 weeks' period expires shall be known as the "final termination date". In the event a sale or a binding agreement to sell (whichever is first) occurs during the 26 weeks' notice period on a date that is more than 97 days prior to the final termination date the respondents shall be entitled to issue new termination notices giving the applicants 90 days' notice which will commence to run from a date seven days after the date of sale or date of the binding agreement to sell whichever first occurs. (8) The Overall Arrangement as determined by the Court in Gough & Gilmour Holdings Pty Limited v Caterpillar of Australia Limited (No 11) [2002] NSWIRComm 354 to have existed between the applicants and the respondents is further varied as follows: During the additional sale period Caterpillar of Australia Limited, Caterpillar Inc, Caterpillar SARL and Caterpillar Overseas Credit Corporation SA ("Caterpillar") will not at any time: (i) approach, solicit or entice employees or contractors of Gough & Gilmour Holdings Pty Limited, Harcourt David Gough and Anthony Lansley Gilmour ("Gough & Gilmour") to terminate any contract or arrangement between such employees or contractors and Gough & Gilmour;

[35]

The parties were directed to file short minutes of order reflecting the decision. The Court made formal orders on 14 July 2003 giving effect to the decision. 13 No sale of the business of the applicants occurred and the respondents gave notices of termination of the Dealership Agreements on 7 October 2003, having an expiry date of 9 April 2004. Termination of the Agreements took effect in accordance with the notices. 14 The applicants subsequently prepared a document referred to as the Fourth Further Amended Summons to reflect the amendments approved in Judgment No. 15 In April 2005, the applicants made submissions seeking leave to rely upon a further amended summons, namely, the Fifth Further Amended Summons. In the proposed amended summons the applicants claimed compensatory orders as follows: (1) Compensation for the "lost opportunity" of retaining the dealership. Two amounts were sought in that respect: (a) A nominal amount of $125 million (subject to allowance by way of deduction), calculated by reference to anticipated net profits for a period of at least ten years commencing in early 2000; (b) An amount of $950,000 as compensation for amounts paid to retain staff between March and May 2000. (2) Compensation for the "lost opportunity" to sell shares in the first applicant. The amounts sought in that respect were: (a) A nominal amount of $150 million (subject to allowance by way of deduction), calculated by reference to the price at which the applicants allege that a share sale was highly probable to have occurred in October/November 2000; (b) Amounts for costs incurred with respect to the failed sale process in 2000, particularised as: (i) Valuation and advisory fees of $600,000; (ii) Legal and mandatory costs of $450,000; (iii) Legal and financial costs incurred in due diligence process of $250,000. (3) Compensation was also claimed in an unspecified sum for loss of net profits arising from "the management distraction and disruption caused by these proceedings and by the publicity and associated uncertainty concerning the Applicants' future as a Caterpillar dealer". 15 Whilst the Fourth Further Amended Summons was filed, no decision was made accepting that the Summons as filed properly reflected the amendments approved in Judgment No. 15 Further, no decision was made on whether leave would be granted to further amend the summons in the form of the Fifth Summons. Any amendments, therefore, if the Court approves them, would be to the Third Further Amended Summons.

[36]

16 As the respondents submitted, in light of the application by the applicants seeking leave to further amend the initiating process in the proceedings, and jurisdictional cases which had been determined by the NSW Court of Appeal, the respondents commenced proceedings in the NSW Court of Appeal in file No. CA 40500 of 2005 (the "CA Proceedings"). The CA Proceedings, inter alia, sought to challenge the jurisdictional findings and orders made in proceedings before this Court. The application in the CA Proceedings also sought to prohibit further steps being taken in proceedings before this Court directed to the making of orders for the payment of money on the grounds that such orders could not relate, closely or at all, to the performance of work in an industry by the applicants, or by any other person. 17 Further, as the respondents submitted, the CA Proceedings were stood over for a significant period of time by consent because of the view that the issues being considered by the High Court of Australia in appeals from decisions of the Court of Appeal in Solution 6 Holdings Ltd v Industrial Relations Comn (NSW) (2004) 60 NSWLR 558, QSR v IRC (NSW) (2004) 208 ALR 368 and Old UGC Inc v Industrial Relations Commission of New South Wales (2004) 60 NSWLR 620, might be relevant to the determination of the CA Proceedings. These proceedings were also stood over for the same reasons. 18 On 1 December 2005, the NSW Parliament passed the Industrial Relations Amendment Act 2005, which commenced operation on 9 December 2005. The Amendment Act replaced the previous s 179 with a new privative provision. The purpose of the new provision was explained in the second reading speech (Hansard, Legislative Assembly, 17 November 2005, at p 20010): The Court of Appeal has in a number of its decisions granted orders prohibiting the commission from exercising, or purporting to exercise, its power under section 106 with respect to particular proceedings, or from hearing and determining certain proceedings, on the basis that the commission does not have jurisdiction. These orders have been made where no decision has yet been made in relation to the matter by the commission, for example, in BEA Systems Pty Ltd v Industrial Relations Commission of New South Wales in Court Session & Anor [2005] NSW CA 227. Further, these applications are no longer confined to applications under section 106: an additional 13 matters relating to prosecutions for occupational health and safety matters have been filed in the Court of Appeal. This is a bad result for workers, the courts and the community.

[39]

(b) the performance of work is a significant purpose of the contractual arrangements made by the person. 20 The problem to which subs (2A) was directed was explained in the second reading speech as: In Solution 6 , the Court of Appeal held that the Commission may only declare void or vary a collateral arrangement or related condition that itself leads directly to the performance of work. This interpretation of the section significantly narrows the scope of the Commission's unfair contracts jurisdiction. It is problematic because an arrangement that leads directly to the performance of work may consist of a formal work contract as well as related agreements, which, in themselves, may not lead to the performance of work. If this interpretation were continued, and a person's total package were not reviewable, then the Commission's unfair contracts jurisdiction would be narrowed to a significant extent for employees and independent contractors. It would then be open to unscrupulous employers to ensure that the contract for work was minimalist and carefully quarantined from other aspects of the relationship that are set out in different documents, or entered into at different times. 21 On 12 December 2005, the Court of Appeal stood over the matter until 26 June 2006 to await the outcome in the High Court. On 20 January 2006 the respondents filed an application for the grant of an extension of time to file an application for leave to appeal and appeal Judgments No. 9, 11 and 15. On 18 May 2006 Kavanagh J refused the application for an extension: Caterpillar of Australia Ltd & Ors v Gough & Gilmour Holdings Pty Ltd & Ors [2006] NSWIRComm 146. Coincidentally, on the same day (18 May), the High Court delivered its judgments in Fish v Solution 6 Holdings Ltd (2006) 80 ALJR 959, Batterham v QSR Ltd & Ors (2006) 80 ALJR 995 and Old UGC, Inc v Industrial Relations Commission of New South Wales in Court Session (2006) 80 ALJR 1018. 22 On 6 June 2006, the respondents filed an application in the Industrial Court for leave to appeal and to appeal the judgment of Kavanagh J. At a directions hearing on 16 June 2006 Walton J, Vice President, raised with the parties whether or not it would be appropriate for the jurisdictional issues that the respondents wanted to raise to be dealt with by the trial judge at first instance. The respondents subsequently filed a notice of motion on 24 July 2006, which is before the Court in these proceedings. The motion sought the following orders: 1 An order dismissing the proceedings. 2 In the alternative to paragraph 1, an order permanently staying the proceedings.

[40]

23 The grounds in support of the motion included the following: 26 As the law has now been declared, following the decisions in the CA proceedings and in the HCA proceedings concerning the Court's jurisdiction, it is clear in the IRC proceedings (which are yet to be finally determined) that there is no jurisdiction for the Court to take any further steps in the Proceedings for reasons which include the following (the Respondents reserve the right to rely upon further grounds): (a) the Dealership Agreement or "Overall Arrangement" to which the First Applicant and the First Respondent were parties (or alleged to be parties) were commercial contracts which do not fall within the jurisdiction of the Court; (b) none of the three Dealership Agreements or the "Overall Arrangement" are contracts or arrangements whereby a person performs work in an industry within the meaning of section 106 of the 1996 Act, and therefore amenable to the jurisdiction of the Court, because: (i) they did not directly lead to the performance of work in an industry in that: (A) the performance of work in an industry was not their purpose; (B) they did not in a relevant sense provide for the performance of work in an industry under or pursuant to their terms; and (C) they did not have a relevant or recognisable impact on the conditions of the performance of work in an industry. (ii) if (which is denied) any work was performed in an industry in consequence of the Dealership Agreements and/or the "Overall Arrangement", such work was merely incidental tot the provision of goods and services under those contracts or arrangements; (iii) the Second and Third Applicants were no persons who were required to or did perform work for any of the Respondents within the meaning of section 106 of the 1996 Act. (c) the Court has no jurisdiction or power to make orders for the payment of money in the Proceedings because such could not relate, closely or at all, to the performance of work in an industry by any person.

[43]

27 The respondents, in support of their motion, filed written submissions on 7 September 2006. The applicants responded in writing on 20 October 2006 opposing what they contended was, in effect, an application to re-open the orders made by this Court following Judgments No. 11 and No. 15 on the ground that the Court had no power to re-open its orders that had been "perfected" or, in the alternative, the respondents had not established "exceptional circumstances" justifying the re-opening of the orders. The applicants also opposed the claim of the respondents to dismiss or stay permanently the proceedings, given that the Court had, both before and after the enactment of section 106(2A) of the Act, power to make the compensation orders sought. 28 The respondents' notice of motion was listed for hearing on 20 and 22 November 2006. On 27 October 2006 the applicants filed a notice of motion seeking an order that they be granted leave to amend the Fourth (sic) Further Amended Summons so that it was in the form of the Sixth Further Amended Summons annexed to the notice of motion and marked "A". The grounds and reasons in support of the applicants' motion were that: 1. Pursuant to s170 of the Industrial Relations Act 1996 (NSW) (" Act" ) the Court may, in any proceedings before it, make any amendments to the proceedings that the Court considers to be necessary in the interests of justice and such amendments can be made at any stage of the proceedings; see also Rule 148 of the Industrial Relations Commission Rules 1996 . 2. The interests of justice dictate that the summons in this matter be further amended in the manner now set out in the Sixth Summons for the reasons set out below. 3. The proposed amendments as contained in the Sixth Summons: (a) seek to identify, with greater particularity than appears in the Fifth Further Amended Summons, matters relevant to the assessment of compensation in the compensation phase of the proceedings - see Part D of the Sixth Summons; (b) seek to avail the effect of the enactment of section 106(2A) - see pars A1B, A2C, B39, B40, B41, D3(a) and D4(a) of the Sixth Summons; and (c) seek to identify additional or alternate bases for the Court concluding that jurisdiction exists, that unfairness exists and that power to make compensation orders exists - see pars A2D and B36(o)(a) of the Sixth Summons. 4. The proposed amendments concerning the assessment of compensation: (a) are consistent with the Court deferring the determination of the amendments concerning compensation until the compensation phase of the proceedings (see Gough & Gilmour Holdings Pty Limited v Caterpillar of Australia Limited [2003] NSWIRComm 173 (" Decision No 15 ") at paragraphs [78], [80], [81] and [287(3)]); (b) address a subject matter - the basis of the assessment of compensation - upon which the Respondents have been on notice since the date of Decision No 15 (4 June 2003); (c) are consistent with the amendments contained in the Fifth Summons which was provided to the Respondents on 15 April 2005; (d) are consistent with the rulings in decision No 15; and (e) will not cause the Respondents prejudice as: (i) the Respondents will have an opportunity to file an Amended Reply in response to the Sixth Summons; (ii) the Respondents will have an opportunity to prepare and file evidence to be used in the compensation phase; (iii) the Respondents will have an opportunity to test by cross-examination evidenced filed by the Applicants for use in the compensation phase; and (iv) the Respondents will have an opportunity to make submissions at the end of the compensation phase of the proceedings. 5. The proposed amendments seeking to avail the enactment of section 106(2A): (a) reflect the change in the law effected by section 106(2A) as enacted by the Industrial Relations Amendment Act 2005 (NSW) which applies to proceedings (such as these proceedings) which were pending as at the date of enactment; (b) will not lead to the filing of new or further evidence by the Applicants; (c) are consistent with the evidence already filed; (d) are consistent with the findings of the Court in Gough & Gilmour Holdings Pty Limited & Ors v Caterpillar of Australia & Anor [2002] NSWIRComm 354 (" Decision No 11 ") and Decision No 15; (e) provide additional or alternative bases for jurisdiction existing in circumstance where the Respondents have, by Notice of Motion filed with the Registry of the Court on 24 July 2006 (" Notice of Motion ") sought to have these proceedings dismissed or permanently stayed for want of jurisdiction; (f) will not cause the Respondents prejudice as they will not lead to new or further evidence and the Respondents will have the opportunity to make submissions concerning their effect. 6. The proposed amendments in the event of a re-opening of Decision No 11: (a) will not lead to the filing of new or further evidence by the Applicants; (b) are consistent with the evidence already filed; (c) provide additional or alternative bases for jurisdiction existing in circumstances where the Respondents have challenged the jurisdiction of the Court by way of the Notice of Motion; and (d) will not cause the Respondents prejudice as they will not lead to new or further evidence and the Respondents will have the opportunity to make submissions concerning their effect. 7. A failure to grant leave to amend to rely upon the proposed amendments would cause significant injustice to the Applicants, particularly given the deferral of the ruling on amendments concerning compensation in Decision No 15, and the recent raising of further jurisdictional challenges by the Respondents. 8. The Applicants rely on the affidavit of David Charles Philip Stewart sworn on 27 October 2006 in support of this motion.

[64]

a. the performance of work in an industry was not their purpose; b. they did not in a relevant sense provide for the performance of work in an industry under or pursuant to their terms; c. they did not have a relevant or recognisable impact on the conditions of the performance of work in an industry. (ii) if (which is denied) any work was performed in an industry in consequence of the Dealership Agreements and/or the "Overall Arrangement", such work was merely incidental to the provision of goods and services under those contracts or arrangements. (iii) the applicants were not persons who were required to or did perform work for any of the respondents within the meaning of section 106 of the Act. (c) in any event, the Court has no jurisdiction or power to make orders for the payment of money in the proceedings because such orders could not relate, closely or at all, to the performance of work in an industry by any person. (5) The principles that can be distilled from the recent NSW Court of Appeal and High Court cases include the following: (a) the contract itself must lead directly to a person working in an industry: see Solution 6 ; Fish and Batterham ; (b) Characterisation of a contract to determine whether it is within jurisdiction of the Court under s.106 will raise questions of fact and degree in cases. The distinction is one of substance, not form. A relevant factor will be to examine whether the company of the alleged "working proprietor" engages a work force of significant magnitude. The critical question is whether the real transaction needs to be uncovered and whether it is a contract whereby a person works in an industry: see McDonald's [95] and [102]; (c) It is not sufficient that a contract involves the provision of goods and services with a consequential performance of work in an industry. The impugned contract must directly, under or pursuant to its terms provide for the performance of work in an industry: see Solution 6 ; (d) The minimum conditions for the conclusion of directness to be drawn may be that the impugned agreement or arrangement itself must directly envisage the employment of a person or persons in industry and have a recognizable impact upon the conditions of that employment: see Solution 6 at 576; (e) Whether a contract leads directly to the performance of work has been posed in terms of whether the relevant contract requires a person to perform work and whether the performance of work is a purpose of the contract: see Solution 6 at 576[59]; (f) If there is an Overall Arrangement, it must still lead directly to the performance of work but need not be performance of work pursuant to a legal obligation, provided work was in fact performed: see QSR at 378 [46-47]; (g) Some element of subordination by the person said to be performing the work to the other party to the contract or arrangement is required to satisfy the concept of work in an industry: see QSR ; (h) There must be a nexus between the relevant jurisdictional fact establishing jurisdiction (i.e. whether there is a contract whereby a person performs work in an industry) and the relief claimed by the Applicants. The power to declare void or vary a contract or arrangement extends only to those parts of the contract or arrangement that are closely related to the performance of work in an industry: see Solution 6 at [95] and McDonald's at [66], [81] and [82]. (6) In addressing the question of jurisdiction in Judgment No. 11 at [70] - [71], the Court concluded that the arrangement between the Applicants and the Respondents was relatively indistinguishable from the arrangement in Majik Markets Pty Ltd v Brake & Service Centre Pty Ltd (1992) 28 NSWLR 443. The Court of Appeal considered in McDonald's whether franchise agreements (comprising certain Licence and Lease agreements) entered into by the parties, were a contract whereby work was performed in an industry. The Court found by majority that they were not.

[72]

(16) In the present proceedings, the question is therefore whether the relief sought has a direct impact on the performance of work. In this case it is clear that it does not for the following reasons: (a) Parts D1 and D2 of the Fifth Further Amended Summons claim compensatory orders for the alleged failure of the respondents to comply with obligations imposed by the Court; (b) Part D3 is a claim for compensation for the lost opportunity of retaining the dealership that has no relationship to the performance of any work pursuant to the Dealer Agreements let alone remuneration by persons performing work pursuant to the Dealer Agreements; (c) Part D4 claims compensation for the lost opportunity to sell shares in the first applicant which is a speculative claim for compensation, which again has nothing to do with the performance of any work pursuant to the Dealer Agreements let alone remuneration by persons performing work pursuant to the Dealer Agreements; and (d) Part D5 claims compensation for loss of net profits from the management distraction and disruption caused by these proceedings and by the publicity and associated uncertainty concerning the applicants' future as a Caterpillar Dealer. Whilst a novel claim, it is certainly a claim that has nothing to do with the performance of any work pursuant to the Dealer Agreements let alone remuneration by persons performing work pursuant to the Dealer Agreements. (17) Section 106(2A) of the Act did not impact upon the current application. The effect of the amendment introducing s 106(2A) was clear: it only sought to reverse so much of the judgment of the NSW Court of Appeal in Solution 6 that established the principle as to the need for a collateral arrangement (such as share option agreements, superannuation arrangements and deeds of releases) to lead directly to a person working in an industry. Section 106(2A), by its terms, had no impact upon the application of s 106(5). Second category 40 In the second category, the respondents referred to what they regarded as a claim by the applicants for loss of opportunity arising from the unfairness found in relation to the Last Resort Policy and Fourth Assurance. It was contended for the respondents that s 106(5) of the Act does not confer power on the Court to make an order or award in the nature of damages, including, in particular, expectation damages. Next, the respondents contended that the Court, as a superior court of record exercising judicial power under section 106, was bound by principles as to finality of judgments and the principles of res judicata and issue estoppel. Accordingly, it was submitted, the applicants were unable, in Stage 2 of the proceedings, to agitate what in effect amounted to further causes of action and to seek to have the Court make further findings of unfairness in respect of them.

[96]

59 As I observed earlier, because the dealership agreements might be said to represent commercial transactions, this does not necessarily put the agreements outside the class of agreements to which s 106 may have application: see Mitchforce v Starkey [2002] NSWIRComm 85 at [36]. Because such transactions might be described as commercial, it does not rob them of the necessary " industrial flavour", which is present if the contract or arrangement leads directly to the performance of work in an industry: Production Spray Painting at 58. 60 I turn to the written Agreements that underpin the relationship between the applicants and the first respondent. The Sales and Service Agreement contains a number of provisions relevant to the question of whether the contract leads directly to the performance of work in an industry. Clause 2(a) of the Agreement provides that: Both Dealer's and Company's primary purpose in entering into this agreement is to develop and promote the sale of products and to provide a high standard of parts availability and mechanical service to insure (sic) satisfaction by users of products. Within the service territory… Dealer shall be primarily responsible for fully and adequately developing and promoting the sale to customers and prospective customers located within such territory and for the servicing of all products … This is a personal contract entered into by Company in reliance upon the capability of Dealer to provide such sales and service to customers. Without the express written consent of Company, Dealer agrees not to appoint others to perform such sales and service responsibilities. 61 "Dealer" is defined to mean the dealer party to the individual dealership agreement and "Company" is Caterpillar of Australia Ltd. Clause 2(b) provides that the dealer cannot have any financial or management affiliation with any end user without Company's consent. Clause 2(c) of the Agreement provides: Company relies upon the qualifications and abilities of the particular individuals named as principals… to achieve such primary purpose. Dealer agrees that such individuals will continue in the active management of Dealer, or will continue to own a substantial financial interest in Dealer. No substantial change shall be made in the management positions, ownership or voting control of such principals without prior approval of Company.

[104]

· Dealer to provide detailed regular reports to Company of all inventories, sales, names and addresses of customers and, annually, full detailed financial reporting in Company designated format (cll 24, 25, 26). 63 The 1991 and 1997 Product Support Agreements contain equivalent provisions to those described above with the additional requirement to appoint TEPS dealers where and when instructed by the Company. 64 The dealership agreements confirm the first respondent's very close involvement in the applicants' business and the first respondent's right to exercise direction and control over important aspects of the dealership. I note that cl 27 of the Sales and Service Agreement provides that the relationship existing between the parties shall be "that of independent contractors and vendor and vendee." But that is stated in the context of a provision that the Dealer is not to be regarded as an agent for the Company. I do not consider that I should view that bare provision as indicating the true nature of the relationship. 65 The agreements, if anything, again strengthen Mr Kimber's contention that the relation between the first respondent and the applicants are akin to that of franchisee and franchisor. The agreements require the applicants to set up a business in a certain way; they require the principals of the dealership to use their qualifications and abilities to achieve the primary purpose of the Agreements, for example, the development and promotion of the sale of products; they directly require the applicants to employ personnel to perform work in the business - the business could not operate unless relatively large numbers of personnel were employed to perform work for the business. Whilst the dealership does not operate under the business name of Caterpillar, the dealership is synonymous with that name. The dealership, through its employees, is required to develop and execute promotion and market development programs to support the sale of Caterpillar products and to solicit orders for Caterpillar products.

[106]

67 It was submitted for the respondents that the dealership agreements "do not require or provide for the licensing or operation of premises for the conduct of a business thereon on behalf of or for the benefit of Caterpillar" and, therefore, it could not be said that the arrangements between the applicants and the first respondent were the same as that which applied in Majik Markets . Similarly, it was submitted that the agreements do not provide for the franchising or licensing of a business and do not require the applicants to conduct a business of Caterpillar or a business of their own under Caterpillar's name. 68 In determining whether the relevant jurisdictional fact exists, I do not consider it is necessary for there to be licensing or operation of premises for the conduct of the first respondent's business. The dealership agreements do, however, provide that the applicants shall maintain a suitable place or places of business; require the applicants to provide adequate sources of products and mechanical service for the benefit of users and that all places of business will be maintained by the applicants in a neat and attractive manner with adequate quantities of Caterpillar products - all to the satisfaction of the first respondent. The agreements also require the applicants to maintain branches in specified locations. 69 I also do not consider it necessary for the dealership agreements to provide for the franchising or licensing of a business or for the applicants to conduct a business of Caterpillar or a business of their own under Caterpillar's name. Franchising or licensing arrangements are not the only such arrangements that may attract the provisions of s 106 and it would be a most artificial distinction to say that the agreements the subject of these proceedings do not come within the ambit of s 106 because they are not specifically franchise or licence arrangements. The dealership in this case is for all intents and purposes an integral part of the Caterpillar organisation. 70 The arrangement between the applicants and the first respondent, which includes the agreements is, except for the reference to land, indistinguishable from those that were the subject of proceedings in Majik Markets. Handley JA described it thus at 188: The franchisees are independent contractors conducting retail businesses on the land of the franchisor and selling motor fuel purchased from the franchisor. The franchisees, or in some cases, their employees, work in the businesses both in consequence of the agreements and in fulfilment of them. The form of agreement requires the franchisee to perform work in the retail industry either personally or through employees and therefore it leads directly to the performance of work in that industry. The franchisor has a real interest in the performance of that work. It results in the sale of motor fuel purchased from the franchisor and tends to maintain and improve both the value of its general goodwill, and the value of the local goodwill attached to the premises. 71 If one were to transpose the observations of Handley JA in Majik Markets to the present proceedings it would read as follows: The applicants are natural persons and a corporate entity conducting a sales and service business on land at a location determined by Caterpillar and required by Caterpillar to be suitable for the purpose, and selling Caterpillar equipment purchased from Caterpillar. The applicants, or their employees, work in the business both in consequence of the agreements and in fulfilment of them. The form of the agreement requires the applicants to perform work in the sales and service industry either personally or through employees and therefore it leads directly to the performance of work in that industry. Caterpillar has a real interest in the performance of that work. It results in the sale of Caterpillar products purchased from Caterpillar and tends to maintain and improve the value of its general goodwill. Conclusion as to jurisdiction

[125]

60 In any event, in so far as the majority decision in McDonald's is concerned, in Wirraway, a judgment by which I am bound, the Full Bench stated at [33]-[35]: 33 In McDonald's, the franchisee company and its proprietor operated four McDonald's restaurants under license and lease agreements and the proprietor was required to devote his full-time attention to and exercise his best efforts in the operation of the restaurants. The Chief Justice could not distinguish the McDonald's arrangements from the franchise arrangements held to be within jurisdiction in Feenan and Majik Markets. While Handley JA (with whom Mason P agreed) readily accepted the correctness of Feenan and Majik Markets , it was thought that to merely approach the McDonald's' arrangements on the basis that a single working proprietor under a franchise agreement had been held to be within jurisdiction was too literal a construction and application of s106. The defining difference appeared to be the fact that the earlier cases did not involve contracts with a working proprietor holding a number of franchises and employing a workforce of the magnitude involved in McDonald's, namely, 350 mainly casual employees with some 20 - 25 being full-time employees. It is unknown whether the evidence descended into any detail as to the regularity of work available to casuals or whether there were a very large number of casuals performing a very small number of hours of work (as often favoured by students and persons seeking remuneration additional to their substantive employment). 34 It is difficult to understand how the number of franchise outlets and the number of persons employed in those outlets would affect the jurisdictional issue of whether the contracts were ones whereby work was performed in an industry. It might be expected that different contractual provisions or important factual differences would be needed to take the same type of contract outside of the jurisdiction when it would be within jurisdiction when involving a single proprietor with a small number of employees. To focus on the number of employees or employees and outlets suggests a reformulation of the test rejected in Majik Markets , namely, that properly construed the franchise arrangements were really commercial arrangements beyond the reach of the Commission's jurisdiction. In addition, the provision has never been restricted to cases where there has been a subterfuge taking workers outside award regulation.

[126]

35 Having regard to the number of outlets and the number of employees, either as a test or a relevant consideration, has additional difficulties. Firstly, the High Court in its recent decisions about s106 has cautioned against an approach that does not focus upon a search for the provision within the contract whereby a person performs work in an industry. Secondly, in applying the McDonald's approach, a question arises as to where the line is to be drawn. When does a contract involving work by a proprietor and a number of employees become so numerous in the number of franchise outlets and employees that it can no longer be regarded as a contract whereby work is performed in an industry? These difficulties strongly suggest that the decision in McDonald's falls into a unique or special category and is a case that is limited to its own peculiar facts. 61 Implicit in the Full Bench decision in Wirraway is a cautionary note about following McDonald's because it was "strongly" suggested that decision "falls into a unique or special category and is a case that is limited to its own peculiar facts." The respondents contended, nonetheless, that the circumstances in McDonald's were relevantly indistinguishable from those in the present case. If that were so, despite what I regard as some difficulties with the majority judgment in McDonald's I would, nevertheless, be bound to follow it. However, I do not regard the facts in this case as being on all fours with McDonald's. The proposition that it is overlooks the findings in Judgment No. 11, in particular, as the applicants submitted, that: [T]he Dealership Agreements were unique "partnership" agreements creating an " unusually close relationship " (distinguished from the normal " arm's length " or " commercial relationship ") under which the Applicants as the dealer principals were treated as an "integral" part of the Caterpillar business and where their "personal qualifications and abilities" were "so relied on" by Caterpillar that they could not surrender their management roles without Caterpillar's consent. 62 The Overall Arrangement as found by the Court was, in my opinion, on reflection, akin to an employment relationship between the first respondent and the second and third applicants given the closeness of the relationship.

[173]

86 The respondent submitted s 106(5) does not speak in terms of damages or compensation, let alone damages in the nature of expectation loss. Section 106(5) only authorises an order for the payment of money in the nature of restitution within the scope enunciated by the High Court in Brown v Rezitis (1970) 127 CLR 157 at 165, 170 per Barwick CJ; see also ex parte Ashfield Brokers Re Witek [1972] 14 AILR 486. The claims for damages for loss of opportunity as foreshadowed by the applicants in the Sixth Summons fell well beyond the limitations set out in Brown v Rezitis and well beyond any concept of restitutionary damages. 87 The difficulty I have in accepting this submission is the decision in Westfield Holdings v Adams (2001) 114 IR 241, where the Full Bench specifically addressed the basis upon which monetary relief might be granted under s 106(5) and in doing so had regard to Brown v Rezitis. After addressing at some length the decision of Barwick CJ the Full Bench stated at [98]-[102]: 98 So, the formulation by Barwick CJ as to the nature of the power to make money orders under s 88F(2) of the 1940 Act may be said to be, strictly speaking, obiter . However, the main point we wish to make about Brown v Rezitis is that in arriving at his formulation, the Chief Justice did so against the background of the facts of the case. He was required to focus on the question of restitution because of the order of Richards J that the appellants repay the $2,000 paid by the respondents for the contract, thus restoring "the aggrieved party to a situation which existed before the making of the contractual arrangement". Understandably then, the concept of restitution figured prominently in the Chief Justice's judgment. Given the other orders by Richards J requiring the appellants to pay the respondents for work done and expenses incurred, Barwick CJ was also required to address the question of making remedial provision for what had taken place or been done under the contract. 99 In these circumstances, given the particular facts of the case with which Barwick CJ was dealing, it could not be said that the formulation by the Chief Justice regarding the nature of the power to make money orders under s 106 is to be taken as the exclusive, or even the primary, test to be applied universally to all of the diverse circumstances that arise under s 106. Restitution has been said to be concerned with restoring or giving back something to its proper owner or making reparation for loss or injury previously inflicted. As the Full Industrial Court ( Fisher CJ, Bauer and Hill JJ) observed in State of New South Wales v Health and Research Employees Association of New South Wales (unreported, 31 March 1993) (at 82): "... 'restitution' seems to involve a reversion to a position as if the contract had never been entered into."

[176]

102 We do not think that Brown v Rezitis mandates an approach to the assessment of compensation under s 106(5) on the basis that restitution in the sense referred to, is to be the fundamental guiding principle. Restitution so understood may be appropriate in particular cases, but the fundamental guiding principle is that which is stated in the statute itself, namely, what is just in the circumstances of the case. 88 It is not unusual in the cases to find compensation having been awarded under s 106(5) for the loss of opportunity. In Westfield Ltd v Helprin (1998) 82 IR 411, for example, the Full Bench agreed with Marks J's conclusion at first instance that Mr Helprin's contract was unfair in that it did not require a counselling and warning process, including an opportunity for Mr Helprin to improve his performance, prior to the exercise of the right of termination. Both Marks J and the Full Bench considered it appropriate to vary the contract to incorporate a requirement that the respondent provide the applicant with a period in which to improve his performance. Thus, the variation to remedy the unfairness in Mr Helprin's case enabled the Court to make a consequential order awarding monetary compensation to reflect the respondent's failure to provide the opportunity to the applicant to improve his performance. Another example is David Jones Ltd v Cukeric (1997) 78 IR 430 where, notwithstanding Mr Cukeric's employment had been terminated, the Full Bench varied the contract ab initio to provide that the employment was not to be terminated as a result of any restructuring without fair consideration first being given to Mr Cukeric's future position in any new structure. The Full Bench also concluded at 462 that: [I]t would be just in the circumstances to make a monetary order in favour of Mr Cukeric in connection with the arrangement as varied by us. The Company is to pay to Mr Cukeric an amount of money (additional to that already paid) to reflect entitlements in respect of a further period of 6 months' notice of termination.

[184]

(4) Those amendments to the proposed fifth further amended summons that make further changes to Part D - Particulars of the manner in which any amount claimed will be calculated. These amendments are set out in the proposed sixth further amended summons. Principles governing amendments 95 The power of the Court to amend is contained in s 170 of the Act and r 148 of the Industrial Relations Commission Rules 1996. As the respondents acknowledged, the Court usefully summarised the principles relating to amendment of pleadings in Judgment No. 15 at [52]-[57] and, as well, the respondents accepted the correctness of the applicants' summary of the principles which, I consider, is worth reproducing: The power to amend may be exercised " at any stage of any proceedings " (see section 170(2)(a) of the Act and rule 148(1) of the Rules; see also Decision No 15 at [52]). Consistent with the position under general law (see National Australia Bank Limited v Nobile (1988) 100 ALR 227 at 235; TCN Channel 9 Pty Limited v Antoniadis (1998) 44 NSWLR 682 (" TCN Channel 9 ") at 695), the power may be exercised as after the evidence has closed and even after the delivery of judgment (see Decision No 15 at [57]; Mercantile Mutual Insurance v Farrington (1996) 44 NSWLR 634 at 648F-651F). In TCN Channel 9 , the Court of Appeal said (at page 695B-695C) that: "There being no legal objection to the proposed contextual imputations, the finding that Channel Nine did not rely on any new facts to support them was a compelling reason for allowing the amendment. An amendment which reformulates a claim or defence within a cause of action or defence which has already been pleaded, based on evidence that has been or will be adduced, should ordinarily be allowed in order to raise the real questions and issue between the parties. Such an amendment should be allowed even after the evidence has closed. This is not a new principle as can be seen from Clough v London and North Western Railway Company (1871) 7 Ex 26 at 30 and it was emphatically endorsed by Stephen J, Mason J and Jacobs J in Leotta v Public Transport Commission (NSW) (1976) 50 ALJR 666 at 668; 9 ALR 437 at 446, and by this Court in Commonwealth v McLean (1996) 41 NSWLR 389 at 397-398" (Underlining added) Decision No 15 itself involved this Court permitting the Applicants to further amend the Third Summons after the evidence was closed and after the Court had delivered its decision in Gough & Gilmour Holdings Pty Limited & Ors v Caterpillar of Australia Limited & Ors [2002] NSWIRComm 354 (19 December 2002) (" Decision No 11 ") (see also Gilbertson v South Australia (1976) 15 SASR 156 at 159 generally; FF Seeley Nominees Pty Limited v El Ar Initiations (UK) Limited (No 41) (1990) 55 SASR 314; Sherpa v Anderson (unreported, Supreme Court of NSW (Young J), 14 October 2003, BC9302148) at page 3.5 and 5.2 of the Internet print; see further Decision No 15 at [16]-[19], [64]-[66]). The power to amend is to be exercised in such manner as the Court considers " to be necessary in the interests of justice " (see section 170(1) of the Act and rule 148(1) of the Rules; see also Decision No 15 at [52], [55]). The consideration of " justice " reflects the position under the general law (see Queensland v J L Holdings Pty Limited (1997) 189 CLR 146 (" J L Holdings ") at 155, 167, 172; see also Macquarie Bank Limited v National Mutual Life Association of Australia Limited (1996) 40 NSWLR 543 at 554). In J L Holdings (at 153), the majority cited with approval the following passage from Clough and Rogers v Frog (1974) 48 ALJR 481 at 482 wherein the High Court said: "As the defence, if established, would be a complete answer in either action, the amendments sought should have been allowed unless it appeared that an injustice would thereby have been occasioned to the respondent, there being nothing to suggest fraud or improper concealment of the defence on the part of the appellants. With the exception of the suggestion of prejudice arising in respect of the loss of the possible claim against the nominal defendant, the matters relied upon by the respondent in opposition to the amendment sought go at the most to delay and irregularity only, matters which are relevant to costs but do not constitute injustice to the respondent in the sense in which that expression is used " (underlining added).

[185]

The above authorities stand for the following propositions, namely that: (a) subject to a number of factors identified below, proposed amendments to pleadings should be permitted " at any stage of proceedings ", save in circumstances of " incurable prejudice " to the other side (see Decision No 15 at [59]-[60]); (b) when the evidence is closed, there is no barrier to further "pleading" amendments that merely seek to contend that such evidence would or could also support alternative legal characterisations or conclusions (see Mummery v Irvings Pty Limited (1956) 96 CLR 99 at 112; Leotta v Public Transport Commission (1976) 9 ALR 437 (" Leotta ") at 446 (note the view of Barwick CJ, in dissent - that there was a penalty involved in running a case in a particular way - was rejected by the majority)); and (c) it is not a relevant type of prejudice that allowance of proposed amendments will or may deprive the other party of a success which would or might be achieved were the amendment not to be allowed (see Nominal Defendant v Cameron (unreported, Court of Appeal: (Kirby P, Hope and Samuels JJA), 2 August 1998, BC8801666) at page 6.9 of the Internet print). 96 The respondents submitted, however, the general principles summarised by the applicants were subject to the following considerations: (a) Justice does not necessarily require that a party should have multiple opportunities to plead and present its case: Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 at 171 per Kirby J. (b) The applicant for leave bears the onus of persuading the Court that it is just to allow the amendment. "If the court concludes that it cannot decide whether or not it is just to allow the amendment, the party applying for leave must fail" : Hancock Shipping Co v Kawasaki Ltd [1992] 3 All ER 132 at 137 per Staughton LJ (with whom Sir Michael Kerr agreed); McKenzie v Commonwealth of Australia [2001] VSC 361 at [88] per Gillard J; Moore v TWT Ltd (1991) 105 FLR 350 at 353 per Higgins J (ACTSC).

[193]

(b) The proposed section 106(2A) amendments and the proposed Dealership Agreement amendments do not involve factual considerations or disputes but rather involve a question as to whether the Last Resort Policy and the Fourth Assurance (as found by the Court) can, in the alternative, be properly characterised as "collateral arrangements" or "related conditions" to the Dealership Agreements such that Judgment No. 11 and Judgment No. 15 can be supported (if need be), inter alia , by reference to section 106(2A) of the Act. Furthermore, give that the Court found that, in this case, the Dealership Agreements themselves were unfair vis-a-vis termination and decided to correct any unfairness by varying the Overall Arrangement, inter alia , so as to override the unfair operation of clause 29 of the Dealership Agreements, these proposed amendments which simply advance alternative characterisations and other remedial options available on the evidentiary case already heard and determined do not raise "new issues" such that the Respondents would suffer incurable prejudice (see Judgment No. 15 [63]-[69] generally; see also Leotta at 446-447). In such circumstance, just as the Court of Appeal will not prohibit proceedings in this Court where jurisdiction can be established by an amendment asserting that undisputed facts have a particular legal effect (see Solution 6 at [36] and [43]; Mayne Nickless at [61]), this Court will not deny the applicants an opportunity to further amend the Third Summons based on established facts, especially in the face of asserted challenges to the jurisdiction and power of the Court to make the decisions and orders that it has made. (4) Do not cause prejudice, in that: (a) In light of the authorities bearing upon the relevant prejudice (or type of prejudice) that needs to be shown and the fact that none of the proposed section 106(2A) amendments or the proposed Dealership Agreements amendments will require the calling of any further evidence (or would have resulted in the respondents calling further evidence), there is no proper basis for suggesting that the respondents will suffer any relevant prejudice at all if the Court grants leave to the applicants to move on the basis of the Sixth Summons. The applicants do not ask the Court to create any new "phase" in these proceedings so as to consider and rule on the proposed amendments (apart from the proposed Section D amendments which will be considered by the Court in the compensation phase of these proceedings in any event ) but rather assert that, out of abundance of caution in the circumstances that have arisen (namely the introduction of section 106(2A) of the Act the Third Summons should be further amended so that, inter alia , the applicants are not faced with a Burgess type argument in any appeal to the Full Bench of this Court (assuming that the Respondents can convince a Full Bench that they can still appeal against Judgment No. 11 and Judgment No. 15) or any further proceedings that may be taken by the respondents in the Court of Appeal. Respondents' contentions

[205]

(10) The manifest inconsistency between the claims made in paragraphs D3 and D4 are embarrassing. While claims in the alternative are in certain circumstances permissible, here the Applicants invite the Court to speculate about the possibility that the first applicant may have been able to retain the dealership for some 10 years beyond 2000, on the one hand, and the possibility that the second and third Applicants may have been able to negotiate, in 2000, a sale of their shares in the first applicant's capital, on the other. The facts which have been established to the Court's satisfaction are that the relationship of trust and confidence fundamental to the continuance of the First Applicant's dealership had broken down completely by 2000 and that it was inevitable that in the dealership would either be sold or terminated. By the orders made in light of the Judgment No. 15, the Court afforded the Applicants an opportunity to dispose of either the First Applicant's business or the Second and Third Applicants' shares. The Applicants elected not to take advantage of that opportunity with the result that the dealership was duly terminated. In light of the continuing (substantial) profitability of the undertaking between 2000 and 2003, there is simply no factual basis in the Revised Sixth Summons for any contention that the business or shares were worth any less in 2003 than they were in 2000. It follows that if the Applicants have incurred a loss as a result of not availing themselves of the opportunity to sell the business or shares, that loss is a loss of their own making and cannot, in any sense, be attributable to any improper conduct on the part of any of the Respondents. However, importantly in the context of the present application to amend, the Applicants have failed to plead any facts in support of the Revised Sixth Summons which occurred after 26 October 2000. On that basis alone, there is simply no justification for this aspect of the amendment being permitted.

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