Harmer v Caltex Petroleum Pty Ltd & Ors [2000] NSWIRComm 100 | Case summary

1 By notice of motion of 24 May 2000, the applicant sought orders permitting the amendment of the summons filed on 23 December 1999, to insert as the sixth respondent, Caltex Australia Nominees Pty Ltd ('Caltex Nominees'). 2 At the hearing, Mr G Hatcher of counsel appeared for Caltex Nominees, as well as for the first, second, third and fifth respondents. Those respondents did not wish to be heard in relation to the application, but Caltex Nominees, while conceding the Court's jurisdiction to make such orders, opposed them being granted in the circumstances here prevailing. 3 Those circumstances were outlined in an earlier interlocutory judgment given on 5 April 2000. It was common ground that Caltex Nominees is the trustee of the Australian Petroleum Superannuation Plan ('the Superannuation Plan'). The assets of the Caltex Oil (Australia) Pty Limited Pension Plan ('the Pension Plan'), of which the applicant was formerly a member, were transferred to the Superannuation Plan when the Pension Plan was wound up, on the applicant's case, without his knowledge or consent. 4 The case advanced for the applicant by Mr P Hayward, was that the joinder application was pursued on the basis that Caltex Nominees now held the original assets of the Pension Plan, of which the applicant had been a member. 5 Reference was made to the summons, where in paragraph 2, reference was made to another 'entity', then not specified because the precise name was not known. That entity had now been identified to be Caltex Nominees. The money orders sought were a sum of money equivalent to the applicant's residual benefit in the Pension Plan. 6 Mr Hatcher put at issue that the application had arisen as the result of recently acquired knowledge, given an express agreement in earlier proceedings before Peterson J. It was submitted, however, that nothing turned on this, so I deal with the matter no further. 7 Mr Hatcher submitted that the application would be refused, because while the Commission had a very wide jurisdiction under s106 of the Industrial Relations Act 1996, it had no tracing jurisdiction like that conferred upon the Federal Court in bankruptcy or upon the Supreme Court in winding up proceedings. Even in such proceedings, a male fides transition of funds needed to be established. 8 Here the question was said to be whether there was any material which could satisfy the Court that there was arguably a culpable involvement of Caltex Nominees in the contract or arrangement the subject of the proceedings. The test was that stated by the High Court in Brown v Rezitis (1970) 127 CLR 157. Here it was submitted the Court would be on guard because Caltex Nominees was not in existence at the time that the contract or arrangement in question came to an end. If it were not then even in existence, how could it have had the necessary involvement? 9 If it were alleged, which it was not, that the transmission formed a part of an overall arrangement to defeat the applicant's claim, jurisdiction might exist. There had, however, never been any suggestion that the transfer had been anything other than a routine transaction in the interests of the members of the Pension Plan. 10 It was further submitted that if the respondents lost the proceedings, no bar to orders being made against them would arise because of the absence of Caltex Nominees as a party to the proceedings. It was also relevant that the orders sought were framed in a conventional way, none of them proposing that anything be required of Caltex Nominees, other than the payment of money. 11 For the Court to grant the application, it must be satisfied that there was a case to be met. It was submitted that this question would be determined in a similar way to the way in which the authorities on strike out applications had approached such applications. (See Visalli v Southwell & Ors (1988) 12 NSWLR 502). 12 In the absence of evidence of culpability, there would be no jurisdiction to make orders against Caltex Nominees and it followed, so counsel argued, that to the extent that there was discretion involved, the Court would be most reluctant to make the orders sought. The reservations expressed in the interlocutory judgment as to the obstacles facing the applicant would also be relevant to the exercise of that discretion. The addition of Caltex Nominees would not add anything to the proceedings and in those circumstances, the Court could not make orders against it as a matter of jurisdiction. 13 Mr Hayward submitted in reply that the application was a simple one, it sought the joinder of the entity which held the assets containing the residual benefits which the applicant pursued in the proceedings. Mr Hayward then sought and was granted an adjournment so that he could consider the submissions advanced in relation to Brown v Rezitis. 14 It was later submitted that the relevant test flowing from that judgment was not whether there had been 'culpable involvement' by Caltex Nominees in the contract in question, nor were analogies with the equitable principle of tracing relevant to the issue of joinder. In any event, that principle did not depend upon male fides being established. 15 The test was submitted to be that stated by Barwick CJ at p164 of the judgment in Brown v Rezitis. Here the facts were that Caltex Nominees had received directly from the trustees of the Pension Plan, or indirectly, from the employer respondent, the residual benefit which the applicant claimed and on his case, Caltex Nominees was holding. 16 The order sought against Caltex Nominees was the payment of the residual benefit, which it had received. Such an order was clearly connected with the contract in question in the sense discussed by Barwick CJ. Such an order would effect a restitution of the parties to their former position and hence would be granted. 17 Barwick CJ observed in Brown v Rezitis at pp163-166: 'The principal submission made by the appellants is that the only persons who can be made parties to a proceeding under s88F are the persons who are the contracting parties to the contract, arrangement, condition or collateral arrangement (contract or arrangement) which the Commission is asked to vary or to declare void and that therefore sub-s. (2), being a provision to enable the Commission to make orders consequential upon the variation or avoidance of the contract or arrangement must be limited in its operation to those same parties. Hence it is submitted that the power to make an order for the payment of money is limited to the making of an order for payment of money by one of the parties to the contract or arrangement which has been varied or declared to be void. An alternative submission was that the same conclusion could be reached by applying the expression in the sub-section "in connection with any contract, arrangement, condition or collateral arrangement". It was said that these words require that the money the subject of an order for payment must be money which had been paid or was payable in connexion with the contract or arrangement varied or avoided. Therefore, so it was said, the order under sub-s. (2) must be confined to money which had been paid or was payable by one of the parties to the other party or parties to the contract or arrangement. In my opinion, even if the proceedings for the variation or avoidance of the contract or arrangement must be initiated by one of the parties to the contract or arrangement, the parties to the proceedings are not necessarily limited to those parties. It must be borne in mind that one of the purposes of the section is to deal with subterfuges, subterfuges which will take the worker out of the relationship of master and servant and therefore out of the operation of an industrial award designed, amongst other things, for the protection of workers in industry. There may be persons involved in the subterfuge who are not parties to the contract or arrangement but who are in reality the actors deriving benefit from the making or the execution of the contract or arrangement. Also the power given to the Commission includes a power to declare the contractual arrangements void as from their making, not merely void as between the parties, but absolutely void. If there are other persons whose rights are known to depend on the continuance of the contract as a valid instrument according to its terms, then natural justice may in the circumstances require the Commission to afford such persons an opportunity to be heard. Again the avoidance of the contract or arrangement may be a step in uncovering the real transaction benefiting at the expense of the worker parties other than those in whose name the contract or arrangement was apparently made. The five grounds on which the Commission may vary or avoid contractual arrangements are not homogeneous. Only two of them refer to the avoidance of the award for the underpayment of a worker in industry. Consequently the nature of the orders which may be made under sub-s. (2) will of necessity cover a wide field. But underlying sub-s. (2) is I think a broad concept of a restitution of the parties to a situation which existed before the making of the contractual arrangement as well as in an appropriate case to make remedial provision for what has taken place or been done under the contract in the meantime. This, it seems to me, cannot of necessity and in all cases and with relation to an arrangement varied or avoided on each of the grounds in sub-s.(1) be confined to an order for payment of money by one of the parties. In some cases, as I have said, there will be persons who are not the parties to the contract but who have in fact participated in its making and there may be persons who have received money indirectly from one of the parties to the contract or who may be holding money derived therefrom for one of the parties. Consequently, I am of opinion that the power to order the payment of money is not limited to the making of an order for the payment of money by one of the parties to the contract or arrangement varied or avoided. But though there is a generality in the language employed in the sub-section the power to make an order for the payment of money is not, in my opinion, unlimited particularly as to the persons against whom such an order may be made. The problem is to ascertain the limitation by construction of the section. It seems to me that the expression "in connection with" the contractor arrangement varied or avoided provides the necessary limitation as to the nature of the orders for payment of money which can be made and as to the person against whom they may be made. The draftsmanship of the section is inadequate: but I think the expressed intention as to this limitation can be derived from the sub-section read as a whole. Whilst it can be said that the expression "in connection with" is of wide import, it does emphasize the need for a close connexion between the order made and the contract or arrangement varied or avoided. In my opinion, the power to make an order for the payment of money is at best no more than a power to make such an order as can reasonably be thought to have a real connexion with the making, variation or avoidance of the contract or arrangement which has been varied or avoided. It may in truth be limited to a power to make an order for payment of money which has in fact a real connexion with the making, variation or avoidance of the contract or arrangement. However, in either case it will, of course, include power to make an order for payment of money which has been paid or which was payable under the contract arrangements themselves. But, in my opinion, the power will not be limited to the making of such orders. It will extend to ordering the payment of money where the order on the larger view of the jurisdiction given by the sub-section could be considered to be appropriate to effect wholly or partially the restitution of the parties to their former position upon the variation or avoidance of the contract or arrangement. In my opinion, the limitation of the power to order the payment of money to such orders either as are or as may be considered in the circumstances to be connected with the making, performance, variation or avoidance of the contractor arrangement sufficiently limits the power and leaves room for supervision of the Commission by a Court having power to issue prerogative writs so as to confine the Commission within the granted power. Consequently I am unable to accept the submission made by the appellants that an order made by the Commission for the payment of money by any person other than a party to the contract or arrangement varied or avoided is necessarily beyond the power of the Commission. Whether or not it is so depends upon all the circumstances and the terms of the order itself.'

Consideration 18 I have concluded that the application must be granted. The difficulties which lie in the path of the applicant should not be underestimated, but nevertheless, having in mind the views expressed by Barwick CJ, the proper approach to these circumstances is to permit the joinder, there being no question that the funds which the applicant is pursuing as the result of his former membership of the Pension Plan are now held by Caltex Nominees as trustee of the Superannuation Fund, it having received those funds from the trustees of the Pension Plan. In that context, orders made against Caltex Nominees in relation to such funds would plainly be made in connection with the contract in question here, in the sense discussed by Barwick CJ quoted above. 19 The necessity for the joinder may be debatable, given the concession of the existing respondents, that if they are unsuccessful, the absence of Caltex Nominees as a respondent would provide no bar to the money orders sought being made against them, although those respondents may seemingly themselves take different views as to how such orders should apply, as between them, in the event the applicant succeeds. This concession may also, at the end of the day, be relevant to any costs order made. 20 Nevertheless, such considerations cannot, in my view at this stage, properly prevent the joinder of Caltex Nominees as a party to the proceedings, it plainly holding money derived from the trustees of the Pension Plan, which the applicant seeks to recover and on that basis falls within the categories of persons against whom money orders may be made under s106(5), following the approach of Barwick CJ outlined above. That it was not in existence at the relevant time and not culpably associated with the events in question, does not necessary preclude relevant orders being made against it.

Harmer v Caltex Petroleum Pty Ltd & Ors

At a glance

Court

Decision date

Before

Source

Judgment (15 paragraphs)

Orders 21 For all of these reasons, I order that the summons in these proceedings be amended to join Caltex Nominees as a respondent to these proceedings, in the terms sought in the applicant's notice of motion.

Parties

Cases Cited (2)

Cited By (3)