Hardinge v Gert Schidor Design Pty Ltd & Anor

Unfair Contract - Interlocutory proceedings - Stay application - Notice of motion to stay whole proceedings pending determination by Court of Appeal of respondents' summons seeking prohibition against Commission in Court Session from exercising power under s 106 of Industrial Relations Act 1996 in respect of alleged unfair contract - Notice of motion to set aside Notice to Produce - Notice of motion to amend summons for relief - Query whether power in Commission in Court Session to stay proceedings - Principles in respect of stay in circumstances where prohibition is sought - Significance of privative provision of s 179 of Industrial Relations Act - Stay refused - Documents ordered to be produced in accordance with Notice to Produce - Leave granted to amend summons CATCHWORDS: Practice and procedure - Unfair Contract - Interlocutory proceedings - Stay application - Notice of motion to stay whole proceedings pending determination by Court of Appeal of respondents' summons seeking prohibition against Commission in Court Session from exercising power under s 106 of Industrial Relations Act 1996 in respect of alleged unfair contract - Notice of motion to set aside Notice to Produce - Notice of motion to amend summons for relief - Query whether power in Commission in Court Session to stay proceedings - Principles in respect of stay in circumstances where prohibition is sought - Significance of privative provision of s 179 of Industrial Relations Act - Stay refused - Documents ordered to be produced in accordance with Notice to Produce - Leave granted to amend summons

District Court Act 1973 LEGISLATION CITED: Industrial Relations Act 1996

BEA Systems Pty Limited v Industrial Relations Commission of New South Wales & Anor (unreported, CA 40225/05, 11 April 2005) Cohen v McWilliam (1995) 38 NSWLR 476 Hardinge v Gert Schidor Design Pty Ltd & Anor [2004] NSWIRComm 106 Michael John Burgess v Mount Thorley Operations Pty Ltd (2002) 119 IR 52 Mitchforce Pty Ltd v Industrial Relations Commission of NSW (2003) 57 NSWLR 212 Mitchforce Pty Ltd v Starkey (No. 2) (2003) 130 IR 378 CASES CITED: Newcrest Mining v IRC of NSW & CFMEU [2005] NSWCA 85 Old UGC Inc v Industrial Relations Commission of NSW (2004) 60 NSWLR 620 QSR Limited v Industrial Relations Commission of NSW [2004] 208 ALR 368 Solution 6 Holdings Ltd v Industrial Relations Commission of NSW (2004) 60 NSWLR 558 Sydney Water Corporation Ltd & Anor v Industrial Relations Commission of NSW & Anor [2004] NSWCA 436 The Commissioner for Railways v Small [1938] 38 SR (NSW) 564

APPLICANT/ RESPONDENT ON MOTION Mr A Rogers of counsel Solicitor: Mr V Tsolakis Tsolakis Solicitors LEGAL REPRESENTATIVES:

RESPONDENT / APPLICANT ON MOTION Mr J N West QC with Mr C J Whitelaw of counsel Solicitor: Ms S David David Legal Solicitors

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

BIRON HARDINGE v GERT SCHIDOR DESIGN PTY LTD AND ANOR (No 2)

Application under s 106 of the Industrial Relations Act 1996

1 This interlocutory judgment deals with two notices of motion. The first motion, filed by Gert Schidor Design Pty Ltd ("first respondent") and Gert Schidor ("second respondent") seeks a stay of the whole proceedings as pleaded by Biron Hardinge ("the applicant") in his amended summons for relief under s 106 of the Industrial Relations Act 1996 pending determination by the NSW Court of Appeal of the respondents' summons seeking prohibition against the Industrial Relations Commission from exercising or purporting to exercise its power under s 106 in respect of the written contract made between the applicant and the first respondent. Mr Gert Schidor was the sole director of the first respondent. 2 In their motion the respondents also seek that a Notice to Produce served on the first respondent by the applicant and first made returnable on 17 March 2005 be set aside. The Notice sought the first respondent's Profit and Loss Statements, tax returns, annual returns, balance sheets and annual accounts for the years 1999 to 2004. 3 The second motion was filed by the applicant and seeks an order granting leave to the applicant to further amend his summons for relief. Background 4 The background to the proceedings is set out in the judgment of Staff J in Hardinge v Gert Schidor Design Pty Ltd & Anor [2004] NSWIRComm 106, a judgment given on 27 April 2004 in which his Honour dismissed a motion by the respondents to set aside the applicant's summons against both respondents for want of jurisdiction or, in the alternative, to set aside the summons against the second respondent. 5 Mr Hardinge had sought an order pursuant to s 106 declaring void ab initio in part or, alternatively, varying the contract between the applicant and the first respondent pursuant to which work was performed on behalf of the first respondent in an industry so as to provide that the terms of the contract be strictly complied with or that in the event of a breach by the first respondent that the first respondent be liable to the applicant in liquidated damages in the sum of $100,000. 6 The alleged contract between the applicant and first respondent involved the use of a Clipper Bus owned by the applicant in an advertisement being designed by the first respondent. It was alleged by the applicant that the first respondent failed to pay the agreed charges under the contract including hire, labour, towing charges and accommodation and meals and that the first respondent failed to meet its obligations under the contract to restore the bus to its original condition once the first respondent had finished using the bus. 7 The applicant alleged unfairness on the following grounds: (i) The First Respondent was not required to post a bond to ensure compliance with its obligation for restoration of the vehicle. (ii) The contract did not contain a requirement as to strict compliance with the obligations of the First Respondent. (iii) The failure of the First Respondent to restore the bus as it was obliged to do. (iv) The Second Respondent was the effective party to the contract but was not bound to honour its provisions. 8 In 2000 the applicant and his company, Radio Masts (Australia) Pty Ltd, sought to recover from the respondents in proceedings commenced in the District Court, damages for what was said to be breaches by the respondents of the agreement dated 10 November 1999 as referred to in the summons. Following a motion by the respondents, proceedings against the second respondent, Mr Schidor, were struck out. The decision to strike out was upheld in the Court of Appeal. 9 Apparently, by judgment entered in 2004, the District Court held that the first respondent was liable to the applicant for damages in the sum of $62,866.22 plus costs. 10 In his judgment dismissing the respondent's motion, Staff J relevantly held that: 39 In the absence of the whole of the evidence it is not possible to identify, at present, whether it was a term of the agreement that the labour provided was that of the applicant. It is therefore difficult to assess the significance of any such term to the question of jurisdiction at this preliminary stage of the proceedings.

40 As the authorities, particularly, Nagle (T/as W D & J L Nagle & Sons) v Tilburg & Anor (1993) 51 IR 8 and Virtue v New South Wales Department of Education and Training (1999) 92 IR 428 at 447 - 448 make clear a decision on a motion does not determine the respondents' legal rights.

41 It is therefore not necessary for me to come to a final view in respect of a number of the respondents' submissions. In particular, whether the agreement by its terms did, or did not, directly require any work to be done by either the applicant or anyone else for the first respondent. 42 It is sufficient for me to find, as the material stands, that I am not able to make a finding in those terms having regard to the limited material before the Court that, if it was a term of the contract that labour would be provided, and it may have been a term, that the labour was that of the applicant himself.

43 In my view, there is insufficient material before the Court to make a final determination in this regard although the material points to the applicant providing his labour to the first respondent.

… 46 In the circumstances, I find that it is premature to determine whether or not there is jurisdiction to consider this matter. I am not persuaded, as a matter of law that the relief sought is justified. I therefore dismiss the motion.

47 Finally, although it might be argued that satisfaction of the District Court judgment would render these proceedings otiose and that the Court should therefore decline to entertain these proceedings until execution has been attempted, I do not think that is the appropriate course to adopt. The applicant seeks joint and several orders against the first and second respondent. …

49 Mr Rogers in respect of this issue submitted that, in circumstances where the respondent had chosen, because of financial incapacity not to participate in the District Court proceedings, that in light of s 18A(3) of the Arbitration (Civil Actions) Act it is inherently improbable that it would make out sufficient grounds to establish a basis upon which it ought to be granted a rehearing. In respect of this aspect of the matter I accept Mr Rogers submission. However, in light of the decision that I have come to, the Court need not be troubled with this issue. 11 It is apparent from the applicant's viewpoint the first respondent is a "straw man" and pursuit of the Award made in the District Court would be fruitless. Hence, the maintenance of the proceedings in this jurisdiction against both respondents. Submissions for the respondents

12 Mr J N West QC with Mr C J Whitelaw of counsel appeared for the respondents. In relation to the stay application, counsel relied on the principles referred to by Walton J, Vice President in Michael John Burgess v Mount Thorley Operations Pty Ltd (2002) 119 IR 52 at [19]-[20]. It was contended the amended summons raised serious questions as to whether or not the Commission in Court Session had jurisdiction to entertain the proceedings. Mr West described the jurisdictional issues as: (a) Whether the proceedings are statute-barred by s 108B of the Act. (b) Whether the proceedings can be seen not to involve any contract within the meaning ascribed to that term by ss 105 and 106 of the Act and are accordingly beyond jurisdiction. (c) The question of the proper construction of ss 105 and 106 as explained by the Court of Appeal in Solution 6 Holdings Ltd v Industrial Relations Commission of NSW (2004) 60 NSWLR 558, which impacts on whether or not there is here any "contract" whereby work is performed in any industry. This question is not yet settled. The Hight Court has given a grant of special leave to appeal in Solution 6 and in two other cases dealt with contemporaneously with Solution 6 , namely, QSR Limited v Industrial Relations Commission of NSW [2004] NSWCA 199; 208 ALR 368 and Old UGC Inc v Industrial Relations Commission of NSW (2004) 60 NSWLR 620. (d) Whether the principal proceedings being to recover as compensation amounts that were awarded as damages for breach of contract of bailment or reward in proceedings in the District Court of NSW, are beyond the jurisdiction of the Commission in Court Session. (e) Whether the case as pleaded against the respondents is a case in which it is not alleged that any relevant contract was unfair as explained by the Court of Appeal in Sydney Water Corporation Ltd & Anor v Industrial Relations Commission of NSW & Anor [2004] NSWCA 436. 13 Mr West advised the Court that the respondents had sought relief in the Court of Appeal. Moreover, proceedings in the Court of Appeal may well be affected by the outcome of appeals in the High Court in the proceedings mentioned above. It was submitted no point would be served in the parties running up costs by the presentation of proceedings presently in this Court in light of the proceedings in the Court of Appeal and the High Court. In addition to the jurisdictional issues the Court was advised that the respondents in the Court of Appeal proceedings abovementioned also seek relief in the original jurisdiction of the Court of Appeal by way of an anti-suit injunction to restrain proceedings by the applicant in this Court upon the grounds that: (a) He is estopped from bringing the proceedings. (b) The proceedings are res judicata. (c) The proceedings are an abuse of process or are vexatious or oppressive. 14 In relation to the motion to set aside the Notice to Produce, Mr West contended it was an abuse of the Court's process on the basis that it had not been issued bona fide for the purpose of obtaining any evidence relevant to any issue raised by the applicant in his amended summons. Further, that the applicant's sole or main purpose in serving the Notice was to obtain information concerning the first respondent's financial circumstances to assist the applicant in deciding whether or not it would be worthwhile for him to take any steps to enforce the District Court judgment. Mr West submitted the Notice was an attempt at discovery and fell foul of the principles in The Commissioner for Railways v Small [1938] 38 SR (NSW) 564. Submission for the applicant

15 Mr A Rogers of counsel appeared for the applicant. As to the stay application Mr Rogers submitted: (a) The contract in this case led directly to the performance of work and was not a contract of the character considered by the Court of Appeal in Solution 6 . (b) Proceedings were initiated in the Commission in Court Session before the contract terminated and the applicant's claim is not time-barred. (c) The present factual circumstances may be distinguished from those considered by the Court of Appeal in Tszyu v Fightvision Pty Ltd (2001) 104 IR 225. The application in the present proceedings does not seek to undermine in any relevant way the judgment in the District Court; the applicant embraces the judgment in the District Court and it constitutes the foundation from which the Commission should make any decision: see Campbells Cash & Carry v Overmyer Industrial Brokers [2003] NSWSC 76. (d) There is no abuse of process. The proceedings are not parallel proceedings with those in the District Court: see Hardinge v Gert Schidor Design Pty Ltd & Anor [2004] NSWIRComm 106. (e) If the Commission were minded to grant the stay it should be subject to payment of the admitted amount of the debt owed by the first respondent to the applicant. 16 In relation to the application by the respondents to set aside the Notice to Produce the applicant submitted that the reason for seeking the financial records back to 1999 was to show that the first respondent was never going to be able to honour the undertakings given in the contract with the applicant and that goes to the essence of the question of unfairness. It was submitted that the particulars of unfairness in the amended summons included a particular that the contract was unfair because the contract of November 1999 was "effectively incapable of enforcement against the first respondent". The substance of this allegation was that the breach of contract by the first respondent could never be properly remedied because at the time of the breach the first respondent was, or was capable of becoming a man of straw who, having used the applicant's possessions and labour for its own purposes was effectively immune to any action for damages. The contract thereby became unfair upon breach. 17 Mr Rogers submitted that if the applicant simply wanted to establish whether or not it was presently worth enforcing judgment against the first respondent the applicant would need only issue an examination summons (see District Court Act s 91). 18 The further amendment to the summons has, inter alia, the effect of making it clear what the arrangement pleaded was and what was the involvement in that arrangement of the second respondent. It was asserted that a conversation occurred in November 1999 between the applicant, the applicant's son and the second respondent whereby it was alleged the second respondent held himself out to be a party to any contract or arrangement and reached agreement that he would engage the applicant and hire the bus. Further that the second respondent induced the applicant to enter into a written contract by representing to the applicant that he, the second respondent, would personally ensure the terms of the contract would be carried out. 19 In support of the application for amendment to the summons Mr Rogers submitted there was no prejudice to the respondents - they had not yet filed any evidence. Further, that amendments even at a very late stage are generally granted so as to do justice between the parties: Cohen v McWilliam (1995) 38 NSWLR 476. Absent prejudice, it was submitted, there was no compelling reason why the application to amend ought not be granted. Consideration

20 The stay application here is for a stay of the whole proceedings pending determination by the NSW Court of Appeal of the respondents' summons seeking prohibition against the Industrial Relations Commission in Court Session. Neither party addressed the question of the Court's power to grant such a stay. The reliance by the respondents on Michael John Burgess v Mount Thorley Operations Pty Ltd is misplaced; there his Honour considered an application for a stay in appeal proceedings. At [16]-[17] Walton J observed: 16 The distinction between a stay of an order or decision and a stay of proceedings is a well established one, and has been the subject (in different contexts) of many decisions in different jurisdictions, including the decision of the High Court in Re Marks: Australian Conciliation and Arbitration Commission ex parte Australian Building Construction Employees' and Builders Labourers' Federation (1981) 147 CLR 417. 17 Clearly the respondent's submission raises important issues of statutory interpretation and the extent of any inherent jurisdiction of the Commission in Court Session in relation to a stay of proceedings in an appeal matter. I am reluctant to make a decision on these matters in the absence of comprehensive argument, particularly when I consider that, as a discretionary matter (for reasons I shall explain) the stay should not in any event be granted. I simply note, without needing to decide the matter, that the respondent's submission is arguable. 21 No express power to grant a stay of the whole proceedings is contained in the Industrial Relations Act and it could only be that the Court may do so pursuant to its inherent power as a superior court of record. Of course, the power of the Court to permanently stay proceedings has been exercised on numerous occasions and it is probably the case that power exists to order a stay in the circumstances in this case.

22 Nonetheless, in the absence of any argument about this issue, I do not propose to determine it given that in the exercise of my discretion I have decided not to grant the stay in any event. I do wish, however, to refer to the judgment of Bryson JA in Newcrest Mining v IRC of NSW & CFMEU [2005] NSWCA 85 where his Honour set out the relevant principles to be applied. In that case Newcrest sought an order in the nature of prohibition restraining the Industrial Relations Commission of New South Wales from dealing with a notification of an industrial dispute by the CFMEU. Newcrest applied by Notice of Motion for an order that proceedings in the Commission be stayed until determination of the claim in their Summons. 23 In his judgment at [5] Bryson JA considered the Court's power to grant the stay and the basis upon which the Court would do so: 5 Case law to which I was referred relating to stay of proceedings under challenge pending determination in the Court of Appeal relates to staying execution of judgments or enforcement of orders which are themselves under appeal. The principal authority on that subject is Alexander v. Cambridge Credit Corporation (Receivers Appointed) (1985) 2 NSWLR 685. Recent consideration in the context of enforcement or suspension of penal orders which are under appellate challenge is found in New South Wales Bar Association v. Stevens [2003] NSWCA 95 per Spigelman CJ [83 and following]. In my opinion judicial decisions relating to the enforcement of judgments which are under appeal cannot be readily applied to interlocutory stay of proceedings which are the subject of an application in the nature of prohibition, but in principle the inherent power of the Court re-conferred by s.23 of the Supreme Court Act 1970 extends to stay of proceedings in those circumstances. The power exists because it is necessary for the administration of justice, and it is to be exercised where it is necessary to exercise it. The power to order a stay is discretionary and such an intervention should not take place lightly; the outcome which is likely if there is no stay must be so adverse and severe that the attainment of justice requires interlocutory intervention. It must be clearly shown that it is likely that there will be some adverse consequence of allowing the proceedings under challenge to continue, and that the outcome will be so difficult to remedy or otherwise so adverse and severe in its impact that interlocutory intervention by the Court of Appeal should take place notwithstanding that there has not been an opportunity for full consideration. Questions of convenience are relevant, but not, in my view, simply as the balance of convenience: the test is a test of necessity and is not satisfied simply by assessing the relative convenience and harm for one side and the other. An intervention should not be made lightly in the present circumstances, where IRC, itself a superior court the decisions of which are protected from review by s.179 of IR Act , has after argument made a carefully considered and fully stated decision in favour of proceeding to deal with the business before it. 24 The grounds relied upon for the stay went essentially to the proposition that the respondents wish to challenge, on a number of fronts, the Commission's jurisdiction to entertain the applicant's claim for relief under s 106 of the Industrial Relations Act. In particular, it is said the challenge raises issues addressed by the Court of Appeal in Solution 6, which is now the subject of proceedings in the High Court of Australia. It was submitted no point would be served in the parties running up costs by the presentation of proceedings presently in this Court in light of the proceedings in the Court of Appeal and the High Court. 25 There are a number of reasons for rejecting the stay application. First, the Commission in Court Session is a superior court of record whose decisions are protected from review by s 179 of the Industrial Relations Act. The respondents, in seeking to take their claim for prerogative relief to the Court of Appeal at this interlocutory stage, are obviously seeking to avoid the application of s 179 and rely on Solution 6 at [113], [122], [123] and [125]. Proper weight should be given to the existence of s 179 providing, as it does, that decisions of the Commission are final. Avoidance of its terms should not be encouraged by this Commission by granting stay applications merely because they have been sought and where it is not evident that the respondents have a good arguable case or that it is in the interests of justice to do so. That a respondent may be precluded from seeking a review of a decision or purported decision, once made, beyond an appeal to a Full Bench of the Commission, is the very reason for the existence of s 179. It does not seem to me that encouragement of the means to avoid that provision by granting a stay without a very sound basis to do so would be consistent with Parliament's intention. 26 Secondly, as Bryson JA observed, the test of whether to grant a stay in the circumstances of this case "is a test of necessity and is not satisfied simply by assessing the relative convenience and harm for one side and the other." The necessity in this case might be said to arise because, if the Commission in Court Session were to decide the matter, the intervention of the Court of Appeal could only be on the basis that any decision of the Commission fell foul of the Hickman principle: R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 and, therefore, it would be unable to pre-empt or prevent jurisdictional error. This proposition assumes there would be or would likely to be jurisdictional error, something the respondents in this case have not established and, in any event, it tends to ignore what s 179 is obviously intended to achieve, namely, that decisions of the Commission in Court Session are final subject only to an appeal to the Full Bench.

27 Thirdly, it is not apparent on the face of the amended summons or on the proposed further amended summons that the contract or arrangement there pleaded is a contract or arrangement of the character of the Share Sale Agreement considered by the Court of Appeal in Solution 6 or that the performance of work pursuant to the contract or arrangement is merely consequential. It is strongly arguable that the contract or arrangement pleaded is a contract or arrangement coming within the Commission in Court Session's unfair contracts jurisdiction because it is a contract or arrangement that leads directly to the performance of work. The fact that the contract may be a contract of bailment does not, of itself, take it outside the Commission's unfair contracts jurisdiction. 28 Fourthly, Staff J in Hardinge v Gert Schidor Design Pty Ltd & Anor [2004] NSWIRComm 106 dismissed an earlier motion by the respondents to set aside the applicant's summons for want of jurisdiction. The summons was attacked on three bases: (i) that the summons was an abuse of process; (ii) the Commission lacked jurisdiction to hear the summons and (iii) if jurisdiction exists, as a matter of discretion, it should not be exercised. His Honour's judgment was given prior to the decision in Solution 6 but he did have regard to the Full Bench decision in Mitchforce Pty Ltd v Starkey (No. 2) (2003) 130 IR 378 and Mitchforce Pty Ltd v Industrial Relations Commission of NSW (2003) 57 NSWLR 212 where similar issues were considered. 29 Fifthly, none of the other jurisdictional or other objections raised by the respondents appear, on their face, to be knockout points. Sixthly, all of the jurisdictional objections taken by the respondents are capable of being addressed and determined by the Commission in Court Session. 30 Seventhly, the recent flood of applications seeking prerogative relief in the Court of Appeal following the decision in Mitchforce Pty Ltd v Industrial Relations Commission of NSW is having a deleterious effect on the Commission's case management system and is leading to severe delays in disposing of cases before the Commission. Unless there is a proper basis upon which to grant a stay the disruption to the Commission's case management system and the delay and inconvenience that is causing to litigants is a factor weighing against the grant of a stay. 31 It follows from what I have said that I respectfully disagree with the approach taken by Tobias JA in BEA Systems Pty Limited v Industrial Relations Commission of New South Wales & Anor (unreported, CA 40225/05, 11 April 2005). His Honour there considered that the balance of convenience favoured the granting of a stay application against the Commission in Court Session (Marks J) so that the Court of Appeal could exercise its supervisory powers to review the jurisdictional issues posed by the Full Bench judgment in Crowe v UCS Developments Pty Limited (2003) 130 IR 266 "in effect, untrammelled by the impact of s 179(1)." Such an approach gives no weight whatsoever to the existence, purpose or intent of s 179, nor to the fact that there has been a determination on the issue in Crowe by a Full Bench of a superior court of record. 32 In relation to the Notice to Produce, as explained by Mr Rogers, the documents sought have a legitimate forensic purpose, especially in light of the proposed further amended summons, in respect of which I propose to grant leave to amend. The Notice is not an illegitimate attempt at discovery and does not fall foul of the principles in The Commissioner for Railways v Small. 33 In relation to the application to amend the summons I propose to grant leave. I agree with counsel for applicant that absent prejudice, there is no compelling reason why the application to amend ought not be granted. There is no prejudice to the respondents in this case, especially given that they have not yet put on their evidence. 34 Section 170(1) of the Act provides that the Commission may, in any proceedings before it, make any amendments to the proceedings that the Commission considers to be necessary in the interests of justice and any such amendment may be made at any stage of the proceedings. Rule 148 of the Industrial Relations Commission Rules 1996 provides: 148. General

(1) A tribunal may, at any stage of any proceedings, on application by any party or of its own motion, order that any document in the proceedings be amended, or that any party have leave to amend any document in the proceedings, in either case in such manner as the tribunal considers to be necessary in the interests of justice. (2) Unless the tribunal otherwise orders or permits, an application to amend shall be made by notice of motion. Orders

35 The Court makes the following orders: (1) The respondents' application to stay the whole of the proceedings is refused. (2) The respondents are ordered to appear before me, with the documents described in the applicant's Notice to Produce dated 11 March 2005, at 9.45 am on Tuesday 7 June 2005. (3) Leave is granted to the applicant to further amend the amended summons filed on 24 August 2004 in these proceedings in the terms of Annexure A to the affidavit of Janet Boutros, solicitor, dated 6 May 2005 and filed in the Industrial Registry on 9 May 2005. (4) Costs are reserved. _____________________________

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