Grenz Pty Limited & Anor v Jetcrete Australia Pty Limited

HEARING DATES: 07/29/2003 DATE OF JUDGMENT: 10/15/2003

APPLICANTS/RESPONDENTS ON MOTION: Mr A Britt of counsel SOLICITORS: J Biady & Associates

LEGAL REPRESENTATIVES: RESPONDENT/APPLICANT ON MOTION: Mr D Knoll of counsel SOLICITORS: Gadens

JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

Matter Number IRC 2952 of 2002 GRENZ PTY LIMITED AND ANOTHER v JETCRETE AUSTRALIA PTY LIMITED Application under section 106 of the Industrial Relations Act 1996 JUDGMENT

1 This judgment concerns a notice of motion filed by the respondent in December 2002, seeking that the summons filed by the applicants in May 2002, be dismissed for want of jurisdiction. The hearing of the motion did not conclude. Final written submissions were filed on 19 September 2003.

2 The summons seeks the variation of a contract entered between the parties in 1996, as from its commencement, in a number of respects. There was an issue between the parties as to whether or not that contract came to an end and was replaced by another contract, when the second applicant, Mr Clements relocated to Western Australia in 1997, to take up work as the respondent's Western Australian manager.

3 The case which the respondent advanced was that the 1996 contract was then brought to an end. The second contract then entered was not one under which the applicant performed work in an industry in and of New South Wales, so that the Court lacked jurisdiction to make the orders sought in the summons.

4 The applicants' case was that there had been but one contract between the parties; that it was one under which Mr Clements had performed work in an industry in and of New South Wales, both before and after his relocation to Perth and that the Court had the jurisdiction to make the orders sought. Even if the respondent's contention was correct, the summons still sought the variation of the 1996 contract, as from its commencement. There was no issue that work was performed in an industry in and of New South Wales under that contract. It followed that the Court had jurisdiction to grant some, if not all of the relief sought in the summons and so the respondent's motion must be dismissed.

5 Evidence was called by the respondent from Mr Evers, the respondent's Company secretary and Mr Mitchell, its managing director. Mr Clements also gave evidence.

6 The evidence showed that the respondent, a company incorporated in New South Wales, had its head office in Sydney, where its managing director was located. The respondent operated in two areas - mining and civil construction. Its business was the supply and application of Jetcrete. Mr Clements was first employed by the respondent, when it was initially established in 1994. In 1996 the parties entered into a consultancy agreement, under which Mr Clements' services were to be provided to the respondent. Those services were described in the agreement as management services allocated by the respondent from time to time. There was no limitation upon where the services were to be provided, or in which aspect of the respondent's operations.

7 Initially Mr Clements worked as the respondent's contract manager. He was located in New South Wales, worked mainly there in the civil construction part of the respondent's operation, but also worked elsewhere in Australia and in the mining aspect of the respondent's operation, at Mr Mitchell's direction. In 1996, the respondent decided upon a restructure. Mr Clements was approached and he agreed to relocate to Kalgoorlie, under a trial arrangement. While Mr Evers' evidence suggested that Mr Clements work was confined to Western Australia thereafter, the evidence of Mr Clements and Mr Mitchell showed that Mr Clements worked mainly in the Western Australian mining industry, as the respondent's Western Australian manager, but also continued to do some work in the civil construction area and to work in other parts of Australia, including New South Wales, from time to time. He also travelled to Sydney, to meet with and report to Mr Mitchell and on occasions to work there. From time to time he was also given work to perform, connected with the respondent's New South Wales business, which he performed while in Kalgoorlie.

8 Mr Clements also acquired a shareholding in the respondent in 1996. Some of the complaints advanced in the summons related to this aspect of the parties' arrangement. In 1997, he also became a director of the respondent.

9 Later, it was agreed that Mr Clements would relocate to Perth. The contract was terminated subsequently, when the respondent required Mr Clements to relocate to Kalgoorlie. It appears that this involved a variation of the contract, which the applicants did not accept and the contract came to an end as a result.

10 The evidence of Mr Evers was that the 1996 contract had come to an end in February 1997 and had been replaced by a new contract, which governed the work performed in Western Australia as the respondent's Western Australian Manager. Mr Clements' evidence was that there had only ever been one agreement. Its operation had been extended and in 1997, when he moved to Western Australia, he took on the work of Western Australian manager, but also continued to perform his former role of contract manager. The contract was brought to an end by the respondent in 2001. Mr Mitchell's affidavit evidence referred to two separate agreements, but in cross examination, he agreed that there had been but one agreement, the 1996 agreement, the operation of which had been extended by agreement and which had been brought to an end in 2001. He disagreed with Mr Clements, as to the nature of his role and responsibilities, but accepted that Mr Clements continued to perform some work in New South Wales after the move to Western Australia, as I have indicated.

11 The case advanced for the respondent by Mr Knoll of counsel was that the complaints advanced concerned a contract under which the bulk of the work had been performed in Western Australia by a man residing there. Mr Mitchell and Mr Clements disagreed as to the extent of the change in the nature of the work over time. Given Mr Mitchell's position, it was submitted that his evidence would be preferred to that of Mr Clements. It followed that the connection which the contract had with New South Wales was such that it would be concluded that the Court did not have jurisdiction to entertain the claims made.

12 That connection was submitted to have been nothing other than incidental. The vast bulk of Mr Clements' New South Wales work after February/March 1997 involved reporting to Mr Mitchell in Sydney. Reporting lines were not a sufficient basis to ground jurisdiction (Ojeh Pty Limited v Primus Telecommunications Pty Limited [2001] NSWIRComm 276), nor was working for a person headquartered in the jurisdiction (Bell & Berg v Macquarie Bank (2002) 171 IR 281).

13 Mr Clements became a director of the respondent in 1997, after he moved to Western Australia, to take over the manager's role there. Apart from the claim advanced in relation to bonus and the overpricing of the shares, his complaints all concerned what happened afterwards. The complaints in relation to the shareholding were collateral to the work. The jurisdictional nexus did not flow from where or when the share transaction occurred, it depended upon work in an industry in and of New South Wales.

14 It was also submitted that the jurisdictional test had two aspects. The first went to the performance of work, the second, the unfairness complained of. Here the Court was asked to deal with questions concerning a man working in Western Australia, supervising staff there, having moved there permanently and having enrolled to vote there, who was suing a company in which all but one board member was located in Western Australia, the bulk of whose business was located there, but who came to this Court for relief. It was plain that the applicants only came to this Court because of the s106 jurisdiction. That was an inappropriate basis for the Court to take jurisdiction.

15 It was also argued that the respondent operated in two distinct industries, not one nationwide industry. The overwhelming work in the mining industry occurred in Western Australia. There was submitted to be no public interest in this Court regulating the employment practices of a business operating in that State, in respect of the applicants, who also operated in that State. It was submitted that Mr Clements' evidence as to the nature and extent of his work in New South Wales would not be accepted.

16 The case advanced for the defendant by Mr Britt of counsel, was that the respondent had not satisfied the onus which fell upon it in an application such as this. The respondent's case was that there were two agreements, one relating to work in New South Wales and the other in relation to Western Australian work. That was disputed by the applicants, but the unspoken contention inherent in the case advanced by the respondent was that the applicants' claim only related to the Western Australian contract. There was no basis for that contention. The summons sought relief not only in relation to the employment contract, but also the agreement in relation to the sale and purchase of shares. Even if there was found to be a Western Australian agreement, the claim in relation to the shares concerned events which had occurred prior to that agreement having been made. Specific claims were advanced in relation to the respondent's conduct as to those shares and relief was sought in connection with the share arrangement.

17 The applicants' case was that the share arrangement was collateral to the contract which, even on the respondent's case, was in relation to work performed in New South Wales. The Commission's jurisdiction to consider that arrangement was well established and there was no suggestion that the share arrangement was connected to any jurisdiction other than New South Wales. It followed that the respondent's motion had to be dismissed.

18 Submissions were also advanced as to which evidence should be preferred, in the case of conflict. Detailed submissions were also advanced in relation to the evidence, which I will not detail.

19 It was submitted on the evidence that there was no separate Western Australian agreement, but one contract between the parties. Work was performed under that contract in an industry in and of New South Wales; the law of the contract was that of New South Wales; that was where it was made and negotiated, where the applicant then resided, where the respondent's head office and principal place of business was, where the applicant worked predominantly prior to 1997 and where he continued to perform work thereafter. The second applicant was also a director of the respondent.

20 It followed that the respondent had not met the onus which fell upon it to demonstrate that the contract did not have the necessary connection with New South Wales. It followed that the motion must be dismissed with costs.

21 In reply, it was argued that while the applicants pleaded unfairness in relation to the share purchase in 1996, while Mr Clements was working in the civil construction sector in New South Wales, the unfairness pleaded in relation to his work arose only when he was no longer working or residing in New South Wales, 'other than incidentally'.

22 The work performed by the respondent in the two States was in different industries, as Mr Clements accepted in his own evidence. The Western Australian business was 99% mining. After 1997, the applicants had little to do with the New South Wales work. The Court would accept that Mr Clements had exaggerated his involvement in New South Wales after 1997.

23 The fact that there was no separate Western Australian agreement, which was conceded, was not fatal to the motion. Reliance was placed upon the judgment of the Chief Justice in Mitchforce v Industrial relations Commission and Ors [2003] NSWCA 151 at [4] and [96]. The lack of public interest in this Court dealing with matters relating to employment in Western Australia was also further emphasised.

24 The law as to how applications such as this must be approached is well settled. It is that discussed by the Full Court in Nagle v Tilburg (1993) 51 IR 8.

25 The law as to the types of contracts in respect of which the Court has jurisdiction to make orders under s106 of the Act, is also well settled. It is that discussed by a number of Full Courts in cases such as Chrysler Jeep Automotive Distributors Australia Pty Limited v Canberra Star Motors Pty Limited & Ors (1997) 79 IR 452 and Perrott v XcelleNet Australia Ltd (1998) 84 IR 255.

26 In this case, I am satisfied that the orders sought in the respondent's motion may not be granted. The evidence does not permit the conclusion that the contract in respect of which relief under the section is sought in the summons, was not one whereby work was performed in an industry in and of New South Wales. The conflict in the evidence as to whether there had been one, or two, contracts between the parties, was resolved in the cross examination of the respondent's witnesses, as the respondent conceded in its submissions. Mr Clements reported to Mr Mitchell. Mr Evers' understanding of what had occurred in relation to the parties' contractual relationship flowed from his understanding of what had been done by others. He was not involved directly. Mr Clements' and Mr Mitchell's evidence was finally the same. There was but one contract between the parties.

27 On the evidence the 1996 contract was never brought to an end by the parties, as it expressly contemplated. Rather, it continued in force, after its nominal termination date. None of the parties addressed the question of the termination of the agreement at the time that it was due to come to an end. The parties simply continued the agreement, each abiding by its terms thereafter. The parties later expressly agreed to further extend the term by another year. When that period had elapsed, again the parties simply continued to act in accordance with the agreement, until it was later terminated. The reference made by the respondent in the termination letter to the agreement which was being terminated, must properly be understood as referring to the 1996 agreement, which had been so continued in the meantime.

28 Under that agreement Mr Clements was the respondent's contract manager and required to perform other management work assigned to him. The contract did not specify where that work was to be performed. Mr Clements' evidence was that initially the bulk of his work concerned the respondent's operations in New South Wales, but he also had responsibility for contracts entered in other States.

29 In 1997, he was assigned the work of Western Australian manager and moved there to perform that work. Mr Clements' case was that he also continued as the respondent's contracts manager. This was disputed by the respondent. It is unnecessary to resolve this conflict at this stage. It cannot be overlooked, however, that even in the organisational structure annexed to Mr Mitchell's affidavit, which Mr Clements disputed and which he believed had been created subsequent to the events in question, Mr Clements was referred to as the respondent's contract manager, as well as its Western Australian manager.

30 At this stage, it is unnecessary to resolve the extent of the work performed under the contract in an industry in and of New South Wales, after Mr Clements move to Western Australia. His assessment was that something in the order of 12% of his time was spent on New South Wales work, during that period. Mr Mitchell did not agree, but it was common ground that some of Mr Clements' work continued to concern the applicant's operations in New South Wales. This was contemplated by the agreement and plainly involved the applicant in the performance of work in the New South Wales industries in which the respondent was involved. On occasions Mr Clements travelled to New South Wales to perform that work, on others Mr Mitchell also assigned him New South Wales work, which he performed in Western Australia. I am satisfied that the evidence established the necessary connection with New South Wales. Mr Clements' involvement as a director of the respondent, after his acquisition of a shareholding in the respondent under the parties' arrangement, but confirmed the conclusion which I had otherwise reached.

31 In so far as it is necessary to express a view as to whose evidence should be preferred on the matters in contention at this stage of the proceedings, I make it clear that I accept Mr Clements' evidence. Mr Mitchell made a number of concessions in cross examination, which demonstrated the accuracy of Mr Clements' recollections on matters in issue. I am not satisfied that Mr Clements' evidence was likewise shown to have been in error. In the case of conflict I am unable, at this stage, to prefer Mr Mitchell's version on the points which remained in conflict.

32 Even if the above conclusions were not available, in this case I am satisfied that it could not be ignored that the complaints advanced in the summons concerned the terms of the original 1996 contract and the representations made, while the second applicant lived in New South Wales and was much more significantly involved in the respondent's operations in New South Wales industries, than was later the case. Amongst other things, the applicants complain that those terms and representations were not honoured by the respondent; that the contract was accordingly unfair and should be varied, as from its commencement.

33 It seems to me that those circumstances can leave no room for doubt as to the Court's jurisdiction to deal with the claims advanced. Whether or not all of the claims advanced will be made out, or will lead to the exercise of any discretion in the applicants' favour is not a matter which requires determination, at this point. I am satisfied, however, that the heavy onus which the respondent accepted as falling upon it in relation to the motion advanced, was not met.

34 It is only cases in which a respondent clearly demonstrates that the applicant lacks a cause of action, or that the claim is untenable or manifestly groundless, that summary dismissal of the application may properly result at an early stage of the proceedings such as this. (See Nagle at p12.) On the evidence, this is not such a case. I am also satisfied that to allow the applicants to proceed, could not at this stage be properly regarded as involving the parties in useless expense.

35 It follows that the applicants must be accepted as being entitled to have his case dealt with in accordance with the provision made in the Act. If it is not resolved in the compulsory conciliation process which the Industrial Relations Act 1996 provides for, it must go on to be determined at a hearing on the merits.

36 It follows, for all the reasons given, that the respondent's motion must be dismissed, with an order for costs in favour of the applicants. I order accordingly. ------------------------

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