Ian Steabler v Thomas F. Fitzpatrick & Associates Pty Ltd

LEGISLATION CITED: Industrial Relations Act 1996

Brown v Rezitis (1970) 127 CLR 157 In re Herrick and Star Carrying Co. Pty Ltd & Ors CASES CITED: (1968 AR 445)

HEARING DATES: 07/01/2005 EXTEMPORE JUDGMENT DATE: 07/01/2005

Applicant: Mr P.C. Coleman of counsel Solicitors: Carroll & Associates LEGAL REPRESENTATIVES:

Respondent: Dr J.P. Berwick of counsel Solicitors: Gells

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

IAN STEABLER v THOMAS F. FITZPATRICK & ASSOCIATES PTY LTD

Application under s106 of the Industrial Relations Act 1996

1 HER HONOUR: By way of an amended Notice of Motion the applicant seeks leave to join five further respondents to the Summons for Relief filed under s106 of the Industrial Relations Act 1996. 2 The joinder application nominates Thomas F. Fitzpatrick as the second respondent, Nadine Fitzpatrick as the third respondent, Fitzpatrick Logistics Pty Limited as the fourth respondent, Adam Fitzpatrick as the fifth respondent and Yvonne Fitzpatrick as the sixth respondent. 3 In the original Summons for Relief, Thomas F.J. Fitzpatrick & Associates Pty Limited was the named respondent. Dr J.P. Berwick, appearing for the respondents in the joinder application, conceded the joinder of Thomas F. Fitzpatrick as the second respondent and Nadine Fitzpatrick as the third respondent. He challenged the joinder application of the named fourth, fifth and sixth respondents. 4 Mr P.C. Coleman of counsel for the applicant relies upon affidavit evidence with documentary annexures of Emma Louise Howlett sworn 21 September 2004, a solicitor with Carroll & Associates. Also tendered was a document headed "Employment Start" dated 7 February 2003 which document had been issued by Nadine Fitzpatrick, the agreed third respondent. 5 The evidence relied upon by the applicant in support of the joinder of Fitzpatrick Logistics Pty Limited, the joinder fourth respondent, can be summarised thus: · the company came into existence two to three days before the first respondent went into liquidation. · Adam Fitzpatrick and Nadine Fitzpatrick were the named directors of the joinder fourth respondent. · a liquidator's report reveals that Fitzpatrick Logistics Pty Limited, the joinder fourth respondent, bought the trading name from the first respondent for $110,000 (including GST). · Ms Howlett, whose evidence is hearsay, asserts she was informed by the applicant that the proposed fourth respondent commenced to carry on part of the business which had been conducted by the first respondent. 6 The evidence in support of the application to join the fifth joinder respondent, namely, Adam Fitzpatrick is as follows: · Mr Fitzpatrick was the sole director and shareholder of the proposed fourth respondent. · He had been a previous director of the first respondent although it was conceded that he was not a director at the time of the liquidation. · Mr Fitzpatrick was the sole director of a company known as Serafan Risk Management Pty Limited, a company about whom the administrator/liquidator of the first respondent referred to in his report to creditors as a "related" company. The company was controlled by Mr Fitzpatrick. Serafan Risk Management Pty Ltd was paid an amount of $71,300 for consulting/risk management services from 15 December 2003 and 2 February 2004 by the first respondent before its liquidation. · Also relied upon was affidavit evidence sworn in the respondent's case by Mr Fitzpatrick. Mr Fitzpatrick was cross-examined. Mr Fitzpatrick deposed "Following my resignation I did not work with the first respondent in any capacity since 15 March 2002." The liquidator's report, reporting on the financial transactions of the first respondent to the creditors, challenged this evidence. · Mr Fitzpatrick also gave evidence "I had no authority to dismiss the applicant." When the applicant was dismissed at the relevant meeting, the proposed fifth respondent, Mr Adam Fitzpatrick was in attendance with his father, the agreed second respondent. · A document of Nadine Fitzpatrick headed "Employment Start" dated 7 February 2003 asserted Mr Fitzpatrick had authority on behalf of the first respondent. 7 The evidence relied upon for the joinder of Yvonne Fitzpatrick as the sixth respondent is as follows: · she was a shareholder of the first respondent; · she was relevantly a beneficial shareholder in a family company; and · she held six of the fourteen issued shares. 8 Dr Berwick, for the respondents, made the appropriate concession, the directors Thomas and Nadine Fitzpatrick, directors of the first respondent and active in the company, could be held to have relevant connection with the contract and accepted it was appropriate they be joined. He, however, then challenged the joinder of Fitzpatrick Logistics Pty Limited asserting it was an unrelated company. 9 As to the joinder of Adam Fitzpatrick, Dr Berwick asserted any dealings by Mr Fitzpatrick were clearly conducted after the first respondent went into liquidation. He challenged a document relied upon by the applicant in which Nadine Fitzpatrick asserted Mr Fitzpatrick had authority to represent the first named respondent on 7 February 2003 as incorrect. He asserted the document was not Mr Fitzpatrick's document. Mr Fitzpatrick, Dr Berwick submitted, also had denied on oath there was any financial relationship between Mr Fitzpatrick and the impugned contract. 10 As to the joinder of the sixth respondent, Yvonne Fitzpatrick, Dr Berwick asserted no legal authority authorised a joinder simply because a person was a shareholder even though that shareholding was held in a family company. There was, he asserted, not sufficient evidence for the joinder of Ms Fitzpatrick. 11 A number of authorities guide the court in its determination as to joinder. The Court under s170 of the Industrial Relations Act 1996 has power to join third parties who have a connection with the impugned contract. That power is reflected in Rules 130 and 183 of the Act. 12 Regard is had to the decision in Brown v Rezitis 127 CLR 152 and the decision in Bowker v Software Engineers [2002] NSWIRComm 135. In the latter decision, the relevant principles for determining whether or not an application should be granted by the Court are enunciated. The test in a joinder application is whether there has been established a sufficient evidentiary basis for the joinder. 13 The Court must consider if it is appropriate a proposed third party be joined inter alia to have before the Court all the parties in order to fully and properly resolve and determine the issues raised in the proceedings (Wong Cheng t/as Artist Productions (1999) 91 IR 369). 14 The question of joinder depends on whether the proposed respondent has a sufficient connection with and/or involvement in the contract or arrangement (Bell v Macquarie Bank No 4 (1999) 93 IR 199 at 207). 15 In the words of Barwick CJ in Brown v Rezitis (1970) 127 CLR 157 (at 164) the test is: who are in reality the actors deriving benefit from the making or the execution of the contract or arrangement. and otherwise recited the test being whether the joinder(s): have received the proceeds of the contract or arrangement or were in some way culpably associated with the making of the operation.

16 The statement of Sheldon J In re Herrick and Star Carrying Co. Pty Ltd & Ors, 1968 AR 445 (at 446): The Commission can do no more than seek to do justice in the individual cases coming before it under s 88F; but, as the respondent is, more often than not, an evanescent propriety company, such orders as it makes are frequently no more than attempts to extract blood from a stone.

His Honour was therein referring to the possibility of a company being in liquidation. That is the circumstances I have here before me. His Honour then said: In my opinion, s. 88F (2) casts a net sufficiently wide to cover those who bear the moral responsibility for the contract which is avoided even if they are not actually parties. I held in Pegan's Case (1968 A.R. 119) that this sub-section should be construed liberally and, in my opinion, it is, to use its words, "just in the circumstances of the case" to see that in the case of this proprietary company there should be no sheltering under legalities and that the individuals behind it should have sheeted home to them their true responsibilities. This accords with the view I expressed in Pegan's Case that s. 88F enables the Commission "to attack transactions at their moral roots". I think that this approach is fortified by the Commission's general duty (s. 83) to act according to the dictates of equity and good conscience. 17 I am satisfied the evidence against the fourth named respondent is sufficient to persuade given the purchase of the trading name, the interconnection of the directors, and the financial dealings that there is a connection with or involvement in the employment contract or arrangement with the applicant. 18 In determining whether there is sufficient connection with/or involvement in, the contract or arrangement with the applicant, I am satisfied there is sufficient evidence of a financial and administrative nature to establish a connection with the impugned employment contract and the fifth named respondent, Adam Fitzpatrick.

19 I reject the application for joinder of the sixth named respondent. I cannot be persuaded that any of the authorities suggest the simple status of being a shareholder in a company is sufficient for joinder. There was no other evidence placed before me. Yvonne Fitzpatrick had a beneficial interest but no other relationship with the company, in liquidation, that was party to the employment contract. I find that is not a sufficient connection to order joinder. I have seen no evidence of any other connection with the impugned contract. There is no evidence she gained a financial benefit. The company in which she had a concern is in liquidation. She had no other company involvement. 20 I therefore order the joinder of the fourth named respondent and the fifth named respondent in the joinder application, each of whom appear to have derived a benefit from the operation of the contract or arrangement which is contended to be unfair and have both on the evidence been associated with the operation of the contract or arrangement which is impugned. 21 I order the joinder in order to assure that the Court has before it all parties necessary in order to resolve and determine the issues raised in the Summons for Relief (Wong Cheng t/as Artist Productions (1999) 91 IR 369). 22 That is not to say, however, that the applicant has made out any basis for relief being ordered against any of the named respondents. The applicant has not. The only question currently before me is the determination of whether there is sufficient evidentiary basis for the joinder. 23 Whether or not the applicant is ultimately successful in having any orders made in his favour or any further order made against each or every respondent are questions to be determined on all the evidence to be led in the proceedings. Such determinations will then reflect in appropriate costs orders. 24 I reject the application for the joinder of the sixth named respondent. 25 Mr Coleman sought costs of the Notice of Motion. Dr Berwick submitted the Notice of Motion as it was put forward was not successful. The sixth named respondent was not joined. There had been correspondence between the parties and a suggested agreement related to the withdrawal of the application for the joinder of Yvonne Fitzpatrick. Costs issues intervened in the agreement. I order the named respondents to pay two thirds of the applicant's costs of the Notice of Motion. 26 In the circumstances, I order the applicant to pay costs to Ms Yvonne Fitzpatrick in defending the Summons for Relief.

27 Mr Coleman submitted given the later order as to costs, the first order should be reviewed. This application is rejected.

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