(iii) further, and in the alternative to 2, an order varying from its commencement or at some later date the Contract by inserting provisions as to notice upon termination or the alteration of the duties of the applicant, the prohibition of action that would damage the confidence and trust in the relationship with the applicant.
7 When asked to clarify which respondent was said to be party to the contract, the applicant nominated the third respondent as a party to the contract. Following a further enquiry from the Court as to the significance, if any, of the references to the "respondent" and "respondents" in the orders sought, the applicant explained that the "Claims" section of the summons should consistently refer only to the first and second respondents. When asked to clarify which respondent was said to be a party to the contract, the applicant confirmed that the third respondent was a party to the contract.
8 The Court was then informed that the applicant was not proceeding against the third respondent because it had been placed under external administration sometime in April 2006. An extract from the Australian Security and Investments Commission (ASIC) setting out the relevant details was tendered by the applicant.
9 The Court was also informed that the applicant did not intend to seek the requisite leave to proceed against the corporate respondent. After the luncheon adjournment, the applicant filed in court a notice of discontinuance against the third respondent.
10 The relevant provision under the Corporations Act 2001 which deals with the requirements to seek leave to continue proceedings during the administration of a company is s440D which provides:
440D Stay of proceedings
(1) During the administration of a company, a proceeding in a court against the company or in relation to any of its property cannot be begun or proceeded with, except:
(a) with the administrator's written consent; or
(b) with the leave of the Court and in accordance with such terms (if any) as the Court imposes.
(2) Subsection (1) does not apply to:
(a) a criminal proceeding; or
(b) a prescribed proceeding.
11 Although in opening submissions, the applicant informed the Court that the impugned contract upon which he placed reliance was a contract of employment with the third respondent, later in oral submissions, he modified his position by advancing a submission that, "there was a level of uncertainty", as to the correct parties to the contract. According to the applicant, there is some support for this in the summons where it is pleaded that the applicant performed work for the first respondent (Mr Doneski). The Court directed the applicant's attention to other references in the summons to the third respondent, said to be the entity for whom the applicant performed the work as a business development manager, as well as express references to the contract of employment as one between the applicant and the third respondent.
12 Annexed to the summons is the letter of appointment dated 1 March 2005. The contents of this letter purport to offer the applicant a position with the third respondent as a business development manager effective from the date of the letter. Various terms and conditions including the applicant's remuneration payable by the third respondent are set out in the letter. It is signed by Mr Doneski as managing director, "for and on behalf of", the third respondent. I note also that the ABN on the letter corresponds with the ABN appearing on the ASIC extract. Attached to the applicant's affidavit, sworn on 17 July 2006, is an unsigned agreement dated 1 March 2005 between the applicant and the third respondent which purports to set out certain terms and conditions, including details as to the applicant's remuneration package said to comprise a base salary per annum of $60,000 and superannuation in an amount of $5,400, giving a total of $65,400.
13 It is reasonably clear from this documentation that the applicant was in fact employed by the third respondent as a business development manager from 1 March 2005. The relevant parties to the impugned contract therefore, for present purposes, are the applicant and the third respondent.
14 Under s440D, all proceedings in a court not being criminal proceedings or prescribed proceedings may not be begun or proceeded with against a corporation under administration, or in relation to any of its property, unless leave of the Court is obtained or the administrator consents in writing. Under s1382 of the Corporations Act, "proceeding" means a proceeding whether criminal or civil, before a court. The present proceedings are civil proceedings. No submission was advanced that the proceedings are prescribed proceedings. It follows that s440D is applicable to these proceedings.
15 The Court expressed a view at the commencement of proceedings that if the requisite leave to proceed against the third respondent was not obtained under s440D then the applicant could not proceed against the first and second respondents. The applicant disagreed submitting that s440D, although applicable to the corporate respondent, did not extend to the first and second respondents. Several authorities were relied upon by the applicant in support of the submission.
16 The first of these is Rayner v Guthega Alpine Pty Limited & Ors [2006] NSWIRComm 347. The case concerned an application under s106 against two individual respondents and a corporate respondent which was, at the time of the proceedings, in liquidation, and against which a notice of discontinuance had been filed by the applicant. Marks J, having noted these matters, then considered the applicant's claim against the second and third respondents who were the sole director and hotel manager, respectively, of the corporate respondent. His Honour found that the contract of employment in issue was unfair; that the individual respondents were involved in the management of the corporate respondent's business and benefited from its operations; and ordered them to pay the applicant a sum of money under s106(5).
17 There is nothing on the face of the judgment which indicates that, in the absence of leave being obtained to proceed against the corporate respondent, the applicant could not proceed against the two individual respondents against whom he sought orders under s106(5). The matter was not addressed by Marks J in the judgment. It is therefore of little assistance to the resolution of the present issue.
18 The second judgment relied on by the applicant in support of his submission that the Court can make orders for monetary relief against Messrs Doneski and Gawler, is the Full Bench decision of AFMEPKIU, New South Wales Branch v David & Ors [2006] NSWIRComm 206. According to the applicant, the judgment, consistent with the present proceedings, concerned a direct employment relationship between the applicant and a corporate respondent which was in liquidation at the time of the proceedings and against which the applicant had not obtained leave to proceed under s500(2), the relevant provision under the Corporations Act 2001.
19 The factual background, in brief, was that the applicant/trade union, on behalf of several former employees of a company, David Graphics Ltd, filed a summons under s106. The first respondent, Alan Thomas David, was a director and substantial shareholder in David Graphics. That company went into liquidation at about the time the contracts of employment of each of the employees were terminated. Upon liquidation of David Graphics, a sale of the stock and work in progress was made to another company, Digital Graphics Communications Pty Limited (Digital Graphics). It was alleged that Digital Graphics had purchased the stock and work in progress at an undervalue. Digital Graphics continued to operate the business formerly conducted by David Graphics from the same premises. There was nothing to indicate, on the face of the judgment, that leave to proceed had been obtained against David Graphics, or that there was any intention on the part of the applicant to proceed against David Graphics.
20 At first instance, an application to amend the summons to include Digital Graphics as an additional respondent was dismissed. On appeal, the Full Bench approached the issue of joinder by considering whether there was a real or close connection between Digital Graphics and David Graphics and whether the transfer of the business of one company to another was undertaken as a subterfuge to defeat or have the effect of defeating the applicant's claims. What was not addressed by the Full Bench (not surprisingly, because it was not of any apparent relevance to the appeal) was whether the applicant could proceed against the individual respondents (Mr David and John Lawrence Coates) in circumstances where the impugned contract of employment arrangement was with David Graphics, the company in liquidation. In the judgment at first instance, Marks J set out what he described as the essence of the applicant's case to join Digital Graphics as a party to the proceedings; namely, because David Graphics had gone into liquidation any orders made against it would be futile; and, Digital Graphics, "... had received the benefit of the contract with (David Graphics) ...". Later in the judgment, Marks J observed, "... (that) there is no suggestion of any contract or arrangement to which Digital Graphics was a party which would satisfy the definition of s105 of the Act:" Automotive Food, Metals, Engineering, Printing and Kindred Industries Union, New South Wales Branch v Alan Thomas David & Ors [2005] NSWIRComm 428.
21 It would appear from these comments that the issue of proceeding against the individual respondents in the absence of obtaining leave to proceed against the corporate employer and party to the contract of employment was not raised or otherwise identified.
22 A third authority upon which the applicant places reliance in support of the contention that s440D only has application to the corporate respondent under administration and does not extend to directors of the corporation or other individual respondents is United Globalcom, Inc. v Industrial Relations Commission (NSW) in Court Session (2005) 142 IR 204. That authority dealt with a transfer of funds from one corporation (Old UGC) to another, New UGC. The former corporation had been the applicant's employer. Following a restructure involving Old UGC and several other companies, New UGC was created and became the successor in interest and parent of Old UGC. At first instance, an application had been brought under s106 against Old UGC, New UGC and others. In the Court of Appeal, New UGC sought orders to prevent the Commission in Court Session from hearing the proceeding on the ground that it had no connection with the impugned contract or arrangement under s106. It was observed that if an applicant obtains an order under s106 against the respondent, for whom the work was performed, but the assets of that respondent have since passed to another company, then there may be jurisdiction under s106(2) to make a monetary order against the company to which those assets have passed on the basis that such an order may be properly regarded as a monetary payment "in connection with" a contract declared wholly or partly void and varied under s106(5): at [24].
23 It would be immediately apparent from the above judgment that the question of jurisdiction to make orders against New UGC arose in the context of an order first being obtained against a respondent, "... for whom the applicant worked in an industry, that is, the applicant's employer, Old UGC which was a party to the proceedings. This finding, in my view, is consistent with a requirement to proceed against a respondent/party to an impugned contract under s106 if orders under s106(5) are being sought against respondents who are not parties to the contract.